The "Third-Party Litigation Financing Consumer Protection Act" introduces a new chapter in Title 6 of the General Laws of Rhode Island, establishing a comprehensive regulatory framework for litigation financing. The bill defines essential terms such as "consumer," "litigation financer," and "litigation financing transaction," and mandates that litigation financers must register with the state before engaging in financing transactions. This registration process requires a surety bond of at least $50,000 and the maintenance of accurate records with the Department of Business Regulation. All documents related to litigation financing are designated as public records.

The bill emphasizes consumer protection by prohibiting litigation financers from practices such as paying or offering commissions, referral fees, or other forms of consideration to legal representatives or medical providers for referrals, disseminating false or misleading advertisements, and influencing the conduct of a consumer's legal claim. It requires litigation financing contracts to include clear disclosures regarding the consumer's rights, including the right to cancel the contract within five business days, the fees charged, and the litigation financer's lack of authority to make decisions about the consumer's lawsuit.

Furthermore, litigation financers are obligated to submit annual reports to the Department detailing their transactions and ownership structures, while certain information remains confidential. The act specifically exempts commercial litigation financing from its provisions, particularly in personal injury cases, and establishes that any violations of the act or the rules and regulations promulgated under it will render financing contracts unenforceable against consumers. The act is set to take effect immediately upon passage.