Bill > S499

This bill establishes new protections for consumers against unsolicited loans by creating Chapter 140F of the General Laws. It defines an "unsolicited loan instrument" as a negotiable check, money order, draft, or similar item used to activate a loan that the consumer did not request, and prohibits their issuance unless in response to a consumer's request or application, with exceptions for existing customer relationships or valid loan agreements as defined by the Gramm-Leach-Bliley Act. If such an instrument is cashed, the consumer has 10 days to cancel the contract by notifying the lender and returning the full loan amount. Consumers are not liable for debts incurred from the unauthorized negotiation or fraudulent use of these instruments, and issuing institutions must provide a written release of liability, take steps to correct any negative impact on the consumer's credit rating, and inform the consumer of these actions. Furthermore, financial institutions cannot seize funds from a consumer's account due to a default on a debt arising from unauthorized use of an unsolicited loan instrument. Knowingly sending such instruments can result in a fine of up to $5,000 per violation, and fraudulently negotiating one can lead to imprisonment or a fine of up to $25,000. Violations of this chapter are considered unfair or deceptive acts under Chapter 93A, and the Commissioner of Banks is tasked with creating necessary rules and regulations.