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title-19•Title 19 — Financial Institutions
Unless otherwise specified, the following terms shall have the following meanings throughout this title:
(1) “Agreement to form” means the agreement to form a financial institution or the agreement to form a credit union, as applicable, pursuant to this title, and includes, for financial institutions organized before December 31, 1995, the articles of incorporation or the agreement of association of the financial institution, where applicable.
(2) “Branch” means any office or place of business, other than the main office or customer-bank-communication-terminal outlets as provided for in this title, at which deposits are received, or checks paid or money lent, or at which any trust powers are exercised. Any financial institution that had, on or before June 30, 2003, established an office or place of business, other than its main office, at which trust powers are exercised, shall not be required to obtain the approval of the director, or the director’s designee, pursuant to § 19-2-11 for any such offices established as of that date.
(3) “Credit union” means a credit union duly organized under the laws of this state.
(4) “Director” means the director of the department of business regulation, or the director’s designee.
(5) “Division of banking” means the division within the department of business regulation responsible for the supervision and examination of regulated institutions and/or licensees under chapter 14 of this title.
(6) “Federal credit union” means a credit union duly organized under the laws of the United States.
(7) “Financial institution” means any entity, other than a credit union, duly organized under the laws of this state that has the statutory authority to accept money on deposit pursuant to title 19, including an entity that is prohibited from accepting deposits by its own bylaws or agreement to form; the term includes, but is not limited to banks, trust companies, savings banks, loan and investment banks, and savings and loan associations.
(8) “Main office” means, in the case of financial institutions or credit unions, the location stated in the agreement to form, as amended, and, otherwise, the location recognized by the institution’s primary banking regulator as its main office.
(9) “Person” means individuals, partnerships, corporations, limited liability companies, or any other entity however organized.
(10) “Regulated institution” means any financial institution, credit union, or other insured-deposit-taking institution, that is authorized to do business in this state, including one authorized by operation of an interstate banking statute that allowed its original entry.
(11) “Retail installment contract” means any security agreement negotiated or executed in this state, or under the laws of this state, including, but not limited to, any agreement in the nature of a mortgage, conditional sale contract, or any other agreement whether or not evidenced by any written instrument to pay the retail purchase price of goods, or any part thereof, in installments over any period of time and pursuant to which any security interest is retained or taken by the retail seller for the payment of the purchase price, or any part thereof, of the retail installment contract.
(12) “Retail seller” means any person who sells or contracts to sell any goods under a retail installment contract to a retail buyer.
(13) “Superintendent” means the deputy director designated by the director as superintendent of banking in the department of business regulation.
(14) “Unimpaired capital” means the sum of all capital and allowance accounts minus estimated losses on assets, calculated in accordance with generally accepted accounting principles.
(15) “Writing” means hard copy writing or electronic writing that meets the requirements of § 42-127.1-2(7).
History of Section. P.L. 1995, ch. 82, § 38; P.L. 1997, ch. 98, § 1; P.L. 2003, ch. 174, § 1; P.L. 2003, ch. 178, § 1; P.L. 2013, ch. 50, § 1; P.L. 2013, ch. 57, § 1; P.L. 2014, ch. 106, § 1; P.L. 2014, ch. 125, § 1; P.L. 2016, ch. 512, art. 1, § 5.
[Repealed]
History of Section. P.L. 1995, ch. 82, § 38; P.L. 2001, ch. 180, § 20; P.L. 2006, ch. 332, § 1; P.L. 2006, ch. 435, § 1; Repealed by P.L. 2013, ch. 50, § 2, effective June 3, 2013; P.L. 2013, ch. 57, § 2, effective June 3, 2013.
(a) All applications filed by regulated institutions shall be made to the director, or the director’s designee, other than the exceptions set forth in this title.
(b) The director, or the director’s designee, shall cause notice of applications filed to be published on the department’s website and by any other method deemed by the director, or the director’s designee, to communicate with persons who are, or may be, interested in the application. The notice shall include a provision allowing for a public comment period. During this period, the application shall be open for public inspection at the division of banking. If, at the end of the public comment period, there are no objectors to the application, the director, or the director’s designee, may approve or deny the application. If there are any objectors, the director, or the director’s designee, may hold a public hearing to take testimony, under oath, and after considering this testimony, shall approve or deny the application. Any applicant aggrieved by any order regarding an application may appeal pursuant to the provisions of chapter 35 of title 42.
(c) The superintendent shall collect a filing fee with respect to applications submitted to the division of banking for consideration. All fees pursuant to this section shall be paid to the director for the use of the state. The fees to be charged for each type of application shall be established by the division of banking by regulation.
(d) The superintendent is hereby authorized to promulgate rules and regulations for the implementation of this section, including, but not limited to, the establishment of specific time periods within which a decision for the various types of applications must be rendered by the division of banking.
(e) Any party adversely affected by a decision of the director, or the director’s designee, may make written demand upon the director, or the director’s designee, within thirty (30) days notification of the decision from which the party is appealing. A hearing conducted pursuant to this section shall be conducted pursuant to the Administrative Procedures Act, chapter 35 of title 42.
(f) Anyone adversely affected by a decision of the director, or the director’s designee, may appeal the decision by filing an appeal with the superior court pursuant to § 42-35-15.
History of Section. P.L. 1995, ch. 82, § 38; P.L. 1999, ch. 156, § 1; P.L. 2013, ch. 50, § 1; P.L. 2013, ch. 57, § 1.
If any provision of this chapter or the application of this chapter to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter that can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable.
History of Section. P.L. 1995, ch. 82, § 38.
Fifteen (15) or more persons, all of whom shall be citizens and residents of this state, who associate themselves by a written agreement to form, may, upon compliance with the provisions of this chapter, become a financial institution, with all the powers, rights, and privileges, and subject to all of the duties, restrictions, and liabilities set forth in this title and in all laws relating to financial institutions.
History of Section. P.L. 1995, ch. 82, § 39.
(a) Any agreement to form shall state that the subscribers to the agreement associate themselves with the intention of forming a financial institution pursuant to this title to transact business authorized by this title within this state and shall specify:
(1) The name by which the financial institution shall be known, which shall be consistent with words identified with those of financial institutions.
(2) The purpose for which it is formed.
(3) The address at which its business is to be transacted.
(4) For stock-owned companies, the amount of its capital stock, which shall in no event be less than three million dollars ($3,000,000), and the number of shares into which the capital stock is to be divided.
(5) Whether the financial institution intends to exercise trust powers.
(b) Each agreement to form shall contain the name, residence, and post office address of each subscriber, and, for stock-owned companies, the number of shares of stock that each subscriber agrees to take.
History of Section. P.L. 1995, ch. 82, § 39.
The subscribers to the agreement to form shall make application to the director, or the director’s designee, for a certificate that public convenience and advantage will be promoted by the establishment of the financial institution, which certificate the director, or the director’s designee, is hereby authorized to grant. The decision on the certificate may be appealed pursuant to chapter 1 of title 19.
History of Section. P.L. 1995, ch. 82, § 39; P.L. 2013, ch. 50, § 3; P.L. 2013, ch. 57, § 3.
The first meeting of the subscribers to the agreement to form shall be called by a notice signed either by that subscriber to the agreement to form who is designated in the agreement for this purpose, or by a majority of the subscribers. The notice shall state the time, place, and purposes of the meeting. A copy of the notice shall, at least seven (7) days before the day appointed for the meeting, be given to each subscriber or left at the subscriber’s residence, and an affidavit of a majority of the signers of the notice that the notice has been served shall be recorded with the records of the first meeting. If all the subscribers, in writing, endorsed upon the agreement to form, waive this notice and fix the time and place of meeting, no notice shall be required.
History of Section. P.L. 1995, ch. 82, § 39.
At the first meeting, or at the adjournment of any meeting, the subscribers shall, without limiting other actions, choose a temporary secretary, adopt bylaws, and elect, in any manner as the bylaws may determine, directors, a president, a secretary, and any other officers as the bylaws may prescribe. All of the elected officers shall be sworn to the faithful performance of their duties. The temporary secretary shall make and attest a record of the proceedings until the secretary has been chosen and sworn, including a record of the choice and qualification.
History of Section. P.L. 1995, ch. 82, § 39.
The president and a majority of the directors who are elected at the first meeting shall make, sign, and make oath to a certificate setting forth:
(1) A true copy of the agreement to form, the names of the subscribers to the agreement, and the name, residence, and post office address of each of the officers of the financial institution; and
(2) The date of the first meeting.
History of Section. P.L. 1995, ch. 82, § 39.
The certificate in § 19-2-6 shall be submitted to the director, or the director’s designee, together with the records of the first meeting, and the director, or the director’s designee, shall examine the certificate and records and may require an amendment of the certificate and records or any additional information the director may consider necessary. If the director finds that the certificate and records conform to the provisions of the preceding sections relative to the organization of the financial institution; and to the provisions of this title; and that the provisions of this title have been complied with; and that public convenience and advantage will be promoted by the establishment of the financial institution, the director, or the director’s designee, shall endorse his or her approval on the certificate and shall maintain a copy of the certificate, together with the copy of the records of the first meeting. Upon approval of the certificate by the director, or the director’s designee, the certificate shall be filed in the office of the secretary of state, together with the certificate of the general treasurer that the subscribers have paid into the treasury for the use of the state a sum equal to one-tenth of one percent (.1%) of the amount of capital stock.
History of Section. P.L. 1995, ch. 82, § 39.
The secretary of state shall, upon the filing of certificates, as provided in § 19-2-7, and upon the payment of ten dollars ($10.00), record the certificate and issue to the financial institution a certificate, under the seal of the state, substantially in the following form:
STATE OF RHODE ISLAND
BE IT KNOWN THAT WHEREAS (the names of the subscribers to the agreement to form) have associated themselves for the purpose of forming a financial institution under the name of (the name of the financial institution), for the purpose (the purpose declared in the agreement to form), with capital stock of (if applicable, the amount fixed in the agreement to form), and have complied with the provisions of the statutes of this state in the case made and provided, as appears from the certificate of the financial institution, duly approved by the director or the director’s designee and recorded in this office:
NOW, THEREFORE, I (the name of the secretary), secretary of state of the state of Rhode Island, do hereby certify that (the names of the subscribers to the agreement to form), their associates and successors, are legally organized and established as an existing financial institution, under the name of (name of the financial institution), with the powers, rights, and privileges, and subject to the liabilities, duties, and restrictions, imposed by law.
WITNESS my official signature subscribed hereunto subscribed, and the seal of the state of Rhode Island hereunto affixed, this ... day of ... in the year ... .
History of Section. P.L. 1995, ch. 82, § 39.
(a) The financial institution, if a stock financial institution, shall not issue any shares of stock until the par value of the shares has been actually paid in cash, free and clear of all encumbrances. When the whole capital stock has been issued, a complete list of the stockholders, with the name, residence, and post office address of each, and the number of shares held by each, shall be filed with the director, or the director’s designee, which list shall be verified under oath by two (2) of the principal officers of the financial institution.
(b) Upon receipt of the statement in the case of stock financial institutions, the director, or the director’s designee, shall cause an examination to be made. If, after the examination, it appears that the whole capital stock has been paid in cash for stock financial institutions and that all requirements of law have been complied with, the director, or the director’s designee, shall issue a certificate authorizing this financial institution to begin transaction of business, and then the subscribers and their associates, successors, and assigns, shall be authorized to transact business as an organized financial institution, with all of the powers, rights, and privileges, and subject to the liabilities, duties, and restrictions imposed by law, and the records of the first meeting of the subscribers to the agreement to form shall become and be taken as the records of the first meeting of the financial institution. It shall be unlawful for any of these financial institutions to begin the transaction of business until this certificate has been granted.
(c) The financial institution shall in no way be obligated, directly or indirectly, for any indebtedness related to the shareholders’ acquisition of capital stock.
History of Section. P.L. 1995, ch. 82, § 39.
(a) Subject to the approval of the director, or the director’s designee, any financial institution or credit union may amend its agreement to form.
(b) If the amendment increases the capital stock of a stock financial institution, the certificate of the general treasurer that the financial institution has paid into the treasury for the use of the state a sum equal to one tenth of one percent (.1%) of the increase shall be presented to the secretary of state; provided, however, that no share or shares of any increase of stock shall be issued by any financial institution until the par value of the stock has been actually paid in cash.
(c) The director, or the director’s designee, may permit any stock financial institution to transfer to its capital account, from any surplus accounts that are not set aside as security for any class of depositors, an amount that will leave, after the transfer, a surplus in addition to any amount set aside as special security of at least one hundred percent (100%) of the total capital stock. The director may authorize the financial institution to issue further shares of stock for the transferred amount whenever the director, or the director’s designee, is satisfied that the entire capital stock when added to and the remaining surplus represent assets of equivalent value properly invested for banking purposes; and provided, also, that nothing in this section shall be construed to affect, in any way, any right with respect to the determination of the amount and issue of capital stock conferred upon any existing financial institution by its act of formation or any amendment or addition to its act of formation, except that no capital stock shall be issued until the par value of the stock has been actually paid in cash, and until the director, or the director’s designee, certifies this; and provided further that no amendment, change, or alteration shall contain any provision that could not lawfully be contained in an original agreement to form under this title filed at the time of applying for amendment.
(d) Upon the issuance of the duplicate certified by the secretary of state, the agreement to form shall be amended accordingly.
History of Section. P.L. 1995, ch. 82, § 39; P.L. 2000, ch. 146, § 1.
Any financial institution or credit union may establish a branch, or branches, within this state at any other place than its main office upon obtaining the approval of the director, or the director’s designee. The director, or the director’s designee, shall decide, upon consideration of factors consistent with the creation of the financial institution or credit union, whether to issue a certificate of public convenience and advantage.
History of Section. P.L. 1995, ch. 82, § 39; P.L. 1997, ch. 98, § 2.
Any financial institution or credit union may relocate a branch upon sixty (60) days’ prior written notice to the director, or the director’s designee, provided that the relocated branch is:
(1) To be located within the same city or town as the existing branch; or
(2) To be located within a ten (10) mile radius of the existing branch; and
(3) The existing branch will be closed upon construction and/or occupancy of the relocated branch.
History of Section. P.L. 1995, ch. 82, § 39; P.L. 1997, ch. 98, § 2; P.L. 2011, ch. 347, § 1; P.L. 2011, ch. 387, § 1; P.L. 2022, ch. 338, § 1, effective June 29, 2022; P.L. 2022, ch. 339, § 1, effective June 29, 2022.
(a) Any financial institution may, subject to the approval of the director, or the director’s designee, to be given on any notice and terms that the director, or the director’s designee, may require:
(1) Merge into, or consolidate with, another regulated institution or other insured-deposit-taking institution duly organized under the laws of the United States;
(2) Purchase substantially all of the assets and assume substantially all of the liabilities of another regulated institution or other insured-deposit-taking institution duly organized under the laws of the United States; or
(3) Acquire more than fifty percent (50%) of the stock of another regulated institution or other insured-deposit-taking institution duly organized under the laws of the United States.
Any of these transactions shall be undertaken pursuant to a plan that has been approved by an affirmative vote of two thirds (⅔) of the board of directors and, in the case of a mutually owned financial institution, two thirds (⅔) of the board of directors or trustees and a majority vote of the depositors of the mutually owned financial institutions present in person or by proxy, at a meeting called by the board of directors or trustees. For the purpose of this section, unless otherwise required under applicable provisions of federal banking law, the depositor shall be deemed to be the individual whose tax identification number or social security number is used by the bank for interest reporting purposes to the Internal Revenue Service.
(b) The director, or the director’s designee, shall consider:
(1) The fairness to the owners of the financial institutions;
(2) The financial condition of the financial institutions; and
(3) The public convenience and advantage.
(c) All regulated institutions merged under this chapter shall comply with the relevant provisions of §§ 7-1.2-1001 — 7-1.2-1005.
(d) The original of the articles of merger, bearing the approval of the director, or the director’s designee, shall be filed with the director, or the director’s designee, and duplicates shall be filed with the secretary of state, who shall, upon payment to him or her of twenty-five dollars ($25.00), issue a certificate of merger or certificate of consolidation pursuant to § 7-1.2-1003. Upon the issuance of the certificate or upon a later date, not more than thirty (30) days after the filing of the articles of merger or articles of consolidation, as may be set forth in the articles, the merger or consolidation shall be effected pursuant to § 7-1.2-1005. Any shareholder of a financial institution who or that is a party to a plan requiring approval under this section, shall have the right to dissent from the action involved in accordance with § 7-1.2-1201, and any shareholder who or that elects to exercise that right in compliance with § 7-1.2-1202, shall be entitled to the rights of dissenting shareholders on the terms and conditions set forth in § 7-1.2-1202. References to “articles of incorporation” in chapter 1.2 of title 7 shall be deemed to refer to the “Agreement to Form” of the financial institution involved.
History of Section. P.L. 1995, ch. 82, § 39; P.L. 1997, ch. 98, § 2; P.L. 2001, ch. 128, § 1; P.L. 2005, ch. 36, § 15; P.L. 2005, ch. 72, § 15.
(a) Any mutual savings bank chartered under the laws of this state may convert to and become a financial institution with capital stock upon adoption of a plan of conversion by two-thirds (⅔) vote of the board of trustees and approval of the plan by the director, or the director’s designee, and a majority vote of the depositors of the savings bank present in person or by proxy at a meeting called by the board of trustees. For the purpose of this section, unless otherwise required under applicable provisions of federal banking law, the depositor shall be deemed to be the individual whose tax identification number or social security number is used by the bank for interest reporting purposes to the Internal Revenue Service. The plan of conversion shall provide that the savings bank shall issue and sell the stock issued in connection with the conversion at a price that represents its pro forma market value, as determined by an independent appraisal, and shall offer its stock initially in a subscription offering to the depositors of the savings bank on an eligibility record date established by the board of trustees, giving those depositors priority rights to purchase the shares over the general public pro rata based on deposits. The converted savings bank shall also create a liquidation account for the benefit of its depositors on the eligibility record date, in an amount representing the undivided profits and guaranty fund of the savings bank at that time, balances of which shall be calculated and subsequently recalculated as determined in accordance with regulations promulgated by the director, or the director’s designee. Unless otherwise impaired, any liquidation account so created also shall be considered as part of the paid-in and unimpaired capital stock and surplus of any stock financial institution. The plan of conversion may provide for restrictions on the amount of stock that any person or entity may purchase in the conversion, or own or control thereafter, which may also be incorporated into the stock agreement to form the converted entity.
(b) In connection with the conversion, the financial institution may form a holding company or utilize an existing holding company to hold all the shares of the financial institution, and offer to its depositors and general public (subject to subscription rights in favor of depositors) all of the stock of the holding company in lieu of the capital stock of the financial institution. This conversion may also be accomplished pursuant to a merger as permitted by this title. The converting savings bank may, at the time of conversion, merge any financial institution subsidiary into the capital stock financial institution resulting from the conversion, or cause the subsidiary to become a separate subsidiary of a holding company.
(c) No savings bank may convert to a stock form of financial institution unless its deposits will continue to be federally insured. The corporate existence of a mutual savings bank converting to the stock financial institution shall not terminate, but the financial institution shall be deemed to be a continuation of entity of the savings bank so converted.
(d) In connection with its approval of the plan of conversion, the director, or the director’s designee, shall approve the proposed stock agreement to form the converted entity. The director, or the director’s designee, upon finding that the requirements of this section and applicable regulations have been met, and that the conversion has been completed with the sale of all shares offered in the conversion, shall issue a certificate of approval of the conversion to the converted entity. Upon the payment of fifty dollars ($50.00), the certificate of approval shall be filed in the office of the secretary of state, together with the certificate of the general treasurer that the converted entity has paid into the treasury for the use of the state a sum equal to one tenth of one percent (.1%) of its capital stock which, in no event, shall be less than one hundred dollars ($100). Upon the filing of the certificate with the secretary of state and payment of fifty dollars ($50.00), the secretary of state shall immediately record the certificate of approval and stock agreement to form, whereupon the stock agreement to form will become effective.
(e) The director, or the director’s designee, shall issue rules and regulations implementing this section.
(f) To the extent not inconsistent with this section, each mutual savings bank converted into a stock financial institution shall have all the powers and privileges conferred on, and be subject to all the duties and liabilities imposed on, financial institutions.
History of Section. P.L. 1995, ch. 82, § 39; P.L. 1998, ch. 441, § 12.
(a) Any mutual savings bank chartered under the laws of this state may reorganize into the mutual holding company form of organization pursuant to this section. A mutual savings bank may reorganize into a mutual holding company form of organization by organizing a mutual holding company and chartering one or more interim stock financial institutions or corporate subsidiaries and merging with those banks or subsidiaries, or in any other manner approved by the director. The method of organizing the mutual holding company shall be set forth in a plan of mutual holding company reorganization. The corporate existence of a mutual savings bank converting to a stock financial institution as part of the reorganizing into the mutual holding company structure shall not terminate, but the stock financial institution, referred to in this section as the continuing stock financial institution, shall be deemed to be a continuation of the reorganizing mutual savings bank. The mutual holding company must at all times own, directly or indirectly through one or more intermediate stock holding companies, a majority of the voting shares of capital stock of the continuing stock financial institution. A mutual holding company organized under this section also may include an intermediate stock holding company so long as the mutual holding company owns a majority of the voting shares of capital stock of the intermediate stock holding company.
(b) The plan of mutual holding company reorganization must be approved by a two-thirds (⅔) vote of the board of trustees and by the director, or the director’s designee. In connection with its approval of the plan of mutual holding company reorganization, the director, or the director’s designee, shall approve the proposed agreement to form and the proposed bylaws of the mutual holding company. The approval of the plan of mutual holding company reorganization by a majority vote of the depositors of the mutual savings bank present in person or by proxy at a meeting called by the board of trustees is also required. For the purpose of this section, unless otherwise required under applicable provisions of federal banking law, the depositor shall be deemed to be the individual whose tax identification number or social security number is used by the bank for interest reporting purposes to the Internal Revenue Service.
(c) To the extent not inconsistent with this section, the continuing stock financial institution subsidiary of the mutual holding company shall have all the powers and privileges conferred on, and be subject to all the duties and liabilities imposed on, financial institutions.
(d) If shares of common stock are offered for sale by the continuing stock financial institution subsidiary of the mutual holding company, or by an intermediate stock holding company subsidiary of the mutual holding company, to the general public for a price payable in cash, depositors shall be given subscription rights, and the offering shall be conducted in the manner provided in § 19-2-14, and in any regulations issued by the director, or the director’s designee, under that section.
(e) A mutual holding company and any intermediate stock holding company subsidiary may engage in any activity permitted to bank holding companies and financial holding companies under the Bank Holding Company Act of 1956, 12 U.S.C. § 1841 et seq., or to savings and loan and mutual holding companies under the Home Owners’ Loan Act, 12 U.S.C. § 1467a, or in any other activity authorized by the director, or the director’s designee. Without limitation, a mutual holding company, and any intermediate stock holding company subsidiary, may, subject to other applicable provisions of title 19 governing mergers and consolidations and, with the approval of the director, or the director’s designee: (1) Merge with or consolidate with another bank, financial services, or savings and loan holding company, including a mutual holding company; or (2) Acquire or consolidate with another financial institution, whether in mutual or stock form. Any merger or consolidation may occur concurrently with a mutual holding company reorganization under this section, or subsequent to the initial reorganization, and cash and/or stock may be used as consideration for the merger or consolidation as long as the mutual holding company directly or indirectly owns a majority of the voting shares of capital stock of the intermediate stock holding company or stock financial institution after the merger or consolidation.
(f) A mutual holding company may convert to stock form upon a two-thirds (⅔) vote of the board of trustees and the approval of the plan of conversion by the director, or the director’s designee. The conversion shall be conducted in accordance with the applicable provisions of § 19-2-14, including the requirement to obtain depositor approval, and any regulations issued under § 19-2-14 by the director, or the director’s designee. In the case of the conversion of an existing mutual holding company to stock form, where shares of common stock of an intermediate stock holding company or stock financial institution subsidiary of the mutual holding company have previously been issued to persons other than the mutual holding company, referred to in this section as the minority stockholders, the plan of conversion shall provide that such minority stockholders shall receive an ownership interest in the resulting stock holding company equal to their percentage ownership in the intermediate stock holding company or stock financial institution subsidiary of the mutual holding company immediately prior to the conversion, which percentage ownership interest shall be adjusted taking into account the assets held by the mutual holding company, as reflected in the statement of financial condition of the mutual holding company immediately prior to the conversion, with the balance of the shares sold in accordance with § 19-2-14 and any regulations issued under that section. The adjustment, which shall be described in the plan of mutual holding company conversion submitted for approval by the director, or the director’s designee, shall be subject to the approval of the director, or the director’s designee.
(g) The director, or the director’s designee, may issue rules and regulations implementing this section.
History of Section. P.L. 2001, ch. 183, § 1; P.L. 2001, ch. 399, § 1.
The bylaws of any financial institution shall not be altered, amended, or added to except upon approval of the director, or the director’s designee. A certified copy of the proposed alteration, amendment, or addition shall be submitted to the director, or the director’s designee, who shall endorse his or her approval or disapproval, and shall maintain a copy of the approval or disapproval.
History of Section. P.L. 1995, ch. 82, § 39.
Any financial institution or credit union may, by bylaw, authorize its directors or trustees to indemnify and reimburse any person (or the personal representative of any person) who at any time serves, or shall have served, as director, trustee, officer, or employee of the financial institution or credit union, whether or not in office at the time, against and for any and all claims and liabilities to which he or she may be or become subject by reason of this service, and against and for any and all expenses necessarily incurred in connection with the defense or reasonable settlement of any legal or administrative proceedings to which he or she is made a party by reason of this service, except in relation to matters as to which he or she shall be finally adjudged to be liable for negligence or misconduct in the performance of his or her official duties. The provisions of this section shall not be deemed to exclude any other right or privileges to which this person may be entitled.
History of Section. P.L. 1995, ch. 82, § 39.
Every director of a financial institution, when appointed or elected, shall take an oath that he or she will, so far as the duty devolves on him or her, diligently and honestly administer the affairs of the financial institution, and will not knowingly violate, or willingly permit to be violated, any of the provisions of this title. This oath, subscribed to by the director making it, and certified by the officer before whom it is taken, shall be immediately transmitted to the director, or the director’s designee, and shall be filed and preserved in his or her office.
History of Section. P.L. 1995, ch. 82, § 39.
Every financial institution and credit union in this state shall cause a record to be made, in a book kept for that purpose, of all of the proceedings of the board of directors or trustees or standing committees thereof, at every meeting thereof, and of the names of all directors or trustees or members of committees present at any such meeting.
History of Section. P.L. 1995, ch. 82, § 39.
(a) Every officer and employee of a regulated institution shall be bonded in a form and in an amount that the director, or the director’s designee, may prescribe, for the honest discharge of his or her duties, and shall file with the director, or the director’s designee, an attested copy. The director, or the director’s designee, shall promulgate regulations to set minimum amounts of fidelity bond coverage based upon the size of regulated institutions, stating the minimum amount and type of coverage. The director, or the director’s designee, shall be notified of any change in the bond, or any revocation of the bond, within ten (10) business days of the change or revocation by the company issuing the bond and the responsible officer of the regulated institution as designated by the trustees or board of directors of the regulated institution.
(b) The bond or bonds shall be continuous and remain in full force and effect until termination by either the regulated institution or the surety. Termination shall not become effective until thirty (30) days after the director, or the director’s designee, has received notice. Regardless of the number of years, the bond shall continue in force, and the limit of the surety’s liability stated in the bond shall not be cumulative from year to year or period to period.
History of Section. P.L. 1995, ch. 82, § 39.
If any provision of this chapter or the application of this chapter to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter that can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable.
History of Section. P.L. 1995, ch. 82, § 39.
[Repealed]
Every financial institution shall have the powers, rights, and privileges, and be subject to all the duties, restrictions, and liabilities, conferred and imposed upon it by this title, and in addition shall have all the powers, rights, and privileges, and be subject to all the duties, restrictions, and liabilities, set forth in chapters 1, 1.2, 4 — 6, and 9 of title 7, only as is not inconsistent with the provisions of this title, notwithstanding anything to the contrary in the institution’s agreement to form. Every financial institution shall have the power to exercise, by its board of directors or board of trustees or duly authorized officers or agents, all incidental powers necessary to carry on the business of banking including but not limited to the power:
(1) To receive money on deposit and pay interest thereon;
(2) To receive, upon deposit and for safekeeping, property of every description, upon terms prescribed by the financial institution, and to construct, own, lease, and maintain safe deposit vaults, with suitable boxes and places for the reception and deposit of the property, and lease the use of places and boxes to individuals and corporations, upon any terms that the financial institution may prescribe. The financial institution shall in no case incur any liability on account of the deposit of any property so made with it, or by reason of the leasing of any place of deposit, other than liability the financial institution expressly assumes by the terms of the contract or receipt under which it has accepted the deposit or let the place of deposit;
(3) To act as a depository of public money or a financial agent under any law, rule, or regulation;
(4) To issue capital debentures with the approval of the director, or the director’s designee;
(5) To make loans and mortgages and collect interest from them as may be agreed upon;
(6) To invest in any bonds, obligations, or property, real, personal, or mixed, as it may deem prudent, subject to any duties, restrictions, or limitations imposed by this title;
(7) To exercise any power authorized for insured-deposit-taking institutions duly organized under the laws of the United States that are members of the Federal Deposit Insurance Corporation;
(8) To exercise additional powers, not inconsistent with the carrying on of a banking business, with the approval of the director, or the director’s designee.
History of Section. P.L. 1995, ch. 82, § 40; P.L. 2005, ch. 36, § 16; P.L. 2005, ch. 72, § 16.
No financial institution shall make any loan or advance whereby it is liable directly, indirectly, or contingently for the repayment of the loan or advance in whole or in part. This restriction shall not impair the right of a financial institution:
(1) To accept, under its letters of credit or other authorization, drafts or bills of exchange arising out of actual commercial transactions or issued or drawn for agricultural, industrial, or commercial purposes, at sight or on time; or
(2) To purchase from and sell mortgage loans with or without recourse to the Rhode Island housing and mortgage finance corporation or other secondary market investors.
History of Section. P.L. 1995, ch. 82, § 40.
(a) No financial institution shall permit any person or entity to borrow or guaranty an amount(s), directly or indirectly, in the aggregate, that exceeds fifteen percent (15%) of its unimpaired capital. In calculating this limitation, a financial institution shall take into account the credit exposure to any such person or entity arising from derivative transactions. The director shall have the authority to establish the method for determining the credit exposure and the extent to which the credit exposure shall be taken into account. As used in this subsection, “derivative transaction” includes any transaction that is a contract, agreement, swap, warrant, note, or option that is based, in whole or in part, on the value of, any interest in, or any quantitative measure or the occurrence of any event leading to, one or more commodities, securities, currencies, interest or other rates, indices or other assets. The director may adopt regulations establishing the method for determining credit exposure to derivative transactions and the extent to which the credit exposure shall be taken into account. The director shall apply the limitation included herein to derivative transactions entered into on or after January 1, 2013.
This limitation shall not include:
(1) Obligations issued by the United States;
(2) General obligations of the state of Rhode Island;
(3) Loans or any portion thereof that are insured or guaranteed by the United States or any agency thereof;
(4) Inter-bank transactions involving the transfer of immediately available funds resulting from credits to deposit balances at Federal Reserve banks or from credit to new or existing deposit balances due from a correspondent depository institution (commonly known as the sale of federal funds) with a maturity of one business day or less; or
(5) Loans secured by deposits within the financial institution where a perfected interest in the deposits is on record.
(b) To the extent that a deposit-taking institution regulated by the Federal Reserve System and insured by the Federal Deposit Insurance Corporation is expressly permitted to make loans that would exceed the limitations set forth in this section, the lending limitations of the Federal Reserve System shall apply. Nothing herein shall limit the department of business regulation from taking any action it deems appropriate to maintain appropriate safety and soundness standards relative to any loan or loans made by any financial institutions.
History of Section. P.L. 1995, ch. 82, § 40; P.L. 1997, ch. 29, § 1; P.L. 2013, ch. 26, § 1; P.L. 2013, ch. 37, § 1; P.L. 2024, ch. 316, § 1, effective June 25, 2024; P.L. 2024, ch. 317, § 1, effective June 25, 2024.
No stock-formed financial institution shall make a loan or discount on the security of the shares of its own capital stock, nor be the purchaser or holder of its shares, unless the security or purchase is necessary to prevent loss upon a debt previously contracted in good faith; provided, however, that whenever a financial institution makes a valid loan or discount in good faith upon the general credit of specific security or collateral of a shareholder, other than the shares in the financial institution, nothing in this section shall be construed to abridge or modify any of the provisions of the bylaws of the financial institution, as affecting the transaction, giving it a lien upon, or any other right or remedy relating to or affecting, the stock of the shareholder. All stock so purchased or acquired by the financial institution in good faith shall, within one year after its purchase, be disposed of or sold.
History of Section. P.L. 1995, ch. 82, § 40.
(a) Any financial institution or credit union may hold stocks, bonds, or other securities of a non-legal character acquired in settlements and reorganizations effected to reduce or avoid losses on defaulted bonds and investments. These securities shall be sold within five (5) years after being acquired; provided, however, that the director, or the director’s designee, shall have discretionary power regarding the enforcement of the five-year (5) limitation, and these securities may be held after the expiration of the period of five (5) years until the director, or the director’s designee, shall order the sale of these securities.
(b) An investment that was legal when acquired, but because of changed conditions has become of non-legal character may be held subject to the same provisions as subsection (a).
History of Section. P.L. 1995, ch. 82, § 40.
(a) Subject to the limitations contained in this section, a financial institution may invest in the capital stock of any financial institution or other insured-deposit-taking institution duly organized under the laws of any state or of the United States or of any holding company for the institution as defined in this section.
(b) For the purpose of this section, a company shall be a holding company:
(1) If it is a corporation registered and regulated under the laws of the United States as a bank holding company; or
(2) If it is a corporation (whether or not so registered) organized under the laws of the United States or any state thereof and it owns a majority of the capital stock of one or more insured-deposit-taking institutions duly organized under the laws of the United States or any state thereof, the stock of which is an authorized investment under the provisions of this section, provided a majority in value of the corporation’s assets shall be invested in stock and/or securities of the insured-deposit-taking institution.
(c)(1) Except as hereinafter provided, the aggregate amount of stocks held by a financial institution pursuant to this section shall not exceed ten percent (10%) of the assets of the financial institution.
(2)(i) The amount of stock of any one institution held pursuant to this section shall not exceed three percent (3%) of the financial institution’s total assets; and
(ii) The amount of stock of any one institution held pursuant to this section shall not exceed five percent (5%) of the total issued and outstanding voting stock of the institution being held.
(3) None of the limitations set forth in this subsection shall apply to holdings at any time by a financial institution of the stock of any one or more banks of which the financial institution is the holder, directly or indirectly, and with the approval of the director, or the director’s designee, pursuant to this title, of fifty percent (50%) or more of the issued and outstanding voting stock.
(d) Nothing in this section shall be construed to render unlawful any holdings of bank stocks at any time arising out of any merger or consolidation; or occurring from stock dividends or the exercise of rights to subscribe to stock; or arising out of operation of law; or accruing or arising out of foreclosure or other right of acquisition taken as security in the regular course of business. In determining the amount of stock of a bank held by a financial institution, the stock shall in all cases be valued at its cost.
History of Section. P.L. 1995, ch. 82, § 40.
(a) Any financial institution may directly or indirectly purchase, own, or otherwise acquire interests in real estate, improved or unimproved, and improve, develop, redevelop, hold, and manage the real estate and any improvements on it, and mortgage, rent, lease, option, sell, or otherwise dispose of it and/or any interest in it; provided, however, that no financial institution shall invest more than five percent (5%) of its assets in investments authorized in this subsection. This limitation excludes real estate owned, held, or leased for the convenient transaction of the financial institution’s business.
(b) A financial institution may hold real estate acquired by the foreclosure of a mortgage owned by it, or by purchase at sales made under the provisions of the mortgage, or upon judgments for debts due to it, or in settlements effected to secure debts. All this real estate shall be sold by the financial institution within five (5) years after the title is vested in it, unless the time is extended as provided in the case of non-legal investments.
History of Section. P.L. 1995, ch. 82, § 40; P.L. 1997, ch. 98, § 3.
(a) In addition to investments set forth in this title, any financial institution may also, to the extent prescribed, invest in any securities that would be acquired by prudent persons of discretion and intelligence in these matters who are seeking a reasonable income and the preservation of their capital, as are set forth below:
(1) In corporate interest-bearing securities not eligible under the laws of this state for investment, subject to a maximum of three percent (3%) of the financial institution’s assets in any one obligation of any one obligor;
(2) In shares of common, preferred, or guaranteed stocks, including the various classifications of stocks, not eligible under the laws of this state for investment, subject to a maximum of one half of one percent (.5%) of the financial institution’s assets in any one corporation;
(3) In the shares of any open-end or closed-end management-type investment company or trust that is registered under the federal Investment Company Act of 1940, 15 U.S.C. § 80a-1 et seq., subject to a maximum of one percent (1%) of the financial institution’s assets in any one company or trust.
(b) No financial institution shall invest more than ten percent (10%) of its assets in investments authorized in this section, unless otherwise expressly provided.
History of Section. P.L. 1995, ch. 82, § 40.
(a) A financial institution, including a credit union, may subscribe to the capital stock and become a member of a Federal Reserve bank within the Federal Reserve district where the financial institution or credit union is situated under the provisions of the United States Federal Reserve Act, 12 U.S.C. § 221 et seq. The member financial institution or credit union shall be subject to the provisions of the Federal Reserve Act relative to member banks, and to the regulations of the Federal Reserve Board.
(b) Every member financial institution or credit union may have and exercise any and all of the powers and privileges which may be exercised by member banks under the provisions of the Federal Reserve Act.
History of Section. P.L. 1995, ch. 82, § 40.
Any financial institution, including a credit union, may become a member of a federal home loan bank organized pursuant to the provisions of the Federal Home Loan Bank Act, 12 U.S.C. § 1421 et seq., and may subscribe to the stock of any federal loan bank and invest therein.
History of Section. P.L. 1995, ch. 82, § 40.
Every financial institution within this state shall maintain reserves as required by the provisions with respect to reserve funds and reserve balances contained in the Federal Reserve Act, 12 U.S.C. § 221 et seq., and in the rules, regulations, orders, and rulings from time to time in force of the Board of Governors of the Federal Reserve System.
History of Section. P.L. 1995, ch. 82, § 40.
Reserve agents shall only include financial institutions or national banking associations in, and members of the clearing house association of, the city of Providence; and national banks, federally insured corporate central credit unions located within the six (6) New England states, and banks or trust companies incorporated by the state in which they are located, and that are approved by the director, or the director’s designee, and that are members of the Federal Reserve System, or that maintain the reserve required by the Federal Reserve Act, 12 U.S.C. § 221 et seq., in the manner provided by that act.
History of Section. P.L. 1995, ch. 82, § 40.
(a) Any financial institution or credit union may make available for use by its customers one or more electronic devices or machines (customer-bank communications terminals/automated teller machines). These devices or machines shall not be deemed to be the establishment of a branch of the particular financial institution or credit union. All surcharges chargeable for use of these devices shall be disclosed prior to completion of any transaction. Disclosure of the surcharge shall be displayed electronically by the electronic device or machine and shall not be disclosed by means of any stickers or placards placed on the exterior of the electronic device or machine.
(b) To the extent consistent with the antitrust laws, each financial institution or credit union, chartered by this or any other state, is permitted, but not required, to share these devices with one or more other financial institutions or credit unions chartered by the state or federal government.
(c) Each financial institution or credit union shall adopt and maintain safeguards on each electronic device or machine consistent with the minimum requirements specified under the federal Bank Protection Act, 12 U.S.C. § 1881 et seq.
History of Section. P.L. 1995, ch. 82, § 40; P.L. 1997, ch. 52, § 1; P.L. 2001, ch. 369, § 1; P.L. 2012, ch. 65, § 1; P.L. 2012, ch. 145, § 1; P.L. 2014, ch. 106, § 2; P.L. 2014, ch. 125, § 2.
No financial institution or credit union authorized pursuant to § 19-3-13 to make available for use by its customers any electronic banking devices or machines (customer bank communication terminals/automated teller machines) shall mail to any of its customers any card or device necessary to access the machines without the permission of its customers and neither shall any financial institution or credit union mail to its customer an access card and the access card’s personal identification number (PIN) within three (3) days of each other unless requested by the customer. Any violation of this section shall result in a fine of one hundred dollars ($100) per incident to be levied against the offending financial institution, and the financial institution shall be liable for any unauthorized withdrawals from a customer’s account that results from a violation of this section.
History of Section. P.L. 1996, ch. 385, § 1.
(a) Any financial institution, credit union, or other entity operating an automated teller machine pursuant to § 19-3-13 or otherwise, that imposes directly on the machine user any fee for use of its machine to process transactions affecting accounts held by other financial institutions, credit unions, or other entities, shall provide to the machine user the following:
(1) Notice in accordance with the requirements of subsection (b); and
(2) Make available a receipt of transaction(s) in accordance with the requirements of subsection (c).
(b) The notice required under subsection (a) with respect to any fee described in that subsection shall appear by means of a display on the screen of the machine after the transaction is initiated and before the user of the machine is irrevocably committed to completing the transaction, and shall display, at a minimum, the following information:
(1) A statement that a fee is being imposed by the operator of the machine, which fee may be in addition to any fee charged by the entity holding the account;
(2) The amount of the fee; and
(3) Clear instructions on how to continue or cancel the transaction.
(c) The receipt required by subsection (a) shall be available to the machine user upon completion of transaction(s), and shall contain the following information:
(1) The amount of the withdrawal, cash advance, or payment transaction;
(2) The amount of the fee imposed by the machine operator;
(3) A statement indicating that the fee is being imposed by the machine operator;
(4) A total based upon the sum of the withdrawal, cash advance, or payment transaction and the operator’s fee; and
(5) A statement indicating how the total amount of the transaction will affect the applicable account (e.g. payment to or withdrawal from the account).
(d) Banks, credit unions, or other financial institutions that operate fifteen (15) or fewer ATM’s shall be deemed to comply with this act if they post the fees charged by a machine adjacent to the machine.
History of Section. P.L. 1997, ch. 104, § 1.
If any provision of this chapter or the application of this chapter to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter that can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable.
History of Section. P.L. 1995, ch. 82, § 40.
The provisions of this chapter shall apply to any financial institution:
(1) Authorized by its agreement to form to exercise trust powers;
(2) Permitted to exercise such powers by laws of this state applicable to that financial institution on or before December 31, 1994; and
(3) To any bank or trust company duly organized under the laws of and carrying on business in another state that has established a trust branch office in this state subject to the provisions of § 19-3.1-6.
History of Section. P.L. 1995, ch. 82, § 41; P.L. 2003, ch. 174, § 2; P.L. 2003, ch. 178, § 2.
(a) Every financial institution subject to this chapter shall have the power:
(1) To receive and hold money in trust, or upon any terms and conditions agreed upon, and to allow the interest upon it;
(2) To receive and hold money, bonds, notes, mortgages, certificates of stock, and other securities, held in a fiduciary capacity. Interest on funds received and held may be paid at any rates obtained or agreed upon;
(3) To receive and execute all trusts that may be created or transferred to it by the decree of any court, and to receive all funds that may be deposited with it by an order of any court, upon any terms agreed upon; and every court into which funds may be paid by parties to any proceeding therein, or may be brought by order or judgment, may by order direct the funds to be deposited with the financial institution. The financial institution shall not be required to accept or execute any trust without its written consent;
(4) In the absence of an express provision to the contrary in the instrument, judgment, decree, or order creating a trust or other fiduciary relationship, to purchase for the fiduciary estate, or to advise others, including any investment company or investment trust, to purchase, directly from underwriters of distributors or in the secondary market, bonds or other securities that are underwritten or distributed by the financial institution or an affiliate or by any syndicate that includes the financial institution or an affiliate and securities of any investment company or investment trust for which the financial institution or any affiliate acts as adviser, distributor, transfer agent, registrar, sponsor, manager, shareholder servicing agent, or custodian in return for reasonable compensation; provided, however, that:
(i) Nothing in this subsection shall affect the degree of prudence required of fiduciaries generally under the common law of the state; and
(ii) Any bonds or securities so purchased shall have sufficient liquidity and quality to satisfy the principles of fiduciary investment; provided, further, that:
(A) Any financial institution purchasing bonds or other securities underwritten or distributed by the financial institution or an affiliate or by any syndicate that includes the financial institution or an affiliate shall, in any written communication or account statement reflecting the purchase, disclose the fact that it or an affiliate may have an interest in the underwriting or distribution of the bonds or securities and any capacities in which it or an affiliate acts for the issuer of the securities; and
(B) Any financial institution purchasing securities of any investment company or investment trust for which the financial institution or any affiliate acts as advisor, distributor, transfer agent, registrar, sponsor, manager, shareholder servicing agent, or custodian shall disclose the provision of the stated services, and the receipt of compensation for services, annually by mailing a prospectus, statement, or letter describing the services to the last known address of each person to whom statements for the fiduciary estate are rendered.
(b) For the purposes of this section, the term “financial institution” shall include insured-deposit-taking institutions duly organized under the laws of the United States and empowered to exercise trust powers.
History of Section. P.L. 1995, ch. 82, § 41; P.L. 1995, ch. 266, § 1; P.L. 1998, ch. 441, § 11.
In the absence of any express provisions to the contrary, whenever any general statute, special act, regulation, trust indenture, will, or other instrument governing the investment powers of trustees directs, requires, authorizes, or permits investment in United States government obligations, a trustee may invest in and hold these obligations, either directly or in the form of interests in an investment company or investment trust registered under the Investment Company Act of 1940, 15 U.S.C. § 80a-1 et seq., the portfolio of which is limited to United States government obligations and to repurchase agreements fully collateralized by these obligations, and that is rated in the top rating category of any nationally recognized rating services.
History of Section. P.L. 1995, ch. 268, § 1.
A financial institution subject to this chapter shall also have power to accept and execute all of these trusts, and to hold in trust all property, of every description, as may be committed to it by any person or persons, or by any corporation, or by any court of this state or of the United States; and also to accept and execute the office and appointment of executors, administrators, custodians, conservators, guardians of estates, assignees, or receivers of any kind or nature whatever, whether that office or appointment be conferred or made by any person or persons, or by any court of probate or other court; and any court of probate in this state is hereby empowered, in its discretion, to appoint the financial institution as executor, administrator, custodian, conservator and guardian of the estate of any person within its jurisdiction, subject however, to the provisions of § 33-8-8, and provided, that the financial institution may, upon the petition of the surviving spouse, be appointed administrator or custodian upon the estate of a spouse dying intestate; provided, further, that the financial institution shall not be authorized to act in any of the foregoing offices until its acceptance in writing of the appointment shall be filed and recorded in the probate court in which the appointment shall be made.
History of Section. P.L. 1995, ch. 82, § 41.
In all cases in which a financial institution shall receive and accept appointment as executor, administrator, custodian, conservator, or guardian of any estate, the financial institution shall give bond in the same manner as provided by law in the case of individuals so appointed. The financial institution shall not be required to give surety upon any bond unless some person pecuniarily interested in the estate, before the bond is given, files a written request, in the court of probate making the appointment, that bond with surety be given, in which case the court may require the financial institution to give bond with surety or sureties satisfactory to the court in the manner provided by law in the case of individuals appointed.
History of Section. P.L. 1995, ch. 82, § 41.
Every financial institution subject to this chapter shall have the power to accept and hold property given by will or otherwise transferred to it in trust for the care and preservation of burial grounds that have been in existence for at least fifty (50) years before the creation of the trust and of the stones, monuments, fences, and other structures thereon, and to administer and apply the trust property in accordance with the terms of the trust; and shall likewise have the power to accept and hold property given to it by will or otherwise transferred to it for the purposes listed in this section and administer the property in accordance with the terms of the trust. Executors may transfer to any financial institution any legacy given for any of the purposes listed in this section and the transfer shall be a valid discharge for the legacy. Trusts for any of the purposes listed in this section are hereby declared to be charitable trusts.
History of Section. P.L. 1995, ch. 82, § 41.
(a) No person shall exercise any of the powers conferred exclusively upon financial institutions, except that a trust company duly organized under the laws of, and carrying on business in, another state, or a national banking association located in another state, may act as trustee under any written instrument in which it is named as trustee, or may be appointed as trustee of any trust by any court of competent jurisdiction of this state, or may be appointed by any probate court of this state as administrator, administrator de bonis non, administrator with the will annexed, guardian of estates, or conservator, or as executor of any will in which it is named as executor, if financial institutions or national banking associations located in this state are permitted to act as trustee, administrator, administrator de bonis non, administrator with the will annexed, guardian of estates, conservator, or executor under similar conditions in the state where the trust company is located. The trust company or national banking association located in another state, as the case may be, shall execute and file in the office of the director, or the director’s designee, a written instrument appointing the director, or the director’s designee, in his or her name of office its true and lawful attorney upon whom all writs and other legal process may be served in any legal proceeding relating to its conduct as trustee, administrator, administrator de bonis non, administrator with the will annexed, guardian, conservator, or executor or affecting any property held by it under the trusts or the will or the appointment, with the same effect as if it were located in this state and had been lawfully served with process.
(b) Upon obtaining the consent of the director, or the director’s designee, a bank or trust company duly organized under the laws of, and carrying on business in another state, may establish a trust branch or branches within this state if the law of the other state authorizes the bank or trust company to exercise trust powers; provided that, in the case of an out-of-state bank or trust company, the law of the state in which it is principally located authorizes under conditions not substantially more restrictive than those imposed by the laws of this state, as determined by the director, or the director’s designee, a financial institution to establish a trust branch in that state. The director, or the director’s designee, shall approve an application for a trust branch if the applicant has satisfied the standards and followed the procedures set forth in this title for the establishment of branches for financial institutions in addition to the requirements of this subsection. The bank or trust company located in another state shall execute and file in the office of the director, or the director’s designee, a written instrument appointing the director, or the director’s designee, in his or her name of office its true and lawful attorney upon whom all writs and other legal process may be served in any legal proceeding relating to trust activities conducted in this state.
History of Section. P.L. 1995, ch. 82, § 41; P.L. 2003, ch. 174, § 2; P.L. 2003, ch. 178, § 2.
A portion of the assets of every financial institution subject to this chapter, equal in value to the par value of its capital stock, shall stand pledged, and shall be taken and considered as the security required by law, for the faithful performance of the institution’s duties as trustee, executor, administrator, custodian, conservator, guardian, assignee or receiver, except as otherwise provided, and for the deposits made by executors, administrators, custodians, conservators, assignees, or receivers, trustees, or guardians. In case of loss, any person beneficially entitled to these estates, and any executor, administrator, custodian, conservator, assignee, or receiver, trustee, or guardian making the deposits shall be first indemnified in full from the amounts so pledged in preference to all other creditors.
History of Section. P.L. 1995, ch. 82, § 41.
(a) Every financial institution subject to this chapter shall deposit with the general treasurer an amount that is at all times equal in value to twenty percent (20%) of the entire capital stock of the financial institution, in:
(1) Bonds, of at least a double A (“AA”) rating or equivalent, of this state or of any state or of the United States;
(2) Bonds, rated at least double A (“AA”) or equivalent, notes, or other financial obligations of any town or city in this state;
(3) Any securities of the classes in which the sinking fund commission of this state is authorized to invest the moneys received by it;
(4) First mortgages on improved real estate in this state of the class required for financial institution investments;
(5) Mortgages insured and debentures issued by the federal housing administration; or
(6) Obligations of national mortgage associations.
(b) These investments shall be held by the general treasurer as an additional security for the faithful performance by the financial institution of its duties as trustee, executor, custodian, conservator, guardian, assignee, or receiver, and also as an additional security for the repayment of deposits with the financial institution by executors, administrators, custodians, conservators, guardians, assignees, or receivers, or trustees on special agreement, made to exonerate the depositors under this title from personal liability to the estates on account of which these deposits were made. The parties intended to be secured by the deposits shall, in case of loss, be first fully indemnified out of the deposit, in preference to all other creditors of the financial institution. However, whenever the deposit or any part of it consists of mortgages on real estate, the financial institution so depositing it shall execute an assignment of the deposit and of the debts secured by it in favor of the general treasurer, in trust, for the uses and purposes listed in this section. No financial institution shall accept or assume to perform any of the trust duties mentioned in this section or receive any deposits from any of the trustees until the deposit has been made. If the security required by this section is one that is maintained in the Federal Reserve book entry system or the depository trust company book entry system or any similar entity, then the financial institution required to make the deposit shall designate the general treasurer as the pledgee of the security and provide written notification to the general treasurer identifying the security.
History of Section. P.L. 1995, ch. 82, § 41.
Upon the receipt by the general treasurer of the securities from the financial institution, the general treasurer shall give to the financial institution a certificate stating the securities and amount of each. The general treasurer shall at all times pay over to the financial institution any interest received upon the deposited securities, and shall at all times permit the institution, by its treasurer or other authorized agent, to examine the securities, to receive all coupons on the securities as they shall mature, and to collect for the use of the financial institution all interest due on the securities. The general treasurer shall also permit the financial institution to retire any deposited securities on substituting other securities of the classes mentioned above, to an amount that the market value of the whole deposit shall not be less than the amount required by this title.
History of Section. P.L. 1995, ch. 82, § 41.
If any provision of this chapter or the application of this chapter to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter that can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable.
History of Section. P.L. 1995, ch. 82, § 41.
Upon the written application, under oath, to the director, or the director’s designee, by depositors representing five percent (5%) of the deposits of any financial institution, as shown by the last published return of the financial institution, or upon the written application to the director, or the director’s designee, of persons holding at least twenty-five percent (25%) of the outstanding capital stock of any regulated institution, or upon the written application to the director, or the director’s designee, of at least one third (⅓) in number of the board of directors or trustees of any regulated institution, setting forth their interest and the reasons for making an examination, and requesting him or her to examine the regulated institution, the director, or the director’s designee, may make or cause to be made a full investigation or examination of its affairs as provided by law.
History of Section. P.L. 1995, ch. 82, § 42; P.L. 1997, ch. 98, § 4.
(a) The director, or the director’s designee, shall, whenever he or she considers it advisable, but at least once in each year, examine each regulated institution. However, the director may extend the examination period for eligible financial institutions to at least once every eighteen (18) months. For the purposes of this section, an eligible financial institution means a financial institution with total assets of less than two hundred fifty million dollars ($250,000,000) that has not experienced a change in control in the last twelve-month (12) period and that is:
(1) Well capitalized;
(2) Well managed;
(3) Highly rated by state and federal banking regulatory agencies; and
(4) Not subject to a formal enforcement proceeding or order.
In addition, the director may also consider other factors that may be considered by federal banking regulatory agencies when those agencies determine whether financial institutions qualify for an extended examination cycle. At each examination the director, or the director’s designee, shall have free access to all books, records, papers, assets and any other information deemed necessary by the director, or the director’s designee, to ascertain the regulated institution’s condition; its ability to fulfill its obligations; and whether it has complied with the provisions of law.
(b) The total cost of an examination made pursuant to this section shall be paid by the examined party and shall include the following expenses:
(1) One hundred fifty percent (150%) of the salary and benefits of the examining personnel engaged in the examination shall be paid to the director to and for the use of the state. The assessment shall be in addition to any taxes and fees otherwise payable to the state. The total examination fees under this section payable in any one year shall not exceed one hundred thousand dollars ($100,000) for any one regulated institution;
(2) All reasonable technology costs related to the examination process. Technology costs shall include the actual cost of software and hardware utilized in the examination process and the cost of training examination personnel in the proper use of the software or hardware; and
(3) All necessary and reasonable education and training costs incurred by the state to maintain the proficiency and competence of the examination personnel. All such costs shall be incurred in accordance with appropriate state of Rhode Island regulations, guidelines, and procedures.
(c) Expenses incurred pursuant to subsections (b)(2) and (b)(3) shall be allocated equally to each regulated institution no more frequently than annually and shall not exceed an annual average assessment of seven hundred fifty dollars ($750) per regulated institution for any given three (3) calendar-year period. All revenues collected pursuant to this section shall be deposited as general revenues. That assessment shall be in addition to any taxes and fees otherwise payable to the state.
(d) The director, or the director’s designee, is authorized to accept in his or her discretion the report of any examination conducted by any federal banking regulatory or federal deposit insuring agencies or other state banking regulatory agency in lieu of an examination by the director, or the director’s designee.
History of Section. P.L. 1995, ch. 82, § 42; P.L. 1997, ch. 98, § 4; P.L. 1999, ch. 156, § 2; P.L. 2003, ch. 62, § 1; P.L. 2003, ch. 78, § 1.
(a) The director, or the director’s designee, shall preserve a full record of each examination. The records and information contained in reports of the regulated institution may be provided by the director, or the director’s designee, to the regulated institution examined.
(b) Confidential treatment.
(1) Documents, materials, or other information in the possession or control of the division of banking that are obtained by or disclosed to the director, or the director’s designee, or any other person in the course of an examination or investigation made pursuant to this chapter shall be confidential by law and privileged, shall not be subject to chapter 2 of title 38, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. However, the director is authorized to use the documents, materials, or other information in the furtherance of any regulatory or legal action brought as a part of the director’s official duties.
(2) Neither the director nor any person who received documents, materials, or other information while acting under the authority of the director, or with whom such documents, materials, or other information are shared pursuant to this section, shall be permitted or required to testify in any private civil action concerning any confidential documents, materials, or information subject to this section.
(3) In order to assist in the performance of the director’s duties, the director:
(i) May share documents, materials, or other information, including the confidential and privileged documents, materials or information subject to subsection (b) with other state, federal, and international regulatory agencies and federal deposit insuring agencies, with the Conference of State Banking Supervisors (CSBS), and its affiliates and subsidiaries, and with state, federal, and international law enforcement authorities, provided that the recipient agrees in writing to maintain the confidentiality and privileged status of the document, material, or other information, and has verified in writing the legal authority to maintain confidentiality;
(ii) May receive documents, materials, or information, including otherwise confidential and privileged documents, materials, or information from other state, federal, and international regulatory agencies and federal deposit insuring agencies, from the CSBS, and its affiliates and subsidiaries, and from state, federal, and international law enforcement authorities, and shall maintain as confidential or privileged any document, material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information; and
(iii) May enter into written agreements with other state, federal and international regulatory agencies and federal depositing insuring agencies, with the CSBS, and its affiliates and subsidiaries, and with state, federal, and international law enforcement authorities governing sharing and use of information provided pursuant to this section consistent with this section.
(4) The sharing of information by the director pursuant to this section shall not constitute a delegation of regulatory authority or rulemaking, and the director is solely responsible for the administration, execution, and enforcement of the provisions of this section.
(5) No waiver of any applicable privilege or claim of confidentiality in the document, materials, or information shall occur as a result of disclosure to the director under this section or as a result of sharing as authorized in subsection (b).
(6) Documents, materials, or other information filed in the possession or control of the CSBS pursuant to this section shall be confidential by law and privileged, shall not be subject to chapter 2 of title 38, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action.
(c) The imparting of this information by the director, or the director’s designee, other than according to the provisions of this chapter shall be sufficient cause for removal, and any such deputy, assistant, or officer, who, except in the discharge of his or her official duty and other than as set out above, imparts this information shall be liable for a fine of not exceeding one thousand dollars ($1,000) and this deputy or assistant may also be removed from office or employment by the director, or the director’s designee. These records, examinations, and reports are not subject to chapter 2 of title 38.
History of Section. P.L. 1995, ch. 82, § 42; P.L. 1997, ch. 98, § 4; P.L. 2001, ch. 128, § 2; P.L. 2011, ch. 145, § 1.
Every regulated institution audited by a licensed, independent certified public accountant pursuant to applicable federal law or regulation shall submit a copy of the audit to the director, or the director’s designee, within thirty (30) days of receipt of the audit.
History of Section. P.L. 1995, ch. 82, § 42.
[Repealed]
History of Section. P.L. 1995, ch. 82, § 42; repealed by P.L. 2022, ch. 338, § 7, effective June 29, 2022; repealed by P.L. 2022, ch. 339, § 7, effective June 29, 2022.
Every financial institution and credit union, at those times that the director, or the director’s designee, shall require, but at least once in each calendar year, shall render a report to the director, or the director’s designee, signed and sworn to by its president, or a vice-president, and also by its secretary, treasurer, or auditor, and attested by at least three (3) of the members of its board of directors, showing accurately the condition of the financial institution or credit union at the close of business on any past day specified by the director, or the director’s designee, in the form and containing the information that the director, or the director’s designee, shall require; and the report shall be transmitted to the director, or the director’s designee, within thirty (30) days, exclusive of Sundays and holidays, after the director’s request. At the time of filing each report the sum of fifty-five dollars ($55.00) shall be paid by the financial institution or credit union to the director to and for the use of the state.
History of Section. P.L. 1995, ch. 82, § 42; P.L. 2002, ch. 65, art. 13, § 18.
[Repealed]
History of Section. P.L. 1995, ch. 82, § 42; repealed by P.L. 2022, ch. 338, § 7, effective June 29, 2022; repealed by P.L. 2022, ch. 339, § 7, effective June 29, 2022.
Any financial institution or credit union that delays transmission of any of the reports required by this chapter beyond the limits set by this chapter, unless additional time is granted in writing for proper cause by the director, or the director’s designee, shall pay a penalty of twenty-five dollars ($25.00) for each day of delay to and for the use of the state.
History of Section. P.L. 1995, ch. 82, § 42.
The director shall make available, by electronic means, the annual reports filed by all financial institutions and credit unions regulated by him or her and shall provide such reports to members of the public and general assembly upon request.
History of Section. P.L. 1995, ch. 82, § 42; P.L. 2015, ch. 82, § 9; P.L. 2015, ch. 105, § 9.
Any regulated institution permitted by law to receive deposits, except a financial institution prevented from accepting deposits by its bylaws or agreement to form, shall maintain federal deposit insurance. Failure to maintain federal deposit insurance shall be deemed sufficient cause for the director, or the director’s designee, to revoke the agreement to form or right to do business of the noncomplying regulated institution.
History of Section. P.L. 1995, ch. 82, § 42.
The director, or the director’s designee, may summon the directors, trustees, employees, officers, or agents of any regulated institution and any other witnesses that he or she thinks proper, and examine them relative to the affairs, transactions, and condition of the regulated institution, and for that purpose may administer oaths. Whoever, without justifiable cause, refuses to appear and testify when so required, or obstructs the director, or any of the director’s designees, in the performance of his or her duties, shall be punished by a fine not exceeding one thousand dollars ($1,000) or by imprisonment for not more than one year. If any person refuses to furnish any information requested by the director, or any of the director’s designees, under the authority of any chapter in this title, the director, or the director’s designee, may apply to the superior court and that court shall cause the person to come before it and shall inquire into the facts set forth in the application and may commit the person to jail until he or she shall comply with the request. If, in the opinion of the director, or the director’s designee, the regulated institution or its officers or trustees have violated any law relative to the regulated institution, the director, or the director’s designee, may report the violation to the attorney general, who may, on behalf of the state, institute a prosecution or other appropriate proceedings for the violation.
History of Section. P.L. 1995, ch. 82, § 42.
(a) Whenever it appears to the director, or the director’s designee, that a regulated institution has violated its agreement to form, or any law or regulation, or is conducting its business in an unauthorized or unsafe manner, or the regulated institution has been notified by its federal deposit insurer of its intent to terminate deposit insurance, the director, or the director’s designee, may exercise any or all of the following powers:
(1) Restrict the withdrawal of deposits when he or she finds the restriction necessary for the protection of depositors;
(2) Order any person to cease violating any provision of the banking laws of this state or any rule or regulation issued thereunder, or cease engaging in any unsafe or unsound or deceptive banking or credit union practices;
(3) Order that capital be restored, to the extent that the capital of the financial institution or credit union has been impaired;
(4) Suspend or remove any director, committee member, officer, or employee who becomes ineligible to hold his or her position or who, after receipt of an order to cease under this chapter, violates the banking laws of this state or a rule, regulation, or order issued thereunder, or who is reckless or incompetent in the conduct of the financial institution’s or credit union’s business. Each suspension or removal order shall specify the grounds therefor, and a copy of the order shall be sent to the financial institution or credit union concerned.
(b) Any action taken pursuant to subsection (a) may be taken in the director’s, or the director’s designee’s, discretion before or after affording the regulated institution and/or affected individuals an opportunity for hearing. When an action is not preceded by an opportunity for hearing, such an opportunity must be afforded to the regulated institution and/or affected individuals within a reasonable time after the action; provided further, that a request for hearing subsequent to an action by the director, or the director’s designee, shall not act to stay the action of the director, or the director’s designee, pending the outcome of the hearing, although the director, or the director’s designee, may, in his or her discretion, grant a stay. All hearings shall be conducted pursuant to chapter 35 of title 42.
History of Section. P.L. 1995, ch. 82, § 42; P.L. 2013, ch. 50, § 4; P.L. 2013, ch. 57, § 4.
After suspension of the right of a regulated institution to do business, the regulated institution affected shall cease to have any right to continue its business, except for the purpose of winding up the affairs of the regulated institution. Any officers, directors, or agents of the regulated institution thereafter selling shares of the regulated institution, or soliciting business for the regulated institution, shall be guilty of a misdemeanor, and upon conviction thereof shall be fined not more than one thousand dollars ($1,000) for each offense.
History of Section. P.L. 1995, ch. 82, § 42.
(a) Any person or regulated institution aggrieved by a final order of the director, or the director’s designee, made under the authority of this title may appeal to the superior court pursuant to chapter 35 of title 42.
(b) The director, or the director’s designee, may apply to the superior court to enforce any administrative order issued.
History of Section. P.L. 1995, ch. 82, § 42.
(a) The director, or the director’s designee, shall have authority to examine, at any time, the accounts, books, and papers of any person in the business of receiving money on deposit, in order to ascertain whether the person has violated or is violating any provision of this title.
(b) Any person carrying on an unauthorized banking business shall forfeit to the state one thousand dollars ($1,000) a day for every day or part thereof during which the violation continues.
History of Section. P.L. 1995, ch. 82, § 42.
The director, or the director’s designee, may adopt reasonable rules and regulations for the implementation and administration of this title.
History of Section. P.L. 1995, ch. 82, § 42.
(a) No person, except regulated institutions, including any bank or trust company that has established a trust branch office in this state pursuant to the provisions of § 19-3.1-6(b), or banks or credit unions organized under the laws of the United States or of any other state within the United States shall use any sign at the place where its business is transacted, having on it any name containing the word or words “bank”, “savings bank”, “loan and investment bank”, “trust company”, “credit union”, or other word or words, indicating, in the opinion of the director, or the director’s designee, that the place or office is the place or office of a regulated institution or bank or credit union duly organized under the laws of the United States or of any other state within the United States. The secretary of state shall not accept for filing any articles of association or incorporation, or amendment thereof, containing the word or words without the approval of the director, or the director’s designee.
(b) No person, except regulated institutions, including any bank or trust company that has established a trust branch office in this state pursuant to the provisions of § 19-3.1-6(b), or other banks or credit unions duly organized under the laws of the United States or of any other state within the United States, shall use or circulate any written or printed, or partly written and partly printed, paper whatsoever, having on it any name or other word or words indicating that its business is the business of a regulated institution or other bank or credit union duly organized under the laws of the United States or of any other state within the United States. No bank or credit union organized under the laws of any other state within the United States shall establish an office within this state or otherwise have a physical presence within this state for the purpose of receiving deposits, paying checks, lending money, or exercising trust powers within this state unless such bank or credit union has received approval from the director, or the director’s designee, for the establishment of an interstate branch office pursuant to chapter 7 of this title. No person except regulated institutions, banks, or credit unions organized under the laws of the United States or of any other state within the United States shall transact business in this state in any way or manner as to lead the public to believe, or as, in the opinion of the director, or the director’s designee, might lead the public to believe, that its business is that of a regulated institution or other bank or credit union duly organized under the laws of the United States or of any other state within the United States.
History of Section. P.L. 1995, ch. 82, § 42; P.L. 2003, ch. 163, § 1; P.L. 2003, ch. 169, § 1; P.L. 2003, ch. 174, § 3; P.L. 2003, ch. 178, § 3.
Notwithstanding any general or special law to the contrary, a person, domestic or foreign corporation, partnership, association, limited-liability company, or similar entity shall not use the name, trade name, or trademark of any covered institution in any written or oral advertisement or solicitation for products or services, without the express written consent of the covered institution. For the purposes of this section, the word “covered institution” shall mean a regulated institution as defined in § 19-1-1, or a lender or loan broker licensed under chapter 14 of title 19, or any subsidiary of any institution, lender, or broker; and the words “advertisement” or “solicitation” shall mean an email, direct-mail solicitation, or oral solicitation to a specifically identified consumer or that contains specific information on the account or loan of a specifically identified consumer.
A person, domestic or foreign corporation, partnership, association, limited-liability company, or similar entity shall not make reference to a covered institution without the express written consent of the covered institution or make reference to a loan number, or other specific loan information, on the outside of an envelope, visible through the envelope window, or on a postcard in connection with any written solicitation or an email for products or services to a specifically identified consumer.
A person, domestic or foreign corporation, partnership, association, limited-liability company, or similar entity shall not include a loan number, or other specific loan information, other than the loan amount, relative to a specifically identified consumer that is publicly available in a written or oral solicitation for the purchase of products or services unless the solicitation clearly and conspicuously states in bold-face type on the front page of the correspondence that the person, domestic or foreign corporation, partnership, association, limited-liability company, or similar entity is not sponsored by, or affiliated with, and that the solicitation is not authorized by the covered institution. The statement shall include the name, address, and telephone number of the person making the solicitation and that any loan information referenced was not provided by the covered institution. The statements required in this paragraph shall also be given at the time of any oral solicitation to a specifically identified consumer.
A person, domestic or foreign corporation, partnership, association, limited-liability company, association, or similar entity, which is considered to have violated this section, shall be considered to have engaged in an unfair and deceptive practice.
A covered institution that has had its name, trade name, or trademark used in violation of this section may, in addition to any other remedy provided by law, bring an action in the superior court in which venue the covered institution has an office to enjoin an act in violation of this section and recover damages. The court shall award damages in the amount of actual damages or ten thousand dollars ($10,000) per violation, whichever is greater. In any successful action for injunctive relief or for damages, the court shall award the covered institution, attorney’s fees and costs, including court costs.
This chapter shall not apply to, nor shall any action be brought against, the use of a name, trade name, or trademark of any covered institution where such use would constitute fair use under federal law.
History of Section. P.L. 2007, ch. 143, § 1; P.L. 2007, ch. 152, § 1.
If any provision of this chapter or the application of this chapter to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter that can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable.
History of Section. P.L. 1995, ch. 82, § 42.
Each bank and lending institution doing business in this state, whether acting under state or federal authority, shall maintain a resident agent in this state who shall have authority to endorse insurance claim checks on behalf of those banks and lending institutions, which banks and lending institutions shall include, but are not limited to:
(1) A bank, savings bank, or trust company, as defined in this title, its affiliates or subsidiaries;
(2) A bank holding company, as defined in 12 U.S.C. § 1841, its affiliates or subsidiaries;
(3) Mortgage companies; and
(4) Any other individual, corporation, partnership, or association authorized to take deposits and/or to make loans of money under the provisions of this title.
History of Section. P.L. 2022, ch. 338, § 5, effective June 29, 2022; P.L. 2022, ch. 339, § 5, effective June 29, 2022.
In this chapter, the term “credit union” means a cooperative association formed for the purpose of promoting thrift among its members and offering opportunities for members to use and control their own money in order to improve their economic and social condition.
History of Section. P.L. 1995, ch. 82, § 43.
Fifteen (15) or more citizens of this state who have associated themselves by a written agreement to form a credit union may, with the consent of the director, or the director’s designee, become a corporation upon complying with the provisions of §§ 7-6-33 — 7-6-35. The subscribers to the agreement to form shall give notice in writing to the director, or the director’s designee, of their intention to form a credit union by filing a copy of the agreement to form with the director, or the director’s designee. If the director, or the director’s designee, finds:
(1) That the agreement to form is in conformity with law;
(2) That the conditions under which the credit union is to be established do not render unlikely the successful financial operation; and
(3) That the standing of the proposed members is such as to give assurance that its affairs will be administered in accordance with the spirit of this section and that the formation will benefit the proposed membership,
the director, or the director’s designee, may issue an authorization to commence operations.
History of Section. P.L. 1995, ch. 82, § 43.
After organization of any credit union has been completed, nothing in this chapter shall be construed to debar from membership any fraternal organization, voluntary association, partnership, or corporation.
History of Section. P.L. 1995, ch. 82, § 43.
(a) The director, or the director’s designee, shall promulgate regulations that prescribe the form and content of the credit union’s bylaws that shall, if not contrary to state law, reflect the guidelines of the federal credit union model bylaws and amendment provisions.
(b) No credit union seeking formation shall operate until the time the director, or the director’s designee, has approved the bylaws. Amendments to the bylaws shall not be operative until approved by the director, or the director’s designee. Any credit union aggrieved by the decision of the director, or the director’s designee, shall have the right to appeal pursuant to chapter 35 of title 42.
History of Section. P.L. 1995, ch. 82, § 43.
Whenever payment for shares or deposits has been made in any credit union in the name of two (2) or more persons and payable to either, or any, or the survivor, payment of the amount due on the shares or deposits, or any part, or any interest, or dividend may be made to any of the persons, whether the other or others are living or not, or to the survivor or survivors of them, or to the guardian, executor, or administrator of them, and the receipt of the person or persons so paid shall be a valid and sufficient release and discharge on account of the payment so made. Nothing in this section authorizes the receipt of savings either in payment for share or on deposit in the name of two (2) or more persons unless at least one of the persons is or becomes a member of the credit union.
History of Section. P.L. 1995, ch. 82, § 43.
(a) A credit union may offer demand deposits to its members provided the following conditions are met:
(1) That the credit union has shares and deposits of one million dollars ($1,000,000) or more;
(2) Every credit union shall maintain reserves as required by the provisions with respect to reserve funds and reserve balances contained in the Federal Reserve Act, 12 U.S.C. § 221 et seq., and in the rules, regulations, orders, and rulings from time to time in force of the Board of Governors of the Federal Reserve System; and
(3) That the credit union obtain the approval of the director, or the director’s designee, prior to accepting demand deposits, that approval to be conditioned on compliance with the above requirements and on the soundness of the condition and operation of the credit union.
(b) If at any time the credit union ceases to comply with subdivisions (1) through (3) above, the director, or the director’s designee, may, upon thirty (30) days’ notice and after an opportunity to be heard, withdraw the authority of the credit union to accept demand deposits. Upon withdrawal the credit union shall accept no further sums to be credited to any demand deposit. After two (2) months from the date of withdrawal of authority, the credit union shall cease to maintain demand deposits.
History of Section. P.L. 1995, ch. 82, § 43; P.L. 2002, ch. 235, § 1; P.L. 2002, ch. 390, § 1; P.L. 2006, ch. 110, § 1; P.L. 2006, ch. 127, § 1.
No person shall be entitled to vote at any meeting who has not been a member of the credit union for more than three (3) months, but this restriction shall not apply during the first year of the existence of the credit union, nor shall it apply during the first three (3) months of the second year to any member who was a member at the end of the first year and who has been a member continuously since that time. No member shall have more than one vote, and no member shall be permitted to vote by proxy, unless expressly authorized by the bylaws or except as otherwise provided in this chapter. Any fraternal organization, voluntary association, partnership, or corporation holding membership may, by duly authorized agent, cast one vote at any meeting, but that agent shall not be eligible to election as an officer or as a member of the board of directors, credit committee, or supervisory committee unless that agent holds membership, as an individual, in the credit union.
History of Section. P.L. 1995, ch. 82, § 43.
(a) At the annual meeting, the members shall elect a board of directors, the number of which shall be fixed from time to time by the bylaws, provided, however, that there shall be a minimum of five (5) directors. The directors shall be elected to staggered three (3) year terms so that one-third (⅓) of the whole number, or a close approximation of one-third (⅓), shall be elected at each succeeding annual meeting.
(b) In case of any increase in the number of directors, the length of the initial term of the new director(s) shall be determined in accordance with the requirement that one-third (⅓) of the whole number, or a close approximation of one-third (⅓), shall be elected at each succeeding annual meeting.
(c) No more than two (2) employees of the credit union shall be permitted to serve as members of the board of directors at any one time.
History of Section. P.L. 1995, ch. 82, § 43; P.L. 2001, ch. 369, § 2.
(a) The board of directors shall appoint, or the membership shall elect, qualified members to a supervisory committee consisting of no fewer than three (3) members nor more than five (5) members. The director, or the director’s designee, shall issue guidelines defining a “qualified” supervisory committee member. No officers, directors, or employees of the credit union, or immediate family members thereof, shall be members of the supervisory committee.
(b) Members of the supervisory committee shall be appointed by the board of directors or elected by the membership for no fewer than one nor more than three (3) years, as the bylaws provide. An equal number of members, as nearly as may be, shall be appointed or elected each year.
History of Section. P.L. 1995, ch. 82, § 43.
If the bylaws provide for a credit committee, then pursuant to the provisions of the bylaws, the board of directors may appoint, or the members may elect, a credit committee which shall consist of an odd number of members of the credit union. The method used shall be set forth in the bylaws.
History of Section. P.L. 1995, ch. 82, § 43; P.L. 2011, ch. 347, § 2; P.L. 2011, ch. 387, § 2.
(a) No member of the board of directors, credit committee, supervisory committee, or committees appointed by the board of directors shall serve at the same time as an official in any position of another unaffiliated credit union that is under the supervision of the director. No member of the board of directors shall be a member of either the supervisory committee or the credit committee, nor shall one person be a member of more than one of those committees; all members of those committees, as well as all officers whom they may elect, shall be sworn and shall hold their offices until others are elected and qualified in their place; and a record of every qualification shall be filed and preserved with the records of the credit union.
(b) Every director, credit committee member, and supervisory committee member, when appointed or elected, shall take an oath that he or she will, so far as the duty devolves on him or her, diligently and honestly administer the affairs of the credit union, and will not knowingly violate, or willingly permit to be violated, any of the provisions of this title. This oath shall be immediately transmitted to the director, or the director’s designee, and shall be filed and preserved in the director’s office.
History of Section. P.L. 1995, ch. 82, § 43.
The board of directors shall be responsible for the general management of the affairs, funds, and records of the credit union, and shall meet as often as necessary. It shall be the board’s special powers and duties:
(1) To act upon the expulsion of members;
(2) To approve or ratify the rate of interest that shall be allowed on deposits;
(3) To fill vacancies in the board of directors, the supervisory committee, and in the credit committee of the credit union until the election and qualification of officers and directors to fill those vacancies is completed;
(4) To make recommendations to members relative to the maximum number of shares that may be held by any one member, amendments to the bylaws, and any other matters that, in their opinion, the members should decide;
(5) To borrow, on behalf of the credit union, and to pledge as security the bonds, notes, mortgages, or other securities of the credit union; provided, however, that this borrowing shall not exceed fifty percent (50%) of the assets of the credit union, unless the director, or the director’s designee, shall give his or her written approval;
(6) To declare dividends as provided in this chapter.
History of Section. P.L. 1995, ch. 82, § 43.
The credit committee or duly appointed loan officer shall approve, in writing, every loan or advance made by the credit union, subject to any limitations that may be set from time to time by the board of directors. Every application for a loan shall be made in writing and shall state the purpose for which the loan is desired and the security offered. No loan shall be made unless the credit committee or loan officer is satisfied that it promises to benefit the borrower, nor unless it has been approved by the committee or duly appointed loan officer in accordance with applicable credit union bylaw provisions. The applicant for a loan may appeal the decision of the credit committee or loan officer to the board of directors. If written approval of the credit committee or loan officer is obtained, nothing contained in this section shall prevent a credit union from extending credit to a member in any manner in which it sees fit; provided that no extension of credit shall be made upon an unsecured revolving credit plan, line of credit, or letter of credit in which the credit authorization exceeds five thousand dollars ($5,000), unless the credit authorization is reviewed at least annually by the credit committee, if one exists, or by the board of directors.
History of Section. P.L. 1995, ch. 82, § 43; P.L. 2000, ch. 148, § 1; P.L. 2011, ch. 347, § 2; P.L. 2011, ch. 387, § 2.
(a) The supervisory committee shall make, or cause to be made, an annual audit and shall submit a report of that audit to the board of directors and a summary of the report to the members at the next annual meeting of the credit union.
(b) Following a detailed investigation performed by the supervisory committee that leads the supervisory committee to reasonably conclude that a violation of this chapter or of the bylaws, or any practice of the credit union is unsafe or unauthorized, the supervisory committee, by unanimous vote, may suspend the credit committee, any director, or any officers elected by the board of directors. Written notice of any such suspension shall be given to the director, or the director’s designee, and the deposit insuring agency by registered mail or hand-delivery within twenty-four (24) hours of the vote to suspend. The suspension shall remain in place until the next meeting of the credit union membership called pursuant to its bylaws.
(c) If the supervisory committee of a credit union is elected by the membership, the supervisory committee shall fill vacancies in its own number until the next annual meeting of the credit union members. If the supervisory committee of a credit union is appointed by the board of directors, the board of directors shall fill vacancies in accordance with the credit union’s bylaws.
History of Section. P.L. 1995, ch. 82, § 43; P.L. 1997, ch. 98, § 5; P.L. 2006, ch. 622, § 1.
The capital, deposits, and surplus of the credit union shall be lent to the members for the purposes and upon the security and terms as the credit committee shall approve, as authorized by a written loan policy, duly adopted by the board of directors. Funds not used in loans to members may be deposited in authorized reserve agents, or invested in the same manner as allowed by the national credit union administration rules and regulations, or in the following manner:
(1) Without limitation, in securities issued as direct obligations of the United States government and in securities guaranteed by the United States government, or an agency thereof, as to principal and interest, and in any trust or trusts established for investing directly or collectively in these securities only;
(2) An amount not exceeding one third (⅓) of the assets may be invested in:
(i) Investments other than those described above but that are legal for the investment of funds of financial institutions of this state, subject to the same limitations and restrictions by which financial institutions are governed, provided that credit unions with assets of less than ten million dollars ($10,000,000) may not invest pursuant to the “prudent person” provisions.
(ii) Deposits in financial institutions incorporated under the laws of this state or under federal law and doing business in this state or in those other institutions that may be approved by the director, or the director’s designee.
(iii) Any corporation incorporated by CUNA International, Inc. or its successor, or any associated or subsidiary corporation, for the purpose of providing investment opportunity for credit unions, or any investment or interlending program managed or sponsored by any of these corporations; provided that deposit or investment under this subsection shall be made only after the director, or the director’s designee, has approved the corporation for investment, or the investment or interlending program.
(iv) Common or preferred stocks other than those permitted above to the extent of not over five percent (5%) of the assets of investing credit unions with assets less than ten million dollars ($10,000,000) and to the extent of not over ten percent (10%) of the assets of investing credit unions with assets of ten million dollars ($10,000,000) or more; provided, however, that any of these securities shall be listed on a national stock exchange or on the National Market System of the NASDAQ stock market; that dividends have been paid by the corporation issuing the security and any predecessor corporation or corporations for at least four (4) of the last five (5) years; that the issuing corporation has, as shown by its last audited statement, total assets of at least one hundred million dollars ($100,000,000), and a stockholders’ equity of not less than forty percent (40%) of the amount of its total assets; and provided, further, that the security shall have been approved for investment by the director, or the director’s designee. The director, or the director’s designee, shall have absolute discretion in approving individual securities, provided they meet the requirements set forth above. No credit union shall invest in securities under the terms of this subdivision unless it shall have at least one million dollars ($1,000,000) in total assets as shown by its last annual report. No credit union shall invest more than one percent (1%) of its assets in any one security under the terms of this section.
(v) Funds not used in loans to members may be invested in capital shares, obligations, preferred stock issues of any agency or association organized either as a stock company, mutual association, or membership corporation, provided the membership or stockholding, as the case may be, of the agency or association is confined or restricted to credit unions or organizations of credit unions, and provided the purposes for which the agency or association is organized are designed to serve or otherwise assist credit union operations and provided the investment is authorized by law or regulation for federal credit unions, including, without limitation, an investment in credit union service organizations (“CUSO”) as described in subsection (2)(vi).
(vi) Subject to the department of business regulation and the National Credit Union Administration’s power to limit any CUSO activities or services at any time based upon supervisory, legal or safety and soundness reasons or to refuse to permit any CUSO activities or services, a credit union may invest in, loan to, and/or contract with only those CUSOs that are sufficiently bonded or insured for their specific operations and engaged in the preapproved activities and services related to the routine daily operations of credit unions. The director, or director’s designee, shall promulgate regulations delineating specific preapproved activities and criteria.
In applying the limitations and restrictions as to percentages prescribed in the law governing investments by financial institutions, percentages shall be computed based on the total assets of the credit union;
(3) Every credit union shall have the power to exercise, by its board of directors or duly authorized officers or agents, all incidental powers necessary to carry on the business of a credit union including, but not limited to, the power:
(i) To receive, upon deposit and for safekeeping, property of every description, upon terms prescribed by the credit union and to construct, own, lease, and maintain safe deposit vaults, with suitable boxes and places for the reception and deposit of the property, and lease the use of these places and boxes to individuals and corporations, upon those terms that the credit union may prescribe. The credit union shall in no case incur any liability on account of the deposit of any property so made with it, or by reason of the leasing of any place of deposit, other than that liability as the credit union shall expressly assume in each case by the terms of the contract or receipt under which it shall accept the deposit or shall have let the place of deposit;
(ii) To act as a depositary of public money or a financial agent;
(iii) To purchase, sell, and pledge eligible obligations and assets as set forth in § 19-5-15.1; and
(iv) To exercise additional powers, not inconsistent with the carrying on of a credit union business, with the approval of the director, or the director’s designee.
History of Section. P.L. 1995, ch. 82, § 43; P.L. 1999, ch. 71, § 1; P.L. 2011, ch. 347, § 2; P.L. 2011, ch. 387, § 2.
(a) For purposes of this section:
(1) “Eligible obligation” means a loan or group or portfolio of loans and includes a participation interest in a loan or group or portfolio of loans.
(2) “Participation interest” means a loan where one or more federally insured financial institutions or federally insured credit unions participate pursuant to a written agreement with the originating lender.
(3) “Student loan” means a loan granted to finance the borrower’s attendance at an institution of higher education or at a vocational school that is secured by and on which payment of the outstanding principal and interest has been deferred in accordance with the insurance or guarantee of the federal government, of a state government, or any agency of either.
(b) Purchase.
(1) A credit union may purchase, in whole or in part, within the limitations of the board of directors’ written purchase policies:
(i) Eligible obligations of its members, from any source, if either:
(A) They are loans it is empowered to grant; or
(B) They are refinanced with the consent of the borrowers, within sixty (60) days after they are purchased, so that they are loans it is empowered to grant;
(ii) Eligible obligations of a liquidating credit union’s individual members, from the liquidating credit union;
(iii) Student loans, from any source, if the purchaser is granting student loans on an ongoing basis and if the purchase will facilitate the purchasing credit union’s packaging of a pool of such loans to be sold or pledged on the secondary market;
(iv) Real estate-secured loans, from any source, if the purchaser is granting real estate-secured loans on an ongoing basis and if the purchase will facilitate the purchasing credit union’s packaging of a pool of such loans to be sold or pledged on the secondary mortgage market. A pool must include a substantial portion of the credit union’s members’ loans and must be sold promptly;
(v) Participation interests in loans made by federally-insured financial institutions or federally-insured credit unions; and
(vi) An indirect lending or indirect leasing arrangement shall be classified as a loan and is not the purchase of an eligible obligation because the credit union makes the final underwriting decision and the sales or lease contract is assigned to the credit union very soon after it is signed by the member and the dealer or leasing company.
(2) A credit union may make purchases in accordance with this section (b), provided:
(i) The board of directors approves the purchase;
(ii) A written agreement and schedule of the eligible obligations covered by the agreement are retained in the purchaser’s office;
(iii) For purchases under paragraph (b)(1)(ii) of this section, any advance written approval required by the National Credit Union Administration is obtained before consummation of such purchase; and
(iv) For purchases under paragraph (b)(1)(v) of this section, fifteen (15) business days prior written notice is given to the director, or the director’s designee. Such notice shall set forth such information as the director, or the director’s designee, shall from time to time require. In the event the director, or the director’s designee, fails to object to the proposed purchase within the fifteen (15) business day notice period, the purchase shall be deemed approved.
(3) The aggregate of the unpaid balance of eligible obligations purchased under paragraph (b) of this section shall not exceed five percent (5%) of the unimpaired capital and surplus of the purchaser. The following may be excluded in calculating this five percent (5%) limitation:
(i) Student loans purchased in accordance with paragraph (b)(1)(iii) of this section;
(ii) Real estate loans purchased in accordance with paragraph (b)(1)(iv) of this section; and
(iii) Eligible obligations purchased in accordance with paragraph (b)(1)(i) of this section that are refinanced by the purchaser so that it is a loan it is empowered to grant.
(c) Sale. A credit union may sell, in whole or in part, to any source, eligible obligations of its members, eligible obligations purchased in accordance with paragraph (b)(1)(ii) of this section, student loans purchased in accordance with paragraph (b)(1)(iii) of this section, and real estate loans purchased in accordance with paragraph (b)(1)(iv) of this section, within the limitations of the board of directors’ written sale policies, provided:
(1) The board of directors approves the sale; and
(2) A written agreement and a schedule of the eligible obligations covered by the agreement are retained in the seller’s office.
(d) Pledge.
(1) A credit union may pledge, in whole or in part, to any source, eligible obligations of its members, eligible obligations purchased in accordance with paragraph (b)(1)(ii) of this section, student loans purchased in accordance with paragraph (b)(1)(iii) of this section, and real estate loans purchased in accordance with paragraph (b)(1)(iv) of this section, within the limitations of the board of directors’ written pledge policies, provided:
(i) The board of directors approves the pledge;
(ii) Copies of the original loan documents are retained; and
(iii) A written agreement covering the pledging arrangement is retained in the office of the credit union that pledges the eligible obligations.
(2) The pledge agreement shall identify the eligible obligations covered by the agreement.
(e) Servicing. A credit union may agree to service any eligible obligation it purchases or sells in whole or in part.
(f) Ten percent (10 %) limitation. The total indebtedness owing to any credit union by any person, inclusive of retained and reacquired interests, shall not exceed ten percent (10%) of its unimpaired capital and surplus.
(g) Conflicts of interest.
(1) No credit union official, employee, or his or her immediate family member may receive, directly or indirectly, any compensation in connection with that credit union’s purchase, sale, or pledge of an eligible obligation under the provisions of this section.
(2) Permissible payments. This section does not prohibit:
(i) A credit union’s payment of salary to employees;
(ii) A credit union’s payment of an incentive or bonus to an employee based on the credit union’s overall financial performance;
(iii) A credit union’s payment of an incentive or bonus to an employee, other than a senior management employee, in connection with that credit union’s purchase, sale, or pledge of an eligible obligation. This payment is permissible if the board of directors establishes a written policy and internal controls for the incentive or bonus program and monitors compliance with the policy and controls at least annually; and
(iv) Payment by a person other than the credit union of compensation to a volunteer official, non-senior management, employee, or his or her immediate family member, for a service or activity performed outside the credit union provided that the credit union, the official, employee, or his or her immediate family member has not made a referral.
(3) Business associates and family members. All transactions under this section with business associates or family members not specifically prohibited by subdivision (g)(1) of this section must be conducted at arm’s length and in the interest of the credit union.
(4) Definitions.
(i) “Compensation” includes non-monetary items, except those of nominal value.
(ii) “Immediate family member” means a spouse or other family member living in the same household.
(iii) “Official” means any member of the board of directors or a volunteer committee.
(iv) “Person” means an individual or an organization.
(v) “Senior management employee” means the credit union’s chief executive officer (typically, this individual holds the title of President or Treasurer/Manager), any assistant chief executive officers (e.g., Assistant President, Vice President, or Assistant Treasurer/Manager), and the chief financial officer (Comptroller).
(vi) “Volunteer official” means an official of a credit union who does not receive compensation from the credit union solely for his or her service as an official.
History of Section. P.L. 2011, ch. 347, § 3; P.L. 2011, ch. 387, § 3; P.L. 2012, ch. 299, § 1; P.L. 2012, ch. 343, § 1.
A credit union shall not permit any person or entity to borrow or guaranty, directly or indirectly, an amount(s), in the aggregate, that exceeds one percent (1%) of its total assets or twenty percent (20%) of the total unimpaired capital, whichever is greater. This limit shall not apply to a loan or loans secured by pledged shares or deposits in the credit union.
History of Section. P.L. 1995, ch. 82, § 43.
(a) No member of the board of directors or member of either the credit or supervisory committee shall directly or indirectly borrow from or become surety for any loan or advance made by the credit union, except that any member of the board of directors or any member from either of the committees may borrow from the credit union up to the amount of shares and deposits pledged for the loan or upon prior authorization and approval by the board of directors.
(b) Any credit union may pay to each of the members of the board of directors, credit committee, and supervisory committee for his or her services as a member of the board or committee(s) a sum that may, from time to time, be fixed by the members at an annual meeting. No officers, directors, or employees may receive any other compensation or fee for services provided to the credit union beyond their compensation as officers, directors, and/or employees.
(c) The director, or the director’s designee, shall promulgate regulations relating to loans to officers and directors of credit unions. The regulations shall provide for limitations and requirements similar to federal regulations governing loans to officers and directors of financial institutions.
History of Section. P.L. 1995, ch. 82, § 43.
Credit union management may expel from the credit union any member who has not fulfilled his or her duties toward the credit union; or who has been convicted of a criminal offense; or who neglects or refuses to comply with the provisions of this chapter or of the credit union’s bylaws; or who habitually neglects to pay debts; or who shall become insolvent or bankrupt; or who shall have deceived the credit union with regard to the use of borrowed money, but no member shall be expelled until credit union management has provided the member a notice in writing of the charges against him or her. The member shall have the right to file a written appeal to the board of directors to reconsider the expulsion notice. The written appeal must be filed within ten (10) business days of the receipt of expulsion notice. No such expulsion shall operate to relieve the member from any remaining liability to the credit union.
History of Section. P.L. 1995, ch. 82, § 43; P.L. 2017, ch. 8, § 1; P.L. 2017, ch. 22, § 1.
At those intervals that the board of directors may authorize, and after provision for required reserves, the board of directors may declare a dividend to be paid at different rates on different types of shares, at different rates and maturity dates in the case of share certificates, and at different rates on different types of share draft accounts. Dividends may be declared, in whole or in part, from profits or undivided earnings. Dividends credited may be accrued on various types of shares, share certificates, and share draft accounts as authorized by the board of directors.
History of Section. P.L. 1995, ch. 82, § 43.
Each credit union shall establish and maintain a regular reserve, as provided by the Federal Credit Union Act, 12 U.S.C. § 1751 et seq. The director, or the director’s designee, shall approve or deny any charges to the reserve.
History of Section. P.L. 1995, ch. 82, § 43.
A credit union may, in accordance with rules and regulations that the director, or the director’s designee, may adopt, destroy its records that have become obsolete.
History of Section. P.L. 1995, ch. 82, § 43.
The capital stock, corporate franchises, and personal property, but not the real estate, of credit unions shall be exempt from taxation; provided, however, that every credit union shall annually pay to the general treasurer forty cents (40¢) on each one hundred dollars ($100) deposited with the credit union in the same manner as in financial institutions, the sums to be ascertained from a report to be made by the credit union to the director, or the director’s designee, on or before the fifteenth day in July of each year, of the total amount of the deposits in the credit union on the last business day in June in that year, and to be paid on or before the first Monday in August.
History of Section. P.L. 1995, ch. 82, § 43.
(a) A credit union may be converted into a federal credit union, and a federal credit union may be converted into a credit union, by complying with all the requirements of applicable federal and state law.
(b) A federal credit union shall become a credit union when its agreement to form has been approved by the director, or the director’s designee, under this chapter and when it has filed a copy of its agreement to form with the national credit union administration and complied with all other requirements of federal law.
(c) A credit union shall become a federal credit union upon the granting of a federal credit union charter to it and the completion of all other requirements of federal law necessary to be completed to become an operating federal credit union, and upon the filing with the director, or the director’s designee, a certified vote of the majority of the credit union members present at a meeting called, in accordance with the credit union’s bylaws, for the purpose of considering a conversion to a federal charter. The converting credit union shall then file with the director, or the director’s designee, a certified copy of the federal credit union charter and shall surrender its copy of its agreement to form, or file proof that the agreement to form has been lost.
History of Section. P.L. 1995, ch. 82, § 43.
(a) Any credit union may, with approval of the director, or the director’s designee, merge with another credit union under the agreement to form of the surviving credit union, pursuant to any plan agreed upon by a two thirds (⅔) vote of those members of the board of directors of each credit union joining in the merger present at a meeting called for that purpose. Additionally, the merger must be approved by the affirmative vote of members representing two thirds (⅔) of the members present of the credit union to be merged, who are eligible to vote pursuant to the bylaws of the credit union, either at a meeting of the members duly called for that purpose or in writing, and if the merger has a significant impact on the surviving credit union, as determined by the director, or the director’s designee, the merger must also be approved by the affirmative vote of members representing two thirds (⅔) of the members present of the surviving credit union, who are eligible to vote pursuant to the bylaws of the credit union, either at a meeting of the members duly called for that purpose or in writing. The credit union being merged shall be required to mail notice of the meeting to its members. Notice of the members’ meeting shall be mailed to all members of the surviving credit union in the discretion of the director, or the director’s designee. The director, or the director’s designee, may waive any or all of the foregoing requirements with respect to notice or to votes of members of the merged credit union or the surviving credit union in order to avert insolvency or imminent failure.
(b) Upon approval by the director, or the director’s designee, and after the votes by the boards of directors and approval of the members of the credit union to be merged, the president and clerk or secretary of each credit union shall execute, in triplicate, a certificate of merger that shall set forth all of the following:
(1) The time and place of the meeting of the board of directors at which the plan was agreed upon;
(2) The vote in favor of adoption of the plan;
(3) A copy of the resolution or other action by which the plan was agreed upon;
(4) The time and place of the meeting of the members at which the plan agreed upon was approved, if applicable;
(5) The vote by which the plan was approved by the members, if applicable; and
(6) The date the merger was approved by the director, or the director’s designee.
(c) The certificates, in triplicate, and a copy of the plan of merger agreed upon shall be forwarded to the director, or the director’s designee, and a copy of the certificate, certified by the director, shall be returned to the merging credit unions within thirty (30) days. Upon any such merger so effected, all property, property rights, and interest of the merged credit union shall vest in the surviving credit union without deed, endorsement, or other instrument of transfer, and all debts, obligations, and liabilities of the merged credit union shall be deemed to have been assumed by the surviving credit union under whose agreement to form the merger was effected.
History of Section. P.L. 1995, ch. 82, § 43; P.L. 1997, ch. 98, § 5; P.L. 2001, ch. 128, § 3.
A credit union may engage in any activity authorized by law or regulation for federal credit unions that, in the opinion of the director, or the director’s designee, is not unsafe and unsound for the credit union.
History of Section. P.L. 1995, ch. 82, § 43.
Every credit union shall maintain liquidity reserves equal to an amount as determined in the credit union’s liquidity and funds management policy as established and adopted by the board of directors of the credit union. Failure to adopt an adequate funds management policy shall be considered an unsafe and unsound practice.
History of Section. P.L. 1995, ch. 82, § 43.
A credit union chartered in another state shall be permitted to do business in Rhode Island if credit unions may do business in the other state, under terms and conditions no more onerous than the laws of the state of Rhode Island, as determined by the director, or the director’s designee. The standards for interstate activities shall be the same as those for financial institutions.
History of Section. P.L. 1995, ch. 82, § 43.
If any provision of this chapter or the application of this chapter to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter that can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable.
History of Section. P.L. 1995, ch. 82, § 43.
(a) If authorized by the credit union board of directors, a credit union registered to do business in the State of Rhode Island may conduct a savings promotion raffle, provided that it has given the department of business regulation prior written notice of its intent to conduct such a raffle. Said notice shall include an attestation that the raffle meets all requirements of all applicable laws and regulations including, but not limited to, the national credit union administration (NCUA) regulations and guidelines related to such contests; that the raffle will be administered in a manner that is fair and non-discriminatory to credit union members; and that there will be no adverse impact on the financial condition of the credit union as a result of the proposed savings promotion raffle. The credit union shall conduct a savings promotion raffle so that each token or ticket representing an entry in the raffle has an equal chance of being drawn. A credit union shall not conduct a savings promotion raffle in a manner that jeopardizes the credit union’s safety and financial soundness or misleads its members.
(b) Pursuant to his or her supervisory powers the director of the department of business regulation may examine the conduct of a savings promotion raffle at any time. The director may issue a cease and desist order for a violation of this section.
(c) A credit union shall maintain records sufficient to facilitate an audit of a savings promotion raffle.
(d) As used in this section, “savings promotion raffle” means a raffle conducted by a credit union where the sole consideration required for a chance of winning designated prizes is the deposit of at least a specified amount of money in a savings account or other savings program offered by the credit union.
History of Section. P.L. 2010, ch. 222, § 1; P.L. 2011, ch. 59, § 1; P.L. 2011, ch. 71, § 1.
This chapter shall be known and may be cited as “The Credit Union Conversion Act of 2001.”
History of Section. P.L. 2001, ch. 233, § 1.
Terms used in this chapter shall have the same meaning as set forth in §§ 19-1-1 and 19-5-1, unless another meaning is expressed or is clearly apparent from the language or context.
History of Section. P.L. 2001, ch. 233, § 1.
(a) Any credit union chartered under the laws of this state may convert to and become a financial institution chartered under the laws of this state or another financial services entity chartered under the laws of the United States. The conversion shall not require the prior liquidation of the subject credit union. In the event that any credit union chartered under the laws of this state elects to convert to and become a financial institution chartered under the laws of this state, the credit union shall first demonstrate compliance with the various requirements of Chapter 2 of this title, as appropriate. In the alternative, in the event that any credit union chartered under the laws of this state elects to convert to and become another form of financial services entity chartered under the laws of the United States, the credit union shall first demonstrate compliance with the various requirements of the federal laws and regulations governing the chartering of that designated financial services entity.
(b) Any credit union chartered under the laws of this state may convert to and become a financial institution chartered under the laws of this state or another form of financial services entity chartered under the laws of the United States upon adoption of a plan of conversion by two-thirds (⅔) vote of the board of directors and approval of the plan by the director, or the director’s designee, and a majority vote of those members of the credit union qualified to vote pursuant to § 19-5-7 who are present in person or by proxy at a meeting called by the board of directors. For the purpose of this section, unless otherwise required under applicable provisions of federal or state banking law, a member shall be deemed to be the individual whose tax identification number or social security number is used by the credit union for interest reporting purposes to the Internal Revenue Service.
(c) In the event that the plan of conversion calls for the issuance of capital stock, it shall also provide that the converted entity shall issue and sell the stock issued in connection with the conversion at a price that represents its pro forma market value, as determined by an independent appraisal, and shall offer its stock initially in a subscription offering to the members of the credit union on an eligibility record date established by the board of directors, giving those members priority rights to purchase the shares over the general public pro rata based on deposits. The converted credit union shall also create a liquidation account for the benefit of its members on the eligibility record date, in an amount representing the total equity of the credit union at the time, the balances of which shall be calculated and subsequently recalculated as determined in accordance with regulations promulgated by the director, or the director’s designee. Unless otherwise impaired, any liquidation account so created also shall be considered as part of the paid-in and unimpaired capital stock and surplus of the newly chartered stock financial institution or financial services entity. The plan of conversion may provide for restrictions on the amount of stock that any person or entity may purchase in the conversion, or own or control thereafter, which may also be incorporated into the stock agreement to form the converted entity.
(d) In connection with the conversion, the financial institution or other financial services entity may form a holding company or utilize an existing holding company to hold all the shares of the financial institution or other financial services entity, and offer to its depositors and general public (subject to subscription rights in favor of depositors) all of the stock of the holding company in lieu of the capital stock of the financial institution or other financial services entity. This conversion may also be accomplished pursuant to a merger.
(e) No credit union may convert to a financial institution or other financial services entity unless its deposits will continue to be federally insured. The corporate existence of a credit union converting to the financial institution or other financial services entity shall not terminate, but the financial institution or other financial services entity shall be deemed to be a continuation of the corporate entity credit union so converted.
(f) In connection with its approval of any plan of conversion to a financial institution chartered under the laws of this state, the director, or the director’s designee, shall approve the proposed agreement to form and the proposed bylaws of the converted entity. The director, or the director’s designee, upon finding that the requirements of this section and applicable regulations have been met (including, when applicable, that the conversion to any entity issuing stock has been completed with the sale of all shares offered in the conversion to a stock form of financial institution), shall issue a certificate of approval of the conversion to the converted entity. Upon the payment of fifty dollars ($50.00), the certificate of approval shall be filed with the secretary of state, together with the certificate of the general treasurer that the converted entity has paid into the treasury for the use of the state a sum equal to one tenth of one percent (.10%) of its capital stock which in no event shall be less than one hundred dollars ($100). Upon the filing of the certificate with the secretary of state and payment of fifty dollars ($50.00), the secretary of state shall immediately record the certificate of approval and any agreement to form, at which time the agreement to form will become effective.
(g) The director, or the director’s designee, shall issue rules and regulations implementing this section.
(h) To the extent not inconsistent with this section, each credit union so converted into a financial institution chartered under the laws of this state shall have all the powers and privileges conferred on, and be subject to all the duties and liabilities imposed on, those financial institutions and each credit union so converted into a financial services entity chartered under the laws of the United States shall have all the powers and privileges conferred on, and be subject to all the duties and liabilities imposed on, those federally chartered financial services entity.
History of Section. P.L. 2001, ch. 233, § 1.
For purposes of this chapter:
(1) “Company”, “control”, and “subsidiary” have the meaning set forth in the Bank Holding Company Act of 1956, 12 U.S.C. § 1841 et seq.
(2) “Rhode Island bank-holding company” means any company, association, partnership, corporation, or any other entity, however formed, that controls a regulated institution.
History of Section. P.L. 1995, ch. 82, § 44.
Whenever the director, or the director’s designee, considers it advisable, he or she may make, or cause to be made, an examination of each Rhode Island bank-holding company. The director, or the director’s designee(s), may also examine any deposit-taking subsidiary of the bank-holding company that fails to meet its minimum capital requirements under applicable federal law, or has received from its principal bank regulator, as its last composite rating based on capital, asset quality, management, earnings, and liquidity (CAMEL) or similar regulatory rating, a three, four, five, or other unsatisfactory rating. The director, or the director’s designee, shall have the same examination power and authority as he or she has for the examination of regulated institutions. The total cost of these examinations shall be paid in the same manner as other regulated institutions pursuant to this title. In lieu of this examination, the director, or the director’s designee, shall accept the report of an examination made within the last fifteen (15) months by any federal bank regulatory agency or the equivalent supervisory official of another state, pursuant to the laws of that state.
History of Section. P.L. 1995, ch. 82, § 44.
(a) Every Rhode Island bank-holding company shall file an annual financial report with the director, or the director’s designee, signed and sworn to by its president or a vice-president and also by its secretary, treasurer, or auditor, showing the condition of the Rhode Island bank-holding company at the close of business on any past day specified by the director, or the director’s designee. The report shall be transmitted to the director, or the director’s designee, within thirty (30) days of request, exclusive of Sundays and holidays. At the time of filing each report, the sum of fifty dollars ($50.00) shall be paid by the Rhode Island bank-holding company to the director to and for the use of the state. A penalty of twenty-five dollars ($25.00) per day for each day the report is delayed shall be paid to the director to and for the use of the state.
(b) Copies of reports prepared for federal regulatory authorities may be filed in lieu of the above within the time frame required for federal reports, with the above fees.
History of Section. P.L. 1995, ch. 82, § 44.
If any provision of this chapter or the application of this chapter to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter that can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable.
History of Section. P.L. 1995, ch. 82, § 44.
(a) For the purposes of this chapter, the term or terms:
(1) “Bank”, “bank-holding company”, “company”, “subsidiary”, and “control” have the meanings set forth in the federal Bank Holding Company Act of 1956, 12 U.S.C. § 1841 et seq., except that “bank” shall also include financial institutions, as defined in this title, and other forms of federally-insured-deposit-taking institutions. Bank-holding companies shall include thrift-holding companies as set forth in the Home Owners’ Loan Act, 12 U.S.C. § 1461 et seq., whether organized with or without capital stock.
(2) “Out-of-state bank” means a bank whose principal office is located in any other state.
(3) “Out-of-state bank-holding company” means a holding company for which the operations of its bank subsidiaries are principally conducted in any other state.
(4) “Rhode Island bank-holding company” means a bank-holding company that controls a financial institution, provided that an out-of-state bank or bank-holding company that acquired control of one or more financial institutions shall not be deemed to be a Rhode Island bank-holding company, unless operations of its bank subsidiaries are principally conducted in this state.
(b) For the purposes of this chapter, the state in which operations of a bank-holding company’s bank subsidiaries are principally conducted is the state in which total deposits of all of its bank subsidiaries are the largest.
History of Section. P.L. 1995, ch. 82, § 45; P.L. 2017, ch. 451, § 22.
(a) An out-of-state bank or bank-holding company may acquire direct or indirect ownership or control of more than five percent (5%) of the voting stock of one or more financial institutions or Rhode Island bank-holding companies if the following conditions are met:
(1) The laws of the state in which the out-of-state bank is located, or in which operations of the bank subsidiaries of an out-of-state bank-holding company are principally conducted, expressly authorize, under conditions no more restrictive than those imposed by the laws of Rhode Island, as determined by the director, or the director’s designee, the acquisition by a Rhode Island bank-holding company or a financial institution of direct or indirect ownership or control of more than five percent (5%) of the voting stock of banks located in that state or bank-holding companies, the operations of the bank subsidiaries of which are principally conducted in that state;
(2) The acquisition, including all of the terms and conditions of the acquisition, has been approved in advance by the director, or the director’s designee, as being in the public interest, pursuant to a written order evidencing such approval. In determining whether the approval of a proposed acquisition by an out-of-state bank or bank-holding company is in the public interest, the director, or the director’s designee, shall consider, in addition to any other factors he or she may in his or her discretion determine, whether the acquisition shall promote the safety and soundness of the financial institution whose voting stock is to be acquired and the convenience and advantage of communities served by that financial institution, and whether the acquisition is likely to have a significant impact upon the state’s economy, employment levels, and tax base. Any financial institution or Rhode Island bank-holding company that is the subject of an acquisition under this section shall be a party to the proceedings of the director, or the director’s designee, and shall be entitled to seek judicial review of any final decision of the director, or the director’s designee. The procedures for notice and the conducting of hearings by the director, or the director’s designee, and the rights of appeal from decisions of the director, or the director’s designee, shall be governed by this title.
(b) The provisions of subsection (a) shall apply to mergers, acquisitions, consolidations, or purchases of assets and assumptions of liabilities irrespective of whether the transactions under those sections involve an out-of-state bank or out-of-state bank-holding company.
(c) The provisions of this section shall only apply after September 29, 1995, to the extent consistent with and not preempted by federal law.
History of Section. P.L. 1995, ch. 82, § 45; P.L. 1997, ch. 98, § 6.
(a) Any financial institution organized with capital stock may, subject to the approval of the director, or the director’s designee, merge or consolidate with one or more banks:
(1) Each of which is organized with capital stock and is either a financial institution or an out-of-state bank; and
(2) At least one of which is an out-of-state bank, pursuant to a plan of merger or consolidation complying with the provisions of this section; provided, however, that the following conditions shall apply prior to June 1, 1997, to the extent consistent with, and not preempted by, federal laws:
(i) The law of the state in which each of these out-of-state banks has its principal office permits this type of merger or consolidation; and
(ii) The law of the state in which each of these out-of-state banks has its principal office authorizes, under conditions not substantially more restrictive than those imposed by the laws of this state, as determined by the director, or the director’s designee, a financial institution organized with capital stock to be the successor bank of the merger or consolidation.
(b) The plan of merger or consolidation shall conform to the provisions of § 7-1.2-1001 and to any other requirements that may be imposed by the laws applicable to each bank not organized under the laws of this state.
(c) The plan of merger or consolidation shall require approval as follows:
(1) With respect to each financial institution, by the board of directors and shareholder of that financial institution pursuant to the applicable provisions of §§ 7-1.2-1001 — 7-1.2-1002, except that a plan of merger or consolidation must receive the affirmative vote of the holders of two thirds (⅔) or more of the shares entitled to vote thereon; and
(2) With respect to each bank not organized under the laws of this state, in accordance with the applicable provisions imposed by the laws under which it is organized. Thereafter, articles of merger or consolidation complying with the applicable provisions of § 7-1.2-1003 and the applicable provisions of the laws under which each bank not organized under the laws of this state is organized shall be executed in accordance with the applicable provisions and presented to the director, or the director’s designee, for approval, by filing three (3) originals with the director, or the director’s designee.
(d) Upon receipt of the articles of merger or consolidation, the director, or the director’s designee, shall furnish the applicant a form of notice specifying the names of the constituent banks and assigning a date and place for public hearing on the plan of merger or consolidation. The applicant shall publish the notice at least once a week, for three (3) successive weeks, in one or more newspapers designated by the director, or the director’s designee. Upon a finding that the public interest so requires, the director, or the director’s designee, may lessen the period and the manner prescribed for giving notice. In determining whether to approve a proposed merger or consolidation, the director, or the director’s designee, shall consider whether the merger or consolidation is consistent with the safety and soundness of, and the needs and convenience of the communities served by, each financial institution. The procedures for conducting hearings by the director, or the director’s designee, and the rights of appeal from decisions of the director, or the director’s designee, shall be governed by the applicable provisions of this title.
(e) If the director, or the director’s designee, approves the merger or consolidation in accordance with subsection (d), he or she shall endorse approval upon each original of the articles of merger or articles of consolidation and shall deliver the articles to the applicant. One original of the articles of merger or articles of consolidation bearing the approval in writing shall be filed with the director, or the director’s designee, and two (2) originals shall be filed with the secretary of state, who shall, upon payment to the director, or the director’s designee, of twenty-five dollars ($25.00), issue a certificate of merger or certificate of consolidation pursuant to the provisions of § 7-1.2-1003. Upon the issuance of the certificate or upon a later date, not more than thirty (30) days after the filing with the secretary of state of the articles of merger or articles of consolidation, that may be set forth in the plan, the merger or consolidation shall be effected pursuant to the provisions of this chapter with the effects set forth therein. At any time prior to the filing of the articles of merger or articles of consolidation with the secretary of state, the merger or consolidation may be abandoned pursuant to the provisions therefor, if any, set forth in the plan of merger or consolidation.
(f) Any shareholder of a financial institution that is a party to a plan of merger or consolidation under this section shall have the right to dissent from the corporate action involved in accordance with the provisions of § 7-1.2-1201 and on the terms and conditions set forth in § 7-1.2-1202.
(g) If the successor institution of a merger or consolidation under this chapter is to be organized under laws other than the laws of this state, it shall file the following with the director, or the director’s designee, contemporaneously with the application for approval of the merger or consolidation:
(1) An agreement that it may be served with process in this state in any proceeding for the enforcement of any obligation arising out of its business transacted in this state and any obligation of any of its predecessor financial institutions, including the enforcement of the rights of a dissenting shareholder of any predecessor financial institution;
(2) An irrevocable appointment of the director as its agent to accept service of process in any proceeding in the courts of this state or the courts of the United States situated in this state; and
(3) An agreement that it will promptly pay to the dissenting shareholder of any predecessor financial institution the amount, if any, to which they shall be entitled.
History of Section. P.L. 1995, ch. 82, § 45; P.L. 2005, ch. 36, § 17; P.L. 2005, ch. 72, § 17.
(a) Any financial institution organized without capital stock may, subject to the approval of the director, or the director’s designee, merge or consolidate with one or more institutions, if:
(1) Each institution is organized without capital stock and is either a financial institution or an out-of-state bank; and
(2) At least one institution is an out-of-state bank, pursuant to a plan of merger or consolidation complying with the provisions of this section; provided, however, the following conditions shall apply prior to June 1, 1997, to the extent consistent with, and not preempted by, federal law:
(i) That the law of the state in which each these out-of-state banks has its principal office expressly permits this type of merger or consolidation; and
(ii) The law of the state in which each of these out-of-state banks has its principal office expressly authorizes, under conditions not substantially more restrictive than those imposed by the laws of this state, as determined by the director, or the director’s designee, a financial institution organized without capital stock under the laws of this state to be the successor bank of this merger or consolidation.
(b) The plan of merger or consolidation shall conform to the relevant provisions of § 7-1.2-1001 and to the other requirements that may be imposed by the laws applicable to each bank not organized under the laws of this state.
(c) The plan of merger or consolidation shall require approval as follows:
(1) With respect to a mutual savings bank, by a two thirds (⅔) vote of the board of trustees and majority vote of the depositors of the mutual savings bank present in person or by proxy, at a meeting called by the board of trustees; and
(2) With respect to each bank not organized under the laws of this state, in accordance with the applicable provisions imposed by the laws under which it is organized. Thereafter, articles of merger or articles of consolidation complying with the applicable provisions of § 7-1.2-1003 and the applicable provisions of the laws under which each bank not organized under the laws of this state is organized shall be executed in accordance with these provisions and presented to the director, or the director’s designee, for approval by filing three (3) originals with the director, or the director’s designee.
(d) Upon receipt of the articles of merger or consolidation, the director, or the director’s designee, shall furnish the applicant a form of notice specifying the names of the constituent banks and assigning a date and place for public hearing on the plan of merger or consolidation. The applicant shall publish the notice at least once a week, for three (3) successive weeks, in one or more newspapers designated by the director, or the director’s designee. Upon a finding that the public interest so requires, the director, or the director’s designee, may lessen the period and the manner prescribed for giving notice. In determining whether to approve a proposed merger or consolidation, the director, or the director’s designee, shall consider whether the merger or consolidation is consistent with the safety and soundness of, and the convenience and advantage of the communities served by, each of these institutions. The procedures for conducting hearings by the director, or the director’s designee, and the rights of appeal from decisions of the director, or the director’s designee, shall be governed by the applicable provisions of this title.
(e) If the director, or the director’s designee, approves the merger or consolidation in accordance with subsection (d), he or she shall endorse his or her approval upon each original of the articles of merger or articles of consolidation and shall deliver the articles to the applicant. One original of the articles of merger or articles of consolidation bearing the approval in writing shall be filed with the director, or the director’s designee. Two (2) originals shall be filed with the secretary of state, who shall, upon payment to him or her of twenty-five dollars ($25.00), issue a certificate of merger or certificate of consolidation pursuant to § 7-1.2-1003. Upon the issuance of the certificate or upon a later date, not more than thirty (30) days after the filing with the secretary of state of the articles of merger or articles of consolidation, that may be set forth in the plan, the merger or consolidation shall be effected pursuant to the provisions of this chapter with the effects set forth therein. At any time prior to the filing of the articles of merger or articles of consolidation with the secretary of state, the merger or consolidation may be abandoned pursuant to the provisions therefor, if any, set forth in the plan of merger or consolidation.
(f) A merger or consolidation may be approved and effected pursuant to the provisions of this section, notwithstanding that the capital to liabilities ratio of the constituent banks exceeds the percentage of any of the other constituent banks, and no constituent bank having such excess of percentage shall be required to pay an extra dividend or make any distribution to its shareholders or depositors, nor shall any shareholder or depositor have any appraisal or dissenting right with respect to the merger or consolidation.
(g) If the successor bank of a merger or consolidation is to be organized under laws other than the laws of this state, it shall file the following with the director, or the director’s designee, contemporaneously with the application for approval of the merger or consolidation:
(1) An agreement that it may be served with process in this state in any proceeding for the enforcement of any obligation arising out of its business transacted in this state and any of its predecessor financial institutions; and
(2) An irrevocable appointment of the director as its agent to accept service of process in any proceeding in the courts of this state or the courts of the United States situated in this state.
History of Section. P.L. 1995, ch. 82, § 45; P.L. 1997, ch. 98, § 6; P.L. 2005, ch. 36, § 17; P.L. 2005, ch. 72, § 17.
Upon the merger or consolidation of a financial institution with one or more banks in accordance with the provisions of this chapter:
(1)(i) All of the property of each predecessor bank, including all its right, title, and interest in and to all assets of any conceivable value or benefit then existing, belonging or pertaining to it, shall immediately, by act of law and without conveyance or transfer, and without any further act or deed, be vested in and become that of the successor bank. The successor bank shall have, hold, and enjoy the right, privilege, interest, or asset in its own right as fully and to the same extent as when it was possessed, held, or enjoyed by the predecessor bank; and
(ii) The successor bank shall be deemed to be a continuation of the entity and identity of the predecessor bank, and all the rights, obligations, and relations of the predecessor bank to, or in respect to, any person, estate, creditor, depositor, trustee, or beneficiary of any trust and in respect to any executorship or trusteeship or trust or other fiduciary function, including appointments, designations, and nominations, shall remain unimpaired. The successor bank shall succeed to all rights, obligations, relations, and trusts including appointments, designations, and nominations, and the duties and liabilities connected the predecessor bank, and shall execute and perform each and every trust and relation in the same manner as if the successor bank had itself assumed the trust or relation, including the obligations and liabilities connected with the predecessor bank.
(iii) If the predecessor bank was acting as administrator, co-administrator, executor, co-executor, trustee, or co-trustee of, or in respect to, any estate or trust being administered under the laws of this state and, to the extent permitted by the laws of this state, the laws of any other state, such relations as well as any other similar fiduciary relations, and all rights, privileges, duties, and obligations connected with the predecessor bank, shall remain unimpaired and shall continue into and in the successor bank, irrespective of the date when any of these relations may have been created or established, irrespective of the date of any trust agreement relating thereto or the death of any testator or decedent whose estate is being administered.
(2) Nothing done in connection with the merger or consolidation of the bank shall, in respect to any executorship, trusteeship, or similar fiduciary relation, be deemed to be or to effect, under the laws of this state, a renunciation of any letters of administration or letters testamentary pertaining to that relation, or a removal or resignation from any executorship or trusteeship, nor shall the act or any other thing done be deemed to be of the same effect as if the executor or trustee had died or otherwise become incompetent to act.
(3) A pending action or other judicial proceeding to which any of the constituent banks is a party shall not be deemed to have abated or to have discontinued by reason of the merger or consolidation, but may be prosecuted to final judgment, order, or decree in the same manner as if the merger or consolidation had not occurred; or the successor bank may be substituted as a party to any action or proceeding to which the predecessor bank was a party, and any judgment, order, or decree may be rendered for or against the successor bank that might have been rendered for or against the predecessor bank if the merger or consolidation had not occurred.
(4) After merger or consolidation, a foreclosure of a mortgage begun by any predecessor bank may be completed by the successor bank and publication begun by the predecessor bank may be continued in the name of the successor bank. Any certificate of possession, affidavit of sale, or foreclosure deed relative to the foreclosure shall be executed by the proper officers on behalf of whichever of the constituent banks actually took possession or made the sale, but any instrument executed on behalf of the successor bank shall recite that it is the successor of the predecessor bank that commenced the foreclosure.
(5) A new name may be adopted as the name of the successor bank as part of the plan of merger or consolidation, and it shall, without further action, become the name of the successor bank upon the effective date of the merger or consolidation.
(6) The offices and branches of any bank merged or consolidated under the provisions of this chapter may be maintained as branch offices of the successor bank with the written permission of, and under the conditions, if any, set forth by the director, or the director’s designee, whether or not the branch offices shall be in more than one state.
History of Section. P.L. 1995, ch. 82, § 45; P.L. 1997, ch. 98, § 6.
(a) In addition to any other power granted under the laws of this state, a financial institution may, with the approval of the director, or the director’s designee, purchase all or part of the assets of, and assume all or part of the liabilities of, an out-of-state bank and operate any office or branch of the out-of-state bank acquired in connection with the out-of-state bank.
(b) An out-of-state bank may, with the approval of the director, or the director’s designee, purchase substantially all of the assets and assume substantially all of the liabilities of a financial institution and operate any office or branch of the bank acquired in connection therewith; provided, however, that the law of the state in which the out-of-state bank has its principal office:
(1) Permits such a purchase of assets, assumption of liabilities, and operation of offices and branches; and
(2) Authorizes, under conditions not substantially more restrictive than those imposed by the laws of this state, as determined by the director, or the director’s designee, a financial institution to purchase assets, assume liabilities, and operate offices and branches in another state. No out-of-state bank shall apply to the director, or the director’s designee, for approval of such a purchase, assumption, and operation unless the purchase, assumption, and operation shall first be approved as follows:
(i) With respect to financial institutions having capital stock, by the board of directors and shareholders pursuant to the applicable provisions of § 7-1.2-1102, except that the purchase, assumption, and operation must receive the affirmative vote of two-thirds (⅔) or more of the shareholders entitled to vote thereon;
(ii) With respect to a mutual savings bank organized under this title, by a two thirds (⅔) vote of the board of trustees thereof and a majority vote of the depositors of the mutual savings bank present in person or by proxy, at a meeting called by the board of trustees; and
(iii) With respect to each such bank not organized under the laws of this state, in accordance with the applicable provisions imposed by the laws under which it is organized.
(c) Upon the filing of an application to purchase assets and assume liabilities under this section, together with duplicate originals of the agreement of purchase and assumption entered into in connection therewith, the director, or the director’s designee, shall furnish the applicant a form of notice specifying the names of the purchasing financial institution and the selling financial institution and the location of the offices or branches to be acquired and assigning a date and place for public hearing on the application. The applicant shall publish the notice at least once a week, for three (3) successive weeks, in one or more newspapers designated by the director, or the director’s designee. Upon a finding that the public interest so requires, the director, or the director’s designee, may lessen the period and the manner prescribed for giving notice.
In determining whether to approve the application, the director, or the director’s designee, shall consider whether the purchase, assumption, and operation is consistent with the safety and soundness of, and the convenience and advantage of the communities served by, each financial institution that is a party to the agreement. The procedures for conducting hearings by the director, or the director’s designee, and the rights of appeal from decisions of the director, or the director’s designee, shall be governed by the applicable provisions of this title. If the director, or the director’s designee, approves the application, he or she shall endorse his or her approval upon each original of the agreement of purchase and assumption and shall deliver the agreement to the applicant. One original of the agreement bearing the director’s, or the director’s designee’s, approval in writing shall be filed with the director, or the director’s designee, and the other shall be retained by the applicant as evidence of the approval. The applicant shall cause notice of any abandonment of a transaction approved pursuant to this subsection to be filed with the director, or the director’s designee, and in the event of such abandonment, any approval granted hereunder shall be null and void.
(d) A shareholder of a selling financial institution shall have the right to dissent from the corporate action involved in accordance with the provisions of § 7-1.2-1201 and on the terms and conditions set forth in § 7-1.2-1202. No shareholder or depositor of a financial institution without capital stock that is a party to an agreement of purchase and assumption shall have any appraisal or dissenting right with respect to this corporate action.
(e) An out-of-state bank that is to be the purchasing bank shall file the following with the director, or the director’s designee, contemporaneously with the filing of any application for approval under this section:
(1) An agreement that it may be served with process in this state in any proceeding for the enforcement of any obligation arising out of its business transacted in this state and any obligation assumed by it; and
(2) An irrevocable appointment of the director as its agent to accept service of process in any proceeding in the courts of this state or the courts of the United States situated in this state.
(f) The offices or branches acquired pursuant to an agreement of purchase and assumption approved by the director, or the director’s designee, may be operated as branch offices of the purchasing bank with the written permission of, and under conditions, if any, approved by the director, or the director’s designee, whether or not the branch offices shall be in more than one state.
History of Section. P.L. 1995, ch. 82, § 45; P.L. 1997, ch. 98, § 6; P.L. 2005, ch. 36, § 17; P.L. 2005, ch. 72, § 17.
If organized under laws other than the laws of this state, a successor bank or purchasing bank shall have and may exercise within this state the powers and privileges granted to financial institutions. A successor financial institution or purchasing financial institution shall have and may exercise in this state the powers and privileges granted to it under the laws of this state, and, in any state under the laws of which one or more of its predecessor banks was organized or in which it operates a branch, the powers and privileges granted to it under the laws of that state or states.
History of Section. P.L. 1995, ch. 82, § 45.
For purposes of this chapter:
(1) The surviving or new bank resulting from a merger or consolidation, as the case may be, shall be called the “successor financial institution” or “successor bank”, as applicable;
(2) Each bank discontinuing its corporate existence pursuant to a merger or consolidation shall be called a “predecessor financial institution” or “predecessor bank”, as applicable;
(3) The bank purchasing assets and assuming liabilities and acquiring offices and branches under an agreement of purchase and assumption shall be called the “purchasing financial institution” or “purchasing bank”, as applicable;
(4) The bank selling assets and permitting its liabilities to be assumed and transferring branches and offices under an agreement shall be called the “selling financial institution” or “selling bank”, as applicable;
(5) References to “articles of incorporation” in chapter 1.2 of title 7 shall be deemed to refer to the agreement to form, charter, or the articles or agreement of association of each bank or financial institution involved, as from time to time amended, however it may be described by the law under which the institution is organized and whether or not it shall have been created by any special act of incorporation.
History of Section. P.L. 1995, ch. 82, § 45; P.L. 2005, ch. 36, § 17; P.L. 2005, ch. 72, § 17.
Upon obtaining the consent of the director, or the director’s designee, a financial institution may establish a branch, or branches, outside of this state and an out-of-state bank may establish a branch, or branches, within this state; provided that, in the case of an out-of-state bank, the law of the state in which it is principally located authorizes under conditions not substantially more restrictive than those imposed by the laws of this state, as determined by the director, or the director’s designee, a financial institution to establish a branch in that state. The director, or the director’s designee, shall approve an application for a branch if the applicant has satisfied the standards and followed the procedures set forth for the establishment of branches for financial institutions in addition to the requirements of this section.
History of Section. P.L. 1995, ch. 82, § 45.
To the extent it is empowered to do so, this state authorizes banks organized under the laws of the United States that have a main office in Rhode Island to merge or consolidate with and to acquire assets and assume liabilities of out-of-state banks and to have assets and liabilities assumed by out-of-state banks.
History of Section. P.L. 1995, ch. 82, § 45.
The director, or the director’s designee, may make or cause to be made an examination of each bank in order to fulfill the requirements of this chapter. The total cost of these examinations shall be borne by the bank so examined and shall be governed by the same terms and conditions as the examinations of regulated institutions. In lieu of this examination, the director, or the director’s designee, may accept the report of an examination made by the equivalent supervisory official of another state, pursuant to the laws of that state.
History of Section. P.L. 1995, ch. 82, § 45.
If any provision of this chapter or the application of this chapter to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter that can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable.
History of Section. P.L. 1995, ch. 82, § 45.
For the purposes of this chapter the terms:
(1) “Control” shall have the meaning set forth in the Bank Holding Company Act of 1956, 12 U.S.C. § 1841 et seq.
(2) “Regulated institution” shall also include a Rhode Island bank-holding company.
History of Section. P.L. 1995, ch. 82, § 46.
Any person who, acting directly or indirectly or through or in concert with one or more other persons, acquires control of any financial institution through purchase, assignment, transfer, pledge or other disposition of voting stock of a financial institution shall make application to the director, or the director’s designee, in the prescribed manner.
History of Section. P.L. 1995, ch. 82, § 46.
Upon receiving an application, the director, or the director’s designee, shall:
(1) Conduct an investigation of the competence, experience, integrity, and financial ability of each person by whom the acquisition is to be made; and
(2) Make an independent determination of the accuracy and completeness of any information prescribed.
History of Section. P.L. 1995, ch. 82, § 46.
Except as otherwise provided, an application filed pursuant to this section shall contain the following information:
(1) The identity, personal history, business background, and experience of each person by whom or on whose behalf the acquisition is to be made, including the person’s material business activities and affiliations during the past five (5) years, a description of any material pending legal or administrative proceedings in which he or she is a party, and any pending or prior criminal indictment or conviction of the person by a state or federal court;
(2) A statement of the assets and liabilities of each person by whom, or on whose behalf, the acquisition is to be made, as of the end of the fiscal year for each of the five (5) years immediately preceding the date of the application, together with related statements of income and source and application of funds for each of the fiscal years then concluded, all prepared in accordance with generally accepted accounting principles consistently applied, and an interim statement of the assets and liabilities for each such person, together with related statements of income and source and application of funds, as of a date not more than ninety (90) days prior to the date of the filing of the application;
(3) The terms and conditions of the proposed acquisition and the manner in which the acquisition is to be made;
(4) The identity, source, and amount of the funds or other consideration used, or to be used, in making the acquisition, and if any part of these funds or other consideration has been, or is to be, borrowed or otherwise obtained for the purpose of making the acquisition, a description detailing the transaction, the names of the parties, and any arrangements, agreements, or understandings with these persons;
(5) Any plans or proposals that any acquiring party making the acquisition may have to liquidate the regulated institution, to sell its assets or merge it with any company, or to make any other major change in its business or corporate structure or management;
(6) The identification of any person employed, retained, or to be compensated by the acquiring party, or by any person on his or her behalf, to make solicitations or recommendations to stockholders for the purpose of assisting in the acquisition, and a description of the terms of the employment, retainer, or arrangement for compensation;
(7) Copies of all invitations or tenders or advertisements making a tender offer to stockholders for purchase of their stock to be used in connection with the proposed acquisition;
(8) Any additional information in the form that the director, or the director’s designee, may require;
(9) Evidence that a majority of the shares of stock entitled to vote of the financial institution whose shares of voting stock are to be acquired have approved the change of control at a meeting called for that purpose or in writing.
History of Section. P.L. 1995, ch. 82, § 46; P.L. 2001, ch. 128, § 4.
The director, or the director’s designee, may disapprove any proposed acquisition if:
(1) The proposed acquisition of control would result in a monopoly or would be in furtherance of any combination or conspiracy to monopolize or attempt to monopolize the business of banking;
(2) The effect of the proposed acquisition of control may be substantially to lessen competition, or to tend to create a monopoly, or would in any other manner be in restraint of trade, and the anticompetitive effects of the proposed acquisition of control are not outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served;
(3) The financial condition of any acquiring person might jeopardize the financial stability of the regulated institution or prejudice the interests of the depositors of the regulated institution;
(4) The competence, experience, or integrity of any acquiring person, or of any of the proposed management personnel, indicates that it would not be in the interest of the depositors of the regulated institution, or in the interest of the public to permit the person to control the regulated institution;
(5) Any acquiring person neglects, fails, or refuses to furnish the information required; or
(6) The acquisition would not promote the public convenience and advantage.
History of Section. P.L. 1995, ch. 82, § 46.
Whenever a change in control occurs, each regulated institution shall report promptly to the appropriate banking regulator any change or replacement of its chief executive officer or any directors occurring in the next twelve-month (12) period. The report shall contain a statement of the past and current business and professional affiliations of the new chief executive officer or directors.
History of Section. P.L. 1995, ch. 82, § 46; P.L. 1997, ch. 98, § 7.
The application process and public hearing requirement may be waived by the director, or the director’s designee, in writing, when, in the public interest, the change in control results from any regulatory action in order to prevent a probable failure or default of the regulated institution.
History of Section. P.L. 1995, ch. 82, § 46.
The director, or the director’s designee, may adopt reasonable rules and regulations for the implementation and administration of this chapter.
History of Section. P.L. 1995, ch. 82, § 46.
If any provision of this chapter or the application of this chapter to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter that can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable.
History of Section. P.L. 1995, ch. 82, § 46.
For purposes of this chapter:
“Lending institution” includes any regulated institution and any person who or that makes loans of money or negotiates the lending of money for another in any state or jurisdiction.
History of Section. P.L. 1995, ch. 82, § 47; P.L. 1997, ch. 98, § 8.
(a) Every mortgagee holding funds of a mortgagor in escrow for the payment of taxes and insurance premiums with respect to mortgaged property located in this state shall pay or credit interest on those funds at a rate equal to the rate paid to the mortgagee on its regular savings account, if offered, and otherwise at a rate not less than the prevailing market rate of interest for regular savings accounts offered by local financial institutions as determined by the director, said determination to be made within thirty (30) days of the effective date of this provision and thereafter annually on the first business day of the year. Said credit of interest shall accrue on the daily balance and be made annually on December 31. If the mortgage debt is paid prior to December 31 in any year, the interest to the date of payment shall be paid to the mortgagor. The provision of this section shall apply only with respect to mortgages on owner-occupied residential property consisting of not more than four (4) living units. The provisions of this section shall not be waived. No mortgagee holding the mortgagor’s funds in escrow for the payment of taxes shall also charge an annual “tax service fee” or other annual fee for ascertaining whether or not the real estate taxes have in fact been paid. Any mortgagee violating the provisions of this section shall be fined not more than one hundred dollars ($100) for each offense.
(b) Mortgages insured or guaranteed by the Farmer’s Home Loan Administration, Federal Housing Administration, or the Veterans’ Administration, or a private mortgage insurer licensed to do business in the state of Rhode Island or made pursuant to the provisions of chapter 55 of title 42 shall be exempt from the requirements of this section.
(c) The director, or the director’s designee, shall adopt any regulations that are necessary to carry out the provisions of this section.
History of Section. P.L. 1995, ch. 82, § 47; P.L. 2008, ch. 238, § 2; P.L. 2008, ch. 309, § 2.
All monthly billing by mortgagees to mortgagors must show the allocation of the mortgagor’s prior monthly payment to principal, interest, and escrow, if applicable.
History of Section. P.L. 2006, ch. 636, § 1.
(a) Every lending institution that accepts an application for a mortgage loan that requires the payment of an appraisal fee, shall, prior to the payment of the appraisal fee, inform the applicant that if the mortgage is not approved, the appraisal fee may not be refunded to the customer.
(b) Every lending institution that accepts an application for a mortgage loan and which, at the applicant’s expense, engages a real estate appraiser to conduct an appraisal of the subject real estate shall, upon written request, provide the applicant with a copy of the appraisal.
History of Section. P.L. 1995, ch. 82, § 47.
(a) Every lending institution, that accepts an application for any residential mortgage loan or any commercial mortgage loan that requires an appraisal in order to process the loan, is not permitted to use an appraisal company that is either owned by or has directors, stockholders, or employees of that lending institution.
(b) Each lending institution doing business in the state pursuant to a charter or license issued under this title shall, upon request of the director of business regulation, or the director’s designee, disclose to the director those appraisal companies with which the lending institution has an ownership interest or which have directors, stockholders, or employees of the lending institution.
(c) Any lending institution that maintains Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA) insurance protection for its deposits is exempt from the provisions of this section.
History of Section. P.L. 2001, ch. 128, § 5.
(a) Each regulated institution, as defined in this chapter, to which the Community Reinvestment Act of 1977, 12 U.S.C. § 2901 et seq., and as subsequently amended from time to time, applies, shall file with the division of banking, a copy of each report and document that it is required to prepare for or file with one or more federal agencies pursuant to the provisions of that law and the rules and regulations promulgated thereunder. Each regulated institution, as defined in this chapter, to which the Community Reinvestment Act of 1977, 12 U.S.C. § 2901 et seq., and as subsequently amended from time to time, does not apply, shall file with the division of banking any reports that it may require, but in substantially the same form as the reports required to be filed pursuant to the Community Reinvestment Act by the regulated institutions to which the act applies. Where a regulated institution has filed these reports or documents with the division of banking, an update of the reports or documents shall be required whenever the regulated institution requests the director, or the director’s designee, to take any action on any application to which the provisions of this title apply.
(b) When taking any action on an application made by a regulated institution under this title, the director, or the director’s designee, shall take into account, among other factors, an assessment, in writing, of the record of performance of the regulated institution in helping to meet the credit needs of its entire community, consistent with the safe and sound operation of the regulated institution and an assessment of the economic impact of the matter that is the subject of the application. The assessment and any written communications from the division of banking to a regulated institution relating to the assessment shall be made available to the public upon request. In making the assessment, the director, or the director’s designee, shall review all reports and documents filed with the division of banking pursuant to this section and any signed, written comments received by it or the division of banking that specifically relate to the regulated institution’s performance in helping to meet the credit needs of its community. In addition, the director, or the director’s designee, shall consider the following factors in assessing a regulated institution’s record of performance:
(1) The most recent public Community Reinvestment Act rating by the applicable federal banking regulatory agency;
(2) Any practices intended to discourage application for types of credit set forth in the regulated institution’s Community Reinvestment Act statement(s);
(3) The geographic distribution of the regulated institution’s credit extensions, credit applications, and credit denials;
(4) Evidence of prohibited discriminatory or other illegal credit practices;
(5) The regulated institution’s participation, including investments, in local community development and redevelopment projects or programs;
(6) The regulated institution’s origination of residential mortgage loans, housing rehabilitation loans, home improvement loans, and small business or small farm loans within its community or the purchase of such loans originated in its community;
(7) The regulated institution’s participation in governmental-insured, guaranteed, or subsidized loan programs for housing, small businesses, or small farms;
(8) The effect of the matter that is the subject of the application upon the economy of the neighborhood, city or town, region, or state, including number of and types of jobs and tax base; and
(9) Other factors that, in the judgment of the director, or the director’s designee, reasonably bear upon the extent to which a regulated institution is helping to meet the credit needs and economy of the entire community.
(c) In assessing the record of performance of a regulated institution pursuant to the provision of subsection (b), the director, or the director’s designee, may, where he or she deems it appropriate, if not otherwise required by law, provide for a public hearing when an objection to the regulated institution’s application has been submitted.
(d) An assessment of a regulated institution’s record of performance under subsection (b) may be the basis for denying an application under the provisions of this section.
(e) When taking an action pursuant to subsection (b), the director, or the director’s designee, shall request from the applicant-regulated institution, and from the appropriate federal bank regulatory authorities, any documents other than those required to be filed with the division of banking by this section or by other applicable statutes or regulations.
(f) For the purposes of this section only, and notwithstanding any other provision of this title or any other law to the contrary, the term “regulated institution” shall not include credit unions whose bylaws significantly limit the field of membership, as determined by the director, or the director’s designee.
(g) The director, or the director’s designee, is hereby authorized and empowered to promulgate rules and regulations effectuating the provisions of this section.
History of Section. P.L. 1995, ch. 82, § 47; P.L. 1997, ch. 98, § 8.
Every lending institution that accepts an application for a mortgage loan on property located in this state and that engages a title attorney to search the title of the subject real estate shall require the attorney to offer to the prospective mortgagor, at the usual premium rate, an owner’s policy title for the real estate. In the event the prospective mortgagor does not wish to purchase this title insurance, then the prospective mortgagor shall have the right to reject the offer of title insurance, provided the rejection is in writing and signed.
History of Section. P.L. 1995, ch. 82, § 47.
(a) Every lending institution that accepts an application for any residential mortgage loan or any commercial mortgage loan and requires that a title attorney search the title of the subject real estate, or requires a policy of title insurance, shall permit the prospective mortgagor to select a qualified title attorney or title insurance company of his, her, or its own choice to search the title of the subject real estate and to furnish title insurance. The lending institution shall not unreasonably disapprove a title insurance policy provided or paid for directly or indirectly by a borrower. The disapproval shall be deemed unreasonable if it is not based solely on reasonable standards uniformly applied, relating only to the extent of coverage required or the financial soundness of an insurer. The standards shall not discriminate against any particular insurer, nor shall the standards call for the disapproval of an insurance policy because the policy contained coverage in addition to that required. Acceptance of a title insurance company’s policy by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation shall be conclusive proof that the title insurance company meets the reasonable standards required by this section whether or not the borrower is applying for a residential or a commercial mortgage loan.
(b) In the event the prospective mortgagor does not select a qualified title attorney or title insurance company, the prospective mortgagor shall sign a waiver permitting the lending institution to select an attorney. If any lending institution violates this section, an aggrieved party may file a complaint in the superior court of the county in which the aggrieved party shall dwell or has his, her, or its principal place of business, or Providence county, if the superior court of that county shall not be in session, or if the aggrieved party is a nonresident or has no principal place of business in this state, of any other county as may be agreed upon by the parties to the petition, and serve upon the lending institution a petition for an order of the court for the enforcement of this section, and the petition may request and the court shall have jurisdiction to grant, after notice and hearing, an order:
(1) Granting injunctive relief to restrain the lending institution from engaging in the alleged or suspected violation;
(2) Awarding reasonable attorney’s fees, costs, and expenses of the action; and
(3) Granting any other relief, as may be required, until the person or lending institution complies with the requirements of this section.
History of Section. P.L. 1995, ch. 82, § 47.
(a) Except as provided in subsections (b) through (d), no lending institution making a loan in this state, or any attorney, agent, or representative for that lending institution, shall directly or indirectly, as a condition of a loan or advance, require any attorney representing a borrower in the loan transaction to give an opinion in relation to the validity, binding effect, or enforceability of any of the loan documents or the availability of remedies thereunder.
(b) Subsection (a) shall not apply to any transaction in which the state, or any municipality in the state, or any department, agency, authority, or instrumentality of the state is the borrower.
(c) Subsection (a) shall not apply to transactions involving the public sale or underwriting of bonds, debentures, or other securities.
(d) Subsection (a) shall not prohibit, as part of a loan transaction, any requirement or condition with respect to opinions dealing with the authority and status of a borrower and matters relating to collateral.
(e) No opinion obtained in violation of this section may be relied on for any purpose, and this opinion shall not give rise to, or form the basis for, any action against any attorney or firm rendering the opinion. Any lending institution, or attorney, agent, or representative of a lending institution, knowingly violating this section shall be subject to an action as may be lawfully imposed by the regulatory authority or court that has licensing or disciplinary authority over the lending institution, attorney, or other individual in question.
History of Section. P.L. 1995, ch. 82, § 47.
Notwithstanding the provisions of any other laws, any person doing business under and as permitted by any law of this state or of the United States relating to lending institutions is authorized, in connection with the making of any loan, to contract for the accrual of interest, at a rate of interest, equal to or less than the note or contractual rate of interest, on unpaid interest accruing during previous billing or payment periods. Accrued and unpaid interest that is thus added to the principal balance of the loan for the purposes of further interest accrual shall, for the purposes of chapter 26 of title 6, be deemed to constitute additional net proceeds or additional principal of the loan, but shall for all other purposes and all other laws constitute interest on the original loan.
History of Section. P.L. 1995, ch. 82, § 47.
(a) Every lending institution or other entity that owns or services a loan, secured by a mortgage on property located in this state, shall:
(1) Provide to the obligor, within three (3) business days after receipt of a written or telefaxed request, the exact payoff due the lender on the loan;
Notwithstanding the foregoing, if the payoff is requested for a loan that is forty-five (45) days or more delinquent in payment thereof or for any equity line of credit, the payoff shall be provided within five (5) business days of said request. Nothing contained herein shall prevent the institution from providing the exact payoff sooner than the deadline set forth herein;
Notwithstanding the foregoing, nonamortizing loans made by Rhode Island housing and mortgage finance corporation for the purpose of providing closing cost or down-payment assistance shall not be subject to the provisions of this section;
(2) Permit the payoff to be made to it or, in the case of a mortgage owned or serviced by its subsidiary or affiliate or servicing agent, permit the payoff to be made at the subsidiary’s or affiliate’s principal place of business located in this state;
(3) Accept as final interest due the lender on this payoff the interest calculated as of the business day full payment is made to the lending institution or servicing agent; and
(4) Issue or provide to the mortgagor, or his or her agent or real estate closing officer, a discharge of the mortgage securing the loan within thirty (30) days after full payment of the payoff and final interest by separate instrument of release of the mortgage or as provided in § 34-26-3.
(b) “Payoff statement” means any statement produced by a lending institution or servicer of a mortgage setting forth the amount of the unpaid balance on said mortgage loan, including principal, interest, and other charges assessed pursuant to the loan documentation of such mortgage and a statement of the interest on a per-diem basis with respect to the unpaid principal balance of the mortgage loan.
(c) Notwithstanding the provisions of any law or regulation to the contrary, if a settlement agent complies with all of the terms of a payoff statement from the lending institution or servicer then the settlement agent shall not be responsible for any shortfall in the amount due to the mortgagee to pay off the mortgage loan in full. The settlement agent shall not be liable for any interest on funds tendered to said lending institution or servicer beyond the date that said funds were received by said lending institution or servicer even if said funds were insufficient to pay off the full balance of the mortgage loan.
History of Section. P.L. 1995, ch. 82, § 47; P.L. 2004, ch. 172, § 1; P.L. 2004, ch. 403, § 1.
Any lending institution providing a purchase money first mortgage loan on a property within this state containing less than four (4) living units shall make disbursement of the loan proceeds on or before the date upon which the conveyance and/or mortgage documents are to be recorded. The disbursement shall be in the form of cash, wired funds, government check, cashier’s check, or other immediately available funds. The disbursement shall be made to the agent responsible for settlement. If the disbursement is not as provided in this section, no interest shall be charged for the first thirty (30) days following the closing date.
History of Section. P.L. 1995, ch. 82, § 47.
Every person not under guardianship who may make a deposit personally in any regulated institution may control, transfer, or withdraw the money so deposited, including accruing dividends or interest; notwithstanding, that the person at the time of exercising control or making the transfer or withdrawal, may be a minor.
History of Section. P.L. 1995, ch. 82, § 47.
If a deposit is made with any regulated institution by one person in trust for another, the name and residence of the person for whom it is made shall be disclosed, and it shall be credited to the depositor as trustee for that person. If no other motive of the existence and terms of a trust has been given in writing to the regulated institution, the deposit, with the interest thereon, may, in case of the death of the trustee, be paid to the person for whom the deposit was made or to that person’s legal representative.
History of Section. P.L. 1995, ch. 82, § 47.
When a deposit is made in a regulated institution in the name of two (2) or more persons as trustees, and a check is drawn upon the trust account by any trustee or trustees authorized by the other trustee or trustees to draw checks upon the trust account, neither the payee, nor the other holder, nor the bank is bound to inquire whether it is a breach of trust to authorize the trustee or trustees to draw checks upon the trust account, and the payee, or other holder, or the regulated institution is not liable unless the action of the payee or other holder or the regulated institution amounts to bad faith.
History of Section. P.L. 1995, ch. 82, § 47.
When a deposit has been or shall be made in any regulated institution in the name of two (2) persons and payable to either or to the survivor, the deposit, or any part of the deposit, or any interest or dividend on the deposit, may be paid to either of those persons, whether the other is living or not, or to the guardian, executor, or administrator of the survivor, and the receipt of the person so paid shall be valid and sufficient release and discharge on account of the payment so made.
History of Section. P.L. 1995, ch. 82, § 47.
Part I. Definitions and General Provisions
(a) Definitions. For purposes of this section the following words and phrases shall have the following meanings, unless the context indicates another meaning:
(1) “Account” means a contract of deposit between a depositor and a depository institution, and includes a checking account, savings account, certificate of deposit, and share account.
(2) “Agent” means a person authorized to make account transactions for a party.
(3) “Beneficiary” means a person named as one to whom sums on deposit in an account are payable on request after death of all parties or for whom a party is named as trustee.
(4) “Devisee” means any person designated in a will to receive a testamentary disposition of real or personal property.
(5) “Depository institution” means an organization authorized to receive deposits and to do business under state or federal laws relating to financial institutions and credit unions, and includes a bank, trust company, savings bank, building and loan association, savings and loan company or association.
(6) “Heirs” means those persons, including a surviving spouse, who are entitled under the statutes of intestate succession to the property of a decedent.
(7) “Multiple-person” or “Multiple-party account” means an account payable on request to one or more parties, whether or not a right of survivorship is mentioned.
(8) “Party” means a person who, by the terms of an account, has a present right, subject to request, to payment from the account other than as a beneficiary or agent.
(9) “Payment” means payment of sums on deposit and includes withdrawal, payment to a party or third person pursuant to check or other request, and a pledge of sums on deposit by a party, or a set-off, reduction, or other disposition of all or part of an account pursuant to a pledge.
(10) “Personal representative” includes executor, administrator, successor, or other court-appointed fiduciary, and persons who perform substantially the same function under the law governing decedent’s estates.
(11) “POD designation” means the designation of: (i) a beneficiary in an account payable on request to one party during his or her lifetime and on his or her death to one or more beneficiaries; or to one or more parties during their lifetimes and on death of all of them to one or more beneficiaries; or (ii) a beneficiary in an account in the name of one or more parties as trustee for one or more beneficiaries if the relationship is established by the terms of the account and there is no trust property other than the sums on deposit in the account, whether or not payment to the beneficiary is mentioned.
(12) “Receive”, as it relates to notice to a depository institution, means receipt in the principal office or branch office of the depository institution in which the account is established, but if the terms of the account require notice at a particular place, in the place required.
(13) “Request” means a request for payment complying with all terms of the account, including special requirements concerning necessary signatures and regulations of the depository institution; but, for purposes of this section, if terms of the account condition payment on advance notice, a request for payment is treated as immediately effective and a notice of intent to withdraw is treated as a request for payment.
(14) “State” includes any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, and any territory or possession subject to the legislative authority of the United States.
(15) “Successors” means those persons, other than creditors, who are entitled to property of a decedent under the decedent’s will, by intestacy or otherwise.
(16) “Sums on deposit” means the balance payable on an account, including interest and dividends earned, whether or not included in the current balance, and any deposit life insurance proceeds added to the account by reason of death of a party.
(17) “Terms of the account” includes the deposit agreement and other terms and conditions, including the form, of the contract of deposit.
(b) Scope. This section applies to accounts in this state. This section does not apply to:
(1) An account established for a partnership, joint venture, or other organization for a business purpose;
(2) An account controlled by one or more persons as an agent or trustee for a corporation, unincorporated association, or charitable or civic organization; or
(3) A fiduciary or trust account in which the relationship is established other than by the terms of the account.
(c) Types of accounts — Existing accounts.(1) An account may be for a single party or multiple parties. A multiple-party account may be with or without a right of survivorship between the parties. Subject to subsection (h)(3), either a single-party account or a multiple-party account may have a POD designation.
(2) An account established before, on, or after the effective date of this section [July 5, 2008], whether in the form prescribed in subsection (d) or in any other form, is either a single-party account or a multiple-party account, with or without right of survivorship, and with or without a POD designation, within the meaning of this section is governed by this subsection.
(d) Forms.(1) A contract of deposit that contains provisions in substantially the following form establishes the type of account provided; and the account is governed by the provisions of this section applicable to an account of that type:
UNIFORM SINGLE- OR MULTIPLE-PARTY ACCOUNT FORM
PARTIES [Name One or More Parties]: _________________________________________
OWNERSHIP [Select One And Initial]:
___ SINGLE-PARTY ACCOUNT — Party’s own account
___ MULTIPLE-PARTY ACCOUNT — Parties’ own account in proportion to net contributions unless there is clear and convincing evidence of a different intent.
RIGHTS AT DEATH [Select One And Initial]:
___ SINGLE-PARTY ACCOUNT — At death of party, ownership passes as part of party’s estate.
___ SINGLE-PARTY ACCOUNT WITH POD (PAY ON DEATH) DESIGNATION — At death of party, ownership passes to POD beneficiary or beneficiaries, equally, and is not part of party’s estate.
[Name One Or More Beneficiaries]:
___ MULTIPLE-PARTY ACCOUNT WITH RIGHT OF SURVIVORSHIP — At death of party, ownership passes to surviving party or parties.
___ MULTIPLE-PARTY ACCOUNT WITH RIGHT OF SURVIVORSHIP AND POD (PAY ON DEATH) DESIGNATION — At death of last surviving party, ownership passes to POD beneficiary or beneficiaries, equally, and is not part of last surviving party’s estate.
[Name One Or More Beneficiaries]:
___ MULTIPLE-PARTY ACCOUNT WITHOUT RIGHT OF SURVIVORSHIP — At death of party, deceased party’s ownership passes as part of deceased party’s estate.
(2) A contract of deposit that does not contain provisions in substantially the form provided in subsection (d)(1) is governed by the provisions of this section applicable to the type of account that most nearly conforms to the depositor’s intent.
(e) Designation of agent.(1) By a writing signed by all parties, the parties may designate another person as agent of all parties on an account.
(2) Unless the terms of an agency designation provide that the agent’s authority terminates on disability or incapacity of a party, the agent’s authority survives such disability or incapacity. The agent may act for a disabled or incapacitated party until the authority of the agent is terminated.
(3) Death of the sole party or last surviving party terminates the authority of an agent.
(f) Applicability of Parts. The provisions of Part II concerning beneficial ownership as between parties or as between parties and beneficiaries apply only to controversies between those persons and their creditors and other successors, and do not apply to the right of those persons to payment as determined by the terms of the account. Part III governs the liability and set-off rights of depository institutions that make payments pursuant to it.
Part II. Ownership as Between Parties and Others
(g) Ownership during lifetime.(1) In this subsection, “net contribution” of a party means the sum of all deposits to an account made by or for the party, less all payments from the account made to or for the party that have not been paid to or applied to the use of another party and a proportionate share of any charges deducted from the account, plus a proportionate share of any interest or dividends earned, whether or not included in the current balance. The term includes any deposit life insurance proceeds added to the account by reason of death of the party whose net contribution is in question.
(2) During the lifetime of all parties, an account belongs to the parties in proportion to the net contribution of each to the sums on deposit, unless there is clear and convincing evidence of a different intent. As between parties married to each other, in the absence of proof otherwise, the net contribution of each is presumed to be an equal amount.
(3) A beneficiary in an account having a POD designation has no right to sums on deposit during the lifetime of any party.
(h) Rights at death.(1) Except as otherwise provided in this section, on death of a party sums on deposit in a multiple-party account belong to the surviving party or parties. If two (2) or more parties survive and one is the surviving spouse of the decedent, the amount to which the decedent, immediately before death, was beneficially entitled under subsection (g) belongs to the surviving spouse. If two (2) or more parties survive and none is the surviving spouse of the decedent, the amount to which the decedent, immediately before death, was beneficially entitled under subsection (g) belongs to the surviving parties in equal shares, and augments the proportion to which each survivor, immediately before the decedent’s death, was beneficially entitled under subsection (g), and the right of survivorship continues between the surviving parties.
(2) In an account with a POD designation:
(i) On death of one of two (2) or more parties, the rights in sums on deposit are governed by subsection (h)(1).
(ii) On death of the sole party or the last survivor of two (2) or more parties, sums on deposit belong to the surviving beneficiary or beneficiaries. If two (2) or more beneficiaries survive, sums on deposit belong to them in equal and undivided shares, and there is no right of survivorship in the event of death of a beneficiary thereafter. If no beneficiary survives, sums on deposit belong to the estate of the last surviving party.
(3) Sums on deposit in a single-party account without a POD designation, or in a multiple-party account that, by the terms of the account, is without right of survivorship, are not affected by death of a party, but the amount of which the decedent, immediately before death, was beneficially entitled under subsection (g) herein is transferred as part of the decedent’s estate. A POD designation in a multiple-party account without right of survivorship is ineffective. For purposes of this section, designation of an account as a tenancy in common establishes that the account is without right of survivorship.
(4) The ownership right of a surviving party or beneficiary, or of the decedent’s estate, in sums on deposit is subject to requests for payment made by a party before the party’s death, whether paid by the depository institution before or after death, or unpaid. The surviving party or beneficiary, or the decedent’s estate, is liable to the payee of an unpaid request for payment. The liability is limited to a proportionate share of the amount transferred under this section, to the extent necessary to discharge the request for payment.
(i) Alteration of rights. Rights at death of a party under subsection (h) are determined by the terms of the account at the death of the party. A party may alter the terms of the account by a notice signed by the party and given to the depository institution to change the terms of the account or to stop or vary payment under the terms of the account. To be effective, the notice must be received by the financial institution during the party’s lifetime. A right of survivorship, arising from the express terms of the account, subsection (h), or a POD designation, may not be altered by will.
(j) Accounts and transfers nontestamentary. A transfer resulting from the application of subsection (h) is effective by reason of the terms of the account involved and this section and is not testamentary or subject to estate administration.
Part III. Protection of Depository Institutions
(k) Authority of depository institution. A depository institution may enter into a contract of deposit for a multiple-party account to the same extent it may enter into a contract of deposit for a single-party account, and may provide for a POD designation in either a single-party account or a multiple-party account. A depository institution need not inquire as to the source of a deposit to an account or as to the proposed application of a payment from an account.
(l) Payment on multiple-party account. A depository institution, on request, may pay sums on deposit in a multiple-party account to:
(1) One or more of the parties, whether or not another party is disabled, incapacitated, or deceased when payment is requested and whether or not the party making the request survives another party; or
(2) The personal representative, if any, or, if there is none, the heirs or devisees of a deceased party if proof of death is presented to the depository institution showing that the deceased party was the survivor of all other persons named on the account either as a party or beneficiary, unless the account is without right of survivorship under subsection (h).
(m) Payment on POD designation. A depository institution, on request, may pay sums on deposit in an account with a POD designation to:
(1) One or more of the parties, whether or not another party is disabled, incapacitated, or deceased when the payment is requested and whether or not a party survives another party;
(2) The beneficiary or beneficiaries, if proof of death is presented to the depository institution showing that the beneficiary or beneficiaries survived all persons named as parties; or
(3) The personal representative, if any, or, if there is none, the heirs or devisees of a deceased party, if proof of death is presented to the depository institution showing that the deceased party was the survivor of all other persons named on the account either as a party or beneficiary.
(n) Payment to designated agent. A depository institution, on request of an agent under a power of attorney or other agency designation for an account, may pay to the agent sums on deposit in the account, whether or not a party is disabled, incapacitated, or deceased when the request is made or received, and whether or not the authority of the agent terminates on the disability or incapacity of a party.
(o) Payment to minor. If a depository institution is required or permitted to make payment pursuant to this chapter to a minor designated as a beneficiary, payment may be made pursuant to the Uniform Transfers to Minors Act.
(p) Discharge.(1) Payment made pursuant to this section in accordance with the terms of the account discharges the depository institution from all claims for amounts so paid, whether or not the payment is consistent with the beneficial ownership of the account as between parties, beneficiaries, or their successors. Payment may be made whether or not a party, beneficiary, or agent is disabled, incapacitated, or deceased when payment is requested, received, or made.
(2) Protection under this section does not extend to payments made after a depository institution has received written notice from a party, or from the personal representative, surviving spouse, or heir or devisee of a deceased party, to the effect that payments in accordance with the terms of the account, including one having an agency designation, should not be permitted, and the depository institution has had a reasonable opportunity to act on it when the payment is made. Unless the notice is withdrawn by the person giving it, the successor of any deceased party must concur in request for payment if the depository institution is to be protected under this section. Unless a depository institution has been served with process in an action or proceeding, no other notice or other information shown to have been available to the depository institution affects its right to protection under this section.
(3) A depository institution that receives written notice pursuant to this section or otherwise has reason to believe that a dispute exists as to the rights of the parties may refuse, without liability, to make payments in accordance with the terms of the account.
(4) Protection of a depository institution under this section does not affect the rights of parties in disputes between themselves or their successors concerning the beneficial ownership of sums on deposit in accounts or payments made from accounts.
(q) Set-off. Without qualifying any other statutory right to set-off or lien and subject to any contractual provision, if a party is indebted to a depository institution, the institution has a right to set-off against the account. The amount of the account subject to set-off is the proportion to which the party is, or immediately before death was, beneficially entitled under subsection (g) or, in the absence of proof of that proportion, an equal share with all parties.
History of Section. P.L. 2008, ch. 295, § 1.
Any deposit evidenced by a passbook in a regulated institution may be pledged by delivery of the passbook to the pledgee, with an order for its transfer; but this pledge shall not be effective to secure the deposit against any person other than the pledgor or his or her executor or administrator, unless an actual transfer of the deposit has been made upon the books of the regulated institution or the order for the transfer has been disclosed to, and a copy filed with, the regulated institution holding the deposit.
History of Section. P.L. 1995, ch. 82, § 47.
When any person to whom a passbook, share certificate, membership certificate, stock certificate, deposit certificate, or other form of investment contract has been issued by any regulated institution, or by any insured-deposit-taking institution organized under the laws of the United States, states in writing, under oath, to the regulated institution or insured-deposit-taking institution organized under the laws of the United States that issued the book, certificate, or other form of investment contract, that the book, certificate, or other form of investment contract has not been hypothecated, but has been lost or destroyed, and shall make written application for the issue of a duplicate book, certificate, or other form of investment contract, then the regulated institution or insured-deposit-taking institution organized under the laws of the United States may issue a duplicate book, certificate, or other form of investment contract, and upon delivery, the regulated institution or insured-deposit-taking institution organized under the laws of the United States shall be discharged from all liability on account of the issue of the original book, certificate, or other form of investment contract. References in this section to an issuing regulated institution or insured-deposit-taking institution organized under the laws of the United States shall be taken to include any successor regulated institution or insured-deposit-taking institution organized under the laws of the United States.
History of Section. P.L. 1995, ch. 82, § 47; P.L. 1997, ch. 98, § 8.
Every regulated institution shall provide for charge-free savings accounts to persons aged seventeen (17) years or less; provided, however, that the provisions of this section shall not apply to those accounts having a balance of five hundred dollars ($500) or more.
History of Section. P.L. 1995, ch. 82, § 47.
All regulated institutions shall, unless they have reason to doubt the validity of the identification, accept as sufficient identification for the cashing of checks and other banking transactions involving municipal, state, or federal funds in amounts less than seven hundred and fifty dollars ($750), duly authorized Rhode Island identification cards issued pursuant to the provision of § 3-8-6(b), the picture identification card issued by the division of elderly affairs, or an operator’s or chauffeur’s license issued pursuant to chapter 10 of title 31.
History of Section. P.L. 1995, ch. 82, § 47.
(a) All checks, drafts, or similar negotiable or non-negotiable instruments or orders of withdrawal that are drawn against funds held by a regulated institution, as defined in this title, shall clearly display on the face the month and year in which the account was opened. This section does not apply to temporary checks, drafts, similar negotiable or non-negotiable instruments, or orders of withdrawal.
(b) For the purposes of this section, the term “consumer deposit account” means a demand or other similar deposit account established and maintained by a natural person with a regulated institution and operated primarily for personal, family, or household purposes.
(c) No liability or penalty shall be imposed on any depositor, regulated institution, or printer for an unintentional failure to comply with this section.
History of Section. P.L. 1995, ch. 82, § 47.
Except as required by federal law, no regulated institution or other insured-deposit-taking institutions organized under the laws of the United States shall assess any penalty for early withdrawal from any time deposit account if the owner of the account has died or been declared mentally incompetent by a court of competent jurisdiction.
History of Section. P.L. 1995, ch. 82, § 47.
It shall be unlawful for any regulated institution or other insured-deposit-taking institution duly organized under the laws of the United States, to charge any service charge whatsoever for the holding of passbook savings deposits or accounts.
History of Section. P.L. 1995, ch. 82, § 47.
Any bank, credit union, or other financial institution doing business in this state shall display a notice that enumerates that there may be charges imposed by the institution of which the customer may not be aware.
History of Section. P.L. 1999, ch. 338, § 1.
Every president, director, officer, trustee, cashier, treasurer, teller, clerk, employee, or agent of any licensee licensed pursuant to chapter 14 of title 19, regulated institution, or other depository, who, without authority of the directors or trustees, issues or puts forth any certificate of deposit, draws any order or bill of exchange, makes any acceptance, assigns any note, bond, draft, bill of exchange, mortgage, judgment, or decree, or who makes any false entry in any book, report, or statement of the licensee, regulated institution, or other depository with intent in either case to injure or defraud the licensee, regulated institution, or other depository, or any company, corporation, or person, or to deceive any officer of the licensee, regulated institution, or other depository, the director of business regulation, or any agent appointed by the director to examine the affairs of that licensee, regulated institution, or other depository; and any person who with like intent aids or abets any officer, clerk, or agent in violation of this section, upon conviction, shall be fined not exceeding fifty thousand dollars ($50,000), or be imprisoned not exceeding twenty (20) years, or both.
History of Section. P.L. 1995, ch. 82, § 47; P.L. 2000, ch. 236, § 1.
Every president, director, officer, trustee, cashier, treasurer, teller, clerk, or agent of any regulated institution, insurance company, or other depository who embezzles, abstracts, purloins, or willfully misapplies any of the moneys, funds, or credits entrusted to the custody or care of the regulated institution, insurance company, or other depository, and any person who, with like intent, aids or abets any officer, clerk, or agent in violation of this section, upon conviction, shall be fined not exceeding two hundred fifty thousand dollars ($250,000), or be imprisoned not exceeding twenty (20) years, or both.
History of Section. P.L. 1995, ch. 82, § 47.
(a) Any person who purchases any goods, materials, or services, makes payment for that purchase by check, draft, or order for payment of money, and takes possession of the goods or materials, or has the benefit of the service, and who subsequently orders payment stopped on the check, draft, or order for payment, or who, with intent to defraud, makes, draws, utters, or delivers any check, draft, or order for the payment of money, in an amount not exceeding one thousand five hundred dollars ($1,500), upon any regulated institution or other depository, knowing at the time of making, drawing, uttering, or delivering that the maker or drawer has not sufficient funds in, or credit with, that regulated institution or other depository for the payment of that check, draft, or order, in full, upon its presentation, shall, upon conviction, be fined not more than five hundred dollars ($500), or be imprisoned not exceeding one year, or may be subjected to both fine and imprisonment.
(b) With regard to the purchase of any goods or materials, it shall not be in violation of this section if goods or materials are returned to the vendor within three (3) business days of the filing of the stop payment order.
(c) The word “credit” means an arrangement or understanding with the regulated institution or other depository for the payment of the check, draft, or order.
(d) Any person violating any of these provisions may be prosecuted and proceeded against in any judicial district or in any county in which the offense was committed, or in which the check, draft, or order was uttered or delivered.
History of Section. P.L. 1995, ch. 82, § 47; P.L. 2012, ch. 137, § 2; P.L. 2012, ch. 176, § 2.
(a) Any person who purchases any goods, materials, or services, pays for that purchase by check, draft, or order for payment of money, and takes possession of the item, and who subsequently orders payment stopped on the check, draft, or order for payment, or who, with intent to defraud, makes, draws, utters, or delivers any check, draft, or order for the payment of money, in an amount exceeding one thousand five hundred dollars ($1,500), upon any regulated institution or other depository, knowing at the time of making, drawing, uttering, or delivering that the maker or drawer has not sufficient funds in, or credit with, that regulated institution or other depository for the payment of the check, draft, or order, in full, upon its presentation, shall, upon conviction, be fined not more than two thousand dollars ($2,000), or be imprisoned not more than two (2) years, or may be subjected to both fine and imprisonment.
(b) With regard to the purchase of any goods or materials, it shall not be in violation of this section if goods or materials are returned to the vendor within three (3) business days of the filing of the stop payment order.
(c) The word “credit” means an arrangement or understanding with the regulated institution or other depository for the payment of the check, draft, or order.
(d) Any person violating any of these provisions may be prosecuted and proceeded against in any judicial district or in any county in which the offense was committed, or in which the check, draft, or order was uttered or delivered.
History of Section. P.L. 1995, ch. 82, § 47; P.L. 2012, ch. 137, § 2; P.L. 2012, ch. 176, § 2.
The following shall be prima facie evidence of intent to defraud within the meaning of §§ 19-9-24 and 19-9-25 as against the maker or drawer: the making, drawing, uttering, or delivering of a check, draft, or order for the payment of money upon any regulated institution or other depository, payment of which is refused by the drawee for the reason that the maker or drawer has not sufficient funds in, or credit with, the regulated institution or other depository for the payment of the check, draft, or order in full upon its presentation, or for the reason that the maker or drawer has stopped payment on a check, draft, or order for the payment of money for the purchase of any goods, materials or service; provided, however, that these shall not be prima facie evidence of intent to defraud if the maker or drawer shall pay the check, draft, or order, or deposit and leave with the drawee for its payment the amount due thereon within seven (7) days after the receipt of written notice from the payee by certified mail, return receipt requested, at the last address of the maker or drawer which is available in the records of the payee.
If the check, draft, or order has not been paid within seven (7) business days after the maker or drawer receives written notice by certified mail, return receipt requested, or if there is a return of the notice undelivered and the payee presents an affidavit containing facts within the payee’s own knowledge that the maker or drawer was not residing at the last address available in the records of the payee, the payee shall forthwith notify the prosecuting officer of the city or town where the check, draft, or order was written of that fact and the prosecuting officer shall prosecute all violations of §§ 19-9-24, 19-9-25, and 19-9-26 within ten (10) business days of the notice.
History of Section. P.L. 1995, ch. 82, § 47.
(a) Notwithstanding the provisions of § 19-9-24 or § 19-9-25, any person, natural or otherwise, who shall utilize any scheme, device, or artifice, commonly known as a check kite or check kiting, for the purposes of defrauding any regulated institution or other depository, any vendor of goods, materials, or services, or for the purpose of deception of any investor, potential investor, or purchaser as to the financial condition or status of that person, in an amount not exceeding one thousand dollars ($1,000), shall be fined not exceeding five hundred dollars ($500), or imprisoned not exceeding one year, or both.
(b) Notwithstanding the provisions of § 19-9-24 or § 19-9-25, any person, natural or otherwise, who shall utilize any scheme, device, or artifice, commonly known as a check kite or check kiting, for the purposes of defrauding any regulated institution or other depository or any vendor of goods, materials, or services, or for the purposes of deception of any investor, potential investor, or purchaser as to the financial condition or status of that person, in an amount exceeding one thousand dollars ($1,000), shall be fined not exceeding ten thousand dollars ($10,000), or imprisoned not exceeding ten (10) years, or both.
(c) For the purposes of this section, a “check kite” or “check kiting” means the practice of taking advantage of the time that elapses between the deposit or negotiation of a check, draft, or other negotiable instrument in one regulated institution or other depository and its collection or presentment in another regulated institution or other depository with the intent to defraud.
History of Section. P.L. 1995, ch. 82, § 47.
Any person who knowingly makes a false statement to any regulated institution, licensee or other depository respecting the financial condition of any person, firm, or corporation for the purpose of obtaining a loan from that regulated institution, licensee, or other depository, whether for that person’s own use or for the use of any other person, firm, or corporation, shall be punished by imprisonment for not less than six (6) months nor more than five (5) years.
History of Section. P.L. 1995, ch. 82, § 47.
Any person who knowingly makes a false statement to any regulated institution or other depository, or who knowingly executes, or attempts to execute, a scheme or artifice to defraud, or willingly overvalues any land, property, or security, for the purpose of influencing in any way the action of that regulated institution or other depository, whether for that person’s own use or for the use of any other person, firm, or corporation, in violation of this section, upon conviction thereof, shall be fined not exceeding two hundred fifty thousand dollars ($250,000), or be imprisoned not exceeding fifteen (15) years, or both. For the purposes of this section, the term “scheme or artifice to defraud” includes a scheme or artifice to deprive another of the intangible right of honest services.
History of Section. P.L. 1995, ch. 82, § 47.
(a) The attorney general is hereby empowered to bring an action in the name of the state in any court of competent jurisdiction for restraining orders and injunctive relief to restrain and enjoin violations or threatened violation of the provisions of §§ 19-9-23 and 19-9-29.
(b) If any person, firm, corporation, or other legal entity is alienating or disposing of property, or intends to alienate or dispose of property obtained as a result of a violation of §§ 19-9-23 and/or 19-9-29, or property that is traceable to this violation, the attorney general may commence a civil action in any court of competent jurisdiction:
(1) To enjoin the alienation or disposition of property; or
(2) For a restraining order to:
(i) Prohibit any person from withdrawing, transferring, removing, dissipating, or disposing of any of the property or property of equivalent value; and
(ii) Appoint a temporary receiver to administer the restraining order.
(c) A permanent or temporary injunction or restraining order shall be granted without bond. The court shall proceed as soon as practicable to the hearing and determination of an action and may, at any time before final determination, enter a restraining order or prohibition or take other action as is warranted to prevent a continuing and substantial injury to the state or to any person or class of persons for whose protection the action is brought.
History of Section. P.L. 1995, ch. 82, § 47.
Every person who willfully or maliciously instigates, makes, circulates, or transmits to another or others any statement, untrue in fact, derogatory to the financial condition or affecting the solvency or financial standing of any regulated institution or other insured-deposit-taking institution duly organized under the laws of the United States doing business in this state, or who counsels, aids, procures, or induces another to start, transmit, or circulate any statement or rumor, shall, upon conviction, be punished by imprisonment for a term not exceeding one year, or by a fine not exceeding five hundred dollars ($500), or by both fine and imprisonment.
History of Section. P.L. 1995, ch. 82, § 47.
(a) Every financial institution making loans within this state secured by an interest in real estate may require applicants for loans to disclose whether or not the applicant or applicants have been convicted of any degree of the crime of arson as described in chapter 4 of title 11 within ten (10) years prior to the date of application.
(b) A financial institution may use the existence of an arson conviction within ten (10) years of the application date as a reason to deny the application.
(c) Failure to disclose the existence of an arson conviction when requested upon a mortgage application shall be a misdemeanor punishable by a sentence of not more than one year imprisonment.
(d) The mortgage application form shall indicate the existence of a criminal penalty for failure to disclose a conviction for arson.
(e) For the purpose of this section, the term “applicant” means a natural person, trust, partnership, association, corporation, or other form of business organization; provided, however, that if the applicant is a trust, the beneficiaries of the trust shall be included, and if the applicant is a partnership, association, corporation, or other form of business organization, each member, director, shareholder owning more than twenty percent (20%) of the common stock issued by the corporation, and principal officer of the organization shall be included.
History of Section. P.L. 1995, ch. 63, § 1; P.L. 1998, ch. 244, § 1.
If any provision of this chapter or the application of this chapter to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter that can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable.
History of Section. P.L. 1995, ch. 82, § 47.
Every lending institution shall be subject to the provisions of § 27-5-3.2.
History of Section. P.L. 2002, ch. 112, § 2.
(a) For purposes of this section, “mortgage trigger lead” means a consumer report obtained pursuant to section 604(c)(1)(B) of the Fair Credit Reporting Act, 15 U.S.C. § 1681b, where the issuance of the report is triggered by an inquiry made with a consumer reporting agency in response to an application for credit. “Mortgage trigger lead” does not include a consumer report obtained by a lender or servicer that holds or services existing indebtedness of the applicant who is the subject of the report.
(b) With regard to a solicitation of a consumer for a residential mortgage loan, as defined in § 19-14.10-3, which solicitation is based, in whole or in part, on information contained in a mortgage trigger lead, the following shall be deemed to be a prohibited act or practice for purposes of §§ 19-4-12, 19-14-26 and 19-14.10-17:
(1) The failure to clearly and conspicuously state in the initial phase of the solicitation that the solicitor is not affiliated with the lender or broker with which the consumer initially applied;
(2) The failure to clearly and conspicuously state in the initial phase of the solicitation that the solicitation is based on personal information about the consumer that was purchased, directly or indirectly, from a consumer reporting agency without the knowledge or permission of the lender or broker with which the consumer initially applied;
(3) The failure, in the initial solicitation, to comply with the provisions of the federal Fair Credit Reporting Act relating to prescreening solicitations that use consumer reports, including the requirement to make a firm offer of credit to the consumer; or
(4) Knowingly or negligently using information from a mortgage trigger lead:
(i) To solicit consumers who have opted out of prescreened offers of credit under the federal Fair Credit Reporting Act; or
(ii) To place telephone calls to consumers who have placed their contact information on a federal or state “do-not-call” list.
(c) In addition to any other remedy provided by law, any lender or broker aggrieved by a prohibited act or practice under this section may bring an action in the superior court in which venue the lender or broker has an office to enjoin an act in violation of this section and recover damages. The court shall award damages in the amount of actual damages or one thousand dollars ($1,000) per violation, whichever is greater. In any successful action for injunctive relief or for damages, the court shall award the lender or broker attorneys’ fees and costs, including court costs.
(d) The director, or the director’s designee, may adopt reasonable rules and regulations for the implementation of the provisions of this section.
History of Section. P.L. 2015, ch. 200, § 1; P.L. 2015, ch. 202, § 1.
Any financial institution or credit union that is solvent may, subject to the approval of the director, or the director’s designee, liquidate and be closed by a vote of its stockholders owning two thirds (⅔) of its capital stock or, in the case of a mutually owned savings bank, two thirds (⅔) of its depositors or, in the case of credit unions, two thirds (⅔) of its members. For the purpose of closing the affairs of any financial institution or credit union, the directors shall submit a plan of liquidation to the director, or the director’s designee, for approval.
History of Section. P.L. 1995, ch. 82, § 48.
Whenever a vote is taken to go into liquidation, it shall be the duty of the board of directors or trustees to cause notice of this fact to be certified, under the seal of the financial institution or credit union, by its president, cashier, or treasurer, to the director, or the director’s designee. If the director, or the director’s designee, approves of the act of the financial institution or credit union, he or she shall certify the decision upon the certificate setting forth the vote of the financial institution or credit union. The financial institution or credit union shall then publish a notice setting forth the vote and notifying creditors to present their claims against the financial institution or credit union for payment, which notice shall be published once each week for eight (8) successive weeks in a newspaper of general circulation in which the financial institution or credit union is located.
History of Section. P.L. 1995, ch. 82, § 48.
During the period of the liquidation, the financial institution or credit union shall be subject to the same provisions provided in this title for the regulation of financial institutions or credit unions in the hands of receivers. Nothing in this chapter shall be construed to abridge the jurisdiction of the superior court sitting in equity over the financial institution or credit union.
History of Section. P.L. 1995, ch. 82, § 48.
Whenever the final dividend in liquidation shall be declared by any receiver or officer or agent of any financial institution or credit union, now or hereafter in the hands of a receiver or officer or agent for the purposes of liquidation, and two (2) years shall elapse from the time of the commencement of payment of that dividend, or whenever no dividend has been declared by the receiver of any insolvent financial institution or credit union within three (3) years of the commencement of receivership, it shall be lawful for any receiver or officer or agent, at any time thereafter, upon the allowance of his or her account by the superior court, or in the case of voluntary liquidation upon the allowance by the financial institution or credit union, and upon the order of the court or the financial institution or credit union, to pay over all the funds of the financial institution or credit union remaining in his or her hands, whether arising from unclaimed dividends or otherwise, to the general treasurer of this state to be deposited in the general treasury and to deliver all the remaining property of the financial institution or credit union to the general treasurer, upon his or her receipt for it and upon payment and delivery, the powers, obligations, duties, and liabilities of the receiver or officer or agent shall terminate.
History of Section. P.L. 1995, ch. 82, § 48.
It shall be the duty of the receiver or officer or agent at the time of payment to deliver to the general treasurer a list of the unclaimed deposits and dividends in the financial institution or credit union, with the names of the parties entitled to the deposits and dividends, as shown by the books of the financial institution or credit union. Any person claiming any unclaimed dividend shall be entitled to payment of any money in the general treasury not otherwise appropriated on producing evidence satisfactory to the general treasurer of the validity of his or her claim. The state controller is authorized and directed to draw his or her order or orders on the general treasurer in favor of the claimant on the presentation of the proper vouchers. It shall be the duty of the general treasurer to advertise each year, during the period of three (3) years from and after receiving the funds of the financial institution or credit union, a list of the unclaimed dividends in these financial institutions or credit unions and of the persons supposed to be entitled to the unclaimed dividends once a week, at least, for three (3) successive weeks, in one or more of the public newspapers published in the city or town in which the financial institution or credit union is located.
History of Section. P.L. 1995, ch. 82, § 48.
If any provision of this chapter or the application of this chapter to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter that can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable.
History of Section. P.L. 1995, ch. 82, § 48.
Any financial institution with capital stock chartered under the laws of this state and that is solvent may, upon notice to the director, or the director’s designee, pursuant to § 19-10.1-2 and subject to the approval of the director, or the director’s designee, convert to and become a general business corporation organized under the Rhode Island Business Corporation Act, chapter 1.2 of title 7, or another financial services entity chartered under the laws of the United States. As a condition of such conversion, such financial institution shall amend its agreement to form a financial institution, and where applicable for financial institutions organized before December 31, 1995, the articles of incorporation or the agreement of association of the financial institution, such amendment to be by a vote of its stockholders owning two-thirds (⅔) of its capital stock. For the purpose of closing out any depository or other exclusively financial institution related business activities authorized pursuant to § 19-3-1, the directors or trustees of the financial institution shall submit to the director, or the director’s designee, for approval either: (a) A plan, satisfactory in form and content to the director, or the director’s designee, for termination of any remaining depository or other transactions entered into under or pursuant to the powers, rights or activities reserved to financial institutions under § 19-3-1 and to which such entity remains to be a party; or (b) A certification, satisfactory in form and content to the director, or the director’s designee, to the effect that all such depository and other banking related transactions have been terminated for at least one (1) year. The director, or the director’s designee, shall, upon timely completion of its review and approval of the plan or certification, issue an approval and consent for the conversion. The conversion shall not require the prior liquidation of the subject entity. The corporate existence of such entity shall not terminate and such entity shall be deemed to be a continuation of the previously existing financial institution, absent any powers of deposit taking or other powers exclusively reserved to financial institutions under § 19-3-1. Upon issuance of the approval by the director, or the director’s designee, for such conversion, the secretary of state shall be so notified and the agreement to form, or for financial institutions organized before December 31, 1995, the articles of incorporation or the agreement of association, of the financial institution shall be amended by filing an amendment with the secretary of state so as to change the name of the entity to one containing words other than those identified with a financial institution and to otherwise conform its articles of incorporation or agreement of association with the requirements of a business corporation organized under the Rhode Island Business Corporation Act, chapter 1.2 of title 7.
History of Section. P.L. 2005, ch. 206, § 1; P.L. 2005, ch. 335, § 1; P.L. 2006, ch. 216, § 3.
Whenever a vote is taken pursuant to § 19-10.1-1 by a financial institution with capital stock to convert such financial institution into a corporation organized under the Rhode Island Business Corporation Act, it shall be the duty of the board of directors or trustees thereof to cause notice of this fact to be certified, under the seal of the financial institution by its president, cashier, or treasurer, to the director of the department of business regulation, or the director’s designee. If the director, or the director’s designee, approves of the act of conversion of the financial institution pursuant to § 19-10.1-1, he or she shall certify the decision and issue an approval upon the certificate setting forth the vote of the financial institution. The financial institution shall then publish a notice: (1) Setting forth the vote and the director’s approval; (2) Advising that the financial institution will no longer be subject to the jurisdiction of the Rhode Island department of business regulation sixty (60) days after commencement of the publication of such notice; and (3) Notifying depositors and all other interested parties having claims relating to the financial institution’s former status as a regulated banking entity to present those claims against the financial institution for payment. Such notice shall be published in twelve-point (12) bold-faced type once each week for four (4) successive weeks in the legal notices section of a newspaper of general circulation in which the financial institution is located.
History of Section. P.L. 2005, ch. 206, § 1; P.L. 2005, ch. 335, § 1.
Whenever any financial institution with capital stock coverts to and becomes a general business corporation pursuant to § 19-10.1-1 while holding upon deposit or for safekeeping any funds or other property of any description pursuant to its powers under § 19-3-1, such property shall, prior to the conversion to a general business corporation, be delivered to the general treasurer of this state as unclaimed property.
History of Section. P.L. 2005, ch. 206, § 1; P.L. 2005, ch. 335, § 1.
Whenever any financial institution or credit union shall petition the director for the appointment of a conservator of its property, assets, and affairs for the benefit of its depositors and other creditors, and in order to provide an opportunity for a reorganization of its affairs, the director is authorized and empowered to appoint himself or herself or a deputy a conservator of that financial institution or credit union, the petition in each case to be made in pursuance of a vote adopted by a majority of the board of directors or under the same conditions that could allow the director to petition the court for the appointment of a receiver.
History of Section. P.L. 1995, ch. 82, § 49.
If the director, at any time, deems it in the best interest of any financial institution or credit union or its creditors that the conservator appointed pursuant to § 19-11-1 shall be removed from office, the director may so order and may appoint a successor to that office.
History of Section. P.L. 1995, ch. 82, § 49.
Each conservator, with the approval of the director, may engage legal counsel and procure any other expert assistance and advice that the conservator considers necessary or desirable in the administration of the affairs of the financial institution or credit union, and with the same approval, may engage the employees and retain any of those officers and employees of the financial institution or credit union that he or she deems necessary or desirable.
History of Section. P.L. 1995, ch. 82, § 49.
(a) Each conservator, immediately after appointment and qualification, shall take and have possession and management of the property and business of the financial institution or credit union and thereafter shall take any action in the name and behalf of the financial institution or credit union necessary or desirable to carry on its business and to conserve its assets pending reorganization or the disposition of the assets as provided by law, all under the direction and control of the director, or the director’s designee.
(b) Immediately after taking possession of the property and business of the financial institution or credit union, the conservator shall give notice in writing of having taken possession to all persons holding or having possession of any assets of the financial institution or credit union and to all persons indebted to the financial institution or credit union. No financial institution, federally chartered institution, credit union, federal credit union, association, firm, or individual, having been notified of the appointment of the conservator or otherwise having knowledge of his or her appointment, shall have or acquire any lien or charge upon or against any of the property of the financial institution or credit union for any payment, advance, or clearance or any obligation thereafter made or incurred.
History of Section. P.L. 1995, ch. 82, § 49.
During the time that any conservator remains in charge of the property and affairs of any financial institution or credit union in accordance with the provisions of this chapter, the rights of creditors and all other parties in respect to bringing and prosecuting suits and proceedings against the financial institution or credit union and the conservator, except as otherwise provided in this chapter, shall be the same as if the conservator was a receiver of the property and affairs of that financial institution or credit union duly appointed and qualified in and by appropriate judicial proceedings instituted for that purpose.
History of Section. P.L. 1995, ch. 82, § 49.
(a) Each conservator, upon the terms and conditions and in accordance with the orders, rules and regulations, general and special, prescribed from time to time by the director, or the director’s designee, shall, so far as possible, collect all moneys and other assets due and payable to the financial institution or credit union and do all acts necessary to continue its business and to conserve its assets, and may sell or compound bad or doubtful claims and demands due to the financial institution or credit union.
(b) With the written authorization of the director, or the director’s designee, a conservator may, at any time, in the name and upon the credit of the financial institution or credit union, borrow money for any purpose and pledge and deliver to the lender the whole or any part of the property and assets of the financial institution or credit union as security for the repayment of any loan, and may sell all or any part of the real and personal property and other assets of the financial institution or credit union, and in the name of the financial institution or credit union, may take mortgages on real property from purchasers to secure the whole or part of the purchase price.
(c) The conservator may prosecute and defend suits and other proceedings at law and in equity to which the financial institution or credit union is a party.
(d) The conservator may execute, acknowledge, and deliver deeds, assignments, mortgages, releases, promissory notes, and other instruments that the conservator may consider necessary, proper, and desirable to effectuate any sales, pledges, or mortgages of real or personal property and any obligation to repay loans, any compromise, and any other transaction that may be performed or entered into by the conservator under the powers and authority that may be conferred upon him or her. All deeds and other instruments, so executed and delivered, shall be valid and effectual for all purposes to the same extent and with the same effect as if executed by officers of the financial institution or credit union by authority of its board of directors or stockholders.
(e) In addition to all powers and authority and duties specifically mentioned and provided in this chapter, each conservator shall have and exercise all the powers and authority and perform the duties that the director, by either general or special orders, shall prescribe.
History of Section. P.L. 1995, ch. 82, § 49.
The conservator and the conservator’s assistants shall be subject to the same penalties and liabilities to which they would be liable if the conservator were the receiver of a financial institution or credit union appointed in judicial proceedings in this state, including penalties and liabilities now established and which may be established by law. The conservator’s liability shall be limited to the assets of the financial institution or credit union except for fraud or malpractice by the conservator.
History of Section. P.L. 1995, ch. 82, § 49.
During the period of the continuance of any conservatorship provided for, the director, or the director’s designee, may require the conservator to set aside and make available for withdrawal, and permit withdrawal by depositors and other creditors, any amounts or proportions of their respective deposits or claims as the director, or the director’s designee, may order and direct. The director, or the director’s designee, may authorize the conservator in any case to receive and permit withdrawals of new deposits, subject to any rules, regulations, limitations, and dispositions as the director, or the director’s designee, shall prescribe.
History of Section. P.L. 1995, ch. 82, § 49.
Whenever the period of conservatorship provided for in this chapter has been terminated and the financial institution or credit union is permitted to resume business in accordance with this chapter, or whenever a receiver of the property of the financial institution or credit union has been appointed in accordance with law, the new deposits that may have been received shall be disposed of or held for the persons entitled to them in any manner that the director, or the director’s designee, shall prescribe, unless and except as the persons entitled to those deposits have withdrawn the deposits within fifteen (15) days after the conservator has given written notice to them of the opportunity to withdraw those deposits. The conservator shall give this written notice and opportunity at any time and in any manner that the director, or the director’s designee, shall prescribe.
History of Section. P.L. 1995, ch. 82, § 49.
The compensation of the conservator and of legal counsel, assistants, and other employees of the conservator and all other expenses incident to each conservatorship, including costs and expenses incurred by the director, or the director’s designee, in relation to the conservatorship, shall be fixed by the director, or the director’s designee, and paid from and out of the assets of the financial institution or credit union.
History of Section. P.L. 1995, ch. 82, § 49.
If the director, or the director’s designee, shall at any time be satisfied that the further continuance of any conservatorship is no longer necessary or desirable, the director, or the director’s designee, may terminate the conservatorship and direct the conservator to surrender possession of all property then in the conservator’s possession to the financial institution or credit union, and permit it to resume business, all upon the terms, conditions, restrictions, and limitations as the director, or the director’s designee, may prescribe.
History of Section. P.L. 1995, ch. 82, § 49.
Nothing in this chapter, and no appointment or continuance of a conservator under this chapter, shall abridge or affect, or be so construed as to abridge or affect, the right, power, and authority of the director, or the director’s designee, at any time to institute proceedings in accordance with law for the appointment of a receiver of any financial institution or credit union, or of the judicial authority to make appointment of a receiver upon request of the director, or the director’s designee, and if a receiver shall be appointed in this proceeding, the conservator, whenever the receiver shall have been appointed and qualified, shall immediately transfer and deliver to the receiver all property, books, and documents of all kinds then belonging to the financial institution or credit union.
History of Section. P.L. 1995, ch. 82, § 49.
If any provision of this chapter or the application of this chapter to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter that can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable.
History of Section. P.L. 1995, ch. 82, § 49.
(a) The director, or the director’s designee, is empowered immediately to take possession of any financial institution, credit union, or other licensee under this title and its assets if, upon examination, any financial institution or credit union, which has or has not invoked the conservatorship provisions or the voluntary liquidation provisions of this title, appears to be insolvent by reason of:
(1) The financial institution’s, credit union’s, or other licensee’s financial condition is such that the sum of the financial institution’s, credit union’s, or other licensee’s debts are greater than all of the financial institution’s, credit union’s, or other licensee’s property at a fair valuation, exclusive of property transferred, concealed, or removed with intent to hinder, delay, or defraud the financial institution’s, credit union’s, or other licensee’s creditors or because it is generally not paying or is unable to pay its debts as they become due; or
(2) The financial institution’s, credit union’s, or other licensee’s condition is such as to render the continuance of its business hazardous to the public or to those having funds in its custody; or
(3) The financial institution, credit union, or other licensee has failed to maintain adequate deposit insurance as required by this title; or
(4) The financial institution, credit union, or other licensee has failed to remedy unsafe or unsound practices in violation of a cease and desist order.
(b) The director may apply to the superior court for the appointment of the director, or one of the director’s deputies as receiver. In the case when a financial institution’s or credit union’s deposits are insured by the Federal Deposit Insurance Corporation, the National Credit Union Administration, or any other agency or instrumentality of the United States that insures the deposits of the financial institution or credit union, as a receiver or receivers of the financial institution, credit union, or other licensee, the receiver may request an injunction to restrain the financial institution, credit union, or other licensee under this title, in whole or in part, from further proceeding with its business, and the court shall have jurisdiction in equity of the application.
History of Section. P.L. 1995, ch. 82, § 50; P.L. 1998, ch. 441, § 13; P.L. 2022, ch. 338, § 2, effective June 29, 2022; P.L. 2022, ch. 339, § 2, effective June 29, 2022.
The court may appoint, without bond, the director, or one of the director’s deputies, or both, as the receiver or receivers to take possession of the property and effects of the financial institution or credit union, subject to any directions prescribed by the court, and this appointment shall vest in the receiver or receivers all the right, title and interest of the financial institution or credit union in and to its property and effects, and shall vacate and dissolve all attachments or liens thereon, created by, or obtained in, or pursuant to, any suit or proceeding at law or in equity against the financial institution or credit union that was begun within four (4) months before the appointment of the receiver or receivers.
History of Section. P.L. 1995, ch. 82, § 50.
The receiver, or receivers, are authorized to employ any clerical assistance as may be necessary, at the expense of the financial institution or credit union under receivership; but the duties of receivership shall be discharged by the receiver, or receivers, as part of their official duties. The receiver may appoint one or more special deputies to act for him or her, and may appoint clerks, assistants, agents, accountants, and legal counsel as he or she deems necessary. The receiver may grant powers of attorney to execute, acknowledge, and deliver all documents that may be necessary for the transfer of assets or assumption of liabilities. The compensation of the persons appointed by the receiver and the expenses of taking possession of the financial institution or credit union and conducting the receivership proceeding, shall be fixed by the receiver, and shall be paid out of the funds or assets of the financial institution or credit union.
History of Section. P.L. 1995, ch. 82, § 50.
When a receiver or receivers are appointed, the president or treasurer of the financial institution or credit union shall make a schedule of its property, and shall make oath that the schedule sets forth all of the property that the financial institution or credit union owns or is entitled to. The treasurer shall deliver the schedule to the receiver or receivers, who may at any time examine, under oath, the treasurer, board of directors, or trustees, or other officers, to determine whether all of the property that the financial institution or credit union owns or is entitled to has come into the hands of the receiver or receivers.
History of Section. P.L. 1995, ch. 82, § 50.
If any financial institution or credit union appears to have exceeded its powers or failed to comply with any provisions of law, the director may apply to the superior court for the county in which that financial institution or credit union is conducting its business for an injunction to restrain the financial institution or credit union, in whole or in part, from further proceeding with its business, and the court shall have jurisdiction in equity of the application.
History of Section. P.L. 1995, ch. 82, § 50.
It is hereby found as follows:
(1) Certain financial institutions or credit unions, whose deposits were previously insured by the Rhode Island Share and Deposit Indemnity Corporation, are presently unable to obtain adequate deposit insurance as required by § 19-4-10 (formerly § 19-11-9).
(2) As a result thereof, a proclamation of the governor dated January 1, 1991, declared a banking emergency under chapter 13 (formerly chapter 18) of this title with respect to certain of those financial institutions or credit unions pursuant to which operations of those financial institutions or credit unions have been suspended pending their obtaining adequate deposit insurance, and a number of them have obtained federal deposit insurance and have been permitted to resume operations.
(3) There remain more than twelve (12) financial institutions or credit unions subject to orders suspending their operations, which orders preclude approximately one hundred ninety thousand (190,000) members and/or depositors of these financial institutions or credit unions from having access to approximately three hundred thousand (300,000) separate accounts that in the aggregate total more than one billion dollars ($1,000,000,000).
(4) The inability of depositors in the remaining financial institutions or credit unions to withdraw their deposits has created hardships not only for those depositors and their families, but also for a broad sector of citizens and businesses in the state of Rhode Island that depend on payments from depositors for goods and services supplied to them.
(5) It is hereby determined to be necessary in order to preserve and restore liquidity to the economy of the state, to protect deposits of state funds in these financial institutions or credit unions, and to protect the health, safety and general welfare of the people of the state of Rhode Island, for the general assembly to exercise its constitutional and other powers to enact measures to achieve these essential public purposes by providing for the relief of persons affected by the suspension of withdrawals from the financial institutions or credit unions affected by the banking emergency by expediting access by depositors to funds and assets in these financial institutions or credit unions.
(6) The numbers of people, accounts, and funds adversely affected indicate that, without prompt state legislative action, there will be a serious negative impact on the health, safety, and general welfare of the people and the economy of the state, already weakened by current economic conditions.
This chapter shall, therefore, be deemed to be an exercise of the police powers of this state to achieve the essential public purpose of providing for the protection of the health, safety, and general welfare of the people of the state by amending the general laws of Rhode Island to grant priorities in distributions to depositors upon the liquidation of financial institutions or credit unions and to expedite receivership and other proceedings intended to make available to depositors and other affected parties funds and the value of assets in the affected financial institutions and credit unions.
History of Section. P.L. 1995, ch. 82, § 50.
(a) When the superior court assumes jurisdiction of a receivership proceeding with respect to a financial institution or credit union subject to the provisions of this title, the expenses and claims against the financial institution or credit union shall have priority in receiving distributions, including (without limitation) any assumption of liabilities out of the assets of the financial institution or credit union in the following order; except to the extent otherwise provided by subsection (b) of this section, pro rata among any class of claimants having priority until the members of the class have been paid or provided for in full before distribution to any junior class of claimants:
(1) Reasonable administrative expenses as allowed by the court in connection with the administration of the receivership estate, including (without limitation) payment of any loans, together with interest thereon, obtained by the receiver with the approval of the court to fund the operations of the receivership estate and the administration of the receivership proceeding, repayable only from the assets in the estate.
(2) Unsecured claims for wages earned by individuals who provided services as employees to the financial institution or credit union as provided in § 28-14-6.1, in amounts recommended by the receiver subject to the approval of the court.
(3) Subject to subsections (b) and (d) of this section, unsecured claims of depositors in the financial institution or credit union that does not have, or that has failed to obtain, federal deposit insurance; provided, however, that any such claim shall only have priority under this subsection to the extent that, if the financial institution or credit union had maintained insurance with the Federal Deposit Insurance Corporation and whether or not the financial institution or credit union would have been eligible to maintain insurance with the Federal Deposit Insurance Corporation, the deposit with respect to which the claim relates would have been an “insured deposit” as the term is defined in the Federal Deposit Insurance Corporation Act (12 U.S.C. § 1813(m)) as in effect as of December 31, 1990, and would have been covered by deposit insurance under the rules and regulations of the Federal Deposit Insurance Corporation in effect as of December 31, 1990. For the purpose of applying the preceding sentence, in the case of a credit union, all types of the credit union’s member share accounts, including regular shares, share certificates, and share draft accounts, except to the extent the accounts constitute equity ownership interests in the credit union under the terms of the charter or bylaws of the credit union, shall be deemed an insured deposit.
(4) Subject to subsections (b) and (d), unsecured claims of depositors in the financial institution or credit union that does not have, or that has failed to obtain, federal deposit insurance for its deposits, to the extent their deposit claims exceed amounts recovered under subsection (a)(3).
(5) Unsecured claims of any local, state, or federal taxing agency entitled by law to priority in distributions from any receivership estate, to the extent of that priority, in any amounts as shall be approved by the court.
(6) Unsecured claims of all general creditors and depositors of the financial institution or credit union to the extent not accorded priority pursuant to subsections (a)(1) through (a)(4), in any amounts as shall be approved by the court.
(b) Distributions entitled to priority under subsection (a)(3) and/or (a)(4) shall be reduced or limited to the extent that either of the following paragraphs apply:
(1) Any distribution to a depositor pursuant to subsection (a)(3) and/or (a)(4) shall be subject to any legally available setoff and reduction to the extent of any default on any debt of the depositor to the financial institution or credit union at the time of such distribution.
(2) Any distribution to a depositor entitled to priority pursuant to subsection (a)(3) and/or (a)(4) may be affected, reduced, or extended in time to the extent that the receiver may recommend, and the court may approve, a plan of distribution with respect to depositor claims entitled to priority that pays promptly (i) a subclass of the claims in full up to a stated amount for administrative convenience and (ii) if the receiver so recommends and the court approves, the stated amount to all other depositors entitled to priority under subsection (a)(3) and/or (a)(4) whose claims exceed the stated amount to provide partial and more timely relief for those depositors.
(c) The claim of a creditor that is secured by a mortgage, security interest, or lien on property in which the financial institution or credit union has an interest is a secured claim to the extent of the value of the estate’s interest in the property or to the extent of amounts subject to setoff, as the case may be, and is an unsecured claim to the extent that the value of the creditor’s interest or the amount so subject to setoff is less than the amount of the claim as approved by the court. Only the unsecured portion of the claim of the secured creditor shall participate in a distribution provided for in subsection (a) hereof.
(d) Notwithstanding the provisions of subsection (a)(3) and/or (a)(4) or the provisions of § 42-116-7(3)(i) and/or (3)(ii) or § 42-116-12, no priority shall be afforded under subsection (a)(3) and/or (a)(4) to the unsecured claims of any officer, director or employee of any financial institution or credit union or of the Rhode Island Share and Deposit Indemnity Corporation or any other person who, with knowledge of the actual or impending insolvency and/or the impending closing of a financial institution or credit union or of the actual or impending insolvency of and/or the actual or impending cessation of business by the Rhode Island Share and Deposit Indemnity Corporation, and for the purpose of avoiding the loss of funds and/or access to funds in any depository account in any insolvent financial institution or credit union, withdrew from any insolvent financial institution or credit union any amount of money within thirty (30) days prior to the closing of that financial institution or credit union by proclamation of the governor dated January 1, 1991.
History of Section. P.L. 1995, ch. 82, § 50.
In a receivership, or a conservatorship under chapter 11 of this title, of a financial institution or credit union whose deposits are insured by the Federal Deposit Insurance Corporation, the National Credit Union Administration or any other agency or instrumentality of the United States, the allowed expenses and claims against the financial institution or credit union shall have priority in receiving distributions out of the assets of the financial institution or credit union in the following order:
(1) The payment of costs and expenses of the administration of the receivership estate.
(2) The payment of claims for “deposits”, as that term is defined in 12 U.S.C. § 1813( l ), including, but not limited to, the claims of depositors in a mutual savings bank for return of their deposits.
(3) Unsecured claims of any local, state, or federal taxing authority entitled by law to priority in distribution from the receivership or conservatorship estate, to the extent of such priority.
(4) Claims of salaried employees of the financial institution or credit union for wages or salaries earned but unpaid as of the commencement of the receivership or conservatorship.
(5) Claims for all other general liabilities not specified herein.
(6) Claims otherwise proper that were not filed within the prescribed time.
(7) Claims for obligations expressly subordinated to deposits and general liability claims.
Any funds remaining shall be paid to the stockholders of the financial institution or credit union, or, in the case of a mutual financial institution in which there are no stockholders, to the depositors in proportion to the respective amounts of their stock or deposits.
Interest shall be given the same priority as the claim on which it is based, but no interest shall be paid on any claim until the principal of all claims within the same class has been paid or adequately provided for in full.
History of Section. P.L. 1995, ch. 82, § 50.
(a) In receivership proceedings under this chapter, distributions on account of priority claims described in § 19-12-7(a)(1), (a)(2), (a)(3) and/or (a)(4) shall be made to the persons or entities entitled to them as soon as sufficient funds are available to the receiver, subject, however, to § 19-12-7(b). The holders of claims entitled to priority under § 19-12-7(a)(2), (a)(3) and/or (a)(4) are relieved of the necessity of filing claims with the receiver.
(b)(1) On the recommendation of the receiver, the court may approve a sale or other transfer of all or any part of the assets of the financial institution or credit union for consideration sufficient to pay in full or in part the liabilities of the financial institution or credit union that are entitled to priority in distribution pursuant to § 19-12-7(a). The consideration for the transfer, whether in the form of immediate funds or the issuance of deferred obligations, as shall be distributed in accordance with § 19-12-7 in any manner and at any time or times as shall be recommended by the receiver, in a distribution plan as provided in the order of the court approving the transfer.
(2) If the transferee that assumes deposit liabilities of a financial institution or credit union entitled to priority under § 19-12-7(a)(3) and/or (a)(4) in a transfer so approved is a financial institution or credit union authorized by law to receive deposits, and its deposits, including the assumed deposits of the financial institution or credit union, are protected by federal deposit insurance, the court, on the recommendation of the receiver, may approve the transfer of assets and assumption of liabilities, in which case the priority claims of depositors whose claims were so assumed will be deemed to have been adequately provided for and the priority granted the claims satisfied. If the transferee is an entity, including any corporate entity specially chartered by the Rhode Island general assembly to acquire assets or assume any deposit liabilities of the financial institution or credit union in receivership under this chapter, that assumes all or part of the deposit liabilities of a financial institution or credit union not as deposits in an operating depository institution, but as liabilities to be paid out of the assets acquired, the court, based on the recommendation of the receiver and the best interests of the depositors whose priority claims are to be paid or assumed by the transferee, may approve the transfer and the transferee’s plan of distribution, including provisions therein that would be authorized under § 19-12-7(b), in which case the claims entitled to priority pursuant to § 19-12-7(a)(3) and/or (a)(4) shall be deemed to have been provided for and satisfied to the extent they have been assumed by the transferee.
(c) A transferee that assumes or pays any claim entitled to priority pursuant to § 19-12-7(a)(2), (a)(3) and/or (a)(4) pursuant to an order entered by the court under subsection (b) shall be subrogated to the claim and priority position of the employees and depositors whose claims have been so assumed or paid.
History of Section. P.L. 1995, ch. 82, § 50.
(a) The appointment of a temporary or permanent receiver pursuant to the provisions of this chapter, or the taking of possession of the financial institution or credit union and its assets by the director, or the director’s designee, whichever shall first occur, shall operate as a stay until further order of the court, applicable to all persons and entities, of:
(1) The commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the financial institution or credit union that was, or could have been, commenced before the commencement of the receivership under this chapter, or to recover a claim against the financial institution or credit union that arose before the commencement of the receivership pursuant to this chapter;
(2) The enforcement, against the financial institution or credit union or against property of the receivership estate, or a judgment obtained before the commencement of the receivership under this chapter;
(3) Any act to obtain possession of property of, or from, the receivership estate or to exercise control over property of the estate;
(4) Any act to create, perfect, or enforce any lien against property of the receivership estate;
(5) Any act to create, perfect, or enforce against property of the financial institution or credit union any lien to the extent that the lien secures a claim that arose before the commencement of the receivership under this title;
(6) Any act to collect, assess, or recover a claim against the financial institution or credit union that arose before the commencement of the receivership under this chapter; and
(7) The setoff of any debt owing to the financial institution or credit union that arose before the commencement of the receivership under this chapter against any claim against the financial institution or credit union.
(b) Nothing in this section shall be construed to prevent the issuance, employment, or enforcement of process in conjunction with any investigation by state or federal authorities.
History of Section. P.L. 1995, ch. 82, § 50.
(a) In addition to powers granted to the receiver pursuant to this chapter or any other law, a receiver appointed under this chapter shall have the power to reject any executory contract or unexpired lease of the financial institution or credit union.
(b) After notice and hearing, the receiver may abandon any property of the receivership estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate.
(c) On request of a party in interest, and after notice and a hearing, the court may order the receiver to abandon any property of the receivership estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate.
(d) Unless the court orders otherwise, any property scheduled pursuant to § 19-12-4 not otherwise administered at the time of the closing of the receivership proceeding is abandoned to the financial institution or credit union, subject to the receivership proceeding being reopened by the court to administer assets, to accord relief to the financial institution or credit union or for other cause.
(e) Unless the court orders otherwise, property of the receivership estate that is not abandoned under this section and that is not administered in the receivership proceeding remains property of the receivership estate.
History of Section. P.L. 1995, ch. 82, § 50.
(a) A receiver appointed pursuant to this chapter shall have, as of the commencement of the receivership proceeding, and without regard to any knowledge of the receiver or of any creditor, the rights and powers of, or may avoid any transfer of property of the financial institution or credit union or any obligation incurred by the financial institution or credit union that is voidable by:
(1) A creditor who extends credit to the financial institution or credit union at the time of the commencement of the receivership proceeding, and who obtains, at that time and with respect to that credit, a judicial lien on all property on which a creditor on a simple contract could have obtained a judicial lien, whether or not a creditor exists;
(2) A creditor who extends credit to the financial institution or credit union at the time of the commencement of the receivership proceeding, and obtains, at that time and with respect to that credit, an execution against the financial institution or credit union that is returned unsatisfied at that time, whether or not a creditor exists; or
(3) A bona fide purchaser of real property, other than fixtures, from the financial institution or credit union, against whom applicable law permits the transfer to be perfected, and obtains the status of a bona fide purchaser and has perfected the transfer at the time of the commencement of the receivership proceeding, whether or not a purchaser exists.
(b) The receiver may avoid any transfer of an interest of the financial institution or credit union in property or any obligation incurred by the financial institution or credit union that is voidable under any applicable law by a creditor holding an unsecured claim against the financial institution or credit union.
(c) Without limiting the provisions of subsection (a), the receiver shall be deemed a lien creditor as that term is defined in § 6A-9-301-(3) and a creditor as that term is defined in § 6-16-1 and shall have all the rights and powers accorded to the lien creditor or creditor by any provisions of applicable law.
(d) In the event that the receiver shall make any sale or other transfer of all or any part of the assets of the financial institution or credit union to any transferee, the status and the rights and powers accorded the receiver by virtue of the provisions of subsections (a) through (c) of this section shall automatically vest in the transferee with respect to the assets.
History of Section. P.L. 1995, ch. 82, § 50.
No agreement that tends to diminish or defeat the interest of the financial institution or credit union and any asset acquired by the receiver acting in a proceeding under this chapter or by any person or entity acquiring all or any of the interests or assets by a sale or other transfer approved by any order of the court entered in a receivership proceeding under this chapter, including (without limitation) loans made by the financial institution or credit union or any security therefor, shall be valid against the receiver or transferee unless the agreement (1) is in writing; (2) was executed by the financial institution or credit union and any person claiming an adverse interest thereunder, including the obligor, contemporaneously with the acquisition of the assets by the financial institution or credit union; (3) was approved by the governing body of the financial institution or credit union or its loan or other authorizing committee, which approval shall be reflected in the minutes of the board or committee; and (4) has been, continuously, from the time of its execution, an official record of the financial institution or credit union.
History of Section. P.L. 1995, ch. 82, § 50.
With respect to any financial institution or credit union to which a receivership proceeding is commenced pursuant to the provisions of this chapter, any member of its governing body or officer who votes or takes any action solely to approve or authorize the commencement of the proceeding or to accept service of citation or other process; to admit or cause to be admitted the allegations of any complaint or petition commencing the proceeding; or to consent to or join in the request for relief contained therein, shall be conclusively presumed to have taken the action in good faith, in the exercise of a reasonable business judgment, and in the best interests of the financial institution or credit union, its depositors, or other creditors.
History of Section. P.L. 1995, ch. 82, § 50.
The court having jurisdiction over any proceedings under this chapter shall have full power to shorten the time for scheduling hearings and giving notice thereof and to limit notice of creditors, depositors, and other parties in interest to newspaper publication or other means as it shall deem appropriate, given the exigencies of the proceeding, the number of parties to be given notice, and the expenses of providing that form of notice.
History of Section. P.L. 1995, ch. 82, § 50.
Any order or judgment of the court having jurisdiction of any receivership proceeding under this chapter that provides for a payment to employees and depositors that have priority under § 19-12-7(a)(2), (a)(3) and/or (a)(4) or a transfer of assets of the financial institution or credit union for a consideration that includes the payment or assumption of some or all of the liabilities of the financial institution or credit union to the employees or depositors shall be final and binding and not subject to reversal on appeal unless, prior to the consummation of the transfer, the court that entered the judgment shall, on motion of an aggrieved party in interest, grant a stay pending appeal conditioned upon the appellant filing a supersedeas bond in the full amount of the loss the employees and depositors may sustain in the event the order or judgment is upheld on appeal or the supreme court shall, after the motion has been denied by the superior court and prior to the consummation of the payment or transfer, grant a stay pending appeal conditioned upon the appellant filing a similarly conditioned supersedeas bond.
History of Section. P.L. 1995, ch. 82, § 50.
If any provision of this chapter or the application of this chapter to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter that can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable. This chapter shall be construed liberally in aid of its purpose and legislative findings.
History of Section. P.L. 1995, ch. 82, § 50.
The governor may proclaim that a banking emergency exists when it appears necessary to protect the public and the interests of those regulated institutions or of the shareholders, depositors, or other creditors of those regulated institutions. Thereupon, any or all of the regulated institutions shall be subject to special regulation by the director, until the governor, by like proclamation, declares the period of banking emergency terminated. Any action taken or order issued by the director in any of the following sections in this chapter shall, in each instance, be taken only with the approval of the governor.
History of Section. P.L. 1995, ch. 82, § 51.
During the period of a banking emergency, the director may, if deemed necessary for the protection of the public and of the interests of depositors and other creditors of any or all regulated institutions, order the regulated institutions to suspend or restrict, in whole or in part, the payment in currency, or by other means, of the liabilities of the regulated institutions to shareholders, depositors, and other creditors, except as hereinafter provided. The order shall become effective upon receipt by the regulated institutions of notice thereof, and shall continue in full force and effect during the period of banking emergency, until revoked or modified by the director. Whenever, in the judgment of the director, the condition of emergency, because of which the order was made, warrants action, the liability, the payment of which has been suspended or restricted, may be paid by the regulated institution, in whole or pro rata or in part, upon any terms and conditions and in any form as the director shall prescribe, provided that acceptance of any such payment, if and so far as not offered in legal tender, shall be optional with the person entitled to payment of that liability.
History of Section. P.L. 1995, ch. 82, § 51.
Cash deposits, called “new cash deposits”, received by any regulated institution after an order of the director issued under the provisions of this chapter suspending or restricting withdrawals of currency from that regulated institution, and while the order remains in force either in whole or in part, shall not be subject, by reason of the order, to any limitation or restriction as to payment or withdrawal in currency or otherwise, and shall be segregated and held or invested and used solely to meet the new cash deposit liability; provided, however, that the aggregate amount of cash representing those deposits shall be kept separately in cash, or on deposit in Federal Reserve banks, or invested in obligations of the United States, or as may otherwise be authorized from time to time by order of the Secretary of the Treasury of the United States or other constituted federal authority.
History of Section. P.L. 1995, ch. 82, § 51.
New deposits, other than new cash deposits, need not be segregated, but may be drawn against by check to the same extent and in the same manner as deposits existing prior to any order of the director, issued under the provisions of this chapter, and may also be drawn against under the terms of the order; provided, nevertheless, that new deposits made in any medium of exchange prescribed by the director under the provisions of this chapter shall be payable in the deposited medium of exchange, or the medium of exchange into which it may have been converted, and any such deposits may be withdrawn in whole or in part.
History of Section. P.L. 1995, ch. 82, § 51.
The director is further authorized to declare bank holidays with respect to any or all activities of any regulated institutions, whenever in the director’s judgment a declaration is required by the public interest. A bank holiday declared by the director under this section shall have the same effect, with respect to banking activities, as the appointment or proclamation of a legal holiday under the provisions of § 25-1-1.
History of Section. P.L. 1995, ch. 82, § 51.
All of the regulated institutions to which this chapter is applicable shall be permitted to conform to the requirements of any federal proclamation, law, or regulation.
History of Section. P.L. 1995, ch. 82, § 51.
Any person or regulated institution violating any order or any provision of any rule or regulation made by the director under the authority of this chapter, shall be punished by fine of not more than one thousand dollars ($1,000), or by imprisonment for not more than one year, or both.
History of Section. P.L. 1995, ch. 82, § 51.
Any costs and expenses incurred by the director in any exercise of the powers given under this chapter may be assessed by the director against the regulated institutions concerned and, when so assessed, shall be paid by those regulated institutions.
History of Section. P.L. 1995, ch. 82, § 51.
This chapter is declared to be an emergency measure, necessary for the immediate preservation of the public peace and safety, requiring the immediately effective enactment of legislation concerning the protection of deposits in regulated institutions.
History of Section. P.L. 1995, ch. 82, § 51.
In the interest of the protection of depositors in financial institutions or credit unions, the director is authorized to waive, in whole or in part, any provisions of this title relating to public hearings and/or public notice that would hinder or prevent the merger, consolidation, purchase of assets and assumption of liabilities, or other acquisition of a financial institution or credit union that is in danger of insolvency or that has been closed by the proclamation of a banking emergency in accordance with the provisions of this chapter. All waivers shall be made public as to the final decision or disposition within ninety (90) days after the waiver is granted.
History of Section. P.L. 1995, ch. 82, § 51.
The director, or the director’s designee, may adopt reasonable rules and regulations for the implementation and administration of the provisions of this chapter.
History of Section. P.L. 1995, ch. 82, § 51.
If any provision of this chapter or the application of this chapter to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter that can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable.
History of Section. P.L. 1995, ch. 82, § 51.
The provisions of this chapter shall control if in conflict with any other legislation.
History of Section. P.L. 1995, ch. 82, § 51.
Unless otherwise specified, the following terms shall have the following meanings throughout chapters 14, 14.1, 14.2, 14.3, 14.4, 14.6, 14.8, 14.10, and 14.11 of this title:
(1) “Bona fide employee” shall mean an employee of a licensee who works under the oversight and supervision of the licensee.
(2) “Check” means any check, draft, money order, personal money order, or other instrument for the transmission or payment of money. For the purposes of check cashing, travelers checks or foreign denomination instruments shall not be considered checks. “Check cashing” means providing currency for checks.
(3) “Check casher” means a person or entity who or that, for compensation, engages, in whole or in part, in the business of cashing checks.
(4) “Currency transmission” means engaging in the business of any of the following:
(i) Sale or issuance of payment instruments or stored value primarily for personal, family, or household purposes; or
(ii) Receiving money or monetary value for transmission or holding funds incidental to transmission within the United States or to locations abroad by any and all means, including payment instrument, stored value, wire, facsimile, or electronic transfer, primarily for personal, family, or household purposes. This includes maintaining control of virtual currency or transactions in virtual currency on behalf of others.
(5) “Deferred-deposit transaction” means any transaction, such as those commonly known as “payday loans,” “payday advances,” or “deferred-presentment loans,” in which a cash advance is made to a customer in exchange for the customer’s personal check or in exchange for the customer’s authorization to debit the customer’s deposit account and where the parties agree either that the check will not be cashed or deposited, or that the customer’s deposit account will not be debited until a designated future date.
(6) [Deleted by P.L. 2019, ch. 226, § 1 and P.L. 2019, ch. 246, § 1.]
(7) “Deliver” means to deliver a check to the first person who, in payment for the check, makes, or purports to make, a remittance of, or against, the face amount of the check, whether or not the deliverer also charges a fee in addition to the face amount and whether or not the deliverer signs the check.
(8) “Insurance premium finance agreement” means an agreement by which an insured, or prospective insured, promises to pay to an insurance premium finance company the amount advanced, or to be advanced, under the agreement to an insurer or to an insurance producer, in payment of a premium, or premiums, on an insurance contract, or contracts, together with interest and a service charge, as authorized and limited by this title.
(9) “Insurance premium finance company” means a person or entity engaged in the business of making insurance premium finance agreements or acquiring insurance premium finance agreements from other insurance premium finance companies.
(10)(i) “Lender” means any person who makes or funds a loan within this state with the person’s own funds, regardless of whether the person is the nominal mortgagee or creditor on the instrument evidencing the loan;
(ii) A loan is made or funded within this state if any of the following conditions exist:
(A) The loan is secured by real property located in this state;
(B) An application for a loan is taken by an employee, agent, or representative of the lender within this state;
(C) The loan closes within this state;
(D) A retail installment contract as defined herein is created;
(E) The loan solicitation is done by an individual with a physical presence in this state; or
(F) The lender maintains an office in this state;
(iii) The term “lender” shall also include any person engaged in a transaction whereby the person makes or funds a loan within this state using the proceeds of an advance under a line of credit over which proceeds the person has dominion and control and for the repayment of which the person is unconditionally liable. This transaction is not a table-funding transaction. A person is deemed to have dominion and control over the proceeds of an advance under a line of credit used to fund a loan regardless of whether:
(A) The person may, contemporaneously with, or shortly following, the funding of the loan, assign or deliver to the line of credit lender one or more loans funded by the proceeds of an advance to the person under the line of credit;
(B) The proceeds of an advance are delivered directly to the settlement agent by the line-of-credit lender, unless the settlement agent is the agent of the line-of-credit lender;
(C) One or more loans funded by the proceeds of an advance under the line of credit is purchased by the line-of-credit lender; or
(D) Under the circumstances, as set forth in regulations adopted by the director, or the director’s designee, pursuant to this chapter.
(11) “Licensee” means any person licensed under this chapter.
(12) “Loan” means any advance of money or credit including, but not limited to:
(i) Loans secured by mortgages;
(ii) Insurance premium finance agreements;
(iii) The purchase or acquisition of retail installment contracts or advances to the holders of those contracts;
(iv) Educational loans;
(v) Any other advance of money; or
(vi) Any transaction, such as those commonly known as “payday loans,” “payday advances,” or “deferred-presentment loans,” in which a cash advance is made to a customer in exchange for the customer’s personal check, or in exchange for the customer’s authorization to debit the customer’s deposit account, and where the parties agree either, that the check will not be cashed or deposited, or that the customer’s deposit account will not be debited, until a designated future date.
(13) “Loan broker” means any person or entity who or that, for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly, solicits, processes, negotiates, places, or sells a loan within this state for others in the primary market, or offers to do so. A loan broker shall also mean any person who is the nominal mortgagee or creditor in a table-funding transaction. A loan is brokered within this state if any of the following conditions exist:
(i) The loan is secured by real property located in this state;
(ii) An application for a loan is taken or received by an employee, agent, or representative of the loan broker within this state;
(iii) The loan closes within this state;
(iv) The loan solicitation is done by an individual with a physical presence in this state; or
(v) The loan broker maintains an office in this state.
(14) “Loan-closing services” means providing title services, including title searches, title examinations, abstract preparation, insurability determinations, and the issuance of title commitments and title insurance policies, conducting loan closings, and preparation of loan-closing documents when performed by, or under the supervision of, a licensed attorney, licensed title agency, or licensed title insurance company.
(15) “Loan solicitation” shall mean an effectuation, procurement, delivery and offer, or advertisement of a loan. Loan solicitation also includes providing or accepting loan applications and assisting persons in completing loan applications and/or advising, conferring, or informing anyone regarding the benefits, terms and/or conditions of a loan product or service. Loan solicitation does not include loan processing or loan underwriting as defined in this section. Loan solicitation does not include telemarketing that is defined, for purposes of this section, to mean contacting a person by telephone with the intention of collecting such person’s name, address, and telephone number for the sole purpose of allowing a mortgage loan originator to fulfill a loan inquiry.
(16) “Loan underwriting” shall mean a loan process that involves the analysis of risk with respect to the decision whether to make a loan to a loan applicant based on credit, employment, assets, and other factors, including evaluating a loan applicant against a lender’s various lending criteria for creditworthiness, making a determination for the lender as to whether the applicant meets the lender’s pre-established credit standards, and/or making a recommendation regarding loan approval.
(17) “Monetary value” means a medium of exchange, whether or not redeemable in fiat currency.
(18) “Mortgage loan” means a loan secured in whole, or in part, by real property located in this state.
(19) “Mortgage loan originator” has the same meaning set forth in § 19-14.10-3.
(20) “Nationwide Multistate Licensing System” means a system involving more than one state, the District of Columbia, or the Commonwealth of Puerto Rico and that is established to facilitate the sharing of regulatory information and the licensing, application, reporting, and payment processes, by electronic or other means, for mortgage lenders and loan brokers and other licensees required to be licensed under this chapter.
(21) “Natural person employee” shall mean any natural person performing services as a bona fide employee for a person or entity licensed under § 19-14-1 et seq., in return for a salary, wage, or other consideration, where such salary, wage, or consideration is reported by the licensee on a federal form W-2 payroll record. The term does not include any natural person or business entity performing services for a person licensed under the provisions of Rhode Island general laws in return for a salary, wage, or other consideration, where such salary, wage, or consideration is reported by the licensee on a federal form 1099.
(22) “Negative equity” means the difference between the value of an asset and the outstanding portion of the loan taken out to pay for the asset, when the latter exceeds the former amount.
(23) “Negotiates” shall mean, with respect to a loan, to confer directly with, or offer advice directly to, a loan applicant or prospective loan applicant for a loan product or service concerning any of the substantive benefits, terms, or conditions of the loan product or service.
(24) “Nonprofit organization” means a corporation qualifying as a 26 U.S.C. § 501(c)(3) nonprofit organization, in the operation of which no member, director, officer, partner, employee, agent, or other affiliated person profits financially other than receiving reasonable salaries if applicable.
(25) “Operating subsidiary” shall mean a majority-owned subsidiary of a financial institution or banking institution that engages only in activities permitted by the parent financial institution or banking institution.
(26) “Oversight and supervision of the licensee” shall mean that the licensee provides training to the employee, sets the employee’s hours of work, provides the employee with the equipment required to perform the employee’s duties, and supervises the services provided by the employee to the licensee.
(27) “Personal money order” means any instrument for the transmission or payment of money in relation to which the purchaser or remitter appoints, or purports to appoint, the seller as his or her agent for the receipt, transmission, or handling of money, whether the instrument is signed by the seller, or by the purchaser, or remitter, or some other person.
(28) “Primary market” means the market in which loans are made to borrowers by lenders, whether or not through a loan broker or other conduit.
(29) “Principal owner” means any person or entity who or that owns, controls, votes, or has a beneficial interest in, directly or indirectly, ten percent (10%) or more of the outstanding capital stock and/or equity interest of a licensee.
(30) “Processes” shall mean, with respect to a loan, any of a series of acts or functions, including the preparation of a loan application and supporting documents, performed by a person that leads to, or results in, the acceptance, approval, denial, and/or withdrawal of a loan application, including, without limitation, the rendering of services, including loan underwriting, obtaining verifications, credit reports or appraisals, communicating with the applicant and/or the lender or loan broker, and/or other loan processing and origination services, for consideration by a lender or loan broker. Loan processing does not include the following:
(i) Providing loan closing services;
(ii) Rendering of credit reports by an authorized credit reporting agency; and
(iii) Rendering of appraisal services.
(31) “Provisional employee” means a natural person who, pursuant to a written agreement between the natural person and a wholly owned subsidiary of a financial holding company, as defined in the Bank Holding Company Act of 1956 (12 U.S.C. § 1841 et seq.), as amended, a bank-holding company, savings-bank-holding company, or thrift-holding company, is an exclusive agent for the subsidiary with respect to mortgage loan originations and the subsidiary: (a) Holds a valid loan broker’s license; and (b) Enters into a written agreement with the director, or the director’s designee, to include:
(i) An “undertaking of accountability,” in a form prescribed by the director, or the director’s designee, for all of the subsidiary’s exclusive agents to include full-and-direct financial and regulatory responsibility for the mortgage loan originator activities of each exclusive agent as if said exclusive agent were an employee of the subsidiary;
(ii) A business plan, to be approved by the director, or the director’s designee, for the education of the exclusive agents, the handling of consumer complaints related to the exclusive agents, and the supervision of the mortgage loan origination activities of the exclusive agents; and
(iii) A restriction of the exclusive agents’ mortgage loan originators’ activities to loans to be made only by the subsidiary’s affiliated bank.
(32) “Remote location” means a location meeting the requirements of § 19-14-25(b) at which an employee of a licensee may provide services for the licensee notwithstanding that the location differs from the place of business named in the license or a branch certificate issued to the licensee.
(33) “Retail installment contract” means any security agreement negotiated or executed in this state, or under the laws of this state, including, but not limited to, any agreement in the nature of a mortgage, conditional sale contract, or any other agreement whether or not evidenced by any written instrument to pay the retail purchase price of goods, or any part thereof, in installments over any period of time and pursuant to which any security interest is retained or taken by the retail seller for the payment of the purchase price, or any part thereof, of the retail installment contract.
(34) “Sell” means to sell, to issue, or to deliver a check.
(35) “Servicing” means receiving a scheduled, periodic payment from a borrower, pursuant to the terms of a loan, including amounts for escrow accounts, and making the payments to the owner of the loan or other third party of principal and interest and other payments with respect to the amounts received from the borrower as may be required pursuant to the terms of the servicing loan documents or servicing contract. In the case of a home equity conversion mortgage or a reverse mortgage, servicing includes making payment to the borrower.
(36) “Simple interest” means interest computed on the principal balance outstanding immediately prior to a payment for one plus the actual number of days between payments made on a loan over the life of a loan.
(37) “Small loan” means a loan of less than five thousand dollars ($5,000), not secured by real estate, made pursuant to the provisions of chapter 14.2 of this title.
(38) “Small-loan lender” means a lender engaged in the business of making small loans within this state.
(39) “Stored value” means monetary value representing a claim against the issuer that is stored on an electronic or digital medium and is evidenced by an electronic or digital record, and that is intended and accepted for use as a means of redemption for money or monetary value or payment for goods or services. The term does not include stored value that is redeemable by the issuer exclusively in goods or services; stored value that is redeemable exclusively in goods or services limited to transactions involving a defined merchant or location or set of locations, such as a specific retailer or retail chain, college campus, or program points, miles, or other units issued in connection with a customer affinity or rewards program, even if there is a secondary market for the stored value.
(40) “Table-funding transaction” means a transaction in which there is a contemporaneous advance of funds by a lender and an assignment by the mortgagee or creditor of the loan to the lender.
(41) “Tangible net worth” means the aggregate assets of a licensee excluding all intangible assets, less liabilities, as determined in accordance with United States generally accepted accounting principles.
(42) “Third-party loan servicer” means a person or entity who or that, directly or indirectly, engages in the business of servicing a loan secured by residential real estate located in Rhode Island, for a personal, family, or household purpose, owed or due, or asserted to be owed or due, another, or a person or entity that owns the servicing rights to a loan secured by residential real estate located in Rhode Island whether or not that owner services the loan themselves or contracts with another person or entity for the servicing.
(43) “Virtual currency”:
(i) Means a digital representation of value that:
(A) Is used as a medium of exchange, unit of account, or store of value; and
(B) Is not legal tender, whether or not denominated in legal tender; and
(ii) Does not include:
(A) A transaction in which a merchant grants, as part of an affinity or rewards program, value that cannot be taken from or exchanged with the merchant for legal tender, bank credit, or virtual currency;
(B) A digital representation of value issued by or on behalf of a publisher and used solely within an online game, game platform, or family of games sold by the same publisher or offered on the same game platform;
(C) Native digital token used in a proprietary blockchain service platform; or
(D) A gift certificate; store gift card; general-use prepaid card; or loyalty, award, or promotional gift card, as these terms are defined in federal Regulation E, 12 C.F.R. § 1005.20(a), without giving effect to any exception as specified in 31 C.F.R. § 1010.100(kkk) or any card, code or device, or other device that can add funds to those products.
(44) “Writing” means hard-copy writing or electronic writing that meets the requirements of § 42-127.1-2(7).
History of Section. P.L. 1995, ch. 82, § 52; P.L. 1997, ch. 98, § 9; P.L. 2000, ch. 147, § 1; P.L. 2001, ch. 116, § 1; P.L. 2001, ch. 129, § 1; P.L. 2001, ch. 371, § 1; P.L. 2002, ch. 241, § 1; P.L. 2003, ch. 79, § 2; P.L. 2003, ch. 82, § 2; P.L. 2004, ch. 579, § 2; P.L. 2006, ch. 243, § 1; P.L. 2006, ch. 291, § 1; P.L. 2007, ch. 73, art. 16, § 1; P.L. 2007, ch. 244, § 1; P.L. 2007, ch. 251, § 2; P.L. 2008, ch. 261, § 1; P.L. 2008, ch. 452, § 1; P.L. 2009, ch. 148, § 1; P.L. 2009, ch. 160, § 1; P.L. 2010, ch. 56, § 1; P.L. 2010, ch. 64, § 1; P.L. 2010, ch. 239, § 2; P.L. 2014, ch. 106, § 3; P.L. 2014, ch. 125, § 3; P.L. 2014, ch. 487, § 1; P.L. 2014, ch. 522, § 1; P.L. 2015, ch. 82, § 10; P.L. 2015, ch. 105, § 10; P.L. 2015, ch. 250, § 1; P.L. 2015, ch. 268, § 1; P.L. 2016, ch. 512, art. 1, § 6; P.L. 2019, ch. 226, § 1; P.L. 2019, ch. 246, § 1; P.L. 2022, ch. 338, § 3, effective June 29, 2022; P.L. 2022, ch. 339, § 3, effective June 29, 2022; P.L. 2024, ch. 316, § 2, effective June 25, 2024; P.L. 2024, ch. 317, § 2, effective June 25, 2024.
Unless otherwise specified, the following terms shall have the following meanings throughout chapters 14, 14.1, 14.2, 14.3, 14.4, 14.6, 14.8, 14.10, and 14.11 of this title:
(1) “Bona fide employee” shall mean an employee of a licensee who works under the oversight and supervision of the licensee.
(2) “Check” means any check, draft, money order, personal money order, or other instrument for the transmission or payment of money. For the purposes of check cashing, travelers checks or foreign denomination instruments shall not be considered checks. “Check cashing” means providing currency for checks.
(3) “Check casher” means a person or entity who or that, for compensation, engages, in whole or in part, in the business of cashing checks.
(4) “Currency transmission” means engaging in the business of any of the following:
(i) Sale or issuance of payment instruments or stored value primarily for personal, family, or household purposes; or
(ii) Receiving money or monetary value for transmission or holding funds incidental to transmission within the United States or to locations abroad by any and all means, including payment instrument, stored value, wire, facsimile, or electronic transfer, primarily for personal, family, or household purposes. This includes maintaining control of virtual currency or transactions in virtual currency on behalf of others.
(5) [Deleted by P.L. 2025, ch. 373, § 1 and P.L. 2025, ch. 391, § 1.]
(6) [Deleted by P.L. 2019, ch. 226, § 1 and P.L. 2019, ch. 246, § 1.]
(7) “Deliver” means to deliver a check to the first person who, in payment for the check, makes, or purports to make, a remittance of, or against, the face amount of the check, whether or not the deliverer also charges a fee in addition to the face amount and whether or not the deliverer signs the check.
(8) “Insurance premium finance agreement” means an agreement by which an insured, or prospective insured, promises to pay to an insurance premium finance company the amount advanced, or to be advanced, under the agreement to an insurer or to an insurance producer, in payment of a premium, or premiums, on an insurance contract, or contracts, together with interest and a service charge, as authorized and limited by this title.
(9) “Insurance premium finance company” means a person or entity engaged in the business of making insurance premium finance agreements or acquiring insurance premium finance agreements from other insurance premium finance companies.
(10)(i) “Lender” means any person who makes or funds a loan within this state with the person’s own funds, regardless of whether the person is the nominal mortgagee or creditor on the instrument evidencing the loan;
(ii) A loan is made or funded within this state if any of the following conditions exist:
(A) The loan is secured by real property located in this state;
(B) An application for a loan is taken by an employee, agent, or representative of the lender within this state;
(C) The loan closes within this state;
(D) A retail installment contract as defined herein is created;
(E) The loan solicitation is done by an individual with a physical presence in this state; or
(F) The lender maintains an office in this state;
(iii) The term “lender” shall also include any person engaged in a transaction whereby the person makes or funds a loan within this state using the proceeds of an advance under a line of credit over which proceeds the person has dominion and control and for the repayment of which the person is unconditionally liable. This transaction is not a table-funding transaction. A person is deemed to have dominion and control over the proceeds of an advance under a line of credit used to fund a loan regardless of whether:
(A) The person may, contemporaneously with, or shortly following, the funding of the loan, assign or deliver to the line of credit lender one or more loans funded by the proceeds of an advance to the person under the line of credit;
(B) The proceeds of an advance are delivered directly to the settlement agent by the line-of-credit lender, unless the settlement agent is the agent of the line-of-credit lender;
(C) One or more loans funded by the proceeds of an advance under the line of credit is purchased by the line-of-credit lender; or
(D) Under the circumstances, as set forth in regulations adopted by the director, or the director’s designee, pursuant to this chapter.
(11) “Licensee” means any person licensed under this chapter.
(12) “Loan” means any advance of money or credit including, but not limited to:
(i) Loans secured by mortgages;
(ii) Insurance premium finance agreements;
(iii) The purchase or acquisition of retail installment contracts or advances to the holders of those contracts;
(iv) Educational loans; or
(v) Any other advance of money.
(vi) [Deleted by P.L. 2025, ch. 373, § 1 and P.L. 2025, ch. 391, § 1.]
(13) “Loan broker” means any person or entity who or that, for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly, solicits, processes, negotiates, places, or sells a loan within this state for others in the primary market, or offers to do so. A loan broker shall also mean any person who is the nominal mortgagee or creditor in a table-funding transaction. A loan is brokered within this state if any of the following conditions exist:
(i) The loan is secured by real property located in this state;
(ii) An application for a loan is taken or received by an employee, agent, or representative of the loan broker within this state;
(iii) The loan closes within this state;
(iv) The loan solicitation is done by an individual with a physical presence in this state; or
(v) The loan broker maintains an office in this state.
(14) “Loan-closing services” means providing title services, including title searches, title examinations, abstract preparation, insurability determinations, and the issuance of title commitments and title insurance policies, conducting loan closings, and preparation of loan-closing documents when performed by, or under the supervision of, a licensed attorney, licensed title agency, or licensed title insurance company.
(15) “Loan solicitation” shall mean an effectuation, procurement, delivery and offer, or advertisement of a loan. Loan solicitation also includes providing or accepting loan applications and assisting persons in completing loan applications and/or advising, conferring, or informing anyone regarding the benefits, terms and/or conditions of a loan product or service. Loan solicitation does not include loan processing or loan underwriting as defined in this section. Loan solicitation does not include telemarketing that is defined, for purposes of this section, to mean contacting a person by telephone with the intention of collecting such person’s name, address, and telephone number for the sole purpose of allowing a mortgage loan originator to fulfill a loan inquiry.
(16) “Loan underwriting” shall mean a loan process that involves the analysis of risk with respect to the decision whether to make a loan to a loan applicant based on credit, employment, assets, and other factors, including evaluating a loan applicant against a lender’s various lending criteria for creditworthiness, making a determination for the lender as to whether the applicant meets the lender’s pre-established credit standards, and/or making a recommendation regarding loan approval.
(17) “Monetary value” means a medium of exchange, whether or not redeemable in fiat currency.
(18) “Mortgage loan” means a loan secured in whole, or in part, by real property located in this state.
(19) “Mortgage loan originator” has the same meaning set forth in § 19-14.10-3.
(20) “Nationwide Multistate Licensing System” means a system involving more than one state, the District of Columbia, or the Commonwealth of Puerto Rico and that is established to facilitate the sharing of regulatory information and the licensing, application, reporting, and payment processes, by electronic or other means, for mortgage lenders and loan brokers and other licensees required to be licensed under this chapter.
(21) “Natural person employee” shall mean any natural person performing services as a bona fide employee for a person or entity licensed under § 19-14-1 et seq., in return for a salary, wage, or other consideration, where such salary, wage, or consideration is reported by the licensee on a federal form W-2 payroll record. The term does not include any natural person or business entity performing services for a person licensed under the provisions of Rhode Island general laws in return for a salary, wage, or other consideration, where such salary, wage, or consideration is reported by the licensee on a federal form 1099.
(22) “Negative equity” means the difference between the value of an asset and the outstanding portion of the loan taken out to pay for the asset, when the latter exceeds the former amount.
(23) “Negotiates” shall mean, with respect to a loan, to confer directly with, or offer advice directly to, a loan applicant or prospective loan applicant for a loan product or service concerning any of the substantive benefits, terms, or conditions of the loan product or service.
(24) “Nonprofit organization” means a corporation qualifying as a 26 U.S.C. § 501(c)(3) nonprofit organization, in the operation of which no member, director, officer, partner, employee, agent, or other affiliated person profits financially other than receiving reasonable salaries if applicable.
(25) “Operating subsidiary” shall mean a majority-owned subsidiary of a financial institution or banking institution that engages only in activities permitted by the parent financial institution or banking institution.
(26) “Oversight and supervision of the licensee” shall mean that the licensee provides training to the employee, sets the employee’s hours of work, provides the employee with the equipment required to perform the employee’s duties, and supervises the services provided by the employee to the licensee.
(27) “Personal money order” means any instrument for the transmission or payment of money in relation to which the purchaser or remitter appoints, or purports to appoint, the seller as his or her agent for the receipt, transmission, or handling of money, whether the instrument is signed by the seller, or by the purchaser, or remitter, or some other person.
(28) “Primary market” means the market in which loans are made to borrowers by lenders, whether or not through a loan broker or other conduit.
(29) “Principal owner” means any person or entity who or that owns, controls, votes, or has a beneficial interest in, directly or indirectly, ten percent (10%) or more of the outstanding capital stock and/or equity interest of a licensee.
(30) “Processes” shall mean, with respect to a loan, any of a series of acts or functions, including the preparation of a loan application and supporting documents, performed by a person that leads to, or results in, the acceptance, approval, denial, and/or withdrawal of a loan application, including, without limitation, the rendering of services, including loan underwriting, obtaining verifications, credit reports or appraisals, communicating with the applicant and/or the lender or loan broker, and/or other loan processing and origination services, for consideration by a lender or loan broker. Loan processing does not include the following:
(i) Providing loan closing services;
(ii) Rendering of credit reports by an authorized credit reporting agency; and
(iii) Rendering of appraisal services.
(31) “Provisional employee” means a natural person who, pursuant to a written agreement between the natural person and a wholly owned subsidiary of a financial holding company, as defined in the Bank Holding Company Act of 1956 (12 U.S.C. § 1841 et seq.), as amended, a bank-holding company, savings-bank-holding company, or thrift-holding company, is an exclusive agent for the subsidiary with respect to mortgage loan originations and the subsidiary: (a) Holds a valid loan broker’s license; and (b) Enters into a written agreement with the director, or the director’s designee, to include:
(i) An “undertaking of accountability,” in a form prescribed by the director, or the director’s designee, for all of the subsidiary’s exclusive agents to include full-and-direct financial and regulatory responsibility for the mortgage loan originator activities of each exclusive agent as if said exclusive agent were an employee of the subsidiary;
(ii) A business plan, to be approved by the director, or the director’s designee, for the education of the exclusive agents, the handling of consumer complaints related to the exclusive agents, and the supervision of the mortgage loan origination activities of the exclusive agents; and
(iii) A restriction of the exclusive agents’ mortgage loan originators’ activities to loans to be made only by the subsidiary’s affiliated bank.
(32) “Remote location” means a location meeting the requirements of § 19-14-25(b) at which an employee of a licensee may provide services for the licensee notwithstanding that the location differs from the place of business named in the license or a branch certificate issued to the licensee.
(33) “Retail installment contract” means any security agreement negotiated or executed in this state, or under the laws of this state, including, but not limited to, any agreement in the nature of a mortgage, conditional sale contract, or any other agreement whether or not evidenced by any written instrument to pay the retail purchase price of goods, or any part thereof, in installments over any period of time and pursuant to which any security interest is retained or taken by the retail seller for the payment of the purchase price, or any part thereof, of the retail installment contract.
(34) “Sell” means to sell, to issue, or to deliver a check.
(35) “Servicing” means receiving a scheduled, periodic payment from a borrower, pursuant to the terms of a loan, including amounts for escrow accounts, and making the payments to the owner of the loan or other third party of principal and interest and other payments with respect to the amounts received from the borrower as may be required pursuant to the terms of the servicing loan documents or servicing contract. In the case of a home equity conversion mortgage or a reverse mortgage, servicing includes making payment to the borrower.
(36) “Simple interest” means interest computed on the principal balance outstanding immediately prior to a payment for one plus the actual number of days between payments made on a loan over the life of a loan.
(37) “Small loan” means a loan of less than five thousand dollars ($5,000), not secured by real estate, made pursuant to the provisions of chapter 14.2 of this title.
(38) “Small-loan lender” means a lender engaged in the business of making small loans within this state.
(39) “Stored value” means monetary value representing a claim against the issuer that is stored on an electronic or digital medium and is evidenced by an electronic or digital record, and that is intended and accepted for use as a means of redemption for money or monetary value or payment for goods or services. The term does not include stored value that is redeemable by the issuer exclusively in goods or services; stored value that is redeemable exclusively in goods or services limited to transactions involving a defined merchant or location or set of locations, such as a specific retailer or retail chain, college campus, or program points, miles, or other units issued in connection with a customer affinity or rewards program, even if there is a secondary market for the stored value.
(40) “Table-funding transaction” means a transaction in which there is a contemporaneous advance of funds by a lender and an assignment by the mortgagee or creditor of the loan to the lender.
(41) “Tangible net worth” means the aggregate assets of a licensee excluding all intangible assets, less liabilities, as determined in accordance with United States generally accepted accounting principles.
(42) “Third-party loan servicer” means a person or entity who or that, directly or indirectly, engages in the business of servicing a loan secured by residential real estate located in Rhode Island, for a personal, family, or household purpose, owed or due, or asserted to be owed or due, another, or a person or entity that owns the servicing rights to a loan secured by residential real estate located in Rhode Island whether or not that owner services the loan themselves or contracts with another person or entity for the servicing.
(43) “Virtual currency”:
(i) Means a digital representation of value that:
(A) Is used as a medium of exchange, unit of account, or store of value; and
(B) Is not legal tender, whether or not denominated in legal tender; and
(ii) Does not include:
(A) A transaction in which a merchant grants, as part of an affinity or rewards program, value that cannot be taken from or exchanged with the merchant for legal tender, bank credit, or virtual currency;
(B) A digital representation of value issued by or on behalf of a publisher and used solely within an online game, game platform, or family of games sold by the same publisher or offered on the same game platform;
(C) Native digital token used in a proprietary blockchain service platform; or
(D) A gift certificate; store gift card; general-use prepaid card; or loyalty, award, or promotional gift card, as these terms are defined in federal Regulation E, 12 C.F.R. § 1005.20(a), without giving effect to any exception as specified in 31 C.F.R. § 1010.100(kkk) or any card, code or device, or other device that can add funds to those products.
(44) “Writing” means hard-copy writing or electronic writing that meets the requirements of § 42-127.1-2(7).
History of Section. P.L. 1995, ch. 82, § 52; P.L. 1997, ch. 98, § 9; P.L. 2000, ch. 147, § 1; P.L. 2001, ch. 116, § 1; P.L. 2001, ch. 129, § 1; P.L. 2001, ch. 371, § 1; P.L. 2002, ch. 241, § 1; P.L. 2003, ch. 79, § 2; P.L. 2003, ch. 82, § 2; P.L. 2004, ch. 579, § 2; P.L. 2006, ch. 243, § 1; P.L. 2006, ch. 291, § 1; P.L. 2007, ch. 73, art. 16, § 1; P.L. 2007, ch. 244, § 1; P.L. 2007, ch. 251, § 2; P.L. 2008, ch. 261, § 1; P.L. 2008, ch. 452, § 1; P.L. 2009, ch. 148, § 1; P.L. 2009, ch. 160, § 1; P.L. 2010, ch. 56, § 1; P.L. 2010, ch. 64, § 1; P.L. 2010, ch. 239, § 2; P.L. 2014, ch. 106, § 3; P.L. 2014, ch. 125, § 3; P.L. 2014, ch. 487, § 1; P.L. 2014, ch. 522, § 1; P.L. 2015, ch. 82, § 10; P.L. 2015, ch. 105, § 10; P.L. 2015, ch. 250, § 1; P.L. 2015, ch. 268, § 1; P.L. 2016, ch. 512, art. 1, § 6; P.L. 2019, ch. 226, § 1; P.L. 2019, ch. 246, § 1; P.L. 2022, ch. 338, § 3, effective June 29, 2022; P.L. 2022, ch. 339, § 3, effective June 29, 2022; P.L. 2024, ch. 316, § 2, effective June 25, 2024; P.L. 2024, ch. 317, § 2, effective June 25, 2024; P.L. 2025, ch. 373, § 1, effective January 1, 2027; P.L. 2025, ch. 391, § 1, effective January 1, 2027.
(a) No person shall engage within this state in the business of: (1) Making or funding loans or acting as a lender or small loan lender; (2) Brokering loans or acting as a loan broker; (3) Providing currency transmission for a fee or other consideration; (4) Cashing checks for a fee or other consideration, which includes any premium charged for the sale of goods in excess of the cash price of the goods; (5) Providing debt-management services; (6) Performing the duties of a mortgage-loan originator; (7) Servicing a loan, directly or indirectly, as a third-party loan servicer without first obtaining a license or registration from the director or the director’s designee. The licensing requirement for any person providing debt-management plans shall apply to all persons, without regard for state of incorporation or a physical presence in this state, who initiate or service debt-management plans for residents of this state. Special exemptions from licensing for each activity are contained in other chapters in this title.
(b) No lender or loan-broker licensee shall permit an employee to act as a mortgage loan originator without first verifying that the originator is licensed under this chapter. No individual may act as a mortgage-loan originator without being licensed, or act as a mortgage-loan originator for more than one person. The license of a mortgage-loan originator is not effective during any period when the mortgage-loan originator is not associated with a lender or loan-broker licensee.
(c) Each loan negotiated, solicited, placed, found, or made without a license as required in subsection (a) shall constitute a separate violation for purposes of this chapter.
(d) No person engaged in the business of making or brokering loans in this state, whether licensed in accordance with the provisions of this chapter or exempt from licensing, shall accept applications, or referral of applicants from, or pay a fee to, any lender, loan broker, or mortgage-loan originator who is required to be licensed or registered under said sections but is not licensed to act as such by the director, or the director’s designee.
(e) No person, except those exempt pursuant to § 19-14.3-1, shall engage in the business of currency transmission in this state without a license as provided in this chapter.
(f) A currency transmission licensee may conduct its business in this state at one or more locations, directly or indirectly owned, or through one or more authorized delegates, or both, pursuant to the license granted under this chapter.
(g) A person is considered to be engaged in the business of currency transmission in this state if that person enters into a transaction with a person physically located in or resident in Rhode Island at the time the transaction is initiated.
History of Section. P.L. 1995, ch. 82, § 52; P.L. 2000, ch. 147, § 2; P.L. 2003, ch. 163, § 2; P.L. 2003, ch. 169, § 2; P.L. 2004, ch. 579, § 2; P.L. 2006, ch. 243, § 1; P.L. 2006, ch. 291, § 1; P.L. 2007, ch. 73, art. 16, § 1; P.L. 2007, ch. 244, § 1; P.L. 2014, ch. 487, § 1; P.L. 2014, ch. 522, § 1; P.L. 2019, ch. 226, § 1; P.L. 2019, ch. 246, § 1.
(a) The application for a license shall be in the form prescribed by the director and shall contain the name and address or addresses where the business of the applicant is located and if the applicant is a partnership, association, corporation, or other form of business organization, the names and addresses of each member, director, and principal officer thereof and any individual acting in the capacity of the manager of an office location. The application shall also include a description of the activities of the applicant, in such detail and for such periods as the director may require, as well as such further information as the director may require. The director may require a background investigation of each applicant for a license by means of fingerprint checks pursuant to §§ 19-14-7 and 42-14-14, utilizing the Federal Bureau of Investigation, or other agency as determined by the director for state and national criminal history record checks. If the applicant is a partnership, association, corporation, or other form of business organization, the director may require a background investigation by means of fingerprint checks on each member, director, trustee, or principal officer of the applicant and any individual acting in the capacity of the manager of an office location. The director will determine by rule those items of information appearing on a criminal records check that will constitute disqualifying information and therefore render the applicant ineligible for licensing under this chapter in accordance with the provisions of § 19-14-7. Each application for a license shall be accompanied by an investigation fee. The applicant at the time of making application shall pay to the department a fee equal to the annual license fee as provided in this chapter and the sum of one half (½) of the annual license fee as a fee for investigating the application. The license shall be continuous and the license fee shall cover the period through December 31 of each year. The annual license fee for any application approved after November 1 of any given year shall satisfy the annual license fee requirement through the end of the next succeeding calendar year ending December 31. The director, or the director’s designee, is authorized to participate in a multistate licensing system for licensees. The director may establish requirements for participation by an applicant for a license or a person licensed under this chapter. Any such requirements that may be established by the director shall be published on the website of the department of business regulation. Upon implementation, participation by an applicant for a license or by a person licensed under the provisions of this chapter shall be mandatory. The applicant may be required to pay an additional fee for a license or other participation in such multistate licensing system.
(b) [Reserved].
(c) [Reserved].
(d) Any license issued under the provisions of former § 5-66-2 shall remain in full force and effect until its expiration and shall be subject to the provisions of this chapter.
(e) An applicant for issuance of a mortgage loan originator license shall file with the director, or the director’s designee, evidence acceptable to the director, or the director’s designee, that said applicant has complied with the provisions of §§ 19-14.10-5, 19-14.10-7 and 19-14.10-8.
History of Section. P.L. 1995, ch. 82, § 52; P.L. 2004, ch. 579, § 2; P.L. 2006, ch. 243, § 1; P.L. 2006, ch. 291, § 1; P.L. 2007, ch. 73, art. 16, § 1; P.L. 2007, ch. 244, § 1; P.L. 2007, ch. 251, § 2; P.L. 2009, ch. 148, § 1; P.L. 2009, ch. 160, § 1; P.L. 2010, ch. 56, § 1; P.L. 2010, ch. 64, § 1; P.L. 2022, ch. 338, § 3, effective June 29, 2022; P.L. 2022, ch. 339, § 3, effective June 29, 2022; P.L. 2023, ch. 395, art. 2, § 5, effective June 27, 2023.
(a) Each licensee shall pay an annual license fee as follows:
(1) Each small-loan lender license and each branch certificate, the sum of five hundred fifty dollars ($550);
(2) Each loan-broker license and each branch certificate, the sum of five hundred fifty dollars ($550);
(3) Each lender license and each branch certificate, the sum of one thousand one hundred dollars ($1,100);
(4) Each currency transmission license, the sum of one thousand dollars ($1,000);
(5) Each check cashing license, the sum of three hundred sixty dollars ($360);
(6) [Deleted by P.L. 2019, ch. 226, § 1 and P.L. 2019, ch. 246, § 1.]
(7) Each registration to provide debt-management services, the sum of two hundred dollars ($200);
(8) Each mortgage-loan originator license, the sum of four hundred dollars ($400); and
(9) Each third-party loan-servicer license and each branch certificate, the sum of one thousand one hundred dollars ($1,100).
(b) Any licensee who shall not pay the annual fee by December 31 of each year shall be subject to a daily penalty of twenty-five dollars ($25) per day, subject to a maximum of seven hundred fifty dollars ($750). The penalty shall be paid to the director to, and for the use of, the state. The penalty may be waived for good cause by the director, or the director’s designee, upon written request.
History of Section. P.L. 1995, ch. 82, § 52; P.L. 2002, ch. 65, art. 13, § 19; P.L. 2004, ch. 579, § 2; P.L. 2006, ch. 243, § 1; P.L. 2006, ch. 291, § 1; P.L. 2007, ch. 73, art. 16, § 1; P.L. 2007, ch. 244, § 1; P.L. 2007, ch. 251, § 2; P.L. 2009, ch. 68, art. 12, § 1; P.L. 2014, ch. 487, § 1; P.L. 2014, ch. 522, § 1; P.L. 2019, ch. 88, art. 5, § 1; P.L. 2019, ch. 226, § 1; P.L. 2019, ch. 246, § 1.
Each licensee, licensed pursuant to an application for license filed after June 30, 1995, shall maintain the following minimum net worth to be evidenced in accordance with regulations promulgated by the director, or the director’s designee:
(1) Small loan lenders, the sum of twenty-five thousand dollars ($25,000);
(2) Loan brokers, the sum of ten thousand dollars ($10,000);
(3) Lenders, the sum of one hundred thousand dollars ($100,000);
(4) Currency transmission licensees:
(i) Shall maintain at all times a tangible net worth of the greater of one hundred thousand dollars ($100,000) or three percent (3%) of total assets for the first one hundred million dollars ($100,000,000), two percent (2%) of additional assets for one hundred million dollars ($100,000,000) to one billion dollars ($1,000,000,000), and five-tenths percent (0.5%) of additional assets for over one billion dollars ($1,000,000,000);
(ii) Tangible net worth must be demonstrated at initial application by the applicant’s most recent audited or unaudited financial statements pursuant to § 19-14-1;
(iii) Notwithstanding the foregoing provisions of this section, the director shall have the authority, for good cause shown, to exempt, in part or in whole, from the requirements of this section any applicant or licensee; and
(5) Third-party loan servicers, the sum of one hundred thousand dollars ($100,000).
History of Section. P.L. 1995, ch. 82, § 52; P.L. 2014, ch. 487, § 1; P.L. 2014, ch. 522, § 1; P.L. 2019, ch. 226, § 1; P.L. 2019, ch. 246, § 1; P.L. 2024, ch. 316, § 2, effective June 25, 2024; P.L. 2024, ch. 317, § 2, effective June 25, 2024.
(a) An applicant for any license shall file with the director, or the director’s designee, a bond to be approved by him or her in which the applicant shall be the obligor.
(b) The amount of the bond shall be as follows:
(1) Small-loan lenders, the sum of ten thousand dollars ($10,000);
(2) Loan brokers, the sum of twenty thousand dollars ($20,000);
(3) Lenders, the sum of fifty thousand dollars ($50,000);
(4) Currency transmission licensees, the sum of fifty thousand dollars ($50,000). If a currency transmission licensee shows that a surety bond is not generally available in this state at a commercially reasonable cost, the department may accept an alternative form of security;
(5) Check-cashing licensees who accept checks for collection with deferred payment or deferred deposit, the sum of fifty thousand dollars ($50,000) subject to a maximum of one hundred and fifty thousand dollars ($150,000) when aggregated with agent locations;
(6) [Deleted by P.L. 2019, ch. 226, § 1 and P.L. 2019, ch. 246, § 1.]
(7) [Deleted by P.L. 2019, ch. 226, § 1 and P.L. 2019, ch. 246, § 1.]
(8) Each debt-management services registrant, the amount provided in § 19-14.8-13;
(9) Each third-party loan servicer, the sum of fifty thousand dollars ($50,000); or
(10) Each debt collector, the sum of fifty thousand dollars ($50,000).
(c) The bond shall run to the state for the use of the state and of any person who may have cause of action against the obligor of the bond under the provisions of this title. The bond shall be perpetual and shall be conditioned upon the obligor faithfully conforming to, and abiding by, the provisions of this title and of all rules and regulations lawfully made, and the obligor will pay to the state and to any person any and all money that may become due or owing to the state or to the person from the obligor under, and by virtue of, the provisions of this title.
(d) [Deleted by P.L. 2019, ch. 226, § 1 and P.L. 2019, ch. 246, § 1.]
(e) The bond shall remain in force and effect until the surety is released from liability by the director, or the director’s designee, or until the bond is cancelled by the surety. The surety may cancel the bond and be released from further liability under the bond upon receipt by the director, or the director’s designee, of notice in a manner satisfactory to the director, including, but not limited to, for documentation purpose of the cancellation of the bond at least thirty (30) days in advance of the cancellation of the bond. The cancellation shall not affect any liability incurred or accrued under the bond before the termination of the thirty-day (30) period.
(f) Upon receipt of any notice of cancellation, the director may provide notice to the licensee requiring reinstatement or replacement of the bond. Unless the bond is reinstated by the surety, or a satisfactory replacement bond is filed with the director prior to the cancellation of the original bond, the license shall be suspended. The licensee will be provided notice of the suspension and may request a hearing within thirty (30) days. If the licensee does not request a hearing, the director, or director’s designee, shall issue an order revoking the license for failure to comply with this section.
History of Section. P.L. 1995, ch. 82, § 52; P.L. 2001, ch. 129, § 1; P.L. 2002, ch. 171, § 1; P.L. 2004, ch. 579, § 2; P.L. 2006, ch. 243, § 1; P.L. 2006, ch. 291, § 1; P.L. 2007, ch. 73, art. 16, § 1; P.L. 2007, ch. 244, § 1; P.L. 2014, ch. 106, § 3; P.L. 2014, ch. 125, § 3; P.L. 2014, ch. 487, § 1; P.L. 2014, ch. 522, § 1; P.L. 2019, ch. 226, § 1; P.L. 2019, ch. 246, § 1; P.L. 2022, ch. 338, § 3, effective June 29, 2022; P.L. 2022, ch. 339, § 3, effective June 29, 2022.
(a) Upon the filing of a completed application, the payment of fees and the approval of the bond, the director, or the director’s designee, shall commence an investigation of the applicant.
(b) After the investigation determines that a completed application has been filed, the director, or the director’s designee, shall approve the license applied for in accordance with the provisions of this chapter if he or she shall find:
That the financial responsibility, experience, character, and general fitness of the applicant, and of the applicant’s members and of the applicant’s officers, including the designated manager of record of a licensed location, if the applicant is a partnership, limited liability company or association, or of the officers including the designated manager of record of a licensed location, and directors and the principal owner or owners of the issued and outstanding capital stock, if the applicant is a corporation, are such as to command the confidence of the community and to warrant belief that the business will be operated honestly, fairly, and efficiently within the purposes of this title.
(c) A license provided pursuant to this title shall remain in full force and effect until it is surrendered by the licensee or revoked or suspended as provided by law. The licensee is, however, subject to suspension or revocation for failure to comply with any applicable provision of this title or regulation promulgated thereunder.
(d) If the director, or the director’s designee, rejects an application for a license, he or she shall notify the applicant, in writing, and advise the applicant of the reason for the denial of the application for license. When an application for a license is denied by the director, or the director’s designee, or withdrawn by the applicant, the director, or the director’s designee, shall return to the applicant the bond, but shall retain the investigation fee to cover the costs of investigating the application. The applicant may make written demand for hearing upon the director, or director’s designee, within thirty (30) days of the notice to determine the reasonableness of the action to deny the license.
(e) Any applicant or licensee aggrieved by the action of the director, or the director’s designee, in denying a completed application for a license shall have the right to appeal the action, order, or decision pursuant to chapter 35 of title 42.
History of Section. P.L. 1995, ch. 82, § 52; P.L. 2007, ch. 73, art. 16, § 1; P.L. 2007, ch. 244, § 1; P.L. 2009, ch. 148, § 1; P.L. 2009, ch. 160, § 1; P.L. 2012, ch. 65, § 2; P.L. 2012, ch. 145, § 2; P.L. 2014, ch. 106, § 3; P.L. 2014, ch. 125, § 3.
If the applicant has failed to provide the information requested by the department to complete the application, the director, or the director’s designee, shall notify the applicant, in writing, that the application shall be considered withdrawn if all information requested is not received within thirty (30) days of the notice. The notice shall specify what information is necessary for completion. The applicant may make a written demand within thirty (30) days for a hearing to determine the reasonableness of the director’s, or the director’s designee’s, action. The hearing shall be conducted pursuant to the Administrative Procedures Act, chapter 35 of title 42. If the applicant fails to provide the information or request a hearing within thirty (30) days from the notice, the application shall be withdrawn on the basis that it is incomplete.
History of Section. P.L. 1995, ch. 82, § 52; P.L. 2012, ch. 65, § 2; P.L. 2012, ch. 145, § 2; P.L. 2014, ch. 106, § 3; P.L. 2014, ch. 125, § 3.
The license or branch certificate shall contain any information that the director, or the director’s designee, shall require, including the type of activity authorized. In his or her discretion, the director, or the director’s designee, may substitute an electronic record as the confirmation of a license status in substitution for a license or branch certificate. When dealing with an applicant, or potential applicant, for a mortgage loan or when dealing with any person providing settlement services (as defined in the Real Estate Settlement Procedures Act, as amended, 12 U.S.C. § 2601 et seq., or the regulations promulgated thereunder from time to time), a mortgage loan originator shall disclose the mortgage loan originator’s nationwide mortgage licensing system unique identification number upon request to the applicant, or potential applicant, and the fact that the mortgage loan originator is licensed by this state.
History of Section. P.L. 1995, ch. 82, § 52; P.L. 2007, ch. 73, art. 16, § 1; P.L. 2007, ch. 244, § 1; P.L. 2009, ch. 148, § 1; P.L. 2009, ch. 160, § 1; P.L. 2014, ch. 106, § 3; P.L. 2014, ch. 125, § 3; P.L. 2016, ch. 512, art. 1, § 6.
(a) Every licensee shall appoint, and thereafter maintain, in this state a resident agent with authority to accept process for the licensee in this state, including the process of garnishment.
(1) The appointment shall be filed with the director, or the director’s designee, electronically through the Nationwide Multistate Licensing System. The designation of an agent shall provide all contact information, including the business address, street, and number, if any, of the resident agent. Thereafter, if the resident agent changes his or her business address or other contact information, the licensee shall, within ten (10) days after any change, file electronically through the Nationwide Multistate Licensing System notice of the change setting forth the agent’s current business address or other contact information.
(2) If the resident agent dies, resigns, or leaves the state, the licensee shall make a new appointment and file the new appointment electronically through the Nationwide Multistate Licensing System. The original designation shall not be revoked until new appointment shall have been given to some other competent person resident in this state and filed with the department.
(3) Service of process upon the resident agent shall be deemed sufficient service upon the licensee.
(4) Any licensee who fails to appoint a resident agent and file the appointment electronically through the Nationwide Multistate Licensing System, or fails to replace a resident agent for a period of thirty (30) days from vacancy, shall be liable for a penalty not exceeding five hundred dollars ($500) and shall be subject to suspension or revocation of the license.
(5) Upon the filing of any appointment required by this section, a fee of twenty-five dollars ($25.00) shall be paid to the director for the use of the state.
(6) Any licensee that is a corporation and complies with the provisions of chapter 1.2 of title 7 is exempt from the filing requirements of this section. Any licensee that is a limited partnership or limited liability company and complies with the provisions of chapters 13.1 and 16 of title 7 is exempt from the requirements of this section.
(b) Any process, including the process of garnishment, may be served upon the director, or the director’s designee, as agent of the licensee in the event that no resident agent can be found upon whom service can be made, or in the event that the licensee has failed to designate a resident agent as required, and process may be served by leaving a copy of the process with a fee of twenty-five dollars ($25.00) which shall be included in the taxable costs of the suit, action, or proceeding, in the hands of the director, or the director’s designee. This manner of service upon the licensee shall be sufficient, provided that notice of service and a copy of the process shall be immediately sent by certified mail by the plaintiff, or the plaintiff’s attorney of record, to the licensee at the latest address filed with the director, or the director’s designee. If the licensee has not filed his or her address pursuant to this chapter, notice of service shall be given in any manner that the court in which the action is pending may order as affording the licensee reasonable opportunity to defend the action or to learn of the garnishment. Nothing contained in this section shall limit or affect the right to serve process upon a licensee in any other manner now or hereafter permitted by law.
History of Section. P.L. 1995, ch. 82, § 52; P.L. 2005, ch. 36, § 18; P.L. 2005, ch. 72, § 18; P.L. 2014, ch. 106, § 3; P.L. 2014, ch. 125, § 3; P.L. 2016, ch. 512, art. 1, § 6; P.L. 2022, ch. 338, § 3, effective June 29, 2022; P.L. 2022, ch. 339, § 3, effective June 29, 2022; P.L. 2023, ch. 395, art. 2, § 5, effective June 27, 2023.
No license shall be transferable or assignable. A change in ownership of less than twenty-five percent (25%) of the voting stock or equity interests of a licensee shall not be considered a transfer or assignment of the license. A change in ownership of twenty-five percent (25%) or more of the voting stock or equity interests shall require notification to the director within fifteen (15) days of the change in ownership. Change in ownership application procedures, including reasonable response time requirements, shall be established by regulations promulgated by the director, or the director’s designee.
History of Section. P.L. 1995, ch. 82, § 52.
(a) Additional places of business may be maintained under the same license upon written application to the director, or the director’s designee, for the establishment of an additional branch office. A separate application must be filed for each additional branch office being requested. At the time of the application, the licensee shall pay to, and for the use of, the state an investigation fee as provided for in § 19-14-3. Upon the filing of the application, the director, or the director’s designee, shall investigate the facts, and if he or she finds that the requirements for licensure have been met, the director, or the director’s designee, shall grant authority for the operation of the business under the license at the branch location. If the director, or the director’s designee, shall not so find, he or she shall deny the licensee permission to establish the branch location in a manner consistent with the licensing application process. Upon approval of a branch location request, the licensee shall pay an additional annual licensing fee for each branch location in the manner consistent with the licensing application process.
(b) Whenever a licensee wishes to change his or her place of business or branch location to a street address other than that designated in the license, the licensee shall notify the director, or the director’s designee, in the manner directed by the director, or the director’s designee, prior to conducting business at that location. Unless the director, or the director’s designee, finds that the new location is not in the best interests of the public, the director, or the director’s designee, will reflect the change in the records of the department. At the time of notification, the licensee shall pay to the state the sum of fifty dollars ($50.00) as a processing fee.
(c) No licensee shall transact the business provided for by this chapter under any other name than that named in the license or branch certificate. Whenever a licensee shall wish to change the name, the licensee shall make written application to the director, or the director’s designee. If the director, or the director’s designee, shall find that the change of name is appropriate and all requirements for the name change have been met by the licensee, the director, or the director’s designee, shall approve the change and reflect the new name in the records of the department. At the time of application for change of name, the licensee shall pay to, and for the use of, the state the sum of fifty dollars ($50.00) as a processing fee.
History of Section. P.L. 1995, ch. 82, § 52; P.L. 2014, ch. 106, § 3; P.L. 2014, ch. 125, § 3.
(a) The director, or the director’s designee, may, upon ten (10) days’ notice to the licensee, stating his or her intent to revoke and the grounds for revocation, and upon reasonable opportunity for the licensee to be heard, revoke any license issued under this chapter, upon finding that:
(1) The licensee has failed to comply with any demand, ruling, order, or requirement of the director, or the director’s designee, lawfully made pursuant to and within the authority of this title;
(2) The licensee has violated any provisions of this title or § 6-26-2, or any rule or regulation lawfully made by the director, or the director’s designee, under and within the authority of this chapter;
(3) Any fact or condition exists that, if it had existed at the time of the original application for the license, would have warranted the director, or the director’s designee, in refusing originally to issue the license;
(4) The licensee has committed any fraud, engaged in any dishonest activities, or made any misrepresentation;
(5) The licensee has violated any provisions of this title or any regulation issued pursuant to this title;
(6) The licensee has made a false statement in the application for the license or failed to give a true reply to a question in the application; or
(7) The licensee has demonstrated incompetency or untrustworthiness to act as a licensee pursuant to this chapter.
(b) The burden of proving the existence of these facts or conditions as grounds for revocation of a license under this section shall be upon the director, or the director’s designee. The director, or the director’s designee, if he or she has reasonable cause to believe that the grounds for revocation exist, may subpoena and investigate the business, books, and records of the licensee.
History of Section. P.L. 1995, ch. 82, § 52.
(a) The director, or the director’s designee, may revoke any license without a hearing by default if the licensee fails to respond to notifications informing the licensee of a failure to pay the annual license fee; maintain in effect the required bond or bonds; or maintain net worth requirements as required by this title.
(b) For the purposes of revocation by default, the director, or the director’s designee, shall send, in writing, to the licensee and to the licensee’s registered attorney for service of process at their current respective addresses according to the records of the department, notice of the deficiency and potential revocation of the license. Should the licensee, or the licensee’s registered attorney, fail to respond within fifteen (15) days of the notification, the director, or the director’s designee, may revoke the license by default and without hearing. The director, or the director’s designees, shall notify the licensee of such revocation in writing.
(c) Any action taken under this section may be appealed pursuant to the Administrative Procedures Act, chapter 35 of title 42.
History of Section. P.L. 1995, ch. 82, § 52; P.L. 2012, ch. 65, § 2; P.L. 2012, ch. 145, § 2; P.L. 2014, ch. 106, § 3; P.L. 2014, ch. 125, § 3.
The director, or the director’s designee, may, upon three (3) days’ notice and an opportunity for hearing, suspend any license for a period not exceeding thirty (30) days, pending investigation.
History of Section. P.L. 1995, ch. 82, § 52.
Any licensee may surrender any license or branch certificate(s) by delivering to the director, or the director’s designee, electronic notice through the Nationwide Multistate Licensing System surrendering the license or branch certificate(s). The surrender shall not affect the licensee’s civil or criminal liability for acts committed prior to the surrender. Electronic notice through the Nationwide Multistate Licensing System of any surrender must be filed with the director, or the director’s designee, within thirty (30) days of the termination of the business authorized by this chapter at the surrendered location. The surrender of any license does not affect the licensee’s requirement to file an annual report with the fifty-five dollar ($55.00) filing fee. This report shall be filed within thirty (30) days of the surrender of the license. The licensee shall give electronic notification through the Nationwide Multistate Licensing System to the director, or the director’s designee, within twenty-four (24) hours from termination of business.
History of Section. P.L. 1995, ch. 82, § 52; P.L. 2002, ch. 65, art. 13, § 19; P.L. 2022, ch. 338, § 3, effective June 29, 2022; P.L. 2022, ch. 339, § 3, effective June 29, 2022.
Any revocation, suspension, or surrender of a license shall not impair or affect the obligation of any preexisting lawful contract between the licensee and any customer.
History of Section. P.L. 1995, ch. 82, § 52.
Every license issued under this chapter shall remain in force and effect until it shall have been surrendered, revoked, or suspended in accordance with the provisions of this chapter. The director, or the director’s designee, shall have authority on his or her own initiative to reinstate suspended licenses or to issue new licenses to a licensee whose licenses have been revoked if no fact or condition then exists that clearly would have warranted the director, or the director’s designee, in refusing originally to issue the license under this chapter. A license reinstatement fee equal to one half (½) of the annual license fee shall be paid to the director to and for the use of the state.
History of Section. P.L. 1995, ch. 82, § 52.
Whenever the director, or the director’s designee, shall revoke or suspend a license issued pursuant to this chapter, the director shall file, in his or her office, a written order to that effect containing the evidence and the reason(s) supporting the revocation or suspension, and serve upon the licensee a copy thereof.
History of Section. P.L. 1995, ch. 82, § 52.
(a) The licensee shall keep and use any books, accounts, and records, that may be maintained by optical imaging, as will enable the director, or the director’s designee, to determine whether the licensee is complying with the provisions of this title and with the rules and regulations lawfully made by the director, or the director’s designee.
(b) If the licensee maintains its records outside of the state of Rhode Island, the licensee shall be responsible for all reasonable costs and expenses incurred by the examining personnel to examine such records.
History of Section. P.L. 1995, ch. 82, § 52.
(a) No licensee or other person shall advertise, print, display, publish, distribute, telecast, or broadcast, or cause or permit to be advertised, printed, displayed, published, distributed, telecast, or broadcast, in any manner whatsoever any false, misleading, or deceptive statement or representation with regard to the rates, terms, or conditions for licensed activities. The director, or the director’s designee, may order any licensee or other person to desist from any conduct that he or she shall find to be a violation of the foregoing provisions.
(b) The director, or the director’s designee, may require that rates of interest or charges, if stated by a licensee, be stated fully and clearly in any manner the director, or the director’s designee, may deem necessary to prevent misunderstanding of the rates or charges by prospective customers.
(c) The licensee shall disclose in any written or oral advertisements or representation disseminated primarily in this state, the type of license held.
History of Section. P.L. 1995, ch. 82, § 52.
(a) Each licensee shall annually file a report with the director, or the director’s designee, on a quarterly basis, giving any relevant information that the director, or the director’s designee, may reasonably require concerning the business and operations during the reporting period of each licensed place of business conducted by the licensee within the state. The report shall be submitted through the Nationwide Multistate Licensing System and attested to by the entity. To the extent that the Nationwide Multistate Licensing System does not require submission of quarterly reports of condition, each licensee shall, annually, on or before March 31, file a report with the director, or the director’s designee, giving any relevant information that the director, or the director’s designee, may reasonably require concerning the business and operations during the preceding calendar year of each licensed place of business conducted by the licensee within the state. At the time of renewal of the license, the sum of fifty-five dollars ($55.00) per license and fifty-five dollars ($55.00) per branch certificate shall be paid by the licensee to the director for the use of the state. Any licensee who or that shall delay transmission of any report required by the provisions of this title beyond the limit, unless additional time is granted, in writing, for good cause, by the director, or the director’s designee, shall pay a penalty of twenty-five dollars ($25) for each day of the delay. In lieu of a report by any licensed mortgage loan originator, the director, or the director’s designee, may accept a report by the licensed lender or licensed loan broker who or that employed the licensed mortgage loan originator for the activities of the licensed mortgage loan originator while employed by such lender or loan broker during the applicable calendar year.
(b) Any licensee shall, within twenty-four (24) hours after actual knowledge, notify the director, or the director’s designee, in writing, of the occurrence of any of the following events: the institution of bankruptcy, receivership, reorganization, or insolvency proceedings regarding a licensee; the institution of any adverse government action against a licensee; or any felony indictment or conviction of any licensee or any officers, directors, owners, employees, members, or partners thereof, as the case may be.
(c) Each mortgage loan originator licensee shall, on or before March 31, 2010, and every March 31st thereafter, file with the director, or the director’s designee, evidence acceptable to the director, or the director’s designee, that said loan originator licensee has filed with the Nationwide Multistate Licensing System and Registry a report of condition, which shall be in such form and shall contain such information as the Nationwide Multistate Licensing System and Registry may require.
(d) Both the mortgage loan originator and his or her licensed employer shall promptly notify the director, or the director’s designee, in writing, within fifteen (15) business days of the termination of employment or services of a mortgage loan originator.
History of Section. P.L. 1995, ch. 82, § 52; P.L. 2002, ch. 65, art. 13, § 19; P.L. 2007, ch. 73, art. 16, § 1; P.L. 2007, ch. 244, § 1; P.L. 2009, ch. 148, § 1; P.L. 2009, ch. 160, § 1; P.L. 2010, ch. 56, § 1; P.L. 2010, ch. 64, § 1; P.L. 2022, ch. 338, § 3, effective June 29, 2022; P.L. 2022, ch. 339, § 3, effective June 29, 2022.
(a) For the purpose of discovering violations of this title or securing information lawfully required, the director, or the director’s designee(s), may at any time investigate the loans and business and examine the books, accounts, records, and files used therein, of every licensee and person who shall be engaged in any activity that requires a license under this title, whether the person shall act, or claim to act, as principal or agent, or under or without the authority of this title. For that purpose, the director, or the director’s designee(s), shall have free access to the offices and places of business, books, accounts, paper, records, files, and safes, of all such persons. The director, or the director’s designee(s), shall have authority to require the attendance of, and to examine under oath, any person whose testimony may be required relative to the loans or the business or to the subject matter of any examination, investigation, or hearing.
(b) The director, or the director’s designee, shall make an examination of the affairs, business, office, and records of each licensee and branch location as often as is necessary, based upon all relevant factors, including the volume of activity within the state. The department shall provide a report to the legislature after July 1, 2017, but no later than December 31, 2017, regarding the timing of examinations conducted pursuant to this section and shall make recommendations regarding the sufficiency of conducting examinations based on these factors versus on a stated, periodic basis. The director, or the director’s designee, may accept, in lieu of an examination of the business of a licensed mortgage loan originator, the examination by the director, or the director’s designee, of the licensed lender(s) or licensed loan broker who employ the licensed mortgage loan originator and/or who employed the licensed mortgage loan originator during the period under examination. The total cost of an examination made pursuant to this section shall be paid by the licensee or person being examined and shall include the following expenses:
(1) One hundred fifty percent (150%) of the total salaries and benefits plus one hundred percent (100%) for the travel and transportation expenses for the examining personnel engaged in the examinations. The cost of an examination of a mortgage loan originator licensee shall be limited to twenty-five percent (25%) of the total salary and benefits for the personnel engaged in an examination specific to a mortgage loan originator. The fees shall be paid to the director to, and for the use of, the state. The examination fees shall be in addition to any taxes and fees otherwise payable to the state;
(2) All reasonable technology costs related to the examination process. Technology costs shall include the actual cost of software and hardware utilized in the examination process and the cost of training examination personnel in the proper use of the software or hardware; and
(3) All necessary and reasonable education and training costs incurred by the state to maintain the proficiency and competence of the examination personnel. All such costs shall be incurred in accordance with appropriate state of Rhode Island regulations, guidelines, and procedures.
(c) All expenses incurred pursuant to subsections (b)(2) and (b)(3) shall be allocated equally to each licensee, other than licensed mortgage loan originators, no more frequently than annually and shall not exceed an annual average assessment of fifty dollars ($50.00) per company for any given three calendar-year (3) period. All revenues collected pursuant to this section shall be deposited as general revenues. That assessment shall be in addition to any taxes and fees otherwise payable to the state.
(d) The provisions of § 19-4-3 shall apply to records of examinations or investigations of licensees; provided, however, the director, or the director’s designee, is authorized to make public the number of valid consumer complaints as determined by the director, or the director’s designee, filed against the licensee for a twelve-month (12) period immediately preceding the request for the information; and provided, further, that promptly following the completion of any examination under § 19-14-23(b), the director, or the director’s designee, shall provide to the person examined a copy of the written report of the examination, together with a notice requiring the person examined to file a written response or rebuttal to the comments and recommendations contained in the examination report within thirty (30) days of receipt thereof or such longer period as the director, or the director’s designee, may specify.
(e) If the director, or the director’s designee, has reason to believe that any person required to be licensed under this chapter is conducting a business without having first obtained a license under this chapter, or who, after the denial, suspension, or revocation of a license is conducting that business, the director, or the director’s designee, may issue an order to that person commanding him or her to cease and desist from conducting that business. The order shall provide an opportunity to request a hearing to be held not sooner than three (3) days after issuance of that order to show cause why the order should not become final. Any order issued pursuant to this section shall become final if no request for a hearing is received by the director, or the director’s designee, within thirty (30) days of the issuance of the order. The order may be served on any person by mailing a copy of the order, certified mail, return receipt requested, and first-class mail to that person at any address at which that person has done business or at which that person lives. Any hearing held pursuant to this section shall be governed in accordance with chapter 35 of title 42. If that person fails to comply with an order of the director, or the director’s designee, after being afforded an opportunity for a hearing, the superior court for Providence County has jurisdiction upon complaint of the department to restrain and enjoin that person from violating this chapter.
(f) The director may impose an administrative assessment, as well as the penalties provided for under § 19-14-26, against any person named in an order issued under subsection (e) or, in accordance with the rules and regulations promulgated pursuant to § 19-14-30, against any person who violates, or participates in the violation of, any of the applicable provisions of this title, or any regulation promulgated pursuant to any provisions of this title. The amount of the administrative assessment may not exceed one thousand dollars ($1,000) for each violation of this chapter or each act or omission that constitutes a basis for issuing the order. Any person aggrieved by an administrative assessment shall have the opportunity to request a hearing to be held in accordance with chapter 35 of title 42 within thirty (30) days of the imposition of such administrative assessment.
History of Section. P.L. 1995, ch. 82, § 52; P.L. 1999, ch. 156, § 3; P.L. 2001, ch. 125, § 1; P.L. 2003, ch. 56, § 1; P.L. 2003, ch. 70, § 1; P.L. 2007, ch. 73, art. 16, § 1; P.L. 2007, ch. 244, § 1; P.L. 2009, ch. 148, § 1; P.L. 2009, ch. 160, § 1; P.L. 2011, ch. 145, § 2; P.L. 2014, ch. 106, § 3; P.L. 2014, ch. 125, § 3.
No licensee shall condition any sale on the requirement that the consumer purchase any other product or service from a specified provider including those providers with whom the licensee is sharing office space.
History of Section. P.L. 1995, ch. 82, § 52; P.L. 2022, ch. 338, § 3, effective June 29, 2022; P.L. 2022, ch. 339, § 3, effective June 29, 2022.
(a) No licensee shall transact the business provided for by this chapter under any other name or at any other place of business than that named in the license or branch certificate, unless that place is for the exclusive convenience of the customer or meets the requirements for a remote location. The fact that closings occur at a place other than a licensed place of business shall not be deemed to be a violation of this section.
(b) Notwithstanding anything to the contrary under this chapter or chapter 14.10 of this title, employees of a licensee may perform services for the licensee or act as a mortgage loan originator from a remote location subject to each of the following requirements:
(1) The employee is subject to the supervision of the licensee;
(2) The remote location is the employee’s residence or other location identified in the records of the licensee and is within a reasonable distance of a place of business named in the licensee’s license or branch certificate, as established by regulations adopted by the director or the director’s designee;
(3) The licensee has written policies and procedures for supervision of, and employs appropriate risk-based monitoring and oversight process of work performed by, employees working from remote locations;
(4) Access to the licensee’s computer platforms and to customer information is in accordance with the licensee’s comprehensive written information security plan. The licensee must maintain appropriate safeguards for licensee and consumer data, information, and records, including the use of secure virtual private networks (“VPNs”) where appropriate;
(5) No in-person customer interaction occurs at the remote location, and the licensee will not designate the remote location to consumers or customers as a business location unless the remote location is properly licensed as a branch;
(6) Physical records related to the licensee’s business, including consumer information, are not maintained at the remote location;
(7) The licensee must ensure consumer and licensee information and records remain accessible and available for regulatory oversight and exams; and
(8) The licensee must provide training to keep all conversations about, and with, consumers conducted from a remote location confidential, as if conducted from a licensed commercial location, and to ensure remote employees work in an environment conducive and appropriate to that privacy.
(c) A remote location shall not be considered a branch of the licensee; however, activities conducted at a remote location shall be subject to examination under this chapter and § 19-14.10-5.
(d) The director, or the director’s designee, shall have the authority to promulgate rules to establish requirements and standards relating to remote locations.
History of Section. P.L. 1995, ch. 82, § 52; P.L. 2022, ch. 338, § 3, effective June 29, 2022; P.L. 2022, ch. 339, § 3, effective June 29, 2022.
(a) If a person other than a licensee engages in activity for which licensure is required by this title with or on behalf of a resident in violation of this chapter, the department may assess a civil penalty against the person in an amount not to exceed five thousand dollars ($5,000) for each day of violation and/or may order that the person cease and desist from all activities requiring licensure.
(b) If a licensee materially violates or participates in the violation of any of the applicable provisions of this title, or any regulation promulgated under this title, the department may assess a civil penalty of not more than one thousand dollars ($1,000) for each violation or in the case of identifiable measured transactions per transaction, or by imprisonment not exceeding one year, or both. Each violation constitutes a separate offense. Complaints under the provisions of this chapter may be made by the director, or the director’s designee, and shall not be required to give surety for costs. The attorney general shall prosecute all criminal activities under this chapter.
(c) A civil penalty under this section continues to accrue until the earlier of the following:
(1) The date the violation ceases; or
(2) A date specified by the department.
(d) In addition to the remedies set forth in subsections (a) and (b) of this section, upon proof of a material violation by a licensee, the department may take any of the following actions:
(1) Suspend or revoke a license or registration under this chapter;
(2) Order a person to cease and desist from doing activity for which a license or registration is required with or on behalf of a resident;
(3) Request the court to appoint a receiver for the assets of a licensee or registrant;
(4) Request the court to issue temporary, preliminary, or permanent injunctive relief against a licensee or registrant;
(5) Recover on the bond or security posted by the licensee or registrant; or
(6) Impose necessary or appropriate conditions on the conduct of business activity with or on behalf of a resident.
(e) All actions of the department under this section shall be taken in accordance with the requirements of chapter 35 of title 42 (the administrative procedures act).
History of Section. P.L. 1995, ch. 82, § 52; P.L. 1997, ch. 98, § 9; P.L. 2000, ch. 155, § 1; P.L. 2019, ch. 226, § 1; P.L. 2019, ch. 246, § 1; P.L. 2020, ch. 79, art. 2, § 10.
(a) Any person who makes or brokers a loan not invalid for any other reason who knowingly violates § 19-14-2 shall, in the discretion of the court, forfeit and have no right to collect or receive any interest, fees, or charges whatsoever.
(b) In the case of any unlicensed transaction involving lending or loan brokering activities, the amount of interest, fees, or charges previously collected shall be credited to the principal balance of the loan then due and owing or paid to the debtor, at the option of the holder of the loan.
(c) In the case of any unlicensed check cashing, sale of check, or electronic money transfer transaction, the amount of any fees or charges previously collected shall be paid to the person from whom the fee or charge was collected. In the event that the person who collected the fee or charge is unable to identify the person from whom the fee or charge was collected, the fee or charge shall be paid to the director to and for the use of the state.
History of Section. P.L. 2000, ch. 155, § 2.
This chapter, or any part of this chapter, may be modified, amended, or repealed so as to effect a cancellation or alteration of any license or right of a licensee hereunder, provided that the cancellation or alteration shall not impair or affect the obligation of any pre-existing lawful contract between any licensee and any customer.
History of Section. P.L. 1995, ch. 82, § 52.
Any applicant or licensee aggrieved by an action of the director, or the director’s designee, in denying an application for a license or in revoking or suspending a license, or by any order or decision of the director, or the director’s designee, shall have the right to appeal the action, order, or decision pursuant to chapter 35 of title 42.
History of Section. P.L. 1995, ch. 82, § 52.
The general assembly shall annually appropriate any sums it may deem sufficient for clerical assistance and necessary expenses in carrying out the provisions of this chapter. The state controller is authorized and directed to draw orders upon the general treasurer for the payment of the sums appropriated, or so much of the sums as may from time to time be required, upon receipt by him or her of proper vouchers approved by the director, or the director’s designee. All fees received under the provisions of this title shall be turned over to the general treasurer.
History of Section. P.L. 1995, ch. 82, § 52.
The director, or the director’s designee, may adopt reasonable rules and regulations for the implementation and administration of the provisions of this chapter. The director, or the director’s designee, shall adopt and amend reasonable rules and regulations, not later than March 31, 2008, as may be necessary to effectuate and implement the provisions of §§ 19-14-1, 19-14-2, 19-14-3, 19-14-4, 19-14-6, 19-14-7, 19-14-9, 19-14-22, 19-14-23 and 19-14-33 pertaining to mortgage loan originators in order that those provisions pertaining to mortgage loan originators are in effect and force on January 1, 2009.
History of Section. P.L. 1995, ch. 82, § 52; P.L. 2007, ch. 73, art. 16, § 1; P.L. 2007, ch. 244, § 1.
Nothing contained in this chapter shall be construed to impair or affect the obligation of any contract or loan lawfully entered into prior to July 1, 1995.
History of Section. P.L. 1995, ch. 82, § 52.
If any provision of this chapter or the application of this chapter to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter that can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable.
History of Section. P.L. 1995, ch. 82, § 52.
(a) Each licensee shall comply with all applicable federal laws, rules, and regulations, as amended, governing activities conducted under its license.
(b) Each licensee shall exercise due diligence in accordance with the rules and regulations promulgated pursuant to § 19-14-30 in confirming its compliance with applicable state/federal statutes and/or regulations at all phases of activities conducted under the license.
History of Section. P.L. 2007, ch. 73, art. 16, § 2; P.L. 2007, ch. 244, § 2.
(a) Each licensee shall maintain a resident agent in this state who shall have authority to endorse insurance claim checks on behalf of the licensee.
(b) A licensee that has not and will not be included as a loss payee on any insurance policy may be exempted from the provisions of subsection (a) of this section and §§ 5-38-26 and 27-5-3.3. An applicant that wishes to obtain an exemption must clearly state in its business plan that it is not a loss payee on any insurance policy and must provide the department with a statement that it will not be designated as a loss payee on any insurance policy. A licensee that obtains an exemption should expect that compliance will be evaluated on examination.
History of Section. P.L. 2022, ch. 338, § 6, effective June 29, 2022; P.L. 2022, ch. 339, § 6, effective June 29, 2022.
(a) Each licensee shall develop, implement, and maintain a comprehensive information security program that is written in one or more readily accessible parts and contains administrative, technical, and physical safeguards that are appropriate to the licensee’s size and complexity, the nature and scope of activities, including its use of third-party service providers, and the sensitivity of any customer information used by the licensee or is in the licensee’s possession.
(b) As used in this chapter, the following terms shall have the following meanings:
(1) “Customer” means a consumer who has a customer relationship with a licensee.
(2) “Customer information” means any record containing nonpublic personal information about a consumer that a licensee has a relationship with, whether in paper, electronic, or other form, that is handled or maintained by or on behalf of a licensee or its affiliates.
(3) “Encryption” means the transformation of data into a form that results in a low probability of assigning meaning without the use of a protective process or key, consistent with current cryptographic standards and accompanied by appropriate safeguards for cryptographic key material.
(4) “Information security program” means the administrative, technical, or physical safeguards used to access, collect, distribute, process, protect, store, use, transmit, dispose of, or otherwise handle customer information.
(5) “Information system” means a discrete set of electronic information resources organized for the collection, processing, maintenance, use, sharing, dissemination, or disposition of electronic information, as well as any specialized system such as industrial or process controls systems, telephone switching and private branch exchange systems, and environmental controls systems that contains customer information or that is connected to a system that contains customer information.
(6) “Notification event” means acquisition of unencrypted customer information without the authorization of the individual to which the information pertains. Customer information is considered unencrypted for this purpose if the encryption key was accessed by an unauthorized person. Unauthorized acquisition will be presumed to include unauthorized access to unencrypted customer information unless reliable evidence exists that proves there has not been, or could not reasonably have been, unauthorized acquisition of such information.
(7) “Security event” means an event resulting in unauthorized access to, or disruption or misuse of, an information system or information stored on such information system, or customer information held in physical form, commonly known as a “cybersecurity event”.
(c) In order to develop, implement, and maintain the information security program, the licensee shall:
(1) Designate a qualified individual responsible for overseeing, implementing, and enforcing the information security program. The qualified individual may be employed by the licensee, an affiliate, or a service provider. To the extent the requirement in subsection (a) of this section is met using a service provider or an affiliate, the licensee shall:
(i) Retain responsibility for compliance with this section;
(ii) Designate a senior member of the licensee responsible for direction and oversight of the qualified individual; and
(iii) Require the service provider or affiliate to maintain an information security program that protects the licensee in accordance with the requirements of this section.
(2) Perform a risk assessment that identifies reasonably foreseeable internal and external risks to the security, confidentiality, and integrity of customer information that could result in the unauthorized disclosure, misuse, alteration, destruction, or other compromise of such information, and assesses the sufficiency of any safeguards in place to control these risks.
(i) The risk assessment shall be written and shall include:
(A) Criteria for the evaluation and categorization of identified security risks or threats;
(B) Criteria for the assessment of the confidentiality, integrity, and availability of information systems and customer information, including the adequacy of the existing controls in the context of identified risks or threats; and
(C) Requirements describing how identified risks will be mitigated or accepted based on the risk assessment and how the information security program will address the risks.
(ii) A licensee shall periodically perform additional risk assessments that reexamine the reasonably foreseeable internal and external risks to the security, confidentiality, and integrity of customer information that could result in the unauthorized disclosure, misuse, alteration, destruction, or other compromise of such information, and reassess the sufficiency of any safeguards in place to control these risks.
(3) Design and implement safeguards to control the risks identified through risk assessment by:
(i) Implementing and periodically reviewing access controls, including technical and as appropriate, physical controls to:
(A) Authenticate and permit access only to authorized users to protect against the unauthorized acquisition of customer information; and
(B) Limit authorized users’ access only to customer information that they need to perform their duties and functions, or in the case of customers, to access their own information;
(ii) Identify and manage the data, personnel, devices, systems, and facilities that enable the licensee to achieve business purposes in accordance with relative importance to business objectives and the licensee’s risk strategy;
(iii) Protect by encryption all customer information held or transmitted both in transit over external networks and at rest. To the extent it is determined that encryption of customer information, either in transit over external networks or at rest, is infeasible, the licensee may instead secure such customer information using effective alternative compensating controls reviewed and approved by the qualified individual;
(iv) Adopt secure development practices for in-house developed applications utilized by the licensee for transmitting, accessing, or storing customer information and procedures for evaluating, assessing, or testing the security of externally developed applications utilized to transmit, access, or store customer information;
(v) Implement multi-factor authentication for any individual accessing any information system, unless the qualified individual has approved in writing the use of reasonably equivalent or more secure access controls;
(vi) Record retention:
(A) Develop, implement, and maintain procedures for the secure disposal of customer information in any format no later than two (2) years after the last date the information is used in connection with the provision of a product or service to the customer which relates, unless such information is necessary for business operations or for other legitimate business purposes, is otherwise required to be retained by law or regulation, or where targeted disposal is not reasonably feasible due to the manner in which the information is maintained; and
(B) Periodically review data retention policies to minimize the unnecessary retention of data;
(vii) Adopt procedures for change management; and
(viii) Implement policies, procedures, and controls designed to monitor and log the activity of authorized users and detect unauthorized access or use of, or tampering with, customer information by such users.
(4) Based on its risk assessment, the licensee shall perform ongoing testing by:
(i) Regularly testing or otherwise monitoring the effectiveness of the safeguards’ key controls, systems, and procedures, including those to detect actual and attempted attacks on, or intrusions into, information systems;
(ii) For information systems, the monitoring and testing shall include continuous monitoring or periodic penetration testing and vulnerability assessments. Absent effective continuous monitoring or other systems to detect, on an ongoing basis, changes in information systems that may create vulnerabilities, the licensee shall conduct:
(A) Annual penetration testing of its information systems determined each given year based on relevant identified risks in accordance with the risk assessment; and
(B) Vulnerability assessments, including any systemic scans or reviews of information systems reasonably designed to identify publicly known security vulnerabilities in the licensee’s information systems based on the risk assessment, at least every six (6) months; and whenever there are material changes to operations or business arrangements; and whenever there are circumstances that the licensee knows or has reason to know may have a material impact on the information security program.
(5) Implement policies and procedures to ensure that personnel have the ability to enact the information security program by:
(i) Providing personnel with security awareness training that is updated as necessary to reflect risks identified by the risk assessment;
(ii) Utilizing qualified information security personnel employed by the licensee or an affiliate or service provider sufficient to manage information security risks and to perform or oversee the information security program;
(iii) Providing information security personnel with security updates and training sufficient to address relevant security risks; and
(iv) Verifying that key information security personnel take steps to maintain current knowledge of changing information security threats and countermeasures.
(6) Monitor service providers by:
(i) Taking reasonable steps to select and retain service providers that are capable of maintaining appropriate safeguards for the customer information at issue;
(ii) Requiring service providers by contract to implement and maintain such safeguards; and
(iii) Periodically assessing service providers based on the risk they present and the continued adequacy of their safeguards.
(7) Evaluate and adjust the information security program considering the results of the testing and monitoring required by subsection (c)(4) of this section; any material changes to the licensee’s operations or business arrangements; the results of risk assessments performed under subsection (c)(2)(ii) of this section; or any other circumstances that the licensee knows or has reason to know may have a material impact on the information security program.
(8) Establish a written incident response plan designed to promptly respond to, and recover from, any security event materially affecting the confidentiality, integrity, or availability of customer information in your control. Such incident response plan shall address the following areas:
(i) The goals of the incident response plan;
(ii) The internal processes for responding to a security event;
(iii) The definition of clear roles, responsibilities, and levels of decision-making authority;
(iv) External and internal communications and information sharing;
(v) Identification of requirements for the remediation of any identified weaknesses in information systems and associated controls;
(vi) Documentation and reporting regarding security events and related incident response activities; and
(vii) The evaluation and revision as necessary of the incident response plan following a security event.
(9) Require the qualified individual to report in writing, at least annually, to the board of directors or equivalent governing body. If no such board of directors or equivalent governing body exists, such report shall be timely presented to a senior officer responsible for the information security program. The report shall include the following information:
(i) The overall status of the information security program and compliance with this chapter and associated rules; and
(ii) Material matters related to the information security program, addressing issues such as risk assessment, risk management and control decisions, service provider arrangements, results of testing, security events or violations and management’s responses thereto, and recommendations for changes in the information security program.
(10) Establish a written plan addressing business continuity and disaster recovery.
(d) The provisions of this section shall not apply to any regulated institution as defined in § 19-1-1, or subsidiary of such regulated institution, or any bank holding company or subsidiary of a bank holding company subject to federal bank holding company laws and regulations.
History of Section. P.L. 2025, ch. 424, § 1, effective July 2, 2025; P.L. 2025, ch. 425, § 1, effective July 2, 2025.
(a) Each licensee shall notify the director or the director’s designee as promptly as possible, but in no event later than three (3) business days from a determination that a security event has occurred when either of the following criteria has been met:
(1) A security event impacting the licensee of which notice is required to be provided to any governmental body, self-regulatory agency, or any other supervisory body pursuant to any state or federal law; or
(2) A security event that has a reasonable likelihood of materially harming;
(i) Any consumer residing in this state; or
(ii) Any material part of the normal operation(s) of the licensee.
(b) The licensee shall provide any information required by this section in electronic form as directed by the director or the director’s designee. The licensee shall have a continuing obligation to update and supplement initial and subsequent notifications to the director or the director’s designee concerning the security event. The following information shall be provided:
(1) The name and contact information of the reporting licensee;
(2) A description of the types of information that were involved in the notification event;
(3) If the information is possible to determine, the date or date range of the notification event;
(4) The total number of consumers in this state affected or potentially affected by the notification event. The licensee shall provide the best estimate in the initial report to the director or the director’s designee and update this estimate with each subsequent report;
(5) A general description of the notification event including how the information was exposed, lost, stolen, or breached, detailing specific roles and responsibilities of third-party service providers, if any;
(6) A description of efforts being undertaken to remediate the situation that permitted the security event to occur; and
(7) Whether any law enforcement official has provided the licensee with a written determination that notifying the public of the breach would impede a criminal investigation or cause damage to national security, and a means for the director or the director’s designee to contact the law enforcement official. A law enforcement official may request an initial delay of up to thirty (30) days following the date when notice was provided to the director or the director’s designee. The delay may be extended for an additional period of up to sixty (60) days if the law enforcement official seeks such an extension in writing. Additional delay may be permitted only if the director or the director’s designee determines that public disclosure of a security event continues to impede a criminal investigation or cause damage to national security.
(8) Name of contact person who is both familiar with the security event and is authorized to act for the licensee.
(c) A licensee shall comply with chapter 49.3 of title 11, as applicable, and provide a copy of the notice sent to consumers under that chapter to the director or the director’s designee, when a licensee is required to notify the director or the director’s designee.
(d) The provisions of this section shall not apply to any regulated institution as defined in § 19-1-1, or subsidiary of such regulated institution, or any bank holding company or subsidiary of a bank holding company subject to federal bank holding company laws and regulations.
History of Section. P.L. 2025, ch. 424, § 2, effective July 2, 2025; P.L. 2025, ch. 425, § 2, effective July 2, 2025.
No lender or loan broker shall take any confession of judgment, or any power of attorney, except a power of attorney or power of sale authorizing the lender or loan broker in case of default in payment of interest or principal, to enforce the provisions of any chattel mortgage or pledge. No lender or loan broker shall take any note, promise to pay, or security that does not accurately disclose the actual amount of the loan, the time for which it is made, and the agreed rate of interest nor any instrument in which blanks are left to be filled in after execution. The provisions of this section related to confessions of judgment and power of attorney shall not apply to real estate secured loans.
History of Section. P.L. 1995, ch. 82, § 53.
(a) Every lender may lend or loan broker may negotiate the lending of any sum of money and may charge, contract for, and receive points, fees, charges, and interest on the unpaid balance of the loan at a rate not to exceed that provided in § 6-26-2, or as otherwise permitted under applicable federal law or regulation.
(b) Rebates of finance charges on precomputed loans, made for an original term of sixty (60) months or less, may be calculated on the method commonly referred to as the rule of 78 or sum of the digits. Rebates of finance charges on precomputed loans, made for an original term greater than sixty (60) months, must be calculated on the simple interest method.
History of Section. P.L. 1995, ch. 82, § 53; P.L. 1997, ch. 98, § 10; P.L. 2003, ch. 79, § 3; P.L. 2003, ch. 82, § 3.
For the purposes of this chapter, involuntary unemployment insurance coverage shall not be a factor in the approval by the lender or loan broker of any loan. The lender or loan broker shall give and maintain specific written indication that the cost of this coverage is disclosed to the debtor; that the coverage is not a condition for the extension of credit; and that the debtor voluntarily desires the coverage. The debtor shall be given written notice of his or her right to cancel within thirty (30) days of the receipt of the insurance policy and that the cancellation will result in a full refund of any premiums paid. Unemployment resulting from a labor dispute shall be deemed involuntary unemployment.
History of Section. P.L. 1995, ch. 82, § 53.
Every lender or loan broker, as applicable, who is the holder of any note shall:
(1) Give to any borrower, or the borrower’s agent, making a loan payment a plain and complete receipt for all payments on the loan at the time the payment is made in person at the lender’s or loan broker’s office;
(2) Except for an open-end loan, upon written request from the borrower, the holder of a subordinate mortgage loan instrument shall deliver to the borrower, within ten (10) days from receipt of a written request, a statement of the borrower’s account showing the date and amount of all payments made or credited to the account and the total unpaid balance. Not more than two (2) such statements shall be required in any twelve-month (12) period;
(3) Permit payment to be made in advance in any amount on any contract of loan at any time, but the lender or loan broker may apply the payment first to all interest in full at the agreed rate and other permitted charges, up to the date of the payment. Any broker fees, points, or origination fees shall not be subject to any required refund;
(4) Upon repayment of the loan in full, mark indelibly every obligation and security signed by the borrower with the word “paid” or “canceled” and release any mortgage, restore any pledge, cancel and return any note, or a copy of the note, and cancel and return any assignment, or a copy of the assignment, given to the lender or loan broker by the borrower;
(5) Issue mortgage discharges in accordance with the provision of chapter 26 of title 34; and
(6) In the case of educational loans, deliver to the borrower a written statement that discloses the name and address of the borrower and licensee; the name of each payee to whom disbursements will be made; the date and total amount of the loan commitment; a description of the payment schedule; the amount of any insurance procured by the lender with a summary of the nature and extent of coverage; the total amount of all insurance premiums to be collected by the licensee; the schedule of any disbursements to be made to the borrower; and the method by which the schedule of any disbursements to an educational institution will be determined.
History of Section. P.L. 1995, ch. 82, § 53.
No loan document shall contain:
(1) Any acceleration clause under which any part or all of the unpaid balance of the obligation not yet matured may be declared due and payable because the holder deems himself or herself to be insecure;
(2) Any power of attorney to confess judgment or any other power of attorney except a statutory power of sale;
(3) Any provision whereby the debtor waives any rights accruing to him or her under the provisions of this title or any other law expressly prohibiting such waiver;
(4) Except for a change in the payment schedule as a result of the borrower’s default or delinquency, or pursuant to an agreement involving a court proceeding, any requirement that more than one installment be payable in any one installment period; or
(5) Any assignment of or order for the payment of any salary, wages, commission, or other compensation for services, or any part thereof, earned or to be earned.
History of Section. P.L. 1995, ch. 82, § 53; P.L. 1997, ch. 98, § 10.
The payment in money, credit, goods, or things in action, as consideration for any sale or assignment of, or order for, the payment of wages, salary, commissions, or other compensation for services, whether earned or to be earned, shall, for the purposes of regulation under this chapter, be deemed a loan secured by the assignment, and the amount that the assigned compensation exceeds the amount of consideration actually paid shall, for the purposes of regulation under this chapter, be deemed interest upon the loan from the date of the payment to the date the compensation is payable. The transaction shall be governed by and subject to the provisions of this chapter.
History of Section. P.L. 1995, ch. 82, § 53.
No assignment of, or order for, payment of any salary, wages, commissions, or other compensation for services, earned or to be earned, given to secure any loan made by any licensee under this chapter, shall be valid unless the amount of the loan is paid to the borrower simultaneously with its execution; nor shall the assignment or order, or any chattel mortgage or other lien on household furniture then in the possession and use of the borrower be valid unless it is in writing, signed in person by the borrower, nor if the borrower is married unless it is signed in person by both husband and wife, provided that written assent of a spouse shall not be required when husband and wife have been living separate and apart for a period of at least five (5) months prior to the making of the assignment, order, mortgage, or lien.
History of Section. P.L. 1995, ch. 82, § 53.
(a) All fees paid by clients or residential mortgage loan applicants to a lender or loan broker prior to the closing of the loan in connection with which those fees are paid, shall be deposited in one or more escrow accounts maintained at a federally-insured-deposit-taking institution. The account(s) shall contain only those funds collected from clients or residential mortgage loan applicants. Fees shall include, but are not limited to: application fees, appraisal fees, title attorney fees, title insurance fees, credit report fees, rate lock fees, or other similar fees.
(b) A lender or loan broker may offset related funds in the escrow account(s) against commissions to which it is entitled in accordance with the contract for services actually performed or for reimbursement for the fees described in the immediately preceding paragraph paid directly by the lender or loan broker to third parties. All offsets shall be accounted for through written documentation evidencing the amount of offset.
(c) The lender or loan broker shall maintain complete and accurate records of all escrow accounts and shall produce, upon request, all documents pertaining to escrow account activity including, but not limited to: bank statements, check stubs, canceled, voided, or unused checks, deposit tickets, and reconciliations or other comparable account records.
(d) No licensee governed by this chapter shall commingle money collected for fees from clients or residential mortgage loan applicants with its own funds or use any part of a client’s or residential mortgage loan applicant’s money in the conduct of the lender’s or loan broker’s business until those fees or moneys have been offset as provided for in this section.
History of Section. P.L. 1995, ch. 82, § 53.
(a) Any person or entity and the several members, officers, directors, agents and employees thereof, who or that knowingly violates, or participates in the violation of any of the applicable provisions of this chapter, or any regulation promulgated thereunder, shall be guilty of a misdemeanor and, upon conviction of this violation, shall be punished by a fine of not more than one thousand dollars ($1,000), or imprisoned for not more than one year, or both. Each violation shall constitute a separate offense. Complaints under the provisions of this chapter may be made by the director, or the director’s designee, and the director, or the director’s designee, shall not be required to give surety for costs. The attorney general shall prosecute all complaints under this chapter.
(b) Any person who shall violate any provision of this chapter may also be subject to a civil monetary penalty, in the discretion of the court. For unintentional violations, to be determined by the court, the award may include actual damages sustained by the applicant or borrower, as the case may be, as a result of the violation, plus a penalty in an amount not greater than one hundred dollars ($100) per violation. For intentional violations, to be determined by the court, the award may include actual damages sustained by the applicant or borrower, as the case may be, as a result of the violation, plus a penalty in an amount not greater than five hundred dollars ($500) per violation. A person’s failure to take action to correct the violation within a reasonable period of time, as determined by the court, following notice to the person of the violation by the director, or the director’s designee, pursuant to a final written report or other written notice, may be evidence of an intentional violation under this subsection (b) with respect to violations committed after the notice and the expiration of a reasonable time period for correction of the violation.
History of Section. P.L. 1995, ch. 82, § 53.
(a) The licensing provisions of chapter 14 of this title shall not apply to:
(1) Nonprofit charitable, educational, or religious corporations or associations;
(2) Any person who makes less than six (6) loans in this state in any consecutive twelve-month (12) period; there is no similar exemption from licensing for loan brokers for brokering loans or acting as a loan broker;
(3) Any person acting as an agent for a licensee for the purpose of conducting closings at a location other than that stipulated in the license;
(4) Regulated institutions and banks or credit unions organized under the laws of the United States, or subject to written notice with a designated Rhode Island agent for service of process in the form prescribed by the director, or the director’s designee, of any other state within the United States if the laws of the other state in which such bank or credit union is organized authorizes under conditions not substantially more restrictive than those imposed by the laws of this state, as determined by the director, or the director’s designee, a financial institution or credit union to engage in the business of originating or brokering loans in the other state; no bank or credit union duly organized under the laws of any other state within the United States may receive deposits, pay checks, or lend money from any location within this state unless such bank or credit union has received approval from the director, or the director’s designee, for the establishment of an interstate branch office pursuant to chapter 7 of title 19;
(5) Any natural person employee who is employed by a licensee when acting on the licensee’s behalf; provided that this exemption shall not apply to a mortgage loan originator required to be licensed under § 19-14-2 or § 19-14.10-4; or
(6) A licensed attorney when performing loan closing services for a licensee or for an entity identified in subdivision (4) above.
(b) The provisions of this chapter and chapter 14 of this title shall not apply to:
(1) Loans to corporations, joint ventures, partnerships, limited liability companies or other business entities;
(2) Loans over twenty-five thousand dollars ($25,000) in amount to individuals for business or commercial, as opposed to personal, family or household purposes;
(3) Loans principally secured by accounts receivable and/or business inventory;
(4) Loans made by a life insurance company wholly secured by the cash surrender value of a life insurance policy;
(5) Education-purpose loans made by the Rhode Island health and educational building corporation as vested in chapter 38.1 of title 45 of the Rhode Island student loan authority as vested in chapter 62 of title 16;
(6) The acquisition of retail or loan installment contracts by an entity whose sole business in this state is acquiring them from federal banks receivers or liquidators;
(7) Notes evidencing the indebtedness of a retail buyer to a retail seller of goods, services or insurance for a part or all of the purchase price;
(8) Any municipal, state or federal agency that makes, brokers, or funds loans or acts as a lender or a loan broker. This exemption includes exclusive agents or exclusive contractors of the agency specifically designated by the agency to perform those functions on behalf of the agency and which has notified the director, in writing, of the exclusive agency or contract; or
(9) Notes evidencing the indebtedness of a retail buyer to a retail motor vehicle dealer that include as part of the amount financed, disclosed in accordance with 12 C.F.R. § 226.18 as amended, an amount representing negative equity related to the motor vehicle being traded in as part of the purchase price of the motor vehicle being purchased.
(c) No license to make or fund loans, or to act as a lender or small loan lender shall be required of any person who engages in deferred deposit transactions (commonly known as “pay-day advance”) while holding a valid license to cash checks pursuant to chapter 14 of this title.
History of Section. P.L. 1995, ch. 82, § 53; P.L. 1997, ch. 98, § 10; P.L. 2000, ch. 153, § 1; P.L. 2001, ch. 371, § 2; P.L. 2003, ch. 163, § 3; P.L. 2003, ch. 169, § 3; P.L. 2007, ch. 73, art. 16, § 3; P.L. 2007, ch. 244, § 3; P.L. 2008, ch. 261, § 2; P.L. 2008, ch. 452, § 2; P.L. 2009, ch. 148, § 2; P.L. 2009, ch. 160, § 2; P.L. 2011, ch. 345, § 1; P.L. 2011, ch. 361, § 1.
(a) The licensing provisions of chapter 14 of this title shall not apply to:
(1) Nonprofit charitable, educational, or religious corporations or associations;
(2) Any person who makes less than six (6) loans in this state in any consecutive twelve-month (12) period; there is no similar exemption from licensing for loan brokers for brokering loans or acting as a loan broker;
(3) Any person acting as an agent for a licensee for the purpose of conducting closings at a location other than that stipulated in the license;
(4) Regulated institutions and banks or credit unions organized under the laws of the United States, or subject to written notice with a designated Rhode Island agent for service of process in the form prescribed by the director, or the director’s designee, of any other state within the United States if the laws of the other state in which such bank or credit union is organized authorizes under conditions not substantially more restrictive than those imposed by the laws of this state, as determined by the director, or the director’s designee, a financial institution or credit union to engage in the business of originating or brokering loans in the other state; no bank or credit union duly organized under the laws of any other state within the United States may receive deposits, pay checks, or lend money from any location within this state unless such bank or credit union has received approval from the director, or the director’s designee, for the establishment of an interstate branch office pursuant to chapter 7 of this title;
(5) Any natural person employee who is employed by a licensee when acting on the licensee’s behalf; provided that this exemption shall not apply to a mortgage loan originator required to be licensed under § 19-14-2 or § 19-14.10-4; or
(6) A licensed attorney when performing loan closing services for a licensee or for an entity identified in subdivision (4) above.
(b) The provisions of this chapter and chapter 14 of this title shall not apply to:
(1) Loans to corporations, joint ventures, partnerships, limited liability companies, or other business entities;
(2) Loans over twenty-five thousand dollars ($25,000) in amount to individuals for business or commercial, as opposed to personal, family, or household purposes;
(3) Loans principally secured by accounts receivable and/or business inventory;
(4) Loans made by a life insurance company wholly secured by the cash surrender value of a life insurance policy;
(5) Education-purpose loans made by the Rhode Island health and educational building corporation as vested in chapter 38.1 of title 45 of the Rhode Island student loan authority as vested in chapter 62 of title 16;
(6) The acquisition of retail or loan installment contracts by an entity whose sole business in this state is acquiring them from federal banks receivers or liquidators;
(7) Notes evidencing the indebtedness of a retail buyer to a retail seller of goods, services, or insurance for a part or all of the purchase price;
(8) Any municipal, state, or federal agency that makes, brokers, or funds loans or acts as a lender or a loan broker. This exemption includes exclusive agents or exclusive contractors of the agency specifically designated by the agency to perform those functions on behalf of the agency and which has notified the director, in writing, of the exclusive agency or contract; or
(9) Notes evidencing the indebtedness of a retail buyer to a retail motor vehicle dealer that include as part of the amount financed, disclosed in accordance with 12 C.F.R. § 226.18 as amended, an amount representing negative equity related to the motor vehicle being traded in as part of the purchase price of the motor vehicle being purchased.
(c) [Deleted by P.L. 2025, ch. 373, § 2 and P.L. 2025, ch. 391, § 2.]
History of Section. P.L. 1995, ch. 82, § 53; P.L. 1997, ch. 98, § 10; P.L. 2000, ch. 153, § 1; P.L. 2001, ch. 371, § 2; P.L. 2003, ch. 163, § 3; P.L. 2003, ch. 169, § 3; P.L. 2007, ch. 73, art. 16, § 3; P.L. 2007, ch. 244, § 3; P.L. 2008, ch. 261, § 2; P.L. 2008, ch. 452, § 2; P.L. 2009, ch. 148, § 2; P.L. 2009, ch. 160, § 2; P.L. 2011, ch. 345, § 1; P.L. 2011, ch. 361, § 1; P.L. 2025, ch. 373, § 2, effective January 1, 2027; P.L. 2025, ch. 391, § 2, effective January 1, 2027.
The director, or the director’s designee, may adopt reasonable rules and regulations for the implementation and administration of the provisions of this chapter.
History of Section. P.L. 1995, ch. 82, § 53.
If any provision of this chapter or the application of this chapter to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter that can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable.
History of Section. P.L. 1995, ch. 82, § 53.
(a) No person, except as authorized by this chapter, shall directly or indirectly charge, contract for, or receive any interest, discount, or consideration greater than provided by this chapter upon the loan, use, or sale of credit of the amount or value of five thousand dollars ($5,000) or less.
(b) The prohibition in subsection (a) shall apply to any person who, by any device, subterfuge, or pretense shall charge, contract for, or receive greater interest, consideration, or charges than is authorized by this chapter for the loan, use, or forbearance of money, goods, or things in action, or for the loan, use, or sale of credit.
(c) No loan of the amount or value of five thousand dollars ($5,000) or less for which a greater rate of interest, consideration, or charges than is permitted by this chapter has been charged, contracted for, or received, wherever made, shall be enforced in this state, and every person in any way participating therein in this state shall be subject to the provisions of this chapter, provided that this section shall not apply to loans legally made in any other state, commonwealth, or district which then has in effect a regulatory small loan law similar in principal to this chapter.
History of Section. P.L. 1995, ch. 82, § 54.
(a) No person, except as authorized by this chapter, shall directly or indirectly charge, contract for, or receive any interest, discount, or consideration greater than provided by this chapter upon the loan, use, or sale of credit of the amount or value of five thousand dollars ($5,000) or less.
(b) The prohibition in subsection (a) shall apply to any person who, by any device, subterfuge, or pretense shall charge, contract for, or receive greater interest, consideration, or charges than is authorized by this chapter for the loan, use, or forbearance of money, goods, or things in action, or for the loan, use, or sale of credit.
(c) No loan of the amount or value of five thousand dollars ($5,000) or less for which a greater rate of interest, consideration, or charges than is permitted by this chapter has been charged, contracted for, or received, wherever made, shall be enforced in this state, and every person in any way participating therein in this state shall be subject to the provisions of this chapter, provided that this section shall not apply to loans legally made in any other state, commonwealth, or district which then has in effect a regulatory small loan law similar in principal to this chapter.
(d) No person may engage in any device, subterfuge, or pretense to evade the requirements of this chapter, including making loans disguised as personal property sales and leaseback transactions, or disguising loan proceeds as cash rebates for the pretextual installment sale of goods or services, or assisting a debtor to obtain a loan with a greater rate of interest, consideration, or charges than is permitted by this chapter through any method including mail, telephone, internet, or any electronic means regardless of whether the person has a physical location in the state.
History of Section. P.L. 1995, ch. 82, § 54; P.L. 2025, ch. 373, § 3, effective January 1, 2027; P.L. 2025, ch. 391, § 3, effective January 1, 2027.
No small loan lender shall take any confession of judgment, or any power of attorney, except a power of attorney or power of sale authorizing the small loan lender in case of default in payment of interest or principal, to enforce the provisions of any chattel mortgage or pledge. No small loan lender shall take any note, promise to pay, or security that does not accurately disclose the actual amount of the loan, the time for which it is made, and the agreed rate of interest nor any instrument in which blanks are left to be filled in after execution.
History of Section. P.L. 1995, ch. 82, § 54.
For the purposes of this chapter, involuntary unemployment insurance coverage shall not be a factor in the approval by the small loan lender of any loan. The small loan lender shall give and maintain specific written indication that the cost of this coverage is disclosed to the debtor; that the coverage is not a condition for the extension of credit; and that the debtor voluntarily desires the coverage. The debtor shall be given written notice of his or her right to cancel within thirty (30) days of the receipt of the insurance policy and that the cancellation will result in a full refund of any premiums paid. Unemployment resulting from a labor dispute shall be deemed involuntary unemployment.
History of Section. P.L. 1995, ch. 82, § 54.
Every small loan lender who is the holder of any note shall:
(1) Give to the borrower or the borrower’s agent making payment a plain and complete receipt for all payments on the loan at the time the payment is made, in person, at the small loan lender’s office;
(2) Permit payment to be made in advance in any amount on any contract of loan at any time, but the small loan lender may apply the payment first to all interest in full at the agreed rate and other permitted charges, up to the date of the payment; and
(3) Upon repayment of the loan in full, mark indelibly every obligation and security signed by the borrower with the word “paid” or “canceled” and restore any pledge; cancel and return any note or a copy of the note; and cancel and return any assignment, or a copy of the assignment, given to the small loan lender by the borrower.
History of Section. P.L. 1995, ch. 82, § 54.
No loan document shall contain:
(1) Any acceleration clause under which any part or all of the unpaid balance of the obligation not yet matured may be declared due and payable because the holder deems himself or herself to be insecure;
(2) Any power of attorney to confess judgment or any other power of attorney;
(3) Any provision whereby the debtor waives any rights accruing to him or her under the provisions of this title or any other law expressly prohibiting this waiver;
(4) Any requirement that more than one installment be payable in any one installment period; or
(5) Any assignment of or order for the payment of any salary, wages, commission, or other compensation for services, or any part of these, earned or to be earned.
History of Section. P.L. 1995, ch. 82, § 54.
The payment in money, credit, goods, or things in action, as consideration for any sale or assignment of, or order for, the payment of wages, salary, commissions, or other compensation for services, whether earned or to be earned, shall, for the purposes of regulation under this chapter, be deemed a loan secured by the assignment, and the amount that the assigned compensation exceeds the amount of consideration actually paid shall, for the purposes of regulation under this chapter, be deemed interest upon the loan from the date of the payment to the date the compensation is payable. The transaction shall be governed by, and subject to, the provisions of this chapter.
History of Section. P.L. 1995, ch. 82, § 54.
No assignment of, or order for, payment of any salary, wages, commissions, or other compensation for services, earned or to be earned, given to secure any loan made by any small loan lender under this chapter, shall be valid unless the amount of the loan is paid to the borrower simultaneously with its execution; nor shall the assignment or order, or any chattel mortgage or other lien on household furniture then in the possession and use of the borrower, be valid unless it is in writing, signed in person by the borrower, nor if the borrower is married unless it is signed in person by both husband and wife, provided that written assent of a spouse shall not be required when husband and wife have been living separate and apart for a period of at least five (5) months prior to the making of the assignment, order, mortgage, or lien.
History of Section. P.L. 1995, ch. 82, § 54.
Every small loan lender may lend up to five thousand dollars ($5,000) in the aggregate to one borrower and may charge, contract for, and receive on the loan interest on the unpaid principal balance on a loan at a rate not exceeding the following:
(1) Loans up to and including three hundred dollars ($300), three percent (3%) per month;
(2) Loans exceeding three hundred dollars ($300) but not exceeding eight hundred dollars ($800), two and one-half percent (2.5%) per month; and
(3) Loans exceeding eight hundred dollars ($800), but not exceeding five thousand dollars ($5,000), two percent (2%) per month.
History of Section. P.L. 1995, ch. 82, § 54.
No small loan lender shall induce or permit any borrower to split up or divide any loan, or permit any person to become obligated individually under more than one loan contract at the same time, for the purpose or with the result of obtaining a higher rate of charge than would otherwise be permitted.
History of Section. P.L. 1995, ch. 82, § 54.
(a) Interest on loans made under this chapter shall not be paid, deducted, or received in advance, or compounded, and shall be computed and paid only on unpaid principal balances and on the basis of the number of days actually elapsed. For the purpose of these computations, a month shall be any period of thirty (30) consecutive days.
(b) If part or all of the consideration for a contract of a small loan is the unpaid balance of a prior loan with the same licensee, then the principal of the new contract of loan shall not include any unpaid interest on the prior loan, except interest that has accrued within sixty (60) days before the making of the new contract of loan; provided, however, that unpaid interest on a prior loan may not be so included in the principal of a new loan more than once in any period of twelve (12) months.
History of Section. P.L. 1995, ch. 82, § 54.
No small loan lender shall enter into any contract of loan under this chapter of one thousand dollars ($1,000) or less, excluding charges, under which the borrower agrees to make any scheduled repayment of cash advance or principal more than twenty-five (25) months from the date of making the contract, nor, any contract of small loan exceeding one thousand dollars ($1,000), but not exceeding five thousand dollars ($5,000), excluding charges, under which the borrower agrees to make any scheduled repayment of cash advance or principal more than sixty (60) months from the date of making the contract. Every contract of small loan shall provide for repayment of the loan in substantially equal installments at approximately equal periodical intervals of time.
History of Section. P.L. 1995, ch. 82, § 54.
In addition to the interest allowed in this chapter, no small loan licensee shall directly, or indirectly, charge, contract for, or receive any other charges except credit insurance, lawful filing fees and insurance charges, and other fees listed in § 6-26-2(c) or as authorized by regulation.
History of Section. P.L. 1995, ch. 82, § 54.
Every licensee who is the holder of any small loan note shall deliver to the borrower, at the time any small loan is made, a statement of the law regarding interest rate and term limitations, in plain English, showing in clear and distinct terms the amount and date of the loan and of its maturity; the nature of the security, if any, for the loan; the name and address of the borrower and of the licensee; and the agreed rate of interest.
History of Section. P.L. 1995, ch. 82, § 54.
(a) Any person or any member, officer, director, agent, or employee of any person, who knowingly violates or participates in the violation of any of the applicable provisions of this chapter, or any regulation promulgated under this chapter, is guilty of a misdemeanor and, upon conviction, shall be punished by a fine of not more than one thousand dollars ($1,000), or imprisoned for not more than one year, or both. Each violation shall constitute a separate offense. Complaints under this chapter may be made by the director, or the director’s designee, and he or she shall not be required to give surety for costs. The attorney general shall prosecute all complaints under this chapter.
(b) Any contract of loan not invalid for any other reason, in the making or collecting of which any act has been done that constitutes a misdemeanor under this section, shall be voidable, at the discretion of the court, and the small loan lender shall have no right to collect or receive any principal, interest, fees, or charges.
History of Section. P.L. 1995, ch. 82, § 54.
The director, or the director’s designee, may, adopt reasonable rules and regulations for the implementation and administration of the provisions of this chapter.
History of Section. P.L. 1995, ch. 82, § 54.
If any provision of this chapter or the application of this chapter to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter that can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable.
History of Section. P.L. 1995, ch. 82, § 54.
No license to engage in the business of currency transmission shall be required of any:
(1) Regulated institution, bank, or credit union organized under the laws of the United States, or subject to written notice with a designated Rhode Island agent for service of process in the form prescribed by the director, or the director’s designee, of any other state within the United States if the laws of the other state in which the bank or credit union is organized authorizes under conditions not substantially more restrictive than those imposed by the laws of this state, as determined by the director, or the director’s designee, a financial institution or credit union to engage in the business of currency transmission in the other state; no bank or credit union duly organized under the laws of any other state within the United States may receive deposits, pay checks, or lend money from any location within this state unless the bank or credit union has received approval from the director, or the director’s designee, for the establishment of an interstate branch office pursuant to chapter 7 of this title;
(2) Natural person employee who is employed by a licensee when acting on the licensee’s behalf; or
(3) Agents or authorized delegates any licensee shall designate or appoint. No currency transmission licensee shall be required to obtain a branch office license pursuant to § 19-14-12, or shall be subject to the provisions of § 19-14-24. Agents or authorized delegates, in their capacity as agents of the licensee, are subject to the supervision and regulation by the director notwithstanding exemption from licensure.
(4) This chapter shall not apply to activity by:
(i) The United States, a state, political subdivision of a state, agency or instrumentality of federal, state, or local government, or a foreign government or a subdivision, department, agency or instrumentality of a foreign government;
(ii) A person whose participation in a payment system is limited to providing processing, clearing, or performing settlement services solely for transactions between or among persons who are exempt from the licensing or registration requirements of this chapter;
(iii) A person engaged in the business of dealing in foreign exchange to the extent the person’s activity meets the definition in 31 C.F.R. 1010.605(f)(1)(iv), as may be amended from time to time;
(iv) A person who:
(A) Contributes only connectivity software or computing power to support the stability and security of the underlying network;
(B) Provides only data storage or security services for a business engaged in virtual currency business activity and does not otherwise engage in virtual currency business activity on behalf of another person;
(C) Provides only to a person otherwise exempt from this chapter virtual currency as one or more enterprise solutions used solely among each other and has no agreement or relationship with a resident that is an end-user of virtual currency; or
(D) Transmission or communications services providers that provide only the means of transmission or communications;
(v) A person using virtual currency, including creating, investing, buying, or selling, or obtaining virtual currency as payment for the purchase or sale of goods or services, solely:
(A) On its own behalf;
(B) For personal, family, or household purposes; or
(C) For academic purposes;
(vi) An attorney to the extent of providing escrow services to a resident;
(vii) A title insurance company to the extent of providing escrow services to a resident;
(viii) A securities intermediary, as defined in § 6A-8-102, or a commodity intermediary, as defined § 6A-9-102, that:
(A) Does not engage in the ordinary course of business in virtual currency business activity with or on behalf of a resident in addition to maintaining securities accounts or commodities accounts and is regulated as a securities intermediary or commodity intermediary under federal law, the law of this state other than this chapter, or the law of another state; and
(B) Affords resident protections comparable to those set forth in § 19-14.3-3.6;
(ix) A secured party defined in § 6A-9-102(a) or creditor with a judicial lien or lien arising by operation of law on collateral that is virtual currency, if the virtual currency business activity of the creditor is limited to enforcement of the security interest in compliance with chapter 9 of title 6A or a lien in compliance with the law applicable to the lien;
(x) A virtual currency control-services vendor; or
(xi) A person that:
(A) Does not receive compensation from or on behalf of a resident or from sales of data pertaining to a resident for:
(I) Providing virtual currency products or services; or
(II) Conducting virtual currency business activity; or
(B) Is engaged in testing products or services with the person’s own funds.
(5) The department may determine that a person or class of persons, given facts particular to the person or class, should be exempt from this chapter, whether the person or class is covered by requirements imposed under federal law on a money-service business.
History of Section. P.L. 1995, ch. 82, § 55; P.L. 2003, ch. 163, § 4; P.L. 2003, ch. 169, § 4; P.L. 2019, ch. 226, § 3; P.L. 2019, ch. 246, § 3.
In addition to the definitions provided in § 19-14-1 the following definitions are applicable to this chapter:
(1) “Blockchain analytics” means the analysis of data from blockchains or public distributed ledgers, including associated transaction information.
(2) “Blockchain analytics software” means a software service that uses blockchain analytics data to provide risk-specific information about virtual currency wallet addresses, among other things.
(3) “Control” means:
(i) When used in reference to a transaction or relationship involving virtual currency, the power to execute unilaterally or prevent indefinitely a virtual currency transaction; and
(ii) When used in reference to a person, the direct or indirect power to direct the management, operations, or policies of the person through legal or beneficial ownership of twenty-five percent (25%) or more of the voting power in the person or under a contract, arrangement, or understanding.
(4) “Department” means the department of business regulation, division of banking.
(5) “Exchange,” used as a verb, means to assume control of virtual currency from or on behalf of a resident, at least momentarily, to sell, trade, or convert:
(i) Virtual currency for legal tender, bank credit, or one or more forms of virtual currency; or
(ii) Legal tender or bank credit for one or more forms of virtual currency.
(6) “Existing customer” means an individual who has been a customer with a virtual currency kiosk operator for more than thirty (30) days after the customer’s first financial transaction with the virtual currency kiosk operator.
(7) “Legal tender” means a medium of exchange or unit of value, including the coin or paper money of the United States, issued by the United States or by another government.
(8) “Licensee” means a person licensed under this chapter.
(9) “Monetary value” means a medium of exchange, whether or not redeemable in money.
(10) “New customer” means an individual who has never previously transacted with the virtual currency kiosk operator. The new customer shall remain defined as such during the thirty-day (30) period after the first financial transaction with the virtual currency kiosk operator. Following the thirty-day (30) period, a new customer automatically converts to an existing customer.
(11) “Reciprocity agreement” means an arrangement between the department and the appropriate licensing agency of another state that permits a licensee operating under a license granted by the other state to engage in currency transmission business activity with or on behalf of a resident.
(12) “Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
(13) “Registry” means the Nationwide Multistate Licensing System.
(14) “Resident”:
(i) Means a person that:
(A) Is domiciled in this state;
(B) Is physically located in this state for more than one hundred eighty-three (183) days of the previous three hundred sixty-five (365) days; or
(C) Has a place of business in this state; and
(ii) Includes a legal representative of a person that satisfies subsection (14)(i) of this section.
(15) “Responsible individual” means an individual who has managerial authority with respect to a licensee’s currency transmission business activity with or on behalf of a resident.
(16) “Sign” means, with present intent to authenticate or adopt a record:
(i) To execute or adopt a tangible symbol; or
(ii) To attach to or logically associate with the record an electronic symbol, sound, or process.
(17) “State” means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.
(18) “Store,” except in the phrase “store of value,” means to maintain control of virtual currency on behalf of a resident by a person other than the resident. “Storage” and “storing” have corresponding meanings.
(19) “Transaction hash” means a unique identifier made up of a string of characters that act as a record of and provide proof that the transaction was verified and added to the blockchain.
(20) “Transfer” means to assume control of virtual currency from or on behalf of a resident and to:
(i) Credit the virtual currency to the account of another person;
(ii) Move the virtual currency from one account of a resident to another account of the same resident; or
(iii) Relinquish control of virtual currency to another person.
(21) “U.S. Dollar equivalent of virtual currency” means the equivalent value of a particular virtual currency in United States dollars shown on a virtual currency exchange based in the United States for a particular date or period specified in this chapter.
(22) “Virtual currency address” means an alphanumeric identifier associated with a virtual currency wallet identifying the location to which a virtual currency transaction can be sent.
(23) “Virtual currency business activity” means:
(i) Exchanging, transferring, or storing virtual currency whether directly or through an agreement with a virtual currency control-services vendor;
(ii) Holding electronic precious metals or electronic certificates representing interests in precious metals on behalf of another person or issuing shares or electronic certificates representing interests in precious metals; or
(iii) Exchanging one or more digital representations of value used within one or more online games, game platforms, or family of games for:
(A) Virtual currency offered by or on behalf of the same publisher from which the original digital representation of value was received; or
(B) Legal tender or bank credit outside the online game, game platform, or family of games offered by or on behalf of the same publisher from which the original digital representation of value was received.
(24) “Virtual currency control-services vendor” means a person who has control of virtual currency solely under an agreement with a person who, on behalf of another person, assumes control of virtual currency.
(25) “Virtual currency kiosk” or “kiosk” means an electronic terminal acting as a mechanical agent of the virtual currency kiosk operator that enables the virtual currency kiosk operator to facilitate the exchange of virtual currency for money, bank credit, or other virtual currency including, but not limited to:
(i) Connecting directly to a separate “virtual currency exchange” that performs the actual virtual currency transmission; or
(ii) Drawing upon the virtual currency in the possession of the electronic terminal’s operator.
(26) “Virtual-currency kiosk operator” means a person or business entity that engages in virtual-currency business activity via a virtual currency kiosk located in this state or a person who owns, operates, or manages a virtual currency kiosk located in this state through which virtual currency business activity is offered.
(27) “Virtual currency kiosk transaction” means a transaction conducted or performed, in whole or in part, by electronic means via a virtual currency kiosk. Virtual currency kiosk transaction also means a transaction made at a virtual currency kiosk to purchase virtual currency with fiat currency or to sell virtual currency for fiat currency.
(28) “Virtual currency wallet” means a software application or other mechanism providing a means for holding, storing, and transferring virtual currency.
History of Section. P.L. 2019, ch. 226, § 4; P.L. 2019, ch. 246, § 4; P.L. 2025, ch. 113, § 1, effective June 23, 2025; P.L. 2025, ch. 114, § 1, effective June 23, 2025.
A person licensed by another state to engage in currency transmission business activity in that state may engage in currency transmission business activity with or on behalf of a resident to the same extent as a licensee if:
(1) The department determines that the state in which the person is licensed has in force laws regulating currency transmission business activity that are substantially similar to, or more protective of rights of users than, this chapter and enters into a reciprocity agreement with the other state that the state will allow reciprocal licensing of persons licensed under this chapter.
(2) An application under this section is filed with the registry and the applicant shall notify the department in a record that the applicant has submitted the application to the registry and shall submit to the department:
(i) A certification of license history from the agency responsible for issuing a license in each state in which the applicant has been licensed to conduct currency transmission business activity;
(ii) A nonrefundable reciprocal licensing application fee in the amount required by § 19-14-4;
(iii) All other information requested by the department in the application for licensure on the registry.
History of Section. P.L. 2019, ch. 226, § 4; P.L. 2019, ch. 246, § 4; P.L. 2020, ch. 79, art. 2, § 11.
(a) The department may cooperate, coordinate, jointly examine, consult, and share records and other information with the appropriate regulatory agency of another state, a self-regulatory organization, federal or state regulator of banking or non-depository providers, or a regulator of a jurisdiction outside the United States, concerning the affairs and conduct of a licensee in this state.
(b) The department shall:
(1) Establish or participate in, with another state that enacts a law substantially similar to this chapter, a central depository for filings required by law of this state other than this chapter;
(2) Cooperate in developing and implementing uniform forms for applications and renewal reports and the conduct of joint administrative proceedings and civil actions;
(3) Formulate joint rules, forms, statements of policy, and guidance and interpretative opinions and releases; and
(4) Develop common systems and procedures.
(c) In deciding whether and how to cooperate, coordinate, jointly examine, consult, or share records and other information under subsection (a) of this section, the department shall consider:
(1) Maximizing effectiveness and uniformity of regulation, examination, implementation, and enforcement for the benefit of residents and licensees and registrants; and
(2) Minimizing burdens on licensees and registrants without adversely affecting protection for residents.
History of Section. P.L. 2019, ch. 226, § 4; P.L. 2019, ch. 246, § 4.
[Repealed]
History of Section. P.L. 1995, ch. 82, § 55; repealed by P.L. 2024, ch. 316, § 6, effective June 25, 2024; repealed by P.L. 2024, ch. 317, § 6, effective June 25, 2024.
(a) A licensee shall maintain at all times permissible investments that have a market value computed in accordance with United States generally accepted accounting principles of not less than the aggregate amount of all of its outstanding money transmission obligations.
(b) Except for permissible investments enumerated in § 19-14.3-2.2(a), the director, or designee, with respect to any licensee, may by rule or order limit the extent to which a specific investment maintained by a licensee within a class of permissible investments may be considered a permissible investment, if the specific investment represents undue risk to customers, not reflected in the market value of investments.
(c) Permissible investments, even if commingled with other assets of the licensee, are held in trust for the benefit of the purchasers and holders of the licensee’s outstanding money transmission obligations in the event of insolvency, the filing of a petition by or against the licensee under the United States Bankruptcy Code, 11 U.S.C. §§ 101 – 110, as amended or recodified from time to time, for bankruptcy or reorganization, the filing of a petition by or against the licensee for receivership, the commencement of any other judicial or administrative proceeding for its dissolution or reorganization, or in the event of an action by a creditor against the licensee who is not a beneficiary of this statutory trust. No permissible investments impressed with a trust pursuant to this section shall be subject to attachment, levy of execution, or sequestration by order of any court, except for a beneficiary of this statutory trust.
(d) Upon the establishment of a statutory trust in accordance with subsection (c) of this section or when any funds are drawn on a letter of credit pursuant to § 19-14.3-2.2(a)(4), the director, or designee, shall notify the applicable regulator of each state in which the licensee is licensed to engage in money transmission, if any, of the establishment of the trust or the funds drawn on the letter of credit, as applicable. Notice shall be deemed satisfied if performed pursuant to a multistate agreement or through the National Multistate Licensing Service (NMLS). Funds drawn on a letter of credit, and any other permissible investments held in trust for the benefit of the purchasers and holders of the licensee’s outstanding money transmission obligations, are deemed held in trust for the benefit of such purchasers and holders on a pro rata and equitable basis in accordance with statutes pursuant to which permissible investments are required to be held in this state, and other states, as applicable. Any statutory trust established hereunder shall be terminated upon extinguishment of all of the licensee’s outstanding money transmission obligations.
(e) The director, or designee, by rule or by order may allow other types of investments that the director, or designee, determines are of sufficient liquidity and quality to be a permissible investment. The director, or designee, is authorized to participate in efforts with other state regulators to determine that other types of investments are of sufficient liquidity and quality to be a permissible investment.
History of Section. P.L. 2024, ch. 316, § 7, effective June 25, 2024; P.L. 2024, ch. 317, § 7, effective June 25, 2024.
(a) The following investments are permissible under § 19-14.3-2.1:
(1) Cash including demand deposits, savings deposits, and funds in such accounts held for the benefit of the licensee’s customers in a federally insured depository financial institution and cash equivalents including ACH items in transit to the licensee and ACH items or international wires in transit to a payee, cash in transit via armored car, cash in smart safes, cash in licensee-owned locations, debit card or credit card-funded transmission receivables owed by any bank, or money market mutual funds rated “AAA” by S&P, or the equivalent from any eligible rating service;
(2) Certificates of deposit or senior debt obligations of an insured depository institution, as defined in Section 3 of the Federal Deposit Insurance Act, 12 U.S.C. § 1813, as amended or recodified from time to time, or as defined under the federal Credit Union Act, 12 U.S.C. § 1781, as amended or recodified from time to time;
(3) An obligation of the United States or a commission, agency, or instrumentality thereof; an obligation that is guaranteed fully as to principal and interest by the United States; or an obligation of a state or a governmental subdivision, agency, or instrumentality thereof;
(4) The full drawable amount of an irrevocable standby letter of credit for which the stated beneficiary is the director, or designee, that stipulates that the beneficiary need only draw a sight draft under the letter of credit and present it to obtain funds up to the letter of credit amount within seven (7) days of presentation of the items required by subsection (a)(4)(iii) of this section.
(i) The letter of credit must:
(A) Be issued by a federally insured depository financial institution, a foreign bank that is authorized under federal law to maintain a federal agency or federal branch office in a state or states, or a foreign bank that is authorized under state law to maintain a branch in a state that:
(I) Bears an eligible rating or whose parent company bears an eligible rating; and
(II) Is regulated, supervised, and examined by United States federal or state authorities having regulatory authority over banks, credit unions, and trust companies;
(B) Be irrevocable, unconditional, and indicate that it is not subject to any condition or qualifications outside of the letter of credit;
(C) Not contain reference to any other agreements, documents, or entities, or otherwise provide for any security interest in the licensee; and
(D) Contain an issue date and expiration date, and expressly provide for automatic extension, without a written amendment, for an additional period of one year from the present or each future expiration date, unless the issuer of the letter of credit notifies the director, or designee, in writing by certified or registered mail or courier mail or other receipted means, at least sixty (60) days prior to any expiration date, that the irrevocable letter of credit will not be extended.
(ii) In the event of any notice of expiration or non-extension of a letter of credit issued under subsection (a)(4)(i)(D) of this section, the licensee shall be required to demonstrate to the satisfaction of the director, or designee, fifteen (15) days prior to expiration, that the licensee maintains and will maintain permissible investments in accordance with § 19-14.3-2.1(a) upon the expiration of the letter of credit. If the licensee is not able to do so, the director, or designee, may draw on the letter of credit in an amount up to the amount necessary to meet the licensee’s requirements to maintain permissible investments in accordance with § 19-14.3-2.1(a). Any such draw shall be offset against the licensee’s outstanding money transmission obligations. The drawn funds shall be held in trust by the director, or designee, or the designated agent, to the extent authorized by law, as agent for the benefit of the purchasers and holders of the licensee’s outstanding money transmission obligations.
(iii) The letter of credit shall provide that the issuer of the letter of credit will honor, at sight, a presentation made by the beneficiary to the issuer of the following documents on or prior to the expiration date of the letter of credit:
(A) The original letter of credit including any amendments; and
(B) A written statement from the beneficiary stating that any of the following events have occurred:
(I) The filing of a petition by or against the licensee under the United States Bankruptcy Code, 11 U.S.C. §§ 101 – 110, as amended or recodified from time to time, for bankruptcy or reorganization;
(II) The filing of a petition by or against the licensee for receivership, or the commencement of any other judicial or administrative proceeding for its dissolution or reorganization;
(III) The seizure of assets of a licensee by the director, or designee, pursuant to an emergency order issued in accordance with applicable law, on the basis of an action, violation, or condition that has caused or is likely to cause the insolvency of the licensee; or
(IV) The beneficiary has received notice of expiration or non-extension of a letter of credit and the licensee failed to demonstrate to the satisfaction of the beneficiary that the licensee will maintain permissible investments in accordance with § 19-14.3-2.1(a) upon the expiration or non-extension of the letter of credit.
(iv) The director, or designee, may designate an agent to serve on the director’s behalf as beneficiary to a letter of credit so long as the agent and letter of credit meet requirements established by the director, or designee. The director’s agent may serve as agent for multiple licensing authorities for a single irrevocable letter of credit if the proceeds of the drawable amount for the purposes of subsection (a)(4) of this section are assigned to the director.
(v) The director, or designee, is authorized and encouraged to participate in multistate processes designed to facilitate the issuance and administration of letters of credit, including, but not limited to, services provided by the NMLS and State Regulatory Registry, LLC;
(5) One hundred percent (100%) of the surety bond provided for under this chapter that exceeds the average daily money transmission liability in this state.
(b) Unless permitted by the director, or designee, by rule or by order to exceed the limit as set forth herein, the following investments are permissible under § 19-14.3-2.1 to the extent specified:
(1) Receivables that are payable to a licensee from its authorized delegates in the ordinary course of business that are less than seven (7) days old, up to fifty percent (50%) of the aggregate value of the licensee’s total permissible investments;
(2) Of the receivables permissible under subsection (b)(1) of this section, receivables that are payable to a licensee from a single authorized delegate in the ordinary course of business may not exceed ten percent (10%) of the aggregate value of the licensee’s total permissible investments;
(3) The following investments are permissible up to twenty percent (20%) per category and combined up to fifty percent (50%) of the aggregate value of the licensee’s total permissible investments:
(i) A short-term (up to six (6) months) investment bearing an eligible rating;
(ii) Commercial paper bearing an eligible rating;
(iii) A bill, note, bond, or debenture bearing an eligible rating;
(iv) U.S. tri-party repurchase agreements collateralized at one hundred percent (100%) or more with U.S. government or agency securities, municipal bonds, or other securities bearing an eligible rating;
(v) Money market mutual funds rated less than “AAA” and equal to or higher than “A-” by S&P, or the equivalent from any other eligible rating service; and
(vi) A mutual fund or other investment fund composed solely and exclusively of one or more permissible investments listed in subsections (a)(1) through (a)(3) of this section;
(4) Cash (including demand deposits, savings deposits, and funds in such accounts held for the benefit of the licensee’s customers) at foreign depository institutions are permissible up to ten percent (10%) of the aggregate value of the licensee’s total permissible investments if the licensee has received a satisfactory rating in its most recent examination and the foreign depository institution:
(i) Has an eligible rating;
(ii) Is registered under the Foreign Account Tax Compliance Act;
(iii) Is not located in any country subject to sanctions from the Office of Foreign Asset Control; and
(iv) Is not located in a high-risk or non-cooperative jurisdiction as designated by the Financial Action Task Force.
History of Section. P.L. 2024, ch. 316, § 7, effective June 25, 2024; P.L. 2024, ch. 317, § 7, effective June 25, 2024.
Each licensee shall be liable for the payment of all checks or electronic money transfer sold by the licensee in this state, in whatever form and whether directly or through an agent, as the maker or drawer of these according to the negotiable instrument laws of this state; and a licensee who sells a check or electronic money transfer, whether directly or through an agent, upon which the licensee is not designated as maker or drawer shall, nevertheless, have the same liabilities with respect to these as if signed as the maker or drawer of these. Every check or electronic money transfer sold by a licensee, directly or through an agent, shall bear the name of the licensee clearly imprinted on it.
History of Section. P.L. 1995, ch. 82, § 55.
Every person carrying on a foreign exchange business or the business of forwarding foreign drafts or of forwarding money or other credits to any country outside of the United States shall make and preserve a record of each transaction. The record shall contain all of the following information: the amount or value of the money or credit forwarded; the bank or depository from which the money or credit is purchased by the person; the date of the purchase; the names and addresses of the persons forwarding the money or credit; and the serial number or other symbol of any of the drafts or credits deposited with the person for forwarding. The record shall be kept in a separate book for that purpose and shall always be open to the inspection of the person who has forwarded any money or credit through the person upon his or her request. This person shall not fail, neglect, or refuse to submit or show the record or prevent a proper person, as defined in this section, to inspect the record.
History of Section. P.L. 2001, ch. 129, § 3.
Every person, whether engaged in the foreign exchange brokerage business or not, to whom any money, draft, or credit is delivered to be forwarded to a foreign correspondent, shall forward the credit, accompanied by draft credits, or any documents necessary and essential to carrying out the transaction, immediately after the receipt, sale, deposit, or other transaction by which the money, draft, or credit is delivered to the person for forwarding. That person shall also, upon delivery of any money, draft, or credit to be forwarded to a foreign correspondent, give a receipt, showing what the current rate of exchange of the foreign currency to which the money, draft, or credit is to be transferred is on the day of the transaction, and the amount expressed in the denomination of the foreign currency, according to the rate of exchange, that is to be forwarded as set forth above.
History of Section. P.L. 2001, ch. 129, § 3.
Every person who has delivered or deposited money or credit to be forwarded to a foreign correspondent, who has acquired any judgment, debt, claim, or demand relating to the transaction against any person named as principal in any bond filed in accordance with the provisions of this chapter or the person’s agents or employees, arising from defalcation, embezzlement, negligence, breach of contract, or violation of any duty required under this title, shall have a cause of action upon the bond for all damages sustained, and shall upon request be furnished with a certified copy of the bond by the director, or the director’s designee, and may bring suit in the name of the obligee named in the bond for their use and benefit against the principal and surety or sureties named in the bond, and may prosecute the action to final judgment and execution; provided, that the action and its prosecution shall involve the obligee in no expense and that every action shall be commenced and sued within six (6) years after the cause of action shall accrue and not after.
History of Section. P.L. 2001, ch. 129, § 3.
The provisions of §§ 19-4.3-3.1 — 19-4.3-3.3 shall not apply to duly incorporated financial institutions or credit unions.
History of Section. P.L. 2001, ch. 129, § 3.
(a) A licensee engaging in virtual currency business activities shall provide to a resident who uses the licensee’s virtual currency products or service the disclosures required by subsection (b) of this section and any additional disclosure the department by rule determines reasonably necessary for the protection of residents. The department may determine by rule any additional disclosures and/or the time and form required for disclosure. A disclosure required by this section must be made separately from any other information provided by the licensee and in a clear and conspicuous manner in a record the resident may keep. A licensee may propose for the department’s approval alternate disclosures as more appropriate for its virtual currency business activity with or on behalf of residents.
(b) Before establishing a relationship with a resident, a licensee shall disclose, to the extent applicable to the virtual currency business activity the licensee will undertake with the resident:
(1) A schedule of fees and charges the licensee may assess, the manner by which fees and charges will be calculated if they are not set in advance and disclosed, and the timing of the fees and charges;
(2) Whether the product or service provided by the licensee is covered by:
(i) A form of insurance or is otherwise guaranteed against loss by an agency of the United States:
(A) Up to the full U.S. Dollar equivalent of virtual currency placed under the control of or purchased from the licensee as of the date of the placement or purchase, including the maximum amount provided by insurance under the Federal Deposit Insurance Corporation or otherwise available from the Securities Investor Protection Corporation; or
(B) If not provided at the full U.S. Dollar equivalent of virtual currency placed under the control of or purchased from the licensee, the maximum amount of coverage for each resident expressed in the U.S. Dollar equivalent of the virtual currency; or
(ii) Private insurance against theft or loss, including cyber theft or theft by other means;
(3) The irrevocability of a transfer or exchange and any exception to irrevocability;
(4) A description of:
(i) Liability for an unauthorized, mistaken, or accidental transfer or exchange;
(ii) The resident’s responsibility to provide notice to the licensee of the transfer or exchange;
(iii) The basis for any recovery by the resident from the licensee;
(iv) General error-resolution rights applicable to the transfer or exchange; and
(v) The method for the resident to update the resident’s contact information with the licensee;
(5) That the date or time when the transfer or exchange is made and the resident’s account is debited may differ from the date or time when the resident initiates the instruction to make the transfer or exchange;
(6) Whether the resident has a right to stop a pre-authorized payment or revoke authorization for a transfer and the procedure to initiate a stop-payment order or revoke authorization for a subsequent transfer;
(7) The resident’s right to receive a receipt, trade ticket, or other evidence of the transfer or exchange;
(8) The resident’s right to at least thirty (30) days’ prior notice of a change in the licensee’s fee schedule, other terms and conditions of operating its virtual currency business activity with the resident and the policies applicable to the resident’s account; and
(9) That virtual currency is not legal tender.
(c) Except as otherwise provided in subsection (d), at the conclusion of a virtual currency transaction with or on behalf of a resident, a licensee shall provide the resident a confirmation in a record that contains:
(1) The name and contact information of the licensee, including information the resident may need to ask a question or file a complaint;
(2) The type, value, date, precise time, and amount of the transaction; and
(3) The fee charged for the transaction, including any charge for conversion of virtual currency to legal tender, bank credit, or other virtual currency.
(d) If a licensee discloses that it will provide a daily confirmation in the initial disclosure under subsection (c) of this section, the licensee may elect to provide a single, daily confirmation for all transactions with or on behalf of a resident on that day instead of a per-transaction confirmation.
History of Section. P.L. 2019, ch. 226, § 4; P.L. 2019, ch. 246, § 4.
(a) A licensee that has control of virtual currency for one or more persons shall maintain in its control an amount of each type of virtual currency sufficient to satisfy the aggregate entitlements of the persons to the type of virtual currency.
(b) If a licensee violates subsection (a), the property interests of the persons in the virtual currency are pro rata property interests in the type of virtual currency to which the persons are entitled, without regard to the time the persons became entitled to the virtual currency or the licensee obtained control of the virtual currency.
(c) The virtual currency referred to in this section is:
(1) Held for the persons entitled to the virtual currency;
(2) Not property of the licensee; and
(3) Not subject to the claims of creditors of the licensee.
History of Section. P.L. 2019, ch. 226, § 4; P.L. 2019, ch. 246, § 4.
(a) An applicant, before submitting an application, shall create and, during licensure, maintain in a record, policies and procedures for:
(1) An information-security and operational-security program;
(2) A business-continuity program;
(3) A disaster-recovery program;
(4) An anti-fraud program;
(5) An anti-money-laundering program; and
(6) A program to ensure compliance with the Bank Secrecy Act and the USA Patriot Act.
(b) A licensee’s information-security and operational-security policy must include reasonable and appropriate administrative, physical, and technical safeguards to protect the confidentiality, integrity, and availability of any non-public personal information or currency transmission it receives, maintains, or transmits.
(c) A licensee is not required to file with the department a copy of a report it makes to a federal authority unless the department specifically requires filing.
(d) After the policies and procedures required under this section are created by the licensee and approved by the department, the licensee shall engage a responsible individual with adequate authority and experience to monitor each policy and procedure, recommend changes as desirable, and enforce it.
(e) A licensee may:
(1) Request advice from the department as to compliance with this section; and
(2) With the department’s approval, outsource functions, other than compliance, required under this section.
(f) Failure of a particular policy or procedure adopted under this section to meet its goals in a particular instance is not a ground for liability of the licensee if the policy or procedure was created, implemented, and monitored properly. Repeated failures of a policy or procedure are evidence that the policy or procedure was not created or implemented properly.
History of Section. P.L. 2019, ch. 226, § 4; P.L. 2019, ch. 246, § 4.
No person required to be licensed under this chapter shall:
(1) Fail to remit all money or monetary value received for transmission pursuant to this chapter, or give instructions committing equivalent money or monetary value to the person designated by the sender within ten (10) days after receipt by the licensee unless otherwise directed by the sender except in cases relating to the prevention and detection of fraud or money laundering, compliance with applicable sanctions, regimes and other related compliance obligations;
(2) Fail to immediately notify the director in writing if the licensee dishonors or fails to satisfy any currency transmission transaction within the ten (10) days following receipt for any reason other than direction by the sender except in cases relating to the prevention and detection of fraud or money laundering, compliance with applicable sanctions, regimes and other related compliance obligations;
(3) Engage in the business of currency transmission in the state under any name other than that which it is organized or otherwise authorized to do business in the state;
(4) Fail to comply with the Bank Secrecy Act, 31 U.S.C. § 5311 et seq., and 31 C.F.R. Part 1022, including maintenance of an active registration with the United States Department of Treasury Financial Crimes Enforcement Network;
(5) Fail to comply with the Electronic Fund Transfer Act, 15 U.S.C. § 1693 et seq., and Regulation E, 12 C.F.R. 1005 et seq.;
(6) Fail to safeguard identifying information obtained in the course of currency transmission and otherwise comply with the requirements set forth in chapter 52 of title 6;
(7) Fail to comply with applicable state and federal laws and regulations related to the business of currency transmission;
(8) Use or cause to be published or disseminated any advertising communication that contains any false, misleading, or deceptive statement or representation; or
(9) Engage in unfair, deceptive, or fraudulent practices.
History of Section. P.L. 2019, ch. 226, § 4; P.L. 2019, ch. 246, § 4.
(a) A virtual currency kiosk operator shall not engage in virtual currency business activity or hold itself out as being able to engage in virtual currency business activity with or on behalf of another person unless the virtual currency kiosk operator is licensed in the state as a money transmitter.
(b) A virtual currency kiosk operator shall not locate, or allow a third party to locate, a virtual currency kiosk in this state unless the virtual currency kiosk operator registers the virtual currency kiosk and obtains the prior approval of the department of business regulation (DBR) for its activation.
(c) A virtual currency kiosk operator shall submit to the DBR a quarterly report of the location of each virtual currency kiosk located within the State of Rhode Island within forty-five (45) days of the end of each calendar quarter. The report shall include, at a minimum, the following:
(1) The virtual currency kiosk operator’s legal name;
(2) Any fictitious or trade name of the virtual currency kiosk operator;
(3) Physical address of each virtual currency kiosk;
(4) Start date of operation of each virtual currency kiosk at the location;
(5) End date of operation of each virtual currency kiosk at the location, if applicable; and
(6) Virtual currency address(es) associated with each virtual currency kiosk.
History of Section. P.L. 2025, ch. 113, § 2, effective June 23, 2025; P.L. 2025, ch. 114, § 2, effective June 23, 2025.
A virtual currency kiosk operator shall disclose in a clear, conspicuous, and easily readable manner in a chosen language made available to and preferred by the customer, all relevant terms and conditions generally associated with the products, services, and activities of the virtual currency kiosk operator and virtual currency.
(1) The virtual currency kiosk operator shall provide an acknowledgement of receipt of all disclosures required under this section to be acknowledged by the customer as confirmation of consent.
(2) The disclosures under this subsection shall include, at a minimum, the following provisions:
(i) A warning, written prominently and in bold type, and provided separately from the disclosures below, stating: “WARNING: LOSSES DUE TO FRAUDULENT OR ACCIDENTAL TRANSACTIONS ARE NOT RECOVERABLE AND TRANSACTIONS IN VIRTUAL CURRENCY ARE IRREVERSIBLE. VIRTUAL CURRENCY TRANSACTIONS MAY BE USED TO STEAL YOUR MONEY BY CRIMINALS IMPERSONATING THE GOVERNMENT, ORGANIZATIONS, OR YOUR LOVED ONES. WRONGDOERS OFTEN THREATEN JAIL TIME, SAY YOUR IDENTITY HAS BEEN STOLEN, ALLEGE YOUR COMPUTER HAS BEEN HACKED, INSIST YOU WITHDRAW MONEY FROM YOUR BANK ACCOUNT TO PURCHASE VIRTUAL CURRENCY, OR UTILIZE A NUMBER OF OTHER ILLEGAL MEANS TO SCAM YOU. IF YOU BELIEVE YOU ARE BEING SCAMMED, CALL YOUR LOCAL LAW ENFORCEMENT.”;
(ii) A written statement disclosing the material risks associated with virtual currency and virtual currency transactions, including:
(A) A warning that once completed, the transaction may not be reversed;
(B) A disclosure relating to the virtual currency kiosk operator’s liability for unauthorized virtual currency transactions;
(C) A disclosure relating to the virtual currency kiosk customer’s liability for unauthorized currency transactions;
(D) A statement that virtual currency is not legal tender, backed or insured by the government, and accounts and value balances are not subject to Federal Deposit Insurance Corporation, National Credit Union Administration, or Securities Investor Protection Corporation protections;
(E) A statement that some virtual currency transactions are deemed to be made when recorded on a public ledger which may not be the date or time when the person initiates the transaction;
(F) A statement that virtual currency value may be derived from market participants’ continued willingness to exchange fiat currency for virtual currency, which may result in the permanent and total loss of a particular virtual currency’s value if the market for virtual currency disappears;
(G) A statement that a person who accepts virtual currency as payment today is not required to accept and might not accept virtual currency in the future;
(H) A statement that the volatility and unpredictability of the price of virtual currency relative to fiat currency may result in a significant loss over a short period of time;
(I) A statement that the nature of virtual currency means that any technological difficulties experienced by virtual currency kiosk operators may prevent access to or use of a person’s virtual currency; and
(J) A disclosure that any bond maintained by the virtual currency kiosk operator for the benefit of a person may not cover all losses a person incurs;
(iii) A statement disclosing the amount of the transaction denominated in U.S. Dollars as well as the applicable virtual currency;
(iv) A disclosure of any fees or expenses charged by the virtual currency kiosk operator;
(v) A disclosure of any applicable exchange rates;
(vi) Notice of a change in the virtual currency kiosk operator’s rules or policies;
(vii) The name, address, and telephone number of the owner of the kiosk and the days, times and means by which a consumer can contact the owner for consumer assistance shall be displayed on or at the location of the kiosk, or on the first screen of such kiosk;
(viii) A disclosure of the circumstances under which the virtual currency kiosk operator, without a court or government order, discloses a person’s account information to third parties; and
(ix) Other disclosures that are customarily given in connection with a virtual currency transaction.
(3) Transaction receipt. Effective November 1, 2025, upon each transaction’s completion, the virtual currency kiosk operator shall provide a person with a physical receipt in a chosen language made available to and preferred by the customer which shall contain the following information:
(i) The virtual currency kiosk operator’s name and contact information, including a telephone number to answer questions and register complaints;
(ii) The type, value, date, and precise time of the transaction, transaction hash, and each applicable virtual currency address;
(iii) The name and contact information of the sender;
(iv) The name and contact information of the designated recipient;
(v) All fees charged;
(vi) The exchange rate of the virtual currency to U.S. Dollars;
(vii) A statement of the virtual currency kiosk operator’s liability for non-delivery or delayed delivery;
(viii) A statement of the virtual currency kiosk operator’s refund policy; and
(ix) Any additional information or formatting the department of business regulation may require.
History of Section. P.L. 2025, ch. 113, § 2, effective June 23, 2025; P.L. 2025, ch. 114, § 2, effective June 23, 2025.
All virtual currency kiosk operators shall use blockchain analytics software to assist in the prevention of sending purchased virtual currency from a virtual currency kiosk operator to a virtual currency wallet known to be affiliated with fraudulent activity at the time of a transaction. The department of business regulation may request evidence from a virtual currency kiosk operator relating to its current use of blockchain analytics.
(1) All virtual currency kiosk operators shall take reasonable steps to detect and prevent fraud, including establishing and maintaining a written anti-fraud policy. The anti-fraud policy shall, at a minimum, include:
(i) The identification and assessment of fraud related risk areas;
(ii) Procedures and controls to protect against identified risks;
(iii) Allocation of responsibility for monitoring risks; and
(iv) Procedures for the periodic evaluation and revision of anti-fraud procedures, controls, and monitoring mechanisms.
(2) Each virtual currency kiosk operator shall designate and employ a compliance officer in accordance with the following requirements:
(i) The compliance officer shall be qualified to coordinate and monitor compliance with any virtual currency business activity transacted in this state pursuant to this chapter and all other applicable federal and state laws, rules, and regulations;
(ii) The compliance officer shall be employed full-time by the virtual currency kiosk operator; and
(iii) The compliance officer shall not be an individual who owns more than a twenty percent (20%) interest of the virtual currency kiosk operator by whom the individual is employed.
(3) Upon request of the customer, a virtual currency kiosk operator shall issue a refund to a new customer for the full amount of all transactions made within the thirty-day (30) new customer time period as provided in the definition of “new customer” in § 19-14.3-1.1. In order to receive a refund under this subsection, a new customer shall have been fraudulently induced to engage in the virtual currency transaction(s) and shall contact the virtual currency kiosk operator and a government or law enforcement agency to inform them of the fraudulent nature of the transaction(s) within ninety (90) days of the last transaction to occur during the thirty-day (30) new customer time period.
(4) A virtual currency kiosk operator shall issue a refund to an existing customer for the full amount of all transaction fees upon the request of an existing customer. In order to receive a refund under this subsection, an existing customer shall have been fraudulently induced to engage in the virtual currency transaction(s) and shall contact the virtual currency kiosk operator and a government or law enforcement agency to inform them of the fraudulent nature of the transaction(s) within ninety (90) days of each transaction.
History of Section. P.L. 2025, ch. 113, § 2, effective June 23, 2025; P.L. 2025, ch. 114, § 2, effective June 23, 2025.
(a) For new customers a virtual currency kiosk operator shall not accept transactions of more than two thousand U.S. dollars ($2,000) a day of cash or the equivalent.
(b) For existing customers, a virtual currency kiosk operator shall not accept transactions of more than five thousand U.S. dollars ($5,000) a day of cash or the equivalent.
(c) The limits imposed by this section apply to a single customer without regard to the number of virtual currency kiosks utilized in the state.
History of Section. P.L. 2025, ch. 113, § 2, effective June 23, 2025; P.L. 2025, ch. 114, § 2, effective June 23, 2025.
All virtual currency kiosk operators performing business in the state shall provide live customer service, at a minimum, Monday through Friday between 8:00 AM EST and 10:00 PM EST. The customer service toll free number shall be displayed on the virtual currency kiosk or the virtual currency kiosk screen.
History of Section. P.L. 2025, ch. 113, § 2, effective June 23, 2025; P.L. 2025, ch. 114, § 2, effective June 23, 2025.
The director, or the director’s designee, may adopt reasonable rules and regulations for the implementation and administration of the provisions of this chapter.
History of Section. P.L. 1995, ch. 82, § 55.
If any provision of this chapter or the application of this chapter to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter that can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable.
History of Section. P.L. 1995, ch. 82, § 55.
No license to cash checks shall be required of any:
(1) Regulated institution, bank, or credit union organized under the laws of the United States, or subject to written notice with a designated Rhode Island agent for service of process in the form prescribed by the director, or the director’s designee, of any other state within the United States if the laws of the other state in which such bank or credit union is organized authorizes under conditions not substantially more restrictive than those imposed by the laws of this state, as determined by the director, or the director’s designee, a financial institution or credit union to engage in the business of cashing checks in the other state; no bank or credit union duly organized under the laws of another state within the United States may receive deposits, pay checks or lend money from any location within this state unless such bank or credit union has received approval from the director, or the director’s designee, for the establishment of an interstate branch office pursuant to chapter 7 of title 19;
(2) Natural person employee who is employed by a licensee when acting on the licensee’s behalf; or
(3) Persons engaged in the business of cashing checks where that business is incidental to the person’s retail sale of goods or services and the person charges not more than fifty cents ($.50) per check cashed.
History of Section. P.L. 1995, ch. 82, § 56; P.L. 2003, ch. 163, § 5; P.L. 2003, ch. 169, § 5.
(a) Upon the filing of any application in due form, accompanied by the required fee and documents, notice thereof shall be published in a newspaper of general circulation in this state. Each notice shall contain:
(1) The name of the applicant;
(2) The location of the proposed site; and
(3) A statement that any comment or objection by anyone in relation to the application should be submitted in writing to the director, or the director’s designee, for consideration within ten (10) business days of the date of publication.
(b) The general assembly finds and declares that check-cashing businesses provide important and vital services to Rhode Island citizens; that the number of check-cashing businesses should be limited in accordance with the needs of the communities they are to serve; and that it is in the public interest to promote and foster check-cashing businesses and to insure their financial stability.
(c) The director, or the director’s designee, shall cause an investigation of the needs of the community for the establishment of a check-cashing business at the location specified in the application and the effect that granting the license will have on the financial stability of other check-cashing businesses that may be serving the community in which the business of the applicant is proposed to be conducted. If the issuance of a license to engage in the check-cashing business at the location specified will not promote the needs and the convenience and advantage of the community in which the check-cashing business of the applicant is proposed to be conducted, then the application may be denied.
(d) The director, or the director’s designee, shall investigate to ascertain whether the qualifications and requirements have been met. Within ninety (90) days after the publication of the notice, if the director, or the director’s designee, finds that the qualifications have been met, he or she shall issue to the applicant a license to engage in the business of cashing checks in this state.
History of Section. P.L. 1995, ch. 82, § 56.
(a) The director, or the director’s designee, is authorized, directed, and empowered to promulgate regulations that provide for the safety and security of customers of the licensee, and/or its employees, from robbery or other criminal activities to include, but not be limited to, bulletproof glass and steel partitions, except as provided in subsection (c).
(b) The rules and regulations, in addition to any other provisions as the director, or the director’s designee, may require, must provide that licensees maintain:
(1) Continuously, for each licensed premises, liquid assets of at least ten thousand dollars ($10,000);
(2) A cash sheet that must be prepared daily for each day’s business reflecting all transactions for that day;
(3) A money-order register recording the date issued, money order number, amount, and date paid. In lieu of the money-order register, a copy of the money order may be kept when carbonized type money orders are used;
(4) Insurance issued by an insurance company or indemnity company, authorized to do business under the laws of this state, that shall insure the applicant against loss by theft, burglary, robbery, or forgery in principal sum, as determined by the director, or the director’s designee, that shall in no event be less than ten thousand dollars ($10,000), nor more than one hundred thousand dollars ($100,000). The required amounts shall bear a relationship to the liquid assets on hand at the licensed location; and
(5) An adequate written policy and affirmative program to ensure compliance with state and federal money laundering statutes.
(c) Notwithstanding the provisions of subsection (a) or any rule or regulation promulgated by the department of business regulation pertaining to check cashers, persons hosting state-operated video lottery games, and state-operated casino gaming pursuant to licenses issued by the department of business regulation, division of gaming and athletics, and the department of revenue, division of lotteries, are and shall be exempt from any requirement that they construct and maintain bulletproof glass and steel partitions at check cashing stations, transaction windows, counters and/or similar areas, whether or not an exchange of funds, checks, money orders, or other transactions take place therein.
History of Section. P.L. 1995, ch. 82, § 56; P.L. 2019, ch. 289, § 2; P.L. 2019, ch. 303, § 2.
No licensee shall:
(1) Charge check-cashing fees in excess of three percent (3%) of the face amount of the check, or five dollars ($5.00), whichever is greater, if the check is the payment of any kind of state public assistance or federal social security benefit;
(2) Charge check-cashing fees for personal checks in excess of ten percent (10%) of the face amount of the personal check or five dollars ($5.00), whichever is greater;
(3) Charge check-cashing fees in excess of five percent (5%) of the face amount of the check or five dollars ($5.00), whichever is greater, for all other checks; or
(4) Charge deferred deposit transaction fees in excess of ten percent (10%) of the amount of funds advanced.
History of Section. P.L. 1995, ch. 82, § 56; P.L. 2001, ch. 371, § 3; P.L. 2005, ch. 230, § 1; P.L. 2005, ch. 235, § 1; P.L. 2010, ch. 204, § 1.
No licensee shall:
(1) Charge check-cashing fees in excess of three percent (3%) of the face amount of the check, or five dollars ($5.00), whichever is greater, if the check is the payment of any kind of state public assistance or federal social security benefit;
(2) Charge check-cashing fees for personal checks in excess of ten percent (10%) of the face amount of the personal check or five dollars ($5.00), whichever is greater; or
(3) Charge check-cashing fees in excess of five percent (5%) of the face amount of the check or five dollars ($5.00), whichever is greater, for all other checks.
(4) [Deleted by P.L. 2025, ch. 373, § 4 and P.L. 2025, ch. 391, § 4.]
History of Section. P.L. 1995, ch. 82, § 56; P.L. 2001, ch. 371, § 3; P.L. 2005, ch. 230, § 1; P.L. 2005, ch. 235, § 1; P.L. 2010, ch. 204, § 1; P.L. 2025, ch. 373, § 4, effective January 1, 2027; P.L. 2025, ch. 391, § 4, effective January 1, 2027.
(a) In every location licensed pursuant to this chapter, there shall be at all times posted, in a conspicuous place within the licensed premises, a complete and unambiguous schedule of all fees for cashing checks, deferred deposit transactions expressed as both a dollar amount and an annual percentage rate, and the initial issuance of any identification card.
(b) Before a licensee shall deposit, with any regulated institution or other insured-deposit-taking institution organized under the laws of the United States, a check cashed by the licensee, the check must be endorsed with the name under which the licensee is doing business and must include the words “licensed check cashing services”.
(c) The licensee shall provide a receipt for each transaction for the benefit of a customer.
(d) Each check casher shall also post a list of valid identification that is acceptable in lieu of identification provided by the check casher. The information required by this section shall be clear, legible, and in letters not less than one-half (½) inch in height. The information shall be posted in a conspicuous location in the unobstructed view of the public within the check casher’s premises. Failure to post information as required by this section, or the imposition of fees or identification requirements contrary to the information posted, shall constitute a deceptive trade practice under chapter 13.1 of title 6.
History of Section. P.L. 1995, ch. 82, § 56; P.L. 2001, ch. 371, § 3; P.L. 2005, ch. 230, § 1; P.L. 2005, ch. 235, § 1.
(a) In every location licensed pursuant to this chapter, there shall be at all times posted, in a conspicuous place within the licensed premises, a complete and unambiguous schedule of all fees for cashing checks expressed as both a dollar amount, and the initial issuance of any identification card.
(b) Before a licensee shall deposit, with any regulated institution or other insured-deposit-taking institution organized under the laws of the United States, a check cashed by the licensee, the check must be endorsed with the name under which the licensee is doing business and must include the words “licensed check cashing services”.
(c) The licensee shall provide a receipt for each transaction for the benefit of a customer.
(d) Each check casher shall also post a list of valid identification that is acceptable in lieu of identification provided by the check casher. The information required by this section shall be clear, legible, and in letters not less than one-half (½) inch in height. The information shall be posted in a conspicuous location in the unobstructed view of the public within the check casher’s premises. Failure to post information as required by this section, or the imposition of fees or identification requirements contrary to the information posted, shall constitute a deceptive trade practice under chapter 13.1 of title 6.
History of Section. P.L. 1995, ch. 82, § 56; P.L. 2001, ch. 371, § 3; P.L. 2005, ch. 230, § 1; P.L. 2005, ch. 235, § 1; P.L. 2025, ch. 373, § 4, effective January 1, 2027; P.L. 2025, ch. 391, § 4, effective January 1, 2027.
(a) A check casher may defer the deposit of a personal check written by a customer for a term of no less than thirteen (13) days, pursuant to the provisions of this section. The face amount of the check shall not exceed five hundred dollars ($500).
(b) Each deferred deposit shall be made pursuant to a written agreement that has been signed by the customer and by the check casher or an authorized representative of the check casher. The written agreement shall contain a statement of the total amount of any fees charged for the deferred deposit, expressed both in United States currency and as an annual percentage rate (APR), as required by federal regulations. The written agreement shall authorize the check casher to defer deposit of the personal check until a specific date no less than thirteen (13) days from the date the written agreement was signed and executed. The written agreement shall not permit the check casher to accept collateral.
(c) A rollover is an extension or deferral of the payment due date of a deferred deposit transaction for the payment of only an additional fee.
(d) The maximum amount of a single customer’s check is five hundred dollars ($500).
(e) The maximum aggregate amount of concurrently outstanding checks held by the licensee or its affiliate from the same customer is five hundred dollars ($500).
(f) The maximum number of concurrently outstanding checks held by the licensee or its affiliates from the same customer is three (3).
(g) The maximum number of rollovers permitted is one.
(h) The check casher shall give a duplicate original of the agreement to the customer at the time of the transaction.
History of Section. P.L. 2001, ch. 371, § 4; P.L. 2005, ch. 230, § 1; P.L. 2005, ch. 235, § 1.
[Repealed]
History of Section. P.L. 2001, ch. 371, § 4; P.L. 2005, ch. 230, § 1; P.L. 2005, ch. 235, § 1; repealed by P.L. 2025, ch. 373, § 5, effective January 1, 2027; repealed by P.L. 2025, ch. 391, § 5, effective January 1, 2027.
In lieu of the required surety bond or bonds, or of any portion as required by chapter 14, the applicant may deposit with the director, or the director’s designee, or with any financial institutions, credit unions, or national banks in this state that the applicant may designate and the director, or the director’s designee, may approve, United States government/agency obligation or state obligations, to an aggregate amount, based upon principal amount or market value, whichever is lower, of not less than the amount of the required surety bond. The securities shall be deposited and held to secure the same obligations as would the surety bond, but the licensee shall be entitled to receive all interest and dividends thereon; shall have the right, with the approval of the director, or the director’s designee, to substitute other securities for those deposited; and shall be required to substitute securities on the written order of the director, or the director’s designee.
History of Section. P.L. 1995, ch. 82, § 56.
Within five (5) business days after being advised by the payor institution that a check has been altered, forged, stolen, obtained through fraudulent or illegal means, negotiated without proper legal authority, or represents the proceeds of illegal activity, the licensee shall notify the police department in the city or town where the office of the licensee where the check was cashed is located. In the event a check is returned to the licensee by the payor institution for any of the aforementioned reasons, the licensee may not release the check without the consent of the city or town police department, office of the attorney general, or other investigating law enforcement authority.
History of Section. P.L. 1995, ch. 82, § 56.
Check-cashing licensees may engage in the distribution of food stamps in accordance with the regulations promulgated by the director, or the director’s designee.
History of Section. P.L. 1995, ch. 82, § 56.
The operation of any unlicensed check-cashing businesses, or the unlawful conduct or operation of any licensed check-cashing business, is declared to constitute unfair competition with licensed and legally operated check-cashing businesses doing business in the same community. A licensee operating legally under this chapter in the same community has the right to apply to the superior court to obtain an injunction restraining this unfair competition.
History of Section. P.L. 1995, ch. 82, § 56.
If any provision of this chapter or the application of this chapter to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter that can be given effect without the invalid or unconstitutional provisions or application, and to this end the provisions of this chapter are declared to be severable.
History of Section. P.L. 1995, ch. 82, § 56.
[Repealed]
(a) Every agreement shall:
(1) Be dated and signed by, or on behalf of, the insured, and the printed portion thereof shall be in at least eight-point (8) type;
(2) Contain the names and place of business of the insurance producer negotiating the insurance contract or contracts thereto relating, the name and residence, or place of business, of the insured, as specified by the insured, the name and place of business of the company to which payments under the agreement are to be made, a brief description of the insurance contract or contracts, and the amount of the premium or premiums therefore; and
(3) Set forth following items where they are applicable:
(i) The total amount of the premium or premiums;
(ii) The amount of the down payment;
(iii) The principal balance, the difference between (i) and (ii);
(iv) The amount of interest to be charged;
(v) The balance payable by the insured, sum of items (iii) and (iv); and
(vi) The number of installments required, the amount of each installment expressed in dollars, and the due date or period thereof.
(b) The items set forth in subdivision (a)(3) need not be stated in the sequence in which they appear in subdivision (a)(3), and additional items may be included to explain computations made in determining the amount to be paid by the insured.
History of Section. P.L. 2003, ch. 79, § 4; P.L. 2003, ch. 82, § 4.
(a) An insurance premium finance company shall not charge, contract for, receive, or collect any interest or discount charges at a rate in excess of that provided in § 6-26-2.
(b) Interest on any insurance premium finance agreement is to be computed on the balance of the premium or premiums due, after subtracting the down payment made by the insured in accordance with the agreement, from the effective date of the insurance contract, for which the premium or premiums is or are being advanced, to and including the date when the final installment provided for in the agreement is due and payable. The interest so provided for by this chapter anticipates timely repayment, in consecutive equal monthly installments, for a period of one year. With respect to contractual arrangements for repayment in greater or lesser periods, or in unequal, irregular, or other than monthly installments, interest may be computed at an equivalent effective rate, likewise, having due regard for timely payments of installments.
(c) A service charge of fifteen dollars ($15.00) per insurance premium finance agreement, which need not be refunded upon cancellation or prepayment, may be imposed as long as the imposition of said service charge does not cause the total charges provided for in the agreement to exceed that specified in § 6-26-2.
(d) Notwithstanding the provisions of any agreement, an insured may prepay the obligation in full at any time. In that event, the insured shall receive a refund credit. (The refund credit shall represent at least as great a proportion of the interest as the sum of the periodic balances following the month in which prepayment is made bears the sum of all periodic balances under the schedule of installments in the agreement.) If the amount of a refund credit is less than one dollar ($1.00), no actual refund need be made.
History of Section. P.L. 2003, ch. 79, § 4; P.L. 2003, ch. 82, § 4.
(a) An insurance premium finance agreement may provide for payment by the insured of a delinquency charge ranging from one dollar ($1.00) to a maximum of five percent (5%) of an installment that is in default for a period of five (5) days or more.
(b) The agreement may provide for payment by the insured of a cancellation charge of fifteen dollars ($15.00) if the default results in cancellation of any insurance contract or contracts listed in the agreement.
(c) An agreement may also provide for payment, upon default, of reasonable costs of collection, including reasonable attorneys’ fees.
(d) None of the charges referred to in this section shall be considered directly or indirectly in determining whether a violation of the usury laws has occurred under an agreement.
History of Section. P.L. 2003, ch. 79, § 4; P.L. 2003, ch. 82, § 4.
(a) When an insurance premium finance agreement contains a power of attorney enabling the company to cancel an insurance contract or contracts listed in the agreement, the insurance contract or contracts shall not be cancelled by the company unless the cancellation is effectuated in accordance with this section.
(b) Not less than ten (10) days written notice shall be mailed to the insured, at his or her last known address, as shown on the records of the company, of the intention of the company, to cancel the insurance contract or contracts unless the default is removed within the ten-day (10) period.
(c) After expiration of the ten-day (10) period, the company may cancel the insurance contract or contracts by mailing to the insurer a notice of cancellation. The insurance contract or contracts shall be cancelled as if notice of cancellation had been submitted by the insured personally, but without requiring return of the insurance contract or contracts. The company shall also mail a notice of cancellation to the insured at his or her last known address as shown on the records of the company. The insurance contract or contracts shall be cancelled by the insurer on a pro rata basis.
(d) All statutory, regulatory, and contractual restrictions providing that an insurance contract may not be cancelled unless notice be given to a particular governmental agency, mortgagee, or other third party shall be applicable to any cancellation effected under the provisions of this section. The insurer shall give the prescribed notice on behalf of itself or the insured to any governmental agency, mortgagee, or other third party on or before the second business day after the day it receives notice of cancellation from the company, and shall determine the effective date of cancellation, taking into consideration the number of days’ notice required to complete the cancellation.
History of Section. P.L. 2003, ch. 79, § 4; P.L. 2003, ch. 82, § 4.
Whenever a financed insurance contract or contracts is cancelled, the insurer shall return the gross unearned premium or premiums, if any, that may be due under the insurance contract or contracts, directly to the insurance premium finance company for the account of the insured, as soon as reasonably possible, but, in no event, shall the period for the return exceed sixty (60) days after the effective date of cancellation. In the event that crediting of a return premium or premiums to the account of an insured results in a surplus over the amount due from the insured, the insurance premium finance company shall refund the excess to the insured, provided that no refund shall be required if the refund amounts to less than one dollar ($1.00).
History of Section. P.L. 2003, ch. 79, § 4; P.L. 2003, ch. 82, § 4.
Filing of the insurance premium finance agreement shall not be necessary to perfect validity thereof, as a secured transaction against creditors, subsequent purchasers, pledgees, encumbrancers, trustees in bankruptcy, or other insolvency proceeding under any law or any person having the status, power, or authority of the aforementioned, or their successors or assigns.
History of Section. P.L. 2003, ch. 79, § 4; P.L. 2003, ch. 82, § 4.
(a) As used in this section:
(1) “Federal reimbursement rates” means the current listed fee schedule from the Centers for Medicare and Medicaid Services, listing the current Healthcare Common Procedure Coding system (HCPCS) and the corresponding reimbursement rates.
(2) “Orthosis” means a custom fabricated brace or support that is designed based on medical necessity. Orthosis does not include prefabricated or direct-formed orthotic devices, as defined in this section, or any of the following assistive technology devices: commercially available knee orthoses used following injury or surgery; spastic muscle-tone inhibiting orthoses; upper extremity adaptive equipment; finger splints; hand splints; wrist gauntlets; face masks used following burns; wheelchair seating that is an integral part of the wheelchair and not worn by the patient independent of the wheelchair; fabric or elastic supports; corsets; low-temperature formed plastic splints; trusses; elastic hose; canes; crutches; cervical collars; dental appliances; and other similar devices as determined by the director of the department of health, such as those commonly carried in stock by a pharmacy, department store, corset shop, or surgical supply facility.
(3) “Orthotics” means the science and practice of evaluating, measuring, designing, fabricating, assembling, fitting, adjusting or servicing, as well as providing the initial training necessary to accomplish the fitting of, an orthosis for the support, correction, or alleviation of neuromuscular or musculoskeletal dysfunction, disease, injury, or deformity. The practice of orthotics encompasses evaluation, treatment, and consultation; with basic observational gait and postural analysis, orthotists assess and design orthoses to maximize function and provide not only the support but the alignment necessary to either prevent or correct a deformity or to improve the safety and efficiency of mobility or locomotion or both. Orthotic practice includes providing continuing patient care in order to assess its effect on the patient’s tissues and to assure proper fit and function of the orthotic device by periodic evaluation.
(4) “Prosthesis” means an artificial limb that is alignable or, in lower-extremity applications, capable of weight bearing. Prosthesis means an artificial medical device that is not surgically implanted and that is used to replace a missing limb, appendage, or other external human body part, including an artificial limb, hand, or foot. The term does not include artificial eyes, ears, noses, dental appliances, osotmy products, or devices such as eyelashes or wigs.
(5) “Prosthetics” means the science and practice of evaluation, measuring, designing, fabricating, assembling, fitting, aligning, adjusting, or servicing, as well as providing the initial training necessary to accomplish the fitting of, a prosthesis through the replacement of external parts of a human body lost due to amputation or congenital deformities or absences. The practice of prosthetics also includes the generation of an image, form, or mold that replicates the patient’s body or body segment and that requires rectification of dimensions, contours, and volumes for use in the design and fabrication of a socket to accept a residual anatomic limb to, in turn, create an artificial appendage that is designed either to support body weight or to improve or restore function or cosmesis, or both. Involved in the practice of prosthetics is observational gait analysis and clinical assessment of the requirements necessary to refine and mechanically fix the relative position of various parts of the prosthesis to maximize function, stability, and safety of the patient. The practice of prosthetics includes providing and continuing patient care in order to assess the prosthetic device’s effect on the patient’s tissues and to assure proper fit and function of the prosthetic device by periodic evaluation.
(6) “Private insurance company” means any insurance company, or management company hired by an insurance company, that is any of the following:
(i) Based in the state of Rhode Island; or
(ii) Provides coverage for citizens for the state of Rhode Island; or
(iii) Allows subscribing patients to seek prosthetic or orthotic services in the state of Rhode Island.
(b) Every individual or group health insurance contract, plan, or policy delivered; issued for delivery; or renewed in this state on or after January 1, 2006, that provides medical coverage that includes coverage for physician services in a physician’s office, and every policy that provides major medical or similar comprehensive type coverage shall provide coverage for benefits for orthotic and prosthetic devices that equal those benefits provided for under federal laws for health insurance for the aged and disabled pursuant to 42 U.S.C. §§ 1395k, 1395 l , and 1395m and 42 C.F.R. §§ 414.202, 414.210, 414.228, and 410.100 as applicable to this section.
(c) A health insurance contract, plan, or policy may require prior authorization for orthotic and prosthetic devices in the same manner that prior authorization is required for any other covered benefit.
(d) Covered benefits for orthotic or prosthetic devices shall be limited to the most appropriate model that adequately meets the medical needs of the patient as determined by the insured’s treating physician.
(e) The repair and replacement of orthotic or prosthetic devices also shall be covered subject to co-payments and deductibles, unless necessitated by misuse or loss.
(f) An insurer may require, if coverage is provided through a managed care plan, that benefits mandated pursuant to this section be covered benefits only if the orthotic or prosthetic devices are provided by a vendor and orthotic or prosthetic services are rendered by a provider who is licensed by the state of Rhode Island to provide orthotics and prosthetics.
History of Section. P.L. 2006, ch. 210, § 4; P.L. 2006, ch. 380, § 4.
[Repealed]
This chapter shall be known and may be cited as the “Uniform Debt-Management Services Act”.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
In this chapter:
(1) “Director” means the director of the department of business regulation.
(2) “Affiliate”:
(a) With respect to an individual, means:
(i) The spouse of the individual;
(ii) A sibling of the individual or the spouse of a sibling;
(iii) An individual or the spouse of an individual who is a lineal ancestor or lineal descendant of the individual or the individual’s spouse;
(iv) An aunt, uncle, great aunt, great uncle, first cousin, niece, nephew, grandniece, or grandnephew, whether related by the whole or the half blood or adoption, or the spouse of any of them; or
(v) Any other individual occupying the residence of the individual; and
(b) With respect to an entity, means:
(i) A person who directly or indirectly controls, is controlled by, or is under common control with the entity;
(ii) An officer of, or an individual performing similar functions with respect to, the entity;
(iii) A director of, or an individual performing similar functions with respect to, the entity;
(iv) Subject to adjustment of the dollar amount pursuant to this chapter, a person who receives or received more than twenty-five thousand dollars ($25,000) from the entity in either the current year or the preceding year or a person who owns more than ten percent (10%) of, or an individual who is employed by or is a director of, a person who receives or received more than twenty-five thousand dollars ($25,000) from the entity in either the current year or the preceding year;
(v) An officer or director of, or an individual performing similar functions with respect to, a person described in subsection (b)(i) above;
(vi) The spouse of, or an individual occupying the residence of, an individual described in subsections (b)(i) — (b)(v); or
(vii) An individual who has the relationship specified in subsection (a)(iv) to an individual or the spouse of an individual described in subsections (b)(i) — (b)(v).
(3) “Agreement” means an agreement between a provider and an individual for the performance of debt-management services.
(4) “Bank” means a financial institution, including a commercial bank, savings bank, savings and loan association, credit union, and trust company, engaged in the business of banking, chartered under federal or state law, and regulated by a federal or state banking regulatory authority.
(5) “Business address” means the physical location of a business, including the name and number of a street.
(6) “Certified counselor” means an individual certified by a training program or certifying organization, approved by the director, that authenticates the competence of individuals providing education and assistance to other individuals in connection with debt-management services.
(7) “Concessions” means assent to repayment of a debt on terms more favorable to an individual than the terms of the contract between the individual and a creditor.
(8) “Day” means calendar day.
(9) “Debt-management services” means services as an intermediary between an individual and one or more creditors of the individual for the purpose of obtaining concessions, but does not include:
(a) Legal services provided in an attorney-client relationship by an attorney licensed or otherwise authorized to practice law in this state;
(b) Accounting services provided in an accountant-client relationship by a certified public accountant licensed to provide accounting services in this state; or
(c) Financial-planning services provided in a financial planner-client relationship by a member of a financial-planning profession whose members the director, by rule, determines are:
(i) Licensed by this state;
(ii) Subject to a disciplinary mechanism;
(iii) Subject to a code of professional responsibility; and
(iv) Subject to a continuing-education requirement.
(10) “Entity” means a person other than an individual.
(11) “Good faith” means honesty in fact and the observance of reasonable standards of fair dealing.
(12) “Person” means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, or any other legal or commercial entity. The term does not include a public corporation, government, or governmental subdivision, agency, or instrumentality.
(13) “Plan” means a program or strategy in which a provider furnishes debt-management services to an individual and that includes a schedule of payments to be made by or on behalf of the individual and used to pay debts owed by the individual.
(14) “Principal amount of the debt” means the amount of a debt at the time of an agreement.
(15) “Provider” means a person that provides, offers to provide, or agrees to provide debt-management services directly or through others.
(16) “Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
(17) “Settlement fee” means a charge imposed on or paid by an individual in connection with a creditor’s assent to accept in full satisfaction of a debt an amount less than the principal amount of the debt.
(18) “Sign” means, with present intent to authenticate or adopt a record:
(a) To execute or adopt a tangible symbol; or
(b) To attach to or logically associate with the record an electronic sound, symbol, or process.
(19) “State” means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.
(20) “Trust account” means an account held by a provider that is:
(a) Established in an insured bank;
(b) Separate from other accounts of the provider or its designee;
(c) Designated as a trust account or other account designated to indicate that the money in the account is not the money of the provider or its designee; and
(d) Used to hold money of one or more individuals for disbursement to creditors of the individuals.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
(a) This chapter does not apply to an agreement with an individual who the provider has no reason to know resides in this state at the time of the agreement.
(b) This chapter does not apply to a provider to the extent that the provider:
(1) Provides or agrees to provide debt-management, educational, or counseling services to an individual who the provider has no reason to know resides in this state at the time the provider agrees to provide the services; or
(2) Receives no compensation for debt-management services from or on behalf of the individuals to whom it provides the services or from their creditors.
(c) This chapter does not apply to the following persons or their employees when the person or the employee is engaged in the regular course of the person’s business or profession:
(1) A judicial officer, a person acting under an order of a court or an administrative agency, or an assignee for the benefit of creditors;
(2) A bank chartered under the laws of the United States or of this state;
(3) An affiliate, as defined in § 19-14.8-2(2)(b)(i), of a bank described in subsection (2) if the affiliate is regulated by a federal or state banking regulatory authority;
(4) A title insurer, escrow company, or other person that provides bill-paying services if the provision of debt-management services is incidental to the bill-paying services;
(5) A bank chartered under the laws of another state, so long as the laws of such other state expressly authorize such bank to operate in such state, under conditions no more restrictive than those imposed by the laws of this state, as determined by the director, or the director’s designee; or
(6) An affiliate, as defined in § 19-14.8-2(2)(b)(i), of a bank described in subsection (5) if the affiliate is regulated by a federal or state banking regulatory authority.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
(a) Except as otherwise provided in subsection (b) of this section, a provider may not provide debt-management services to an individual who it reasonably should know resides in this state at the time it agrees to provide the services, unless the provider is registered under this chapter.
(b) If a provider is registered under this chapter, subsection (a) does not apply to an employee or agent of the provider.
(c) The director shall maintain and publicize a list of the names of all registered providers.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
(a) An application for registration as a provider must be in a form prescribed by the director.
(b) Subject to adjustment of dollar amounts pursuant to § 19-14.8-32(f), an application for registration as a provider must be accompanied by:
(1) The fee established by chapter 14 of this title;
(2) The bond required by § 19-14.8-13;
(3) Identification of all trust accounts required by § 19-14.8-22 and an irrevocable consent authorizing the director to review and examine the trust accounts;
(4) Evidence of insurance in the amount of two hundred fifty thousand dollars ($250,000):
(A) Against the risks of dishonesty, fraud, theft, and other misconduct on the part of the applicant or a director, employee, or agent of the applicant;
(B) Issued by an insurance company authorized to do business in this state and rated at least “A” by a nationally recognized rating organization;
(C) With a deductible of not more than ten thousand dollars ($10,000);
(D) Payable to the applicant, the individuals who have agreements with the applicant, and this state, as their interests may appear; and
(E) Not subject to cancellation by the applicant without the approval of the director;
(5) If the applicant is a foreign corporation, proof that the applicant holds a certificate of authority to conduct affairs in this state, as required by chapter 6 of title 7; and
(6) If the applicant is organized as a not-for-profit entity or is exempt from taxation, evidence of not-for-profit and tax-exempt status applicable to the applicant under the Internal Revenue Code, 26 U.S.C. § 501, as amended.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3; P.L. 2014, ch. 106, § 4; P.L. 2014, ch. 125, § 4.
An application for registration must be signed under oath or certified under the penalties of perjury and include:
(1) The applicant’s name, principal business address and telephone number, and all other business addresses in this state, electronic-mail addresses, and internet website addresses;
(2) All names under which the applicant conducts business;
(3) The address of each location in this state at which the applicant will provide debt-management services or a statement that the applicant will have no such location;
(4) The name and home address of each officer and director of the applicant and each person that owns at least ten percent (10%) of the applicant;
(5) Identification of every jurisdiction in which, during the five (5) years immediately preceding the application:
(A) The applicant or any of its officers or directors has been licensed or registered to provide debt-management services; or
(B) Individuals have resided when they received debt-management services from the applicant;
(6) A statement describing, to the extent it is known or should be known by the applicant, any material civil or criminal judgment or litigation and any material administrative or enforcement action by a governmental agency in any jurisdiction against the applicant, any of its officers, directors, owners, or agents, or any person who is authorized to have access to the trust account required by § 19-14.8-22;
(7) The applicant’s financial statements, audited by an accountant licensed to conduct audits, for each of the two (2) years immediately preceding the application or, if it has not been in operation for the two (2) years preceding the application, for the period of its existence;
(8) Evidence of accreditation by an independent accrediting organization approved by the director;
(9) Evidence that, within twelve (12) months after initial employment, each of the applicant’s counselors becomes certified as a certified counselor;
(10) A description of the three (3) most commonly used educational programs that the applicant provides or intends to provide to individuals who reside in this state and a copy of any materials used or to be used in those programs;
(11) A description of the applicant’s financial analysis and initial budget plan, including any form or electronic model, used to evaluate the financial condition of individuals;
(12) A copy of each form of agreement that the applicant will use with individuals who reside in this state;
(13) The schedule of fees and charges that the applicant will use with individuals who reside in this state;
(14) At the applicant’s expense, the results of a criminal-records check, including fingerprints, conducted within the immediately preceding twelve (12) months, covering every officer of the applicant and every employee or agent of the applicant who is authorized to have access to the trust account required by § 19-14.8-22;
(15) The names and addresses of all employers of each director during the ten (10) years immediately preceding the application;
(16) A description of any ownership interest of at least ten percent (10%) by a director, owner, or employee of the applicant in:
(A) Any affiliate of the applicant; or
(B) Any entity that provides products or services to the applicant or any individual relating to the applicant’s debt-management services;
(17) A statement of the amount of compensation of the applicant’s five (5) most highly compensated employees for each of the three (3) years immediately preceding the application or, if it has not been in operation for the three (3) years preceding the application, for the period of its existence;
(18) The identity of each director who is an affiliate, as defined in § 19-14.8-2(2)(a) or (b)(i), (b)(ii), (b)(iv), (b)(v), (b)(vi), or (b)(vii), of the applicant; and
(19) Any other information that the director reasonably requires to perform the director’s duties hereunder.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
An applicant or registered provider shall notify the director within ten (10) days after a change in the information specified in § 19-14.8-5(b)(4) or (6) or § 19-14.8-6(1), (3), (6), (12), or (13).
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
Except for the information required by § 19-14.8-6(7), (14), and (17) and the addresses required by § 19-14.8-6(4), the director shall make the information in an application for registration as a provider available to the public.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
(a) Except as otherwise provided in subsections (b) and (c), the director shall issue a certificate of registration as a provider to a person that complies with §§ 19-14.8-5 and 19-14.8-6.
(b) The director may deny registration if:
(1) The application contains information that is materially erroneous or incomplete;
(2) An officer, director, or owner of the applicant has been convicted of a crime, or suffered a civil judgment, involving dishonesty or the violation of state or federal securities laws;
(3) The applicant, or any of its officers, directors, or owners, has defaulted in the payment of money collected for others; or
(4) The director finds that the financial responsibility, experience, character, or general fitness of the applicant, or its owners, directors, employees, or agents, does not warrant belief that the business will be operated in compliance with this chapter.
(c) The director shall deny registration if:
(1) The application is not accompanied by the fee established by the director; or
(2) With respect to an applicant that is organized as a not-for-profit entity or has obtained tax-exempt status under the Internal Revenue Code, 26 U.S.C. § 501, the applicant’s board of directors is not independent of the applicant’s employees and agents.
(d) Subject to adjustment of the dollar amount pursuant to § 19-14.8-32(f), a board of directors is not independent for purposes of subsection (c) of this section if more than one-fourth (¼) of its members:
(1) Are affiliates of the applicant, as defined in § 19-14.8-2(2)(a) or (2)(b)(i), (ii), (iv), (v), (vi), or (vii); or
(2) After the date ten (10) years before first becoming a director of the applicant, were employed by, or directors of, a person that received from the applicant more than twenty-five thousand dollars ($25,000) in either the current year or the preceding year.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3; P.L. 2007, ch. 13, § 1; P.L. 2007, ch. 14, § 1.
(a) The director shall approve or deny an initial registration as a provider within one hundred twenty (120) days after an application is filed. In connection with a request pursuant to this chapter for additional information, the director may extend the one hundred twenty-day (120) period for not more than sixty (60) days. Within seven (7) days after denying an application, the director, in a record, shall inform the applicant of the reasons for the denial.
(b) If the director denies an application for registration as a provider or does not act on an application within the time prescribed in subsection (a), the applicant may appeal and request a hearing pursuant to chapter 35 of title 42.
(c) Subject to this chapter, § 19-14.8-11(d), and § 19-14.8-34, a registration as a provider is valid for one year.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
(a) A provider must obtain a renewal of its registration annually.
(b) An application for renewal of registration as a provider must be in a form prescribed by the director, signed under oath or certified under the penalties of perjury, and:
(1) Be filed in accordance with § 19-14-22;
(2) Be accompanied by the fee established by chapter 14 of this title and the bond required by this chapter;
(3) Contain the matter required for initial registration as a provider by this chapter and a financial statement, audited by an accountant licensed to conduct audits, for the applicant’s fiscal year immediately preceding the application;
(4) Disclose any changes in the information contained in the applicant’s application for registration, or its immediately previous application for renewal, as applicable;
(5) Supply evidence of insurance in an amount equal to the larger of two hundred fifty thousand dollars ($250,000) or the highest daily balance in the trust account required by this chapter during the six-month (6) period immediately preceding the application:
(A) Against risks of dishonesty, fraud, theft, and other misconduct on the part of the applicant or a director, employee, or agent of the applicant;
(B) Issued by an insurance company authorized to do business in this state and rated at least “A” by a nationally recognized rating organization;
(C) With a deductible of not more than ten thousand dollars ($10,000);
(D) Payable to the applicant, the individuals who have agreements with the applicant, and this state, as their interests may appear; and
(E) Not subject to cancellation by the applicant without the approval of the director;
(6) Disclose the total amount of money received by the applicant pursuant to plans during the preceding twelve (12) months from, or on behalf of, individuals who reside in this state and the total amount of money distributed to creditors of those individuals during that period;
(7) Disclose, to the best of the applicant’s knowledge, the gross amount of money accumulated during the preceding twelve (12) months pursuant to plans by, or on behalf of, individuals who reside in this state and with whom the applicant has agreements; and
(8) Provide any other information that the director reasonably requires to perform the director’s duties under this section.
(c) Except for the information required by § 19-14.8-6(7), (14), and (17) and the addresses required by § 19-14.8-6(4), the director shall make the information in an application for renewal of registration as a provider available to the public.
(d) If a registered provider files a timely and complete application for renewal of registration, the registration remains effective until the director, in a record, notifies the applicant of a denial and states the reasons for the denial.
(e) If the director denies an application for renewal of registration as a provider, the applicant, within ten (10) days after receiving notice of the denial, may appeal and request a hearing pursuant to chapter 35 of title 42. Subject to § 19-14.8-34, while the appeal is pending, the applicant shall continue to provide debt-management services to individuals with whom it has agreements. If the denial is affirmed, subject to the director’s order and § 19-14.8-34, the applicant shall continue to provide debt-management services to individuals with whom it has agreements until, with the approval of the director, it transfers the agreements to another registered provider or returns to the individuals all unexpended money that is under the applicant’s control.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3; P.L. 2014, ch. 106, § 4; P.L. 2014, ch. 125, § 4.
[Repealed]
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3; repealed by P.L. 2022, ch. 338, § 8, effective June 29, 2022; repealed by P.L. 2022, ch. 339, § 8, effective June 29, 2022.
(a) Except as otherwise provided in § 19-14.8-14, a provider that is required to be registered under this chapter shall file a surety bond with the director, which must:
(1) Be in effect during the period of registration and for two (2) years after the provider ceases providing debt-management services to individuals in this state; and
(2) Run to this state for the benefit of this state and of individuals who reside in this state when they agree to receive debt-management services from the provider, as their interests may appear.
(b) Subject to adjustment of the dollar amount pursuant to § 19-14.8-32(f), a surety bond filed pursuant to subsection (a) must:
(1) Be in the amount of fifty thousand dollars ($50,000) or other larger or smaller amount that the director determines is warranted by the financial condition and business experience of the provider, the history of the provider in performing debt-management services, the risk to individuals, and any other factor the director considers appropriate;
(2) Be issued by a bonding, surety, or insurance company authorized to do business in this state and rated at least “A” by a nationally recognized rating organization; and
(3) Have payment conditioned upon noncompliance of the provider or its agent with this chapter.
(c) If the principal amount of a surety bond is reduced by payment of a claim or a judgment, the provider shall immediately notify the director and, within thirty (30) days after notice by the director, file a new or additional surety bond in an amount set by the director. The amount of the new or additional bond must be at least the amount of the bond immediately before payment of the claim or judgment. If for any reason a surety terminates a bond, the provider shall immediately file a new surety bond in the amount of fifty thousand dollars ($50,000) or other amount determined pursuant to subsection (b).
(d) The director or an individual may obtain satisfaction out of the surety bond procured pursuant to this section if:
(1) The director assesses expenses under § 19-14.8-32(b)(1), issues a final order under § 19-14.8-33(a)(2), or recovers a final judgment under § 19-14.8-33(a)(4) or (a)(5) or (d); or
(2) An individual recovers a final judgment pursuant to § 19-14.8-35(a), (b), or (c)(1), (c)(2), or (c)(4).
(e) If claims against a surety bond exceed or are reasonably expected to exceed the amount of the bond, the director, on the initiative of the director or on petition of the surety, shall, unless the proceeds are adequate to pay all costs, judgments, and claims, distribute the proceeds in the following order:
(1) To satisfaction of a final order or judgment under § 19-14.8-33(a)(2), (a)(4), or (a)(5) or (d);
(2) To final judgments recovered by individuals pursuant to § 19-14.8-35(a), (b), or (c)(1), (c)(2) or (c)(4), pro rata;
(3) To claims of individuals established to the satisfaction of the director, pro rata; and
(4) If a final order or judgment is issued under § 19-14.8-33(a), to the expenses charged pursuant to § 19-14.8-32(b)(1).
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
(a) Instead of the surety bond required by § 19-14.8-13, a provider may deliver to the director, in the amount required by § 19-14.8-13(b), and, except as otherwise provided in subsection (a)(2)(A) of this section, payable or available to this state and to individuals who reside in this state when they agree to receive debt-management services from the provider, as their interests may appear, if the provider or its agent does not comply with this chapter:
(1) A certificate of insurance issued by an insurance company authorized to do business in this state and rated at least “A” by a nationally recognized rating organization, with no deductible; or
(2) With the approval of the director:
(A) An irrevocable letter of credit, issued or confirmed by a bank approved by the director, payable upon presentation of a certificate by the director stating that the provider or its agent has not complied with this chapter; or
(B) Bonds or other obligations of the United States or guaranteed by the United States or bonds or other obligations of this state or a political subdivision of this state, to be deposited and maintained with a bank approved by the director for this purpose.
(b) If a provider furnishes a substitute pursuant to subsection (a), the provisions of § 19-14.8-13(a), (c), (d), and (e) apply to the substitute.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
A provider shall act in good faith in all matters under this chapter.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
A provider that is required to be registered under this chapter shall maintain a toll-free communication system, staffed at a level that reasonably permits an individual to speak to a certified counselor or customer-service representative, as appropriate, during ordinary business hours.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
(a) Before providing debt-management services, a registered provider shall give the individual an itemized list of goods and services and the charges for each. The list must be clear and conspicuous; be in a record the individual may keep whether or not the individual assents to an agreement; and describe the goods and services the provider offers:
(1) Free of additional charge if the individual enters into an agreement;
(2) For a charge if the individual does not enter into an agreement; and
(3) For a charge if the individual enters into an agreement, using the following terminology, as applicable, and format:
Set-up fee _________________________________________
dollar amount of fee
Monthly service fee _________________________________________
dollar amount of fee or method of determining amount
Settlement fee _________________________________________
dollar amount of fee or method of determining amount
Goods and services in addition to those provided in connection with a plan:
(item) dollar amount or method of determining amount
(item) dollar amount or method of determining amount.
(b) A provider may not furnish debt-management services unless the provider, through the services of a certified counselor:
(1) Provides the individual with reasonable education about the management of personal finance;
(2) Has prepared a financial analysis; and
(3) If the individual is to make regular, periodic payments:
(A) Has prepared a plan for the individual;
(B) Has made a determination, based on the provider’s analysis of the information provided by the individual and otherwise available to it, that the plan is suitable for the individual and the individual will be able to meet the payment obligations under the plan; and
(C) Believes that each creditor of the individual listed as a participating creditor in the plan will accept payment of the individual’s debts as provided in the plan.
(c) Before an individual assents to an agreement to engage in a plan, a provider shall:
(1) Provide the individual with a copy of the analysis and plan required by subsection (b) in a record that identifies the provider and that the individual may keep whether or not the individual assents to the agreement;
(2) Inform the individual of the availability, at the individual’s option, of assistance by a toll-free communication system or in person to discuss the financial analysis and plan required by subsection (b); and
(3) With respect to all creditors identified by the individual or otherwise known by the provider to be creditors of the individual, provide the individual with a list of:
(A) Creditors that the provider expects to participate in the plan and grant concessions;
(B) Creditors that the provider expects to participate in the plan but not grant concessions;
(C) Creditors that the provider expects not to participate in the plan; and
(D) All other creditors.
(d) Before an individual assents to an agreement to engage in a plan, the provider shall inform the individual, in a record that contains nothing else, that is given separately, and that the individual may keep whether or not the individual assents to the agreement:
(1) Of the name and business address of the provider;
(2) That plans are not suitable for all individuals and the individual may ask the provider about other ways, including bankruptcy, to deal with indebtedness;
(3) That establishment of a plan may adversely affect the individual’s credit rating or credit scores;
(4) That nonpayment of debt may lead creditors to increase finance and other charges or undertake collection activity, including litigation;
(5) Unless it is not true, that the provider may receive compensation from the creditors of the individual; and
(6) That, unless the individual is insolvent, if a creditor settles for less than the full amount of the debt, the plan may result in the creation of taxable income to the individual, even though the individual does not receive any money.
(e) If a provider may receive payments from an individual’s creditors and the plan contemplates that the individual’s creditors will reduce finance charges or fees for late payment, default, or delinquency, the provider may comply with subsection (d) by providing the following disclosure, surrounded by black lines:
IMPORTANT INFORMATION FOR YOU TO CONSIDER
(1) Debt-management plans are not right for all individuals, and you may ask us to provide information about other ways, including bankruptcy, to deal with your debts.
(2) Using a debt-management plan may hurt your credit rating or credit scores.
(3) We may receive compensation for our services from your creditors.
Name and business address of provider.
(f) If a provider will not receive payments from an individual’s creditors and the plan contemplates that the individual’s creditors will reduce finance charges or fees for late payment, default, or delinquency, a provider may comply with subsection (d) by providing the following disclosure, surrounded by black lines:
IMPORTANT INFORMATION FOR YOU TO CONSIDER
(1) Debt-management plans are not right for all individuals, and you may ask us to provide information about other ways, including bankruptcy, to deal with your debts.
(2) Using a debt-management plan may hurt your credit rating or credit scores.
Name and business address of provider.
(g) If a plan contemplates that creditors will settle debts for less than the full principal amount of debt owed, a provider may comply with subsection (d) by providing the following disclosure, surrounded by black lines:
IMPORTANT INFORMATION FOR YOU TO CONSIDER
(1) Our program is not right for all individuals, and you may ask us to provide information about bankruptcy and other ways to deal with your debts.
(2) Nonpayment of your debts under our program may:
hurt your credit rating or credit scores;
lead your creditors to increase finance and other charges; and
lead your creditors to undertake activity, including lawsuits, to collect the debts.
(3) Reduction of debt under our program may result in taxable income to you, even though you will not actually receive any money.
Name and business address of provider.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
(a) In this section:
(1) “Federal act” means the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. § 7001 et seq., as amended.
(2) “Consumer” means an individual who seeks or obtains goods or services that are used primarily for personal, family, or household purposes.
(b) A provider may satisfy the requirements of §§ 19-14.8-17, 19-14.8-19, or 19-14.8-27 by means of the internet or other electronic means if the provider obtains a consumer’s consent in the manner provided by § 101(c)(1) of the federal act.
(c) The disclosures and materials required by §§ 19-14.8-17, 19-14.8-19, and 19-14.8-27 shall be presented in a form that is capable of being accurately reproduced for later reference.
(d) With respect to disclosure by means of an internet website, the disclosure of the information required by § 19-14.8-17(d) must appear on one or more screens that:
(1) Contain no other information; and
(2) The individual must see before proceeding to assent to formation of a plan.
(e) At the time of providing the materials and agreement required by § 19-14.8-17(c) and (d), § 19-14.8-19, and § 19-14.8-27, a provider shall inform the individual that upon electronic, telephonic, or written request, it will send the individual a written copy of the materials, and shall comply with a request as provided in subsection (f).
(f) If a provider is requested, before the expiration of ninety (90) days after a plan is completed or terminated, to send a written copy of the materials required by § 19-14.8-17(c) and (d), § 19-14.8-19, or § 19-14.8-27, the provider shall send them at no charge within three (3) business days after the request, but the provider need not comply with a request more than once per calendar month or if it reasonably believes the request is made for purposes of harassment. If a request is made more than ninety (90) days after a plan is completed or terminated, the provider shall send within a reasonable time a written copy of the materials requested.
(g) A provider that maintains an internet website shall disclose on the home page of its website or on a page that is clearly and conspicuously connected to the home page by a link that clearly reveals its contents:
(1) Its name and all names under which it does business;
(2) Its principal business address, telephone number, and electronic-mail address, if any; and
(3) The names of its principal officers.
(h) Subject to subsection (i), if a consumer who has consented to electronic communication in the manner provided by section 101 of the federal act withdraws consent as provided in the federal act, a provider may terminate its agreement with the consumer.
(i) If a provider wishes to terminate an agreement with a consumer pursuant to subsection (h), it shall notify the consumer that it will terminate the agreement unless the consumer, within thirty (30) days after receiving the notification, consents to electronic communication in the manner provided in § 101(c) of the federal act. If the consumer consents, the provider may terminate the agreement only as permitted by § 19-14.8-19(a)(6)(G).
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
(a) An agreement must:
(1) Be in a record;
(2) Be dated and signed by the provider and the individual;
(3) Include the name of the individual and the address where the individual resides;
(4) Include the name, business address, and telephone number of the provider;
(5) Be delivered to the individual immediately upon formation of the agreement; and
(6) Disclose:
(A) The services to be provided;
(B) The amount, or method of determining the amount, of all fees, individually itemized, to be paid by the individual;
(C) The schedule of payments to be made by, or on behalf of, the individual, including the amount of each payment, the date on which each payment is due, and an estimate of the date of the final payment or, if such information is not known to the provider at the time the agreement is made, and affirmative statement to that effect;
(D) If a plan provides for regular periodic payments to creditors:
(i) Each creditor of the individual to which payment will be made, the amount owed to each creditor, and any concessions the provider reasonably believes each creditor will offer or, if the provider cannot form a reasonable belief as to such amounts and concessions at the time the agreement is made, an affirmative statement to that effect; and
(ii) The schedule of expected payments to each creditor, including the amount of each payment and the date on which it will be made;
(E) Each creditor that the provider believes will not participate in the plan and to which the provider will not direct payment;
(F) How the provider will comply with its obligations under § 19-14.8-27(a);
(G) That the provider may terminate the agreement for good cause, upon return of unexpended money of the individual;
(H) That the individual may cancel the agreement as provided in § 19-14.8-20;
(I) That the individual may contact the director with any questions or complaints regarding the provider; and
(J) The address, telephone number, and internet address or website of the director.
(b) For purposes of subsection (a)(5), delivery of an electronic record occurs when it is made available in a format in which the individual may retrieve, save, and print it and the individual is notified that it is available.
(c) If the director supplies the provider with any information required under subsection (a)(6)(J), the provider may comply with that requirement only by disclosing the information supplied by the director.
(d) An agreement must provide that:
(1) The individual has a right to terminate the agreement at any time, without penalty or obligation, by giving the provider written or electronic notice, in which event:
(A) The provider will refund all unexpended money that the provider or its agent has received from or on behalf of the individual for the reduction or satisfaction of the individual’s debt;
(B) With respect to an agreement that contemplates that creditors will settle debts for less than the principal amount of debt, the provider will refund sixty-five percent (65%) of any portion of the set-up fee that has not been credited against the settlement fee; and
(C) All powers of attorney granted by the individual to the provider are revoked and ineffective;
(2) The individual authorizes any bank in which the provider or its agent has established a trust account to disclose to the director any financial records relating to the trust account; and
(3) The provider will notify the individual within five (5) days after learning of a creditor’s decision to reject or withdraw from a plan and that this notice will include:
(A) The identity of the creditor; and
(B) The right of the individual to modify or terminate the agreement.
(e) An agreement may confer on a provider a power of attorney to settle the individual’s debt for no more than fifty percent (50%) of the principal amount of the debt. An agreement may not confer a power of attorney to settle a debt for more than fifty percent (50%) of that amount, but may confer a power of attorney to negotiate with creditors of the individual on behalf of the individual. An agreement must provide that the provider will obtain the assent of the individual after a creditor has assented to a settlement for more than fifty percent (50%) of the principal amount of the debt.
(f) An agreement may not:
(1) Provide for application of the law of any jurisdiction other than the United States and this state;
(2) Except as permitted by Section 2 of the Federal Arbitration Act, 9 U.S.C. § 2, as amended, contain a provision that modifies or limits otherwise available forums or procedural rights, including the right to trial by jury, that are generally available to the individual under law other than this chapter;
(3) Contain a provision that restricts the individual’s remedies under this chapter or law other than this chapter; or
(4) Contain a provision that:
(A) Limits or releases the liability of any person for not performing the agreement or for violating this chapter; or
(B) Indemnifies any person for liability arising under the agreement or this chapter.
(g) All rights and obligations specified in subsection (d) and § 19-14.8-20 exist even if not provided in the agreement. A provision in an agreement that violates subsection (d), (e), or (f) is void.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
(a) An individual may cancel an agreement before midnight of the third (3rd) business day after the individual assents to it, unless the agreement does not comply with subsection (b) or § 19-14.8-19 or § 19-14.8-28, in which event the individual may cancel the agreement within thirty (30) days after the individual assents to it. To exercise the right to cancel, the individual must give notice in a record to the provider. Notice by mail is given when mailed.
(b) An agreement must be accompanied by a form that contains in bold-face type, surrounded by bold black lines:
Notice of Right to Cancel
You may cancel this agreement, without any penalty or obligation, at any time before midnight of the third business day that begins the day after you agree to it by electronic communication or by signing it.
To cancel this agreement during this period, send an e-mail to
_____________ or mail or deliver a signed, dated copy of E-mail address of provider this notice, or any other written notice to _____________ Name of provider at ___________ before midnight on ___________ . Address of provider Date
If you cancel this agreement within the 3-day period, we will refund all money you already have paid us.
You also may terminate this agreement at any later time, but we are not required to refund fees you have paid us.
I cancel this agreement,
Print your name
Signature
Date
(c) If a personal financial emergency necessitates the disbursement of an individual’s money to one or more of the individual’s creditors before the expiration of three (3) days after an agreement is signed, an individual may waive the right to cancel. To waive the right, the individual must send or deliver a signed, dated statement in the individual’s own words describing the circumstances that necessitate a waiver. The waiver must explicitly waive the right to cancel. A waiver by means of a standard-form record is void.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
Unless the director, by rule, provides otherwise, the disclosures and documents required by this chapter must be in English. If a provider communicates with an individual primarily in a language other than English, the provider must furnish a translation into the other language of the disclosures and documents required by this chapter.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
(a) All money paid to a provider by, or on behalf of, an individual pursuant to a plan for distribution to creditors is held in trust. Within two (2) business days after receipt, the provider shall deposit the money in a trust account established for the benefit of individuals to whom the provider is furnishing debt-management services.
(b) Money held in trust by a provider is not property of the provider or its designee. The money is not available to creditors of the provider or designee, except an individual from whom or on whose behalf the provider received money, to the extent that the money has not been disbursed to creditors of the individual.
(c) A provider shall:
(1) Maintain separate records of account for each individual to whom the provider is furnishing debt-management services;
(2) Disburse money paid by, or on behalf of, the individual to creditors of the individual as disclosed in the agreement, except that:
(A) The provider may delay payment to the extent that a payment by the individual is not final; and
(B) If a plan provides for regular periodic payments to creditors, the disbursement must comply with the due dates established by each creditor; and
(3) Promptly correct any payments that are not made or that are misdirected as a result of an error by the provider or other person in control of the trust account and reimburse the individual for any costs or fees imposed by a creditor as a result of the failure to pay or misdirection.
(d) A provider may not commingle money in a trust account established for the benefit of individuals to whom the provider is furnishing debt-management services with money of other persons.
(e) A trust account must at all times have a cash balance equal to the sum of the balances of each individual’s account.
(f) If a provider has established a trust account pursuant to subsection (a), the provider shall reconcile the trust account at least once a month. The reconciliation must compare the cash balance in the trust account with the sum of the balances in each individual’s account. If the provider or its designee has more than one trust account, each trust account must be individually reconciled.
(g) If a provider discovers, or has a reasonable suspicion of, embezzlement or other unlawful appropriation of money held in trust, the provider immediately shall notify the director by a method approved by the director. Unless the director by rule provides otherwise, within five (5) days thereafter, the provider shall give notice to the director describing the remedial action taken or to be taken.
(h) If an individual terminates an agreement or it becomes reasonably apparent to a provider that a plan has failed, the provider shall promptly refund to the individual all money paid by, or on behalf of, the individual which has not been paid to creditors, less fees that are payable to the provider under § 19-14.8-23.
(i) Before relocating a trust account from one bank to another, a provider shall inform the director of the name, business address, and telephone number of the new bank. As soon as practicable, the provider shall inform the director of the account number of the trust account at the new bank.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
(a) A provider may not impose directly, or indirectly, a fee or other charge on an individual or receive money from, or on behalf of, an individual for debt-management services except as permitted by this section.
(b) A provider may not impose charges or receive payment for debt-management services until the provider and the individual have signed an agreement that complies with §§ 19-14.8-19 and 19-14.8-28.
(c) If an individual assents to an agreement, a provider may not impose a fee or other charge for educational or counseling services, or the like, except as otherwise provided in this subsection and § 19-14.8-28(d). The director may authorize a provider to charge a fee based on the nature and extent of the educational or counseling services furnished by the provider.
(d) Subject to adjustment of dollar amounts pursuant to § 19-14.8-32(f), the following rules apply:
(1) If an individual assents to a plan that contemplates that creditors will reduce finance charges or fees for late payment, default, or delinquency, the provider may charge:
(A) A fee not exceeding fifty dollars ($50.00) for consultation, obtaining a credit report, setting up an account, and the like; and
(B) A monthly service fee, not to exceed ten dollars ($10.00) times the number of creditors remaining in a plan at the time the fee is assessed, but not more than fifty dollars ($50) in any month.
(2) If an individual assents to a plan that contemplates that creditors will settle debts for less than the principal amount of the debt, a provider may charge:
(A) Subject to § 19-14.8-19(d), a fee for consultation, obtaining a credit report, setting up an account, and the like, in an amount not exceeding the lesser of four hundred dollars ($400) and four percent (4%) of the debt in the plan at the inception of the plan; and
(B) A monthly service fee, not to exceed ten dollars ($10) times the number of creditors remaining in a plan at the time the fee is assessed, but not more than fifty dollars ($50) in any month.
(3) A provider may not impose or receive fees under both subsections (d)(1) and (d)(2) of this section.
(4) Except as otherwise provided in § 19-14.8-28(d), if an individual does not assent to an agreement, a provider may receive for educational and counseling services it provides to the individual a fee not exceeding one hundred dollars ($100) or, with the approval of the director, a larger fee. The director may approve a fee larger than one hundred ($100) if the nature and extent of the educational and counseling services warrant the larger fee.
(e) If, before the expiration of ninety (90) days after the completion or termination of educational or counseling services, an individual assents to an agreement, the provider shall refund to the individual any fee paid pursuant to subsection (d)(4).
(f) Except as otherwise provided in subsections (c) and (d), if a plan contemplates that creditors will settle an individual’s debts for less than the principal amount of the debt, compensation for services in connection with settling a debt may not exceed, with respect to each debt:
(1) Thirty percent (30%) of the excess of the principal amount of the debt over the amount paid the creditor pursuant to the plan less;
(2) To the extent it has not been credited against an earlier settlement fee:
(A) The fee charged pursuant to subsection (d)(2)(A); and
(B) The aggregate of fees charged pursuant to subsection (d)(2)(B) of this section.
(g) Subject to adjustment of the dollar amount pursuant to § 19-14.8-32(f), if a payment to a provider by an individual under this chapter is dishonored, a provider may impose a reasonable charge on the individual, not to exceed the lesser of twenty-five dollars ($25) and the amount permitted by law other than this chapter.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
A provider may not solicit a voluntary contribution from an individual or an affiliate of the individual for any service provided to the individual. A provider may accept voluntary contributions from an individual but, until thirty (30) days after completion or termination of a plan, the aggregate amount of money received from, or on behalf of, the individual may not exceed the total amount the provider may charge the individual under § 19-14.8-23.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
(a) If a provider imposes a fee or other charge or receives money or other payments not authorized by § 19-14.8-23 or § 19-14.8-24, the individual may void the agreement and recover as provided in § 19-14.8-35.
(b) If a provider is not registered as required by this chapter when an individual assents to an agreement, the agreement is voidable by the individual.
(c) If an individual voids an agreement under subsection (b), the provider does not have a claim against the individual for breach of contract or for restitution.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
(a) If an individual who has entered into an agreement fails for sixty (60) days to make payments required by the agreement, a provider may terminate the agreement.
(b) If a provider or an individual terminates an agreement, the provider shall immediately return to the individual:
(1) Any money of the individual held in trust for the benefit of the individual; and
(2) Sixty-five percent (65%) of any portion of the set-up fee received pursuant to § 19-14.8-23(d)(2) that has not been credited against settlement fees.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
(a) A provider shall provide the accounting required by subsection (b):
(1) Upon cancellation or termination of an agreement; and
(2) Before cancellation or termination of any agreement:
(A) At least once each month; and
(B) Within five (5) business days after a request by an individual, but the provider need not comply with more than one request in any calendar month.
(b) A provider, in a record, shall provide each individual for whom it has established a plan an accounting of the following information:
(1) The amount of money received from the individual since the last report;
(2) The amounts and dates of disbursement made on the individual’s behalf, or by the individual upon the direction of the provider, since the last report to each creditor listed in the plan;
(3) The amounts deducted from the amount received from the individual;
(4) The amount held in reserve; and
(5) If, since the last report, a creditor has agreed to accept as payment in full an amount less than the principal amount of the debt owed by the individual:
(A) The total amount and terms of the settlement;
(B) The amount of the debt when the individual assented to the plan;
(C) The amount of the debt when the creditor agreed to the settlement; and
(D) The calculation of a settlement fee.
(c) A provider shall maintain records for each individual for whom it provides debt-management services for five (5) years after the final payment made by the individual and produce a copy of them to the individual within a reasonable time after a request for them. The provider may use electronic or other means of storage of the records.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
(a) A provider may not, directly or indirectly:
(1) Misappropriate or misapply money held in trust;
(2) Settle a debt on behalf of an individual for more than fifty percent (50%) of the principal amount of the debt owed a creditor, unless the individual assents to the settlement after the creditor has assented;
(3) Take a power of attorney that authorizes it to settle a debt, unless the power of attorney expressly limits the providers authority to settle debts for not more than fifty percent (50%) of the principal amount of the debt owed a creditor;
(4) Exercise or attempt to exercise a power of attorney after an individual has terminated an agreement;
(5) Initiate a transfer from an individual’s account at a bank or with another person unless the transfer is:
(A) A return of money to the individual; or
(B) Before termination of an agreement, properly authorized by the agreement and this chapter, and for:
(i) Payment to one or more creditors pursuant to a plan; or
(ii) Payment of a fee;
(6) Offer a gift or bonus, premium, reward, or other compensation to an individual for executing an agreement;
(7) Offer, pay, or give a gift or bonus, premium, reward, or other compensation to a person for referring a prospective customer, if the person making the referral has a financial interest in the outcome of debt-management services provided to the customer, unless neither the provider nor the person making the referral communicates to the prospective customer the identity of the source of the referral;
(8) Receive a bonus, commission, or other benefit for referring an individual to a person;
(9) Structure a plan in a manner that would result in a negative amortization of any of an individual’s debts, unless a creditor that is owed a negatively amortizing debt agrees to refund or waive the finance charge upon payment of the principal amount of the debt;
(10) Compensate its employees on the basis of a formula that incorporates the number of individuals the employee induces to enter into agreements;
(11) Settle a debt or lead an individual to believe that a payment to a creditor is in settlement of a debt to the creditor unless, at the time of settlement, the individual receives a certification by the creditor that the payment is in full settlement of the debt;
(12) Make a representation that:
(A) The provider will furnish money to pay bills or prevent attachments;
(B) Payment of a certain amount will permit satisfaction of a certain amount or range of indebtedness; or
(C) Participation in a plan will or may prevent litigation, garnishment, attachment, repossession, foreclosure, eviction, or loss of employment;
(13) Misrepresent that it is authorized or competent to furnish legal advice or perform legal services;
(14) Represent that it is a not-for-profit entity unless it is organized and properly operating as a not-for-profit under the law of the state in which it was formed or that it is a tax-exempt entity unless it has received certification of tax-exempt status from the Internal Revenue Service;
(15) Take a confession of judgment or power of attorney to confess judgment against an individual; or
(16) Employ an unfair, unconscionable, or deceptive act or practice, including the knowing omission of any material information.
(b) If a provider furnishes debt-management services to an individual, the provider may not, directly or indirectly:
(1) Purchase a debt or obligation of the individual;
(2) Receive from or on behalf of the individual:
(A) A promissory note or other negotiable instrument other than a check or a demand draft; or
(B) A post-dated check or demand draft;
(3) Lend money or provide credit to the individual, except as a deferral of a settlement fee at no additional expense to the individual;
(4) Obtain a mortgage or other security interest from any person in connection with the services provided to the individual;
(5) Except as permitted by federal law, disclose the identity or identifying information of the individual or the identity of the individual’s creditors, except to:
(A) The director, upon proper demand;
(B) A creditor of the individual, to the extent necessary to secure the cooperation of the creditor in a plan; or
(C) The extent necessary to administer the plan;
(6) Except as otherwise provided in § 19-14.8-23(f), provide the individual less than the full benefit of a compromise of a debt arranged by the provider;
(7) Charge the individual for or provide credit or other insurance, coupons for goods or services, membership in a club, access to computers or the Internet, or any other matter not directly related to debt-management services or educational services concerning personal finance; or
(8) Furnish legal advice or perform legal services, unless the person furnishing that advice to or performing those services for the individual is licensed to practice law.
(c) This chapter does not authorize any person to engage in the practice of law.
(d) A provider may not receive a gift or bonus, premium, reward, or other compensation, directly or indirectly, for advising, arranging, or assisting an individual in connection with obtaining, an extension of credit or other service from a lender or service provider, except for educational or counseling services required in connection with a government-sponsored program.
(e) Unless a person supplies goods, services, or facilities generally and supplies them to the provider at a cost no greater than the cost the person generally charges to others, a provider may not purchase goods, services, or facilities from the person if an employee or a person that the provider should reasonably know is an affiliate of the provider:
(1) Owns more than ten percent (10%) of the person; or
(2) Is an employee or affiliate of the person.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
No later than thirty (30) days after a provider has been served with notice of a civil action for violation of this chapter by or on behalf of an individual who resides in this state at either the time of an agreement or the time the notice is served, the provider shall notify the director in a record that it has been sued.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
A provider that advertises debt-management services shall disclose, in an easily comprehensible manner, the information specified in § 19-14.8-17(d)(3) and (d)(4).
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
If a provider delegates any of its duties or obligations under an agreement or this chapter to another person, including an independent contractor, the provider is liable for conduct of the person that, if done by the provider, would violate the agreement or this chapter.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
(a) The director may act on its own initiative or in response to complaints; and may receive complaints; take action to obtain voluntary compliance with this chapter; refer cases to the attorney general; and seek or provide remedies as provided in this chapter.
(b) The director may investigate and examine, in this state or elsewhere, by subpoena or otherwise, the activities, books, accounts, and records of a person who or that provides or offers to provide debt-management services, or a person to whom or to which a provider has delegated its obligations under an agreement or this chapter, to determine compliance with this chapter. Information that identifies individuals who have agreements with the provider shall not be disclosed to the public. In connection with the investigation, the director may:
(1) Charge the person the reasonable expenses necessarily incurred to conduct the examination;
(2) Require or permit a person to file a statement under oath as to all the facts and circumstances of a matter to be investigated; and
(3) Seek a court order authorizing seizure from a bank at which the person maintains a trust account required by § 19-14.8-22, any or all money, books, records, accounts, and other property of the provider that is in the control of the bank and relates to individuals who reside in this state.
(c) The director may adopt rules to implement the provisions of this chapter in accordance with chapter 35 of title 42.
(d) The director may enter into cooperative arrangements with any other federal or state agency having authority over providers and may exchange with any of those agencies information about a provider, including information obtained during an examination of the provider.
(e) [Reserved].
(f) The director, by rule, shall adopt dollar amounts instead of those specified in §§ 19-14.8-2, 19-14.8-5, 19-14.8-9, 19-14.8-13, 19-14.8-23, 19-14.8-33, and 19-14.8-35 to reflect inflation, as measured by the United States Bureau of Labor Statistics Consumer Price Index for All Urban Consumers or, if that index is not available, another index adopted by rule by the director. The director shall adopt a base year and adjust the dollar amounts, effective on July 1 of each year, if the change in the index from the base year, as of December 31 of the preceding year, is at least ten percent (10%). The dollar amount must be rounded to the nearest one hundred dollars ($100), except that the amounts in § 19-14.8-23 must be rounded to the nearest dollar.
(g) The director shall notify registered providers of any change in dollar amounts made pursuant to subsection (f) and make that information available to the public.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
(a) The director may enforce this chapter and rules adopted under this chapter by taking one or more of the following actions:
(1) Ordering a provider or a director, employee, or other agent of a provider to cease and desist from any violations;
(2) Ordering a provider or a person who or that has caused a violation to correct the violation, including making restitution of money or property to a person aggrieved by a violation;
(3) Subject to adjustment of the dollar amount pursuant to § 19-14.8-32(f), imposing on a provider or a person who or that has caused a violation a civil penalty not exceeding ten thousand dollars ($10,000) for each violation;
(4) Prosecuting a civil action to:
(A) Enforce an order; or
(B) Obtain restitution or an injunction or other equitable relief, or both;
(5) Intervening in an action brought under § 19-14.8-35.
(b) Subject to adjustment of the dollar amount pursuant to § 19-14.8-32(f), if a person violates or knowingly authorizes, directs, or aids in the violation of a final order issued under subsection (a)(1) or (a)(2), the director may impose a civil penalty not exceeding twenty thousand dollars ($20,000) for each violation.
(c) The director may maintain an action to enforce this chapter in any county.
(d) The director may recover the reasonable costs of enforcing the chapter under subsections (a) — (c), including attorney’s fees based on the hours reasonably expended and the hourly rates for attorneys of comparable experience in the community.
(e) In determining the amount of a civil penalty to impose under subsection (a) or (b), the director shall consider the seriousness of the violation; the good faith of the violator; any previous violations by the violator; the deleterious effect of the violation on the public; the net worth of the violator; and any other factor the director considers relevant to the determination of the civil penalty.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
(a) In this section, “insolvent” means:
(1) Having generally ceased to pay debts in the ordinary course of business other than as a result of good-faith dispute;
(2) Being unable to pay debts as they become due; or
(3) Being insolvent within the meaning of the federal bankruptcy law, 11 U.S.C. § 101 et seq., as amended.
(b) The director may suspend, revoke, or deny renewal of a provider’s registration if:
(1) A fact or condition exists that, if it had existed when the registrant applied for registration as a provider, would have been a reason for denying registration;
(2) The provider has committed a material violation of this chapter or a rule or order of the director under this chapter;
(3) The provider is insolvent;
(4) The provider or an employee or affiliate of the provider has refused to permit the director to make an examination authorized by this chapter, failed to comply with § 19-14.8-32(b)(2) within fifteen (15) days after request, or made a material misrepresentation or omission in complying with § 19-14.8-32(b)(2); or
(5) The provider has not responded within a reasonable time and in an appropriate manner to communications from the director.
(c) If a provider does not comply with § 19-14.8-22(f) or if the director otherwise finds that the public health or safety or general welfare requires emergency action, the director may order a summary suspension of the provider’s registration, effective on the date specified in the order.
(d) If the director suspends, revokes, or denies renewal of the registration of a provider, the director may seek a court order authorizing seizure of any or all of the money in a trust account required by § 19-14.8-22, books, records, accounts, and other property of the provider that are located in this state.
(e) If the director suspends or revokes a provider’s registration, the provider may appeal and request a hearing pursuant to chapter 35 of title 42.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
(a) If an individual voids an agreement pursuant to § 19-14.8-25(b), the individual may recover in a civil action all money paid or deposited by, or on behalf of, the individual pursuant to the agreement, except amounts paid to creditors, in addition to the recovery under subsections (c)(3) and (c)(4).
(b) If an individual voids an agreement pursuant to § 19-14.8-25(a), the individual may recover in a civil action three (3) times the total amount of the fees, charges, money, and payments made by the individual to the provider, in addition to the recovery under subsection (c)(4).
(c) Subject to subsection (d), an individual with respect to whom a provider violates this chapter may recover in a civil action from the provider and any person that caused the violation:
(1) Compensatory damages for injury, including noneconomic injury, caused by the violation;
(2) Except as otherwise provided in subsection (d) of this section and subject to adjustment of the dollar amount pursuant to § 19-14.8-32(f), with respect to a violation of § 19-14.8-17, § 19-14.8-19, § 19-14.8-20, § 19-14.8-21, § 19-14.8-22, § 19-14.8-23, § 19-14.8-24, § 19-14.8-27, or § 19-14.8-28(a), (b), or (d), the greater of the amount recoverable under subsection (c)(1) or five thousand dollars ($5,000);
(3) Punitive damages; and
(4) Reasonable attorney’s fees and costs.
(d) In a class action, except for a violation of § 19-14.8-28(a)(5), the minimum damages provided in subsection (c)(2) do not apply.
(e) In addition to the remedy available under subsection (c), if a provider violates an individual’s rights under § 19-14.8-20, the individual may recover in a civil action all money paid or deposited by or on behalf of the individual pursuant to the agreement, except for amounts paid to creditors.
(f) A provider is not liable under this section for a violation of this chapter if the provider proves that the violation was not intentional and resulted from a good-faith error notwithstanding the maintenance of procedures reasonably adapted to avoid the error. An error of legal judgment with respect to a provider’s obligations under this chapter is not a good-faith error. If, in connection with a violation, the provider has received more money than authorized by an agreement or this chapter, the defense provided by this subsection is not available unless the provider refunds the excess within two (2) business days of learning of the violation.
(g) The director shall assist an individual in enforcing a judgment against the surety bond or other security provided under § 19-14.8-13 or § 19-14.8-14.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
If an act or practice of a provider violates both this chapter and either chapter 13.1 of title 6, an individual may not recover under both for the same act or practice.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
(a) An action or proceeding brought pursuant to § 19-14.8-33(a), (b), or (c) must be commenced within four (4) years after the conduct that is the basis of the director’s complaint.
(b) An action brought pursuant to § 19-14.8-35 must be commenced within two (2) years after the latest of:
(1) The individual’s last transmission of money to a provider;
(2) The individual’s last transmission of money to a creditor at the direction of the provider;
(3) The provider’s last disbursement to a creditor of the individual;
(4) The provider’s last accounting to the individual pursuant to § 19-14.8-27(a);
(5) The date on which the individual discovered or reasonably should have discovered the facts giving rise to the individual’s claim; or
(6) Termination of actions or proceedings by the director with respect to a violation of the chapter.
(c) The period prescribed in subsection (b)(5) is tolled during any period during which the provider or, if different, the defendant has materially and willfully misrepresented information required by this chapter to be disclosed to the individual, if the information so misrepresented is material to the establishment of the liability of the defendant under this chapter.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
In applying and construing this chapter, consideration must be given to the need to promote uniformity of the law with respect to its subject matter among states that enact it.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
This chapter modifies, limits, and supersedes the federal Electronic Signatures in Global and National Commerce Act (15 U.S.C. § 7001 et seq.) but does not modify, limit, or supersede § 101(c) of that act (15 U.S.C. § 7001(c)) or authorize electronic delivery of any of the notices described in § 103(b) of that act (15 U.S.C. § 7003(b)).
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
Transactions entered into before this chapter takes effect and the rights, duties, and interests resulting from them may be completed, terminated, or enforced as required or permitted by a law amended, repealed, or modified by this chapter as though the amendment, repeal, or modification had not occurred.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
If any provision of this chapter or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of this chapter that can be given effect without the invalid provision or application, and to this end the provisions of this chapter are severable.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
[Reserved]
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
It is the intention of the general assembly that the official comments to this chapter represent the express legislative intent of the general assembly and shall be used as a guide for interpretation of this chapter.
History of Section. P.L. 2006, ch. 243, § 3; P.L. 2006, ch. 291, § 3.
This chapter shall be known and may be cited as the “Rhode Island Fair Debt Collection Practices Act”.
History of Section. P.L. 2007, ch. 427, § 1.
The purpose of this chapter is to establish standards, by defining unfair or deceptive acts or practices, for the collection of debts from consumers within the state of Rhode Island, and to establish requirements for the registering and supervision of debt collectors.
History of Section. P.L. 2007, ch. 427, § 1.
For the purposes of this chapter, the following terms shall have the following meaning unless the context otherwise requires:
(1) “Consumer” means any person obligated or allegedly obligated to pay any debt, as defined by 15 U.S.C. § 1692a.
(2) “Consumer reporting agency” means any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties.
(3) “Creditor” means any person who offers or extends credit creating a debt or to whom a debt is owed, but the term shall not include a person to the extent that he/she receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of the debt.
(4) “Debt” means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services that are the subject of the transaction are primarily for personal, family, or household purposes, whether or not the obligation has been reduced to judgment.
(5) “Debt collector” means any person who uses an instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. Notwithstanding the exclusion provided by clause (f) below, debt collector shall include a creditor who, in the process of collecting his/her own debt, uses any name other than his/her own which would indicate that a third person is collecting or attempting to collect the debt. Debt collector shall also include a person who uses an instrumentality of interstate commerce or the mails in a business the principal purpose of which is the enforcement of security interests. Debt collector shall not include:
(a) An officer or employee of a creditor while, in the name of the creditor, collecting debts for the creditor;
(b) A person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person acting as a debt collector does so only for a person to whom it is so related or affiliated and if the principal business of the person is not the collection of a debt;
(c) An officer or employee of the United States or a state of the United States to the extent that collecting or attempting to collect a debt is in the performance of his/her official duty;
(d) A person while serving or attempting to serve legal process on another person in connection with the judicial enforcement of a debt;
(e) A nonprofit organization that, at the request of a consumer, performs bona fide consumer credit counseling and assists the consumer in the liquidation of debts by receiving payments from the consumer and distributing the amounts to creditors;
(f) A person collecting or attempting to collect a debt owed or due or asserted to be owed or due another to the extent the activity:
(i) Is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement;
(ii) Concerns a debt that was originated by the person;
(iii) Concerns a debt that was not in default at the time it was obtained by the person or in connection with a debt secured by a mortgage, when first serviced by the person; or
(iv) Concerns a debt obtained by the person as a secured party in a commercial credit transaction involving the creditor;
(g) Attorneys-at-law collecting a debt on behalf of a client;
(h) An agent or independent contractor employed for the purpose of collecting a charge or bill owed by a tenant to a landlord or owed by a customer to a corporation subject to the supervision of the department of business regulation insofar as the person collects charges or bills only for the landlord or supervised corporations.
(6) “Department” means the department of business regulation.
(7) “Director” means the director of the department of business regulation, or the director’s designee.
(8) “Registrant” means an entity registered under this chapter.
History of Section. P.L. 2007, ch. 427, § 1; P.L. 2023, ch. 395, art. 2, § 6, effective June 27, 2023.
Any debt collector communicating with any person, other than the consumer, for the purpose of acquiring location information about the consumer shall:
(a) Identify himself/herself, state that he/she is confirming or correcting location information concerning the consumer, and, only if expressly requested, identify his/her employer;
(b) Not state that such consumer owes any debt;
(c) Not communicate with any such person more than once unless requested to do so by such person or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information;
(d) Not communicate by post card;
(e) Not use any language or symbol on any envelope or in the contents of any communication effected by the mails or telegram that indicates that the debt collector is in the debt collection business or that the communication relates to the collection of a debt; and
(f) After the debt collector knows the consumer is represented by an attorney with regard to the subject debt and has knowledge of, or can readily ascertain, such attorney’s name and address, not communicate with any person other than that attorney, unless the attorney fails to respond within a reasonable period of time to communication from the debt collector.
History of Section. P.L. 2007, ch. 427, § 1.
(1) Without the prior consent of the consumer given directly to the debt collector or the express permission of a court of competent jurisdiction, a debt collector may not communicate with a consumer in connection with the collection of any debt:
(a) At any unusual time or place or a time or place known or which should be known to be inconvenient to the consumer. In the absence of knowledge of circumstances to the contrary, a debt collector shall assume that the convenient time for communicating with a consumer is after 8 o’clock A.M. and before 9 o’clock P.M. local time at the consumer’s location;
(b) If the debt collector knows the consumer is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney’s name and address, unless the attorney fails to respond within a reasonable period of time to a communication from the debt collector or unless the attorney consents to direct communication with the consumer; or
(c) At the consumer’s place of employment if the debt collector knows or has reason to know that the consumer’s employer prohibits the consumer from receiving such communication.
(2) Except as provided in § 19-14.9-4, without the prior consent of the consumer given directly to the debt collector, or the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a postjudgment judicial remedy, a debt collector may not communicate, in connection with the collection of any debt, with any person other than the consumer, his/her attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.
(3) If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt, except:
(a) To advise the consumer that the debt collector’s further efforts are being terminated;
(b) To notify the consumer that the debt collector or creditor may invoke specified remedies that are ordinarily invoked by such debt collector or creditor; or
(c) Where applicable, to notify the consumer that the debt collector or creditor intends to invoke a specified remedy.
(4) If such notice from the consumer pursuant to subsection (3) of this section is made by mail, notification shall be complete upon receipt.
(5) For the purpose of this section, the term “consumer” shall also include the consumer’s spouse, parent (if the consumer is a minor), guardian, executor, or administrator.
History of Section. P.L. 2007, ch. 427, § 1; P.L. 2023, ch. 395, art. 2, § 7, effective June 27, 2023.
A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt. Such conduct shall include, but not be limited to:
(a) Using or threatening to use violence or other criminal means to harm the physical person, reputation, or property of any person;
(b) Using obscene or profane language or language the natural consequence of which is to abuse the hearer or reader;
(c) Advertising for sale of any debt to coerce payment of the debt;
(d) Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number; or
(e) Except as provided in § 19-14.9-4, placing telephone calls without meaningful disclosure of the caller’s identity.
History of Section. P.L. 2007, ch. 427, § 1.
A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Such false or misleading means shall include, but not be limited to:
(a) The false representation or implication that the debt collector is vouched for, bonded by, or affiliated with the United States or any state, including the use of any badge, uniform, or facsimile thereof;
(b) The false representation of:
(1) The character, amount, or legal status of any debt;
(2) Any services rendered or compensation that may be lawfully received by any debt collector for the collection of a debt;
(c) The false representation or implication that any individual is an attorney or that any communication is from an attorney;
(d) The representation or implication that nonpayment of any debt will result in the arrest or imprisonment of any person or the seizure, garnishment, attachment, or sale of any property or wages of any person unless such action is lawful and the debt collector or creditor intends to take such action;
(e) The threat to take any action that cannot legally be taken or that is not intended to be taken;
(f) The false representation or implication that a sale, referral, or other transfer of any interest in a debt shall cause the consumer to:
(1) Lose any claim or defense to payment of the debt;
(2) Become subject to any practice prohibited by this chapter;
(g) The false representation or implication that the consumer committed any crime or other conduct in order to disgrace the consumer;
(h) The communicating, or threatening to communicate, to any person credit information that is known or that should be known to be false, including the failure to communicate that a disputed debt is disputed;
(i) The use of distribution of any written communication that simulates or is falsely represented to be a document authorized, issued, or approved by any court, official, or agency of the United States or any state, or that creates a false impression as to its source, authorization, or approval;
(j) The use of any false representation or deceptive means to collect, or attempt to collect, any debt or to obtain information concerning a consumer;
(k) The failure to disclose in the initial written communication with the consumer and, in addition, if the initial communication with the consumer is oral, in that initial oral communication, that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose, and the failure to disclose in subsequent communications that the communication is from a debt collector, except that this paragraph shall not apply to a formal pleading made in connection with a legal action;
(l) The false representation or implication that accounts have been turned over to innocent purchasers for value;
(m) The false representation or implication that documents are legal process;
(n) The use of any business, company, or organization name other than the true name of the debt collector’s business, company, or organization;
(o) The false representation or implication that documents are not legal process forms or do not require action by the consumer;
(p) Communicating by telephone without disclosure of the name of the debt collector and without disclosure of the personal name of the individual making such communication; provided, however, that any such individual utilizing an alias shall use only one such alias at all times and provided that a mechanism is established by the debt collector to identify the person using such alias; the debt collector shall submit a list of all such aliases and the persons using same to the director;
(q) The false representation or implication that a debt collector operates or is employed by a consumer reporting agency.
History of Section. P.L. 2007, ch. 427, § 1.
A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Such unfair or unconscionable means shall include, but not be limited to:
(a) Collecting any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law;
(b) Publishing, or causing to be published, for general circulation, the name of a consumer or any lists of consumers, or threatening to do so;
(c) Requesting or demanding from a consumer a postdated check, draft, order for withdrawal, or other similar instrument in payment for the debt or any portion thereof, or negotiating such instrument before the due date of the instrument;
(d) Depositing, or threatening to deposit, any postdated check or other postdated payment instrument prior to the date on such check or instrument;
(e) Causing charges to be made to any person for communications by concealment of the true purpose of the communication. Such charges include, but are not limited to, collect telephone calls and fees. However, this section shall not prohibit a debt collector from communicating with a consumer by way of a consumer’s wireless telephone;
(f) Taking, or threatening to take, any nonjudicial action to effect dispossession or disablement of property if:
(1) There is no present right to possession of the property claimed as collateral through an enforceable security interest;
(2) There is no present intention to take possession of the property;
(3) The property is exempt by law from such dispossession or disablement;
(g) Communicating with a consumer regarding a debt by post card;
(h) Using any language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by use of the mails or by telegram, except that a debt collector may use his/her business name if such name does not indicate that he/she is in the debt collection business;
(i) Representing that an existing obligation of a consumer may be increased by the addition of attorney’s fees, investigation fees, service fees, or any other fees or charges, if in fact such fees or charges may not legally be added to the existing obligation;
(j) Soliciting or obtaining any written statement or acknowledgment in any form containing an affirmation of any obligation by a consumer who has been adjudicated bankrupt, without clearly and conspicuously disclosing the nature and consequences of such affirmation;
(k) Reporting to a consumer reporting agency on its transactions or experiences with a consumer in the debt collector’s name. However, a debt collector may, with the express written authorization of the creditor, report to a consumer reporting agency in the creditor’s name.
History of Section. P.L. 2007, ch. 427, § 1.
(1) Within five (5) days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication, or the consumer has paid the debt, send the consumer a written notice containing:
(a) The amount of the debt;
(b) The name of the creditor to whom the debt is owed;
(c) A statement that unless the consumer, within thirty (30) days after receipt of the notice, disputes that validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;
(d) A statement that if the consumer notifies the debt collector in writing within the thirty-day (30) period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and
(e) A statement that, upon the consumer’s written request within the thirty-day (30) period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.
(2) If the consumer notifies the debt collector in writing within the thirty-day (30) period described in subsection (1)(d) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.
(3) The failure of a consumer to dispute the validity of a debt under this section shall not be construed by any court as an admission of liability by the consumer.
History of Section. P.L. 2007, ch. 427, § 1.
If any consumer owes multiple debts and makes any single payment to any debt collector with respect to such debts, such debt collector may not apply such payment to any debt that is disputed by the consumer and, where applicable, shall apply such payment in accordance with the consumer’s directions.
History of Section. P.L. 2007, ch. 427, § 1.
It is unlawful to design, compile, and furnish any form knowing that such form would be used to create the false belief in a consumer that a person other than the creditor of such consumer is participating in the collection of or in an attempt to collect a debt such consumer allegedly owes such creditor, when in fact such person is not so participating.
History of Section. P.L. 2007, ch. 427, § 1.
(1) After July 1, 2008, no person shall engage within this state in the business of a debt collector, or engage in soliciting the right to collect or receive payment for another of an account, bill, or other indebtedness, or advertise for or solicit in print the right to collect or receive payment for another of an account, bill, or other indebtedness, without first registering with the director, or the director’s designee.
(2) The application for registration shall be in writing; shall contain information as the director may determine; and shall be accompanied by a registration fee of seven hundred fifty dollars ($750).
(3) The registration shall be for a period of one year. Each registration shall plainly state the name of the registrant and the city or town with the name of the street and number, if any, of the place where the business is to be carried on; provided that the business shall at all times be conducted in the name of the registrant as it appears on the registration.
(4) No person registered to act within this state as a debt collector shall do so under any other name or at any other place of business than that named in the registration. The registration shall be for a single location but may, with notification to the director, be moved to a different location. A registration shall not be transferable or assignable.
(5) This section shall not apply:
(a) To the servicer of a debt by a mortgage;
(b) To any debt collector located out of this state, provided that the debt collector:
(i) Is collecting debts on behalf of an out-of-state creditor for a debt that was incurred out of state; and
(ii) Only collects debts in this state using interstate communication methods, including telephone, facsimile, or mail; or
(c) To any regulated institution as defined under § 19-1-1, national banking association, federal savings bank, federal savings and loan association, federal credit union, or any bank, trust company, savings bank, savings and loan association, or credit union organized under the laws of this state, or any other state of the United States, or any subsidiary of the above; but except as provided herein, this section shall apply to a subsidiary or affiliate, as defined by the director, of an exempted entity and of a bank holding company established in accordance with state or federal law.
History of Section. P.L. 2007, ch. 427, § 1; P.L. 2014, ch. 106, § 5; P.L. 2014, ch. 125, § 5; P.L. 2019, ch. 88, art. 5, § 2; P.L. 2023, ch. 395, art. 2, § 8, effective June 27, 2023.
(1) Any person who engages in the business of a debt collector without a registration as required by § 19-14.9-12, shall, upon conviction, be fined not more than two thousand dollars ($2,000) or imprisoned not more than one year, or both.
(2) Any debt collector who fails to comply with the provisions of §§ 19-14.9-4 — 19-14.9-11 with respect to a consumer may be subject to revocation of registration and shall be civilly liable to such consumer in an amount equal to the sum of:
(a) Any actual damages sustained by such consumer as a result of such failure;
(b) In the case of any action by an individual, such additional damages as the court may allow, but not to exceed one thousand dollars ($1,000);
(c) In the case of a class action:
(i) Such amount for each named plaintiff as could be recovered under subsection (2)(b);
(ii) Such amount as the court may allow for all other class members, without regard to a minimum individual recovery, not to exceed five hundred thousand dollars ($500,000) or one percent of the net worth of the debt collector, whichever is the lesser;
(d) In the case of any successful action to enforce such liability, the costs of the action, together with such reasonable attorney fees as may be determined by the court.
(3) In determining the amount of liability in any action under subsection (2), the court shall consider, among other relevant factors:
(a) In any individual action under subsection (2)(b), the frequency and persistence of noncompliance by the debt collector or the nature of such noncompliance, and the extent to which such noncompliance was intentional;
(b) In any class action under subsection (2)(c), the frequency and persistence of noncompliance by the debt collector; the nature of such noncompliance; the resources of the debt collector; the number of persons adversely affected; and the extent to which the debt collector’s noncompliance was intentional.
(4) A debt collector may not be held liable in any action brought pursuant to the provisions of this chapter if:
(a) The debt collector shows by a preponderance of evidence that the violation was not intentional or negligent and the violation resulted from a bona fide error, notwithstanding the maintenance of procedures reasonably adapted to avoid any such error; or
(b) Within fifteen (15) days, either after discovering a violation that is able to be cured, or after the receipt of a written notice of such violation, the debt collector notifies the consumer of the violation, and makes whatever adjustments or corrections are necessary to cure the violation with respect to the consumer.
(5) An action to enforce any liability created by the provisions of this article may be brought in any court of competent jurisdiction within one year from the date on which the violation occurs.
(6) The policy of this state is not to award double damages under this article and the federal “Fair Debt Collection Practices Act” (15 U.S.C. § 1692 et seq.). No damages under this section shall be recovered if damages are recovered for a like provision of said federal act.
History of Section. P.L. 2007, ch. 427, § 1; P.L. 2023, ch. 395, art. 2, § 9, effective June 27, 2023.
If any provision of this chapter or its application to any person or circumstance is held invalid by a court of competent jurisdiction, the invalidity does not affect other provisions or applications of the chapter that can be given effect without the invalid provision or application, and to this end the provisions of the chapter are severable.
History of Section. P.L. 2007, ch. 427, § 1.
This chapter shall be known and may be cited as the “Secure and Fair Enforcement Mortgage Licensing Act of 2009”.
History of Section. P.L. 2009, ch. 148, § 3; P.L. 2009, ch. 160, § 3.
The activities of mortgage loan originators and the origination or offering of financing for residential real property have a direct, valuable, and immediate impact upon Rhode Island’s consumers, Rhode Island’s economy, the neighborhoods and communities of Rhode Island, and the housing and real estate industry. The general assembly finds that accessibility to mortgage credit is vital to the state’s citizens. The general assembly also finds that it is essential for the protection of the citizens of Rhode Island and the stability of Rhode Island’s economy that reasonable standards for licensing and regulation of the business practices of mortgage loan originators be imposed. The general assembly further finds that the obligations of mortgage loan originators to consumers in connection with originating or making residential mortgage loans are such as to warrant the regulation of the mortgage lending process. The purpose of this chapter is to protect consumers seeking mortgage loans and to ensure that the mortgage lending industry is operating without unfair, deceptive, and fraudulent practices on the part of mortgage loan originators. Therefore the general assembly establishes within this chapter:
(1) System of supervision and enforcement. An effective system of supervision and enforcement of the mortgage lending industry, including:
(i) The authority to issue licenses to conduct business under this chapter, including the authority to write rules or regulations or adopt procedures necessary to the licensing of persons covered under this chapter.
(ii) The authority to deny, suspend, condition, or revoke licenses issued under this chapter.
(iii) The authority to examine, investigate, and conduct enforcement actions as necessary to carry out the intended purposes of this chapter, including the authority to subpoena witnesses and documents, enter orders, including cease and desist orders, order restitution and monetary penalties, and order the removal and ban of individuals from office or employment.
(2) Broad administrative authority. That the director of the department of business regulation (“director”), or the director’s designee, shall have the broad administrative authority to administer, interpret, and enforce this chapter, and promulgate rules or regulations implementing this chapter, in order to carry out the intentions of the general assembly.
History of Section. P.L. 2009, ch. 148, § 3; P.L. 2009, ch. 160, § 3.
For purposes of this chapter, the following definitions shall apply:
(1) “Depository institution” has the same meaning as in section 3 of the Federal Deposit Insurance Act, and includes any credit union.
(2) “Federal banking agencies” means the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the National Credit Union Administration, and the Federal Deposit Insurance Corporation.
(3) “Immediate family member” means a spouse, child, sibling, parent, grandparent, or grandchild. This includes stepparents, stepchildren, stepsiblings, and adoptive relationships.
(4) “Individual” means a natural person.
(5)(i) “Loan processor or underwriter” means an individual who performs clerical or support duties as an employee at the direction of, and subject to the supervision and instruction of, a person licensed as a lender or as a loan broker, or exempt from licensing under chapter 14 or 14.1 of this title.
(ii) For purposes of subsection (5)(i), “clerical or support duties” may include subsequent to the receipt of an application:
(A) The receipt, collection, distribution, and analysis of information common for the processing or underwriting of a residential mortgage loan; and
(B) Communicating with a consumer to obtain the information necessary for the processing or underwriting of a loan, to the extent that such communication does not include offering or negotiating loan rates or terms, or counseling consumers about residential mortgage loan rates or terms.
(iii) An individual engaging solely in loan processor or underwriter activities shall not represent to the public, through advertising or other means of communicating or providing information including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that such individual can or will perform any of the activities of a mortgage loan originator.
(6)(i) “Mortgage loan originator” means:
(A) An individual who, for compensation or gain or in the expectation of compensation or gain:
(I) Takes a residential mortgage loan application; or
(II) Offers or negotiates terms of a residential mortgage loan;
(B) Does not include an individual engaged solely as a loan processor or underwriter except as otherwise provided in § 19-14.10-4(c);
(C) Does not include a person or entity who or that only performs real estate brokerage activities and is licensed or registered in accordance with Rhode Island law, unless the person or entity is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator;
(D) Does not include a person or entity solely involved in extensions of credit relating to timeshare plans, as that term is defined in 11 U.S.C. § 101(53D), as amended; and
(E) Does not include a person (or its employees) engaged in servicing mortgage loans. For purposes of this exclusion, “servicing mortgage loans” means, on behalf of the note holder, collecting and receiving payments, including payments of principal, interest, escrow amounts, and other sums due, on obligations due and owing to the note holder pursuant to a residential mortgage loan, and, when the borrower is in default or in reasonably foreseeable likelihood of default, working with the borrower on behalf of the note holder and pursuant to the contract between the person servicing mortgage loans and the note holder, to modify but not refinance, either temporarily or permanently, the obligations, or otherwise finalizing collection of the obligation through the foreclosure process.
(ii) “Real estate brokerage activity” means any activity that involves offering or providing real estate brokerage services to the public, including:
(A) Acting as a real estate agent or real estate broker for a buyer, seller, lessor, or lessee of real property;
(B) Bringing together parties interested in the sale, purchase, lease, rental, or exchange of real property;
(C) Negotiating, on behalf of any party, any portion of a contract relating to the sale, purchase, lease, rental, or exchange of real property (other than in connection with providing financing with respect to any such transaction);
(D) Engaging in any activity for which a person engaged in the activity is required to be registered or licensed as a real estate agent or real estate broker under any applicable law; and
(E) Offering to engage in any activity, or act in any capacity, described in subsection (6)(ii)(A), (B), (C), or (D) of this section.
(7) “Nationwide Multistate Licensing System” means a mortgage licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the licensing and registration of licensed mortgage loan originators.
(8) “Nontraditional mortgage product” means any mortgage product other than a thirty-year (30), fixed-rate mortgage.
(9) “Person” means a natural person, corporation, company, limited liability company, partnership, association, or any other entity however organized.
(10) “Registered mortgage loan originator” means any individual who:
(i) Meets the definition of mortgage loan originator and is an employee of:
(A) A depository institution;
(B) A subsidiary that is:
(I) Owned and controlled by a depository institution; and
(II) Regulated by a Federal banking agency; or
(C) An institution regulated by the Farm Credit Administration; and
(ii) Is registered with, and maintains a unique identifier through, the Nationwide Multistate Licensing System.
(11) “Residential mortgage loan” means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent, consensual security interest on a dwelling (as defined in § 103(v) of the Truth in Lending Act) or residential real estate upon which is constructed or intended to be constructed a dwelling (as so defined).
(12) “Residential real estate” means any real property located in Rhode Island upon which is constructed, or intended to be constructed, a dwelling.
(13) “SAFE Act” means the Secure and Fair Enforcement for Mortgage Licensing Act, comprising §§ 1501-1517 of the Housing and Economic Recovery Act of 2008, Pub. L. No. 110-289.
(14) “Unique identifier” means a number or other identifier assigned by protocols established by the Nationwide Multistate Licensing System.
History of Section. P.L. 2009, ch. 148, § 3; P.L. 2009, ch. 160, § 3; P.L. 2010, ch. 56, § 2; P.L. 2010, ch. 64, § 2; P.L. 2011, ch. 145, § 3; P.L. 2015, ch. 200, § 2; P.L. 2015, ch. 202, § 2; P.L. 2022, ch. 338, § 4, effective June 29, 2022; P.L. 2022, ch. 339, § 4, effective June 29, 2022; P.L. 2024, ch. 316, § 3, effective June 25, 2024; P.L. 2024, ch. 317, § 3, effective June 25, 2024.
(a) An individual, unless specifically exempted from this chapter under subsection (b), shall not engage in the business of a mortgage loan originator with respect to any dwelling located in this state without first obtaining and maintaining annually a license under this chapter. Each licensed mortgage loan originator must register with and maintain a valid unique identifier issued by the Nationwide Multistate Licensing System and registry.
(b) The following individuals are exempt from this chapter:
(1) Registered mortgage loan originators, when acting for an entity described in § 19-14.10-3(10)(i)(A), (10)(i)(B), or (10)(i)(C) are exempt from this chapter.
(2) Any individual who offers or negotiates terms of a residential mortgage loan with or on behalf of an immediate family member of the individual.
(3) Any individual who offers or negotiates terms of a residential mortgage loan secured by a dwelling that served as the individual’s residence.
(4) A licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney’s representation of the client, unless the attorney is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator.
(5) A licensed attorney when performing loan closing services for a licensed lender, licensed loan broker, or for an entity exempt from licensing under § 19-14.1-10(a)(4);
(6) A mortgage loan originator: (i) Who is employed by a lender or loan broker licensed under chapter 14 and/or chapter 14.1 of this title; (ii) Who works at a qualified location; (iii) Who is registered with, and maintains a unique identifier through, the Nationwide Multistate Licensing System; (iv) Who acts only as a mortgage loan originator for residential mortgage loans secured by dwellings (as defined in Section 103(v) of the Truth in Lending Act) constructed, or to be constructed, on real property located in states other than Rhode Island; and (v) Who is licensed or registered as required by applicable law in each state in which such real property is located. As used herein, the term “qualified location” means a location licensed under chapter 14 of this title that serves as the primary place of employment of at least one mortgage loan originator licensed under this chapter or a remote location.
(c) An individual loan processor or underwriter who is an independent contractor may not engage in the activities of a loan processor or underwriter unless the independent contractor loan processor or underwriter obtains and maintains a license under chapter 14 of this title and this chapter. Each independent contractor loan processor or underwriter licensed as a mortgage loan originator must have and maintain a valid unique identifier issued by the Nationwide Multistate Licensing System and registry.
(d) For the purposes of implementing an orderly and efficient licensing process the director, or the director’s designee, may establish licensing rules or regulations and interim procedures for licensing and acceptance of applications. For previously registered or licensed individuals the director, or the director’s designee, may establish expedited review and licensing procedures as follows:
(1) A mortgage loan originator applicant whose employer at the time of application for a mortgage loan originator license is an entity described in § 19-14.10-3(10)(i)(A), (10)(i)(B), or (10)(i)(C) and who has been assigned a unique identifier through the Nationwide Multistate Licensing System and registry and who has completed and filed with the director, or the director’s designee, all information, documents, and requirements for licensure pursuant to this chapter shall be permitted to continue to act as a mortgage loan originator for the period prior to action being taken on his or her application by the director, or the director’s designee;
(2) A mortgage loan originator applicant who has been assigned a unique identifier through the Nationwide Multistate Licensing System and who has completed and filed with the director, or the director’s designee, all information, documents, and requirements for licensure pursuant to this chapter and whose employer at the time of application for a mortgage loan originator license is a lender or loan broker licensed under chapters 14 and 14.1 of this title, shall be permitted to continue to act as a mortgage loan originator for the period prior to action being taken on his or her application by the director, or director’s designee, if the applicant and a senior officer or principal of such lender or loan broker files written attestation to the director, or the director’s designee that:
(i) The applicant is currently, or has within the six-month (6) period prior to the date of the application, been acting as a registered mortgage loan originator in this state or as a state-licensed mortgage loan originator in another state, in either case under the provisions of Section 1507 of the SAFE Act, 12 U.S.C. § 5106;
(ii) The applicant has never had a mortgage loan license or registration denied, revoked, or suspended in any governmental jurisdiction; and
(iii) The applicant has not been convicted of a felony that would otherwise authorize the director, or the director’s designee, to deny the applicant a license.
(3) Any provisional authority to act as a mortgage loan originator issued pursuant to this subsection (d) shall expire on the earlier of: (i) The date on which the director, or the director’s designee, issues or denies the application for the license; or (ii) One hundred twenty (120) days from the date of application for the license.
(4) The director, or the director’s designee, may deny or suspend the rights of a lender or loan broker licensed under chapter 14 or 14.1 of this title to employ a mortgage loan originator under this subsection (d) if the director, or the director’s designee, finds that such lender or loan broker, a senior official or principal thereof, or the applicant failed to exercise due diligence and good faith when submitting the attestations required in subsection (d)(1) or (d)(2).
History of Section. P.L. 2009, ch. 148, § 3; P.L. 2009, ch. 160, § 3; P.L. 2010, ch. 56, § 2; P.L. 2010, ch. 64, § 2; P.L. 2011, ch. 145, § 3; P.L. 2022, ch. 338, § 4, effective June 29, 2022; P.L. 2022, ch. 339, § 4, effective June 29, 2022.
(a) Applicants for a license shall apply in a form as prescribed by the director, or the director’s designee. Each such form shall contain content as set forth by rule, regulation, instruction, or procedure of the director, or the director’s designee, and may be changed or updated as necessary by the director, or the director’s designee, in order to carry out the purposes of this chapter.
(b) In order to fulfill the purposes of this chapter, the director, or the director’s designee, is authorized to establish relationships or contracts with the Nationwide Mortgage Licensing System and Registry or other entities designated by the Nationwide Mortgage Licensing System and Registry to collect and maintain records and process transaction fees or other fees related to licensees or other persons subject to this chapter.
(c) In connection with an application for licensing as a mortgage loan originator, the applicant shall, at a minimum, furnish to the Nationwide Mortgage Licensing System and Registry information concerning the applicant’s identity, including:
(1) Fingerprints for submission to the Federal Bureau of Investigation, and any governmental agency or entity authorized to receive such information for a state, national, and international criminal history background check; and
(2) Personal history and experience in a form prescribed by the Nationwide Mortgage Licensing System and Registry, including the submission of authorization for the Nationwide Mortgage Licensing System and Registry and the director to obtain:
(i) An independent credit report obtained from a consumer reporting agency described in § 603(p) of the Fair Credit Reporting Act, 15 U.S.C. § 1681a(p); and
(ii) Information related to any administrative, civil, or criminal findings by any governmental jurisdiction.
(d) For the purposes of this section and in order to reduce the points of contact which the Federal Bureau of Investigation may have to maintain for purposes of this section the director, or the director’s designee, may use the Nationwide Mortgage Licensing System and Registry as a channeling agent for requesting information from and distributing information to the U.S. Department of Justice or any governmental agency.
(e) For the purposes of this section, and in order to reduce the points of contact that the director, or the director’s designee, may have to maintain for purposes of this section, the director, or the director’s designee, may use the Nationwide Mortgage Licensing System and Registry as a channeling agent for requesting and distributing information to and from any source so directed by the director, or the director’s designee.
History of Section. P.L. 2009, ch. 148, § 3; P.L. 2009, ch. 160, § 3.
The director, or the director’s designee, shall not approve a mortgage loan originator license unless the director. or the director’s designee. makes at a minimum the following findings:
(1) The applicant has never had a mortgage loan originator license revoked in any governmental jurisdiction, except that a subsequent formal vacation of such revocation shall not be deemed a revocation.
(2) The applicant has not been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, foreign, or military court:
(i) During the seven-year (7) period preceding the date of the application for licensing and registration; or
(ii) At any time preceding such date of application, if such felony involved an act of fraud, dishonesty, or a breach of trust, or money laundering.
(iii) Pardon of a conviction shall not be a conviction for purposes of this subsection.
(3) The applicant has demonstrated financial responsibility, character, and general fitness such as to command the confidence of the community and to warrant a determination that the mortgage loan originator will operate honestly, fairly, and efficiently within the purposes of this chapter.
(i) For purposes of this subsection, a person has shown that he or she is not financially responsible when he or she has shown a disregard in the management of his or her own financial condition. A determination that an individual has not shown financial responsibility may include, but not be limited to:
(i)(A) Current outstanding judgments, except judgments solely as a result of medical expenses;
(B) Current outstanding tax liens or other government liens and filings;
(C) Foreclosures within the past three years;
(D) A pattern of seriously delinquent accounts within the past three (3) years.
(4) The applicant has completed the pre-licensing education requirement described in § 19-14.10-7.
(5) The applicant has passed a written test that meets the test requirement described in § 19-14.10-8.
(6) The applicant has met the net worth or surety bond requirements required pursuant to § 19-14.10-14.
History of Section. P.L. 2009, ch. 148, § 3; P.L. 2009, ch. 160, § 3; P.L. 2010, ch. 56, § 2; P.L. 2010, ch. 64, § 2.
(a) In order to meet the pre-licensing education requirement referred to in this chapter, a person shall complete at least twenty (20) hours of education approved in accordance with subsection (b), which shall include at least:
(1) Three (3) hours of Federal law and regulations;
(2) Three (3) hours of ethics, which shall include instruction on fraud, consumer protection, and fair-lending issues;
(3) Two (2) hours of training related to lending standards for the nontraditional mortgage product marketplace; and
(4) Three (3) hours of Rhode Island law and regulations.
(b) For purposes of subsection (a), pre-licensing education courses shall be reviewed and approved by the Nationwide Mortgage Licensing System and Registry based upon reasonable standards. Review and approval of a pre-licensing education course shall include review and approval of the course provider.
(c) Nothing in this section shall preclude any pre-licensing education course, as approved by the Nationwide Mortgage Licensing System and Registry that is provided by the employer of the applicant or an entity that is affiliated with the applicant by an agency contract, or any subsidiary or affiliate of such employer or entity.
(d) Pre-licensing education may be offered either in a classroom, online, or by any other means approved by the Nationwide Mortgage Licensing System and Registry.
(e) The pre-licensing education requirements approved by the Nationwide Mortgage Licensing System and Registry for any state shall be accepted as credit towards completion of pre-licensing education requirements in Rhode Island.
(f) A person, previously licensed under this chapter subsequent to the effective date of this chapter applying to be licensed again, must prove that they have completed all of the continuing education requirements for the year in which the license was last held.
History of Section. P.L. 2009, ch. 148, § 3; P.L. 2009, ch. 160, § 3.
(a) In order to meet the written test requirement referred to in this chapter, an individual shall pass, in accordance with the standards established under this subsection, a qualified written test developed by the Nationwide Multistate Licensing System and administered by a test provider approved by the Nationwide Multistate Licensing System based upon reasonable standards.
(b) A written test shall not be treated as a qualified written test for purposes of this section unless the test adequately measures the applicant’s knowledge and comprehension in appropriate subject areas, including:
(1) Ethics;
(2) Federal law and regulation pertaining to mortgage origination;
(3) State law and regulation pertaining to mortgage origination;
(4) Federal and state law and regulation, including instruction on fraud, consumer protection, the nontraditional mortgage marketplace, and fair-lending issues.
(c) Nothing in this section shall prohibit a test provider approved by the Nationwide Multistate Licensing System from providing a test at the location of the employer of the applicant or the location of any subsidiary or affiliate of the employer of the applicant, or the location of any entity with which the applicant holds an exclusive arrangement to conduct the business of a mortgage loan originator.
(d)(1) An individual shall not be considered to have passed a qualified written test unless the individual achieves a test score of not less than seventy-five percent (75%) correct answers to questions.
(2) An individual may retake a test three (3) consecutive times with each consecutive taking occurring at least thirty (30) days after the preceding test.
(3) After failing three (3) consecutive tests, an individual shall wait at least six (6) months before taking the test again.
(4) A licensed mortgage loan originator who fails to maintain a valid license for a period of three (3) years or longer shall retake the test, not taking into account any time during which such individual is a registered mortgage loan originator.
History of Section. P.L. 2009, ch. 148, § 3; P.L. 2009, ch. 160, § 3; P.L. 2022, ch. 338, § 4, effective June 29, 2022; P.L. 2022, ch. 339, § 4, effective June 29, 2022.
(a) The minimum standards for license renewal for mortgage loan originators shall include the following:
(1) The mortgage loan originator continues to meet the minimum standards for license issuance under § 19-14.10-6.
(2) The mortgage loan originator has satisfied the annual continuing education requirements described in § 19-14.10-10.
(3) The mortgage loan originator has paid all required fees for renewal of the license.
(b) The license of a mortgage loan originator failing to satisfy the minimum standards for license renewal shall expire. The director, or the director’s designee, may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the Nationwide Mortgage Licensing System and Registry.
History of Section. P.L. 2009, ch. 148, § 3; P.L. 2009, ch. 160, § 3.
(a) In order to meet the annual continuing education requirements referred to in § 19-14.10-9, a licensed mortgage loan originator shall complete at least (8) hours of education approved in accordance with subsection (b), which shall include at least:
(1) Three (3) hours of federal law and regulations;
(2) Two (2) hours of ethics, which shall include instruction on fraud, consumer protection, and fair-lending issues;
(3) Two (2) hours of training related to lending standards for the nontraditional mortgage product marketplace; and
(4) One hour of Rhode Island law and regulations.
(b) For purposes of this section, continuing education courses shall be reviewed and approved by the Nationwide Multistate Licensing System based upon reasonable standards. Review and approval of a continuing education course shall include review and approval of the course provider.
(c) Nothing in this section shall preclude any education course, as approved by the Nationwide Multistate Licensing System and Registry, that is provided by the employer of the mortgage loan originator or an entity that is affiliated with the mortgage loan originator by an agency contract, or any subsidiary or affiliate of such employer or entity.
(d) Continuing education may be offered either in a classroom, online, or by any other means approved by the Nationwide Multistate Licensing System.
(e) A licensed mortgage loan originator:
(1) Except for § 19-14.10-9(b) and subsection (i) of this section, may only receive credit for a continuing education course in the year in which the course is taken; and
(2) May not take the same approved course in the same or successive years to meet the annual requirements for continuing education.
(f) A licensed mortgage loan originator who is an approved instructor of an approved continuing education course may receive credit for the licensed mortgage loan originator’s own annual continuing education requirement at the rate of two (2) hours credit for every one hour taught.
(g) A person having successfully completed the education requirements approved by the Nationwide Multistate Licensing System in subsections (a)(1), (a)(2), and (a)(3) for any state shall be accepted as credit towards completion of continuing education requirements in Rhode Island. Nothing herein shall relieve an applicant of the obligation to satisfy educational requirements specifically related to Rhode Island law and regulations.
(h) An individual who:
(1) Fails to acquire a valid mortgage loan originator license or federal registration within three (3) years from the date of federal compliance with any approved pre-licensure education (PE) program; or
(2) Has obtained a mortgage loan originator license or federal registration but did not maintain an active license or federal registration for at least three (3) years must complete at least twenty (20) hours of PE in order to be eligible for state mortgage loan originator licensure.
(i) A person meeting the requirements of § 19-14.10-9(a)(1) and (a)(3) may make up any deficiency in continuing education as established by rule or regulation of the director, or the director’s designee.
History of Section. P.L. 2009, ch. 148, § 3; P.L. 2009, ch. 160, § 3; P.L. 2022, ch. 338, § 4, effective June 29, 2022; P.L. 2022, ch. 339, § 4, effective June 29, 2022.
In addition to any other duties imposed upon the director, or the director’s designee, by law, the director, or the director’s designee, shall require mortgage loan originators to be licensed and registered through the Nationwide Mortgage Licensing System and Registry. In order to carry out this requirement the director, or the director’s designee, is authorized to participate in the Nationwide Mortgage Licensing System and Registry. For this purpose, the director, or the director’s designee, may establish by rule or regulation requirements as necessary, including but not limited to:
(1) Background checks for:
(i) Criminal history through fingerprint or other databases;
(ii) Civil or administrative records;
(iii) Credit history; or
(2) Any other information as deemed necessary by the Nationwide Mortgage Licensing System and Registry.
(3) The payment of fees to apply for or renew licenses through the Nationwide Mortgage Licensing System and Registry;
(4) The setting or resetting as necessary of renewal or reporting dates; and
(5) Requirements for amending or surrendering a license or any other such activities as the director, or the director’s designee, deems necessary for participation in the Nationwide Mortgage Licensing System and Registry.
History of Section. P.L. 2009, ch. 148, § 3; P.L. 2009, ch. 160, § 3.
The director, or the director’s designee, shall establish a process whereby mortgage loan originators may challenge information entered into the Nationwide Mortgage Licensing System and Registry by the director, or the director’s designee.
History of Section. P.L. 2009, ch. 148, § 3; P.L. 2009, ch. 160, § 3.
(a) In order to ensure the effective supervision and enforcement of this chapter, the director, or the director’s designee, may, pursuant to chapter 35 of title 42:
(1) Deny, suspend, revoke, condition, or decline to renew a license for a violation of this chapter, rules or regulations issued under this chapter, or order or directive entered under this chapter;
(2) Deny, suspend, revoke, condition, or decline to renew a license if an applicant or licensee fails at any time to meet the requirements of § 19-14.10-6 or § 19-14.10-9, or withholds information or makes a material misstatement in an application for a license or renewal of a license;
(3) Order restitution against persons subject to this chapter for violations of this chapter;
(4) Impose fines on persons subject to this chapter pursuant to subsections (b), (c), and (d); and
(5) Issue orders or directives under this chapter as follows:
(i) Order or direct persons subject to this chapter to cease and desist from conducting business, including immediate temporary orders to cease and desist;
(ii) Order or direct persons subject to this chapter to cease any harmful activities or violations of this chapter, including immediate temporary orders to cease and desist;
(iii) Enter immediate temporary orders to cease business under a license or interim license issued pursuant to the authority granted under this chapter if the director, or the director’s designee, determines that such license was erroneously granted or the licensee is currently in violation of this chapter; and
(iv) Order or direct such other affirmative action as the director, or the director’s designee, deems necessary.
(b) The director, or the director’s designee, may impose a civil penalty on a mortgage loan originator and any lender or loan broker licensed under chapter 14 or 14.1 of title 19 that employs such mortgage loan originator, if the director, or the director’s designee, finds, on the record after notice and opportunity for hearing, that such mortgage loan originator has violated or failed to comply with any requirement of this chapter or any regulation prescribed by the director, or the director’s designee, under this chapter or order issued under authority of this chapter. In addition, the director, or the director’s designee may impose a civil penalty on a lender or loan broker licensed under chapter 14 or 14.1 of title 19 that employs any mortgage loan originator licensed under this chapter, if the director, or the director’s designee, finds, on the record after notice and opportunity for hearing, that such lender or loan broker has violated or failed to comply with any requirement of this chapter or any such regulation or order.
(c) The maximum amount of penalty for each act or omission described in subsection (b) shall be twenty-five thousand dollars ($25,000).
(d) Each violation or failure to comply with any directive or order of the director, or the director’s designee, is a separate and distinct violation or failure.
History of Section. P.L. 2009, ch. 148, § 3; P.L. 2009, ch. 160, § 3; P.L. 2012, ch. 66, § 1; P.L. 2012, ch. 84, § 1; P.L. 2016, ch. 517, § 1.
(a) Each mortgage loan originator shall be covered by a surety bond in accordance with this section. In the event that the mortgage loan originator is an employee of a lender or loan broker licensed under chapter 14 of title 19, the surety bond of such lender or loan broker as required in accordance with the provisions of such chapter, increased to any higher amount, required by this section can be used in lieu of the mortgage loan originator’s surety bond requirement.
(1) The surety bond shall provide coverage for each mortgage loan originator in an amount as prescribed in subsection (b).
(2) The surety bond shall be in a form as prescribed by the director, or the director’s designee.
(3) The director, or the director’s designee, may promulgate rules or regulations with respect to the requirements for such surety bonds as are necessary to accomplish the purposes of this chapter.
(b) The penal sum of the surety bond shall be maintained in an amount that reflects the dollar amount of loans originated as determined by the director, or the director’s designee, by regulation adopted within one hundred twenty (120) days of the effective date of this section.
(c) When an action is commenced on a licensee’s bond, the director, or the director’s designee, may require the filing of a new bond.
(d) Immediately upon recovery upon any action on the bond the licensee shall file a new bond.
(e) The director, or the director’s designee, shall, within one hundred twenty (120) days of the effective date of this section, promulgate rules or regulations with respect to the requirements for surety bonds as are necessary to accomplish the purposes of this chapter.
History of Section. P.L. 2009, ch. 148, § 3; P.L. 2009, ch. 160, § 3; P.L. 2011, ch. 145, § 3.
In order to promote more effective regulation and reduce regulatory burden through supervisory information sharing:
(1) Except as otherwise provided in public law 110-289, § 1512 (12 U.S.C. § 5111), the requirements under any federal law, or chapter 2 of title 38 of the general laws of Rhode Island regarding the privacy or confidentiality of any information or material provided to the Nationwide Mortgage Licensing System and Registry, and any privilege arising under federal or state law (including the rules of any federal or state court) with respect to such information or material, shall continue to apply to such information or material after the information or material has been disclosed to the Nationwide Mortgage Licensing System and Registry. Such information and material may be shared with all state and federal regulatory officials with mortgage industry oversight authority without the loss of privilege or the loss of confidentiality protections provided by federal law or chapter 2 of title 38 of the general laws of Rhode Island.
(2) For these purposes, the director, or the director’s designee, is authorized to enter agreements or sharing arrangements with other governmental agencies, the Conference of State Bank Supervisors, the American Association of Residential Mortgage Regulators or other associations representing governmental agencies as established by rule, regulation, or order of the director, or the director’s designee.
(3) Information or material that is subject to a privilege or confidentiality under subsection (a) shall not be subject to:
(i) Disclosure under any federal or state law governing the disclosure to the public of information held by an officer or an agency of the federal government or the respective state; or
(ii) Subpoena or discovery, or admission into evidence, in any private civil action or administrative process, unless with respect to any privilege held by the Nationwide Mortgage Licensing System and Registry with respect to such information or material, the person to whom such information or material pertains waives, in whole or in part, in the discretion of such person, that privilege.
(4) Section 19-4-3 relating to the disclosure of confidential supervisory information or any information or material described in this section that is inconsistent with this section shall be superseded by the requirements of this section.
(5) This section shall not apply with respect to the information or material relating to the employment history of, and publicly adjudicated disciplinary and enforcement actions against, mortgage loan originators that is included in the Nationwide Mortgage Licensing System and Registry for access by the public.
History of Section. P.L. 2009, ch. 148, § 3; P.L. 2009, ch. 160, § 3.
In addition to any authority allowed under this chapter the director, or the director’s designee, shall have the authority to conduct investigations and examinations as follows:
(1) For purposes of initial licensing, license renewal, license suspension, license conditioning, license revocation or termination, or general or specific inquiry or investigation to determine compliance with this chapter, the director, or the director’s designee, shall have the authority to access, receive and use any books, accounts, records, files, documents, information or evidence including but not limited to:
(i) Criminal, civil, and administrative history information, including non-conviction data, or other non-public record as specified in § 38-2-2(4)(D), specifically, or any other criminal, civil, and administrative record deemed non-public under § 38-2-1 et seq., generally; and
(ii) Personal history and experience information including independent credit reports obtained from a consumer reporting agency described in § 603(p) of the federal Fair Credit Reporting Act, 15 U.S.C. § 1681a(p); and
(iii) Any other documents, information, or evidence the director, or the director’s designee, deems relevant to the inquiry or investigation regardless of the location, possession, control, or custody of such documents, information, or evidence.
(2) For the purposes of investigating violations or complaints arising under this chapter, or for the purposes of examination, the director, or the director’s designee, may review, investigate, or examine any licensee, individual, or person subject to this chapter, as often as necessary in order to carry out the purposes of this chapter. The director, or the director’s designee, may direct, subpoena, or order the attendance of and examine under oath all persons whose testimony may be required about the loans or the business or subject matter of any such examination or investigation, and may direct, subpoena, or order such person to produce books, accounts, records, files, and any other documents the director, or the director’s designee, deems relevant to the inquiry.
(3) Each licensee, individual, or person subject to this chapter shall make available to the director, or the director’s designee, upon request, the books and records relating to the operations of such licensee, individual, or person subject to this chapter. The director, or the director’s designee, shall have access to such books and records and interview the officers, principals, mortgage loan originators, employees, independent contractors, agents, and customers of the licensee, individual, or person subject to this chapter concerning their business.
(4) Each licensee, individual, or person subject to this chapter shall make or compile reports or prepare other information as directed by the director, or the director’s designee, in order to carry out the purposes of this section including but not limited to:
(i) Accounting compilations;
(ii) Information lists and data concerning loan transactions in a format prescribed by the director, or the director’s designee; or
(iii) Such other information deemed necessary to carry out the purposes of this section.
(5) In making any examination or investigation authorized by this chapter, the director, or the director’s designee, may control access to any documents and records of the licensee or person under examination or investigation. The director, or the director’s designee, may take possession of the documents and records or place a person in exclusive charge of the documents and records in the place where they are usually kept. During the period of control, no individual or person shall remove or attempt to remove any of the documents and records except pursuant to a court order or with the consent of the director, or the director’s designee. Unless the director, or the director’s designee, has reasonable grounds to believe the documents or records of the licensee have been, or are at risk of being altered or destroyed for purposes of concealing a violation of this chapter, the licensee or owner of the documents and records shall have access to the documents or records as necessary to conduct its ordinary business affairs.
(6) In order to carry out the purposes of this section, the director, or the director’s designee, may:
(i) Retain attorneys, accountants, or other professionals and specialists as examiners, auditors, or investigators to conduct or assist in the conduct of examinations or investigations;
(ii) Enter into agreements or relationships with other government officials or regulatory associations in order to improve efficiencies and reduce regulatory burden by sharing resources, standardize or uniform methods or procedures, and documents, records, information or evidence obtained under this section;
(iii) Use, hire, contract, or employ public or privately available analytical systems, methods, or software to examine or investigate the licensee, individual, or person subject to this chapter;
(iv) Accept and rely on examination or investigation reports made by other government officials, within or without this state; or
(v) Accept audit reports made by an independent certified public accountant for the licensee, individual, or person subject to this chapter in the course of that part of the examination covering the same general subject matter as the audit and may incorporate the audit report in the report of the examination, report of investigation or other writing of the director, or the director’s designee.
(7) The authority of this section shall remain in effect, whether such a licensee, individual, or person subject to this chapter acts or claims to act under any licensing or registration law of this state, or claims to act without such authority.
(8) No licensee, individual, or person subject to investigation or examination under this section may knowingly withhold, abstract, remove, mutilate, destroy, or secrete any books, records, computer records, or other information.
History of Section. P.L. 2009, ch. 148, § 3; P.L. 2009, ch. 160, § 3.
It is a violation of this chapter for a person or individual subject to this chapter to:
(1) Directly or indirectly employ any scheme, device, or artifice to defraud or mislead borrowers or lenders or to defraud any person;
(2) Engage in any unfair or deceptive practice toward any person;
(3) Obtain property by fraud or misrepresentation;
(4) Solicit or enter into a contract with a borrower that provides in substance that the person or individual subject to this chapter may earn a fee or commission through “best efforts” to obtain a loan even though no loan is actually obtained for the borrower;
(5) Solicit, advertise, or enter into a contract for specific interest rates, points, or other financing terms unless the terms are actually available at the time of soliciting, advertising, or contracting;
(6) Conduct any business covered by this chapter without holding a valid license as required under this chapter, or assist or aid and abet any person in the conduct of business under this chapter without a valid license as required under this chapter;
(7) Fail to make disclosures as required by this chapter and any other applicable state or federal law including regulations thereunder;
(8) Fail to comply with this chapter or rules or regulations promulgated under this chapter, or fail to comply with any other state or federal law, including the rules and regulations thereunder, applicable to any business authorized or conducted under this chapter;
(9) Make, in any manner, any false or deceptive statement or representation with regard to the rates, points, or other financing terms or conditions for a residential mortgage loan, or engage in bait-and-switch advertising;
(10) Negligently make any false statement or knowingly and willfully make any omission of material fact in connection with any information or reports filed with a governmental agency or the Nationwide Mortgage Licensing System and Registry or in connection with any investigation conducted by the director, or the director’s designee, or another governmental agency;
(11) Make any payment, threat, or promise, directly or indirectly, to any person for the purposes of influencing the independent judgment of the person in connection with a residential mortgage loan, or make any payment, threat, or promise, directly or indirectly, to any appraiser of a property, for the purposes of influencing the independent judgment of the appraiser with respect to the value of the property;
(12) Collect, charge, attempt to collect or charge, or use or propose any agreement purporting to collect or charge, any fee prohibited by this chapter;
(13) Cause or require a borrower to obtain property insurance coverage in an amount that exceeds the replacement cost of the improvements as established by the property insurer;
(14) Fail to truthfully account for monies belonging to a party to a residential mortgage loan transaction; or
(15) Act in the capacity of and compensated as both a real estate agent and mortgage loan originator in the same transaction.
History of Section. P.L. 2009, ch. 148, § 3; P.L. 2009, ch. 160, § 3; P.L. 2025, ch. 185, § 1, effective June 24, 2025; P.L. 2025, ch. 186, § 1, effective June 24, 2025.
Each lender, loan broker, or mortgage loan originator licensee shall submit to the Nationwide Mortgage Licensing System and Registry reports of condition, which shall be in such form and shall contain such information as the Nationwide Mortgage Licensing System and Registry may require.
History of Section. P.L. 2009, ch. 148, § 3; P.L. 2009, ch. 160, § 3.
Subject to state privacy law the director, or the director’s designee, is required to report regularly violations of this chapter, as well as enforcement actions and other relevant information, to the Nationwide Mortgage Licensing System and Registry subject to the provisions contained in § 19-1-4-3.
History of Section. P.L. 2009, ch. 148, § 3; P.L. 2009, ch. 160, § 3.
[Reserved]
History of Section. P.L. 2009, ch. 148, § 3; P.L. 2009, ch. 160, § 3.
The name and the unique identifier assigned by the Nationwide Multistate Licensing System of any person originating a residential mortgage loan shall be clearly shown on all residential mortgage loan application forms, solicitations or advertisements, including business cards or websites, and any other documents as established by rule, regulation, or order of the director, or the director’s designee.
History of Section. P.L. 2009, ch. 148, § 3; P.L. 2009, ch. 160, § 3; P.L. 2022, ch. 338, § 4, effective June 29, 2022; P.L. 2022, ch. 339, § 4, effective June 29, 2022.
If any provision of this chapter or its application to any person or circumstance is held invalid, the remainder of the chapter or the application of the provision to other persons or circumstances is not affected.
History of Section. P.L. 2009, ch. 148, § 3; P.L. 2009, ch. 160, § 3.
(a) No person shall act as a third-party loan servicer, directly or indirectly, for a loan to a Rhode Island borrower without first obtaining a license under this chapter from the director, or the director’s designee.
(b) No license shall be required of:
(1) A depository institution, or an affiliate or subsidiary of a depository institution, that is controlled by, or under common control with, the depository institution and subject to the regulatory authority of the primary regulator of the depository institution.
(2) A lender licensed under chapter 14 of title 19 that retains the servicing rights on a loan originally closed in the lender’s name and subsequently sold, in whole or in part, to a third party, provided that the provisions of §§ 19-14.11-2 (segregated accounts) and 19-14.11-4 (prohibited acts and practices) of this chapter shall apply to such lender.
(3) A debt-management company licensed in this state when engaged in activities permitted pursuant to its debt-management license.
(4) An attorney licensed in this state when collecting a debt on behalf of a client.
(5) Bona-fide nonprofit, organizations, exempt from taxation under section 501(c) of the Internal Revenue Code, that are approved by the Department of Housing and Urban Development as housing counseling agencies; that have a physical location in Rhode Island; and that lend state or federal funds.
History of Section. P.L. 2014, ch. 487, § 2; P.L. 2014, ch. 522, § 2.
(a) All amounts paid by borrowers to a licensee subject to this chapter shall be deposited in one or more accounts maintained at a federally insured depository institution, and with respect to such funds, the licensee shall act as a fiduciary. Such account, or accounts, shall be segregated from all other accounts of the licensee. Such funds shall not be used in the conduct of the licensee’s personal affairs or in the licensee’s business affairs.
(b) The licensee may withdraw funds from the segregated account for payment directly to the owner of the loan or other third party of principal and interest and other payments as may be required pursuant to the terms of the loan document or servicing contract.
(c) The licensee may withdraw funds from the segregated account for commissions to which it is entitled for services actually performed.
(d) The licensee may return funds from the segregated account to the borrower if not prohibited.
(e) The licensee shall maintain complete and accurate account records, including, at a minimum, the source of all deposits; the nature and recipient of all disbursements; the date and amount of each transaction; and the name of the borrower. All documents pertaining to account activity shall be produced upon request of the director.
History of Section. P.L. 2014, ch. 487, § 2; P.L. 2014, ch. 522, § 2.
The licensee shall keep, use in the licensee’s business, and make available to the director, or the director’s designee, upon request, such books, accounts, records, and data compilations as will enable the director, or director’s designee, to determine whether such licensee is complying with the provisions of this and other applicable chapters and with the rules and regulations promulgated thereunder. Every licensee shall preserve such books, accounts, records, and data compilations in a secure manner and in accordance with § 19-14-20 for at least three (3) years after making the final entry on any loan recorded therein.
History of Section. P.L. 2014, ch. 487, § 2; P.L. 2014, ch. 522, § 2.
It is a violation of this chapter for a person to:
(1) Directly or indirectly employ any scheme, device, or artifice to defraud or mislead borrowers or lenders or to defraud any person.
(2) Engage in any unfair or deceptive practice toward any person.
(3) Obtain property by fraud or misrepresentation.
(4) Use any unfair or unconscionable means in servicing a loan.
(5) Knowingly misapply or recklessly apply loan payments to the outstanding balance of a loan.
(6) Knowingly misapply or recklessly apply payments to escrow accounts.
(7) Require the unnecessary forced placement of insurance when adequate insurance is currently in place.
(8) Fail to provide loan payoff information within the time period set forth in chapter 19.
(9) Charge excessive or unreasonable fees to provide loan payoff information.
(10) Fail to manage and maintain escrow accounts in accordance with § 19-9-2.
(11) Knowingly or recklessly provide inaccurate information to a credit bureau, thereby harming a consumer’s credit worthiness.
(12) Fail to report both the favorable and unfavorable payment history of the consumer to a nationally recognized consumer credit bureau at least annually if the servicer regularly reports information to a credit bureau.
(13) Collect private mortgage insurance beyond the date for which private mortgage insurance is required.
(14) Knowingly or recklessly facilitate the illegal foreclosure of real property collateral.
(15) Knowingly or recklessly facilitate the illegal repossession of chattel collateral.
(16) Fail to respond to consumer complaints in a timely manner.
(17) Conduct any business covered by this chapter without holding a valid license as required under this chapter, or assist, or aid and abet, any person in the conduct of business under this chapter without a valid license as required under this chapter.
(18) Fail to comply with any federal or state law, rule, or other legally binding authority relating to the evaluation of loans for modification purposes or the modification of loans.
(19) Fail to comply with this chapter, or rules adopted under this chapter, or fail to comply with any orders or directives from the director, or fail to comply with any other state or federal law, including the regulations thereunder, applicable to any business authorized or conducted under this chapter.
History of Section. P.L. 2014, ch. 487, § 2; P.L. 2014, ch. 522, § 2.
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Every person, partnership, or corporation, except a national bank or bank or trust company duly incorporated under the laws of this state, engaged in the business of loaning money on the security of a deposit of any personal property other than choses in action, whether or not a note or other evidence of indebtedness be given by the borrower, shall be deemed to be carrying on the business of a pawnbroker, within the meaning of this chapter, and shall be subject to all the provisions contained in this chapter.
History of Section. G.L. 1896, ch. 105, § 17; P.L. 1909, ch. 435, § 5; G.L. 1923, ch. 131, § 17; G.L. 1938, ch. 364, § 17; G.L. 1956, § 19-26-1.
The city or town council of any city or town may grant licenses to suitable persons, residents of the state, under any conditions and regulations that it may think proper, to carry on the business of pawnbrokers within their respective cities or towns for the term of one year at the place designated in the license, and every license granted shall designate the place where the business shall be carried on, and the carrying on of the business in any other place than that designated in the license, whether by the person named or by any other person, shall be deemed to be without license, and shall be punished accordingly; and every person taking the license shall pay to the city or town treasurer a sum not less than fifty dollars ($50.00), nor more than two hundred dollars ($200), to be fixed by the city or town council, and notwithstanding anything contained in this chapter, any license granted may be revoked and annulled by the city or town council at any time without affecting any liability under the bonds to be given, and without any claim for the money, or any part of the money, paid for the license.
History of Section. G.L. 1896, ch. 105, § 1; G.L. 1909, ch. 126, § 1; G.L. 1923, ch. 131, § 1; G.L. 1938, ch. 364, § 1; G.L. 1956, § 19-26-2; P.L. 2004, ch. 169, § 1.
Before any license is issued under the provisions of this chapter, the person applying for the license shall give bond to the city or town treasurer in the penal sum of two thousand dollars ($2,000), with at least two (2) sureties satisfactory to the town council, which sureties shall be residents of the town or city where the licensee proposes to do business, conditioned that he or she will not violate any of the provisions of this chapter, and for the payment of all costs and damages incurred by any violation of this chapter, and the other fines and penalties provided for in this section for any violation of the provisions of this chapter shall not affect the liability of the obligor upon the bond.
History of Section. G.L. 1896, ch. 105, § 1; G.L. 1909, ch. 126, § 1; G.L. 1923, ch. 131, § 1; G.L. 1938, ch. 364, § 1; G.L. 1956, § 19-26-3.
Every person carrying on the business of pawnbroker without a license shall be fined two hundred dollars ($200) for the first offense and five hundred dollars ($500) for the second and every subsequent offense.
History of Section. G.L. 1896, ch. 105, § 2; G.L. 1909, ch. 126, § 2; G.L. 1923, ch. 131, § 2; G.L. 1938, ch. 364, § 2; G.L. 1956, § 19-26-4.
(a) Every pawnbroker shall require positive proof of identification with photograph, date of birth, and current address of every pawnor and shall require the pawnor to sign a statement on a form to be approved or provided by the attorney general stating that the pawnor is the legal owner of the property or is the agent of the owner authorized to pawn the property, and when and where or in what manner the property was obtained.
(b)(1) Every pawnbroker shall keep a copy of the statement form approved by the attorney general, in the English language, in which the pawnbroker shall enter the date, duration, and amount of any loan made by him or her; a full and accurate description of all articles pawned; the rate of interest; and the name, personal description, occupation, telephone number, date of birth, and place of residence (with the street and number of the house) of the pawnor. The pawnbroker shall require the pawnor to sign the statement form with his or her name and address.
(2) Upon the receipt of the property, the pawnbroker shall deliver to the pawnor a memorandum in writing, signed by him or her, numbered with a number corresponding to the number of the statement form, and containing the substance of the statement form.
(3) Whenever required, the pawnbroker shall submit copies of the statement forms to the inspection of the attorney general, mayor, chief of police, or the deputy chief of police, or any member of the detective police of any city, or to the chief of police or the town sergeant of any town, and shall also make out and deliver to the chief of police of the city, or to the chief of police or the town sergeant of the town where the license has been granted, every day before twelve o’clock noon (12:00 p.m.), a legible and correct copy of all the statement forms made during the twenty-four (24) hours preceding the hour of ten o’clock (10:00) a.m. of the day upon which the copy is made. The pawnbroker shall deliver or mail weekly to the attorney general copies of all statement forms from the preceding seven-day (7) period; and shall retain for inspection of the attorney general, mayor, chief of police, deputy chief of police, or any member of the detective police of any city, or of the chief of police or town sergeant of any town, all articles received in pawn, for a period of at least forty-eight (48) hours from the time the articles were received.
(4) Any pawnbroker who knowingly writes the wrong name or address of a person offering any article for pawn, or who knowingly permits the signing of the wrong name or address, shall be fined one hundred dollars ($100) for the first offense. Upon a second offense, the pawnbroker’s license shall be revoked, and he or she shall not be permitted to conduct the business of pawnbroker in this state for one year. For violating any other provisions of this section a pawnbroker shall be fined one hundred dollars ($100).
(5) Any person offering any article for pawn who signs a wrong name or address shall be punished by a fine of not more than one hundred dollars ($100) or by imprisonment for not more than six (6) months.
History of Section. G.L. 1896, ch. 105, § 3; G.L. 1909, ch. 126, § 3; P.L. 1909, ch. 435, § 1; G.L. 1923, ch. 131, § 3; G.L. 1938, ch. 364, § 3; G.L. 1956, § 19-26-5; P.L. 1996, ch. 166, § 2; P.L. 1996, ch. 201, § 2; P.L. 2004, ch. 595, art. 26, § 2.
If it appears to any of the officers specified in § 19-26-5 that any article or articles that have been pawned have been stolen, the officer may give notice in writing to the pawnbroker to hold the article or articles, and the pawnbroker shall thereafter hold the article or articles for sixty (60) days, unless the notice is recalled in writing by the officer giving it. The article or articles shall be subject to inspection of the officer and any person with the officer at all reasonable times, and the article or articles shall be produced on notice or summons before any court or grand jury if the question of the larceny of the article or articles is under investigation. The pawnbroker shall not be liable in damages or otherwise on account of the detention. Any person who willfully hinders, obstructs, or prevents the officer from inspecting the article or articles, or violates any provision of this section, shall be fined not exceeding five hundred dollars ($500), or be imprisoned not exceeding six (6) months.
History of Section. G.L. 1896, ch. 105, § 16; P.L. 1909, ch. 435, § 5; G.L. 1923, ch. 131, § 16; G.L. 1938, ch. 364, § 16; G.L. 1956, § 19-26-6.
No pawnbroker licensed as provided in § 19-26-2 shall purchase any second-hand articles, or sell, dispose of, or keep for sale, any second-hand articles, unless they have been pawned to him or her and are sold under the provisions of § 19-26-10. Any article sold to the pawnbroker upon the understanding that the article is to be purchased from the pawnbroker by the seller of the article, or by any person acting for the seller, shall be deemed to have been pawned within the meaning of this chapter.
History of Section. G.L. 1896, ch. 105, § 4; G.L. 1909, ch. 126, § 4; G.L. 1923, ch. 131, § 4; G.L. 1938, ch. 364, § 4; G.L. 1956, § 19-26-7.
No pawnbroker shall knowingly take from any apprentice, servant, or employee any article or thing offered by the apprentice, servant, or employee in pledge without first ascertaining that the article or thing is the property of the person so offering it for sale. For every violation of this section the pawnbroker shall be fined not exceeding one hundred dollars ($100).
History of Section. G.L. 1896, ch. 105, § 5; G.L. 1909, ch. 126, § 5; G.L. 1923, ch. 131, § 5; G.L. 1938, ch. 364, § 5; G.L. 1956, § 19-26-8.
No pawnbroker shall buy or receive in pawn, gold, silver, or platinum scraps, gold- or silver-plated scraps, gold or silver solder, gold, silver, or platinum, or any of the same, in combination with any other or others of the same, melted into a button, bar, or any other shape, or any article of gold, silver, platinum, gold plate or silver plate in course of manufacture; nor shall he or she deface, scratch, obliterate, melt, separate, or break into parts any finished or unfinished article received by him or her in pawn, or otherwise in any manner do, cause, or suffer to be done by others, anything that shall destroy or tend to destroy the identity of the article, or render the identification more difficult; and for every violation of any provision of this section the pawnbroker shall be fined not exceeding two thousand dollars ($2,000) or be imprisoned not exceeding one year, and his or her license shall become void.
History of Section. G.L. 1896, ch. 105, § 6; G.L. 1909, ch. 126, § 6; P.L. 1909, ch. 435, § 2; G.L. 1923, ch. 131, § 6; G.L. 1938, ch. 364, § 6; G.L. 1956, § 19-26-9.
(a) No pawnbroker shall sell or dispose of any property pawned with him or her within three (3) months after the maturity of the loan on the property if not of a perishable nature; and, if perishable, for at least one month after that date. For the purposes of this section, “perishable” means any item(s) or good(s) subject to rapid decay and/or the value of which will be diminished if not put to the intended use within a short time.
(b)(1) All such sales shall be made in this state.
(2) All sales of articles received in pawn by any pawnbroker shall be at public auction to the highest bidder, except that any article less than twenty-five dollars ($25.00) in value may be sold at private sale, and a record of the articles sold and the sale prices shall be made, at the time of the sale, in the book required to be kept by the pawnbroker by § 19-26-5.
(3) Notice of the sale at public auction shall be published at least six (6) days before the sale in one of the public newspapers, published in English, in the city or town where the business is carried on, or if no newspaper is published in the city or town, then in some newspaper published in the county in which the city or town is located.
(4) The notice shall specify the time and place at which the sale is to take place and by whom it is to be conducted, and shall contain the same number and description of the articles or goods to be sold as is contained in the memorandum delivered to the pawnor as required by § 19-26-5.
(c) The borrower, or any person entitled to the property pledged, may, at any time prior to the sale, pay or tender to the pawnbroker the amount loaned and the interest on the loan, together with the proportionate cost of advertising the sale, if any, and the payment or tender shall reinvest the pawnor or the person entitled to the property pledged with the title and right of possession to the property pawned free of the pledge.
History of Section. G.L. 1896, ch. 105, § 7; G.L. 1909, ch. 126, § 7; P.L. 1909, ch. 435, § 3; G.L. 1923, ch. 131, § 7; G.L. 1938, ch. 364, § 7; G.L. 1956, § 19-26-10; P.L. 1994, ch. 340, § 1.
The surplus money, if any, rising from the sale, after deducting the amount of the loan, the interest then due on the loan, and the proportionate expense of advertising, if any, and of selling, if at public auction, shall be paid over by the pawnbroker to the person who would be entitled to redeem the pledge or pawn in case no sale had taken place. If there is surplus money, notice of the sale and of any balance due the pawnor or the person entitled shall be sent by the pawnbroker by registered or certified mail addressed to the pawnor at the place of residence specified in the record book. If any other person claims to be entitled to the money, and his or her place of residence is known to the pawnbroker, the pawnbroker shall also send that person notice, addressed to that person at his or her residence, by registered or certified mail. If the notice or notices are sent, and neither the pawnor nor the other person claims the balances within one year from the time of sending the notice or notices, he or she shall be barred from recovering the money from the pawnbroker. For every violation of this section or § 19-26-10, the pawnbroker shall be fined not exceeding five hundred dollars ($500), and the pawnbroker’s license shall become void.
History of Section. G.L. 1896, ch. 105, § 7; G.L. 1909, ch. 126, § 7; P.L. 1909, ch. 435, § 3; G.L. 1923, ch. 131, § 7; G.L. 1938, ch. 364, § 7; impl. am. P.L. 1956, ch. 3717, § 1; G.L. 1956, § 19-26-11.
(a) No pawnbroker shall receive in pledge or mortgage or by way of sale, either absolutely or with an agreement to sell back, any goods, note, bill, check, assignment or order for money or other property, or any article, thing, or property of any description, from any person, after receiving from any one of the officers mentioned in § 19-26-5, or the parent or guardian of any minor or person of unsound mind, written notice that the person is a minor or is of unsound mind; or neglects all lawful business; or habitually frequents houses of ill fame, gaming houses, or tippling houses; or by drinking, gaming, idleness, or debauchery of any kind squanders his or her earnings or wastes his or her estate; or is likely to bring self or family to want or to render self or family a public charge; or is a known thief or suspected of thievery.
(b) No pawnbroker shall knowingly receive any pawn from any person under eighteen (18) years of age, or from any person in a visible state of intoxication from liquors, drugs, or narcotics.
(c) Any pawnbroker violating any provision of this section shall be fined not exceeding five hundred dollars ($500), and the pawnbroker’s license shall become void.
History of Section. G.L. 1896, ch. 105, § 8; G.L. 1909, ch. 126, § 8; P.L. 1909, ch. 435, § 4; G.L. 1923, ch. 131, § 8; G.L. 1938, ch. 364, § 8; G.L. 1956, § 19-26-12.
Whenever complaint shall be made by any person, on oath to a judge, that any property belonging to that person has been lodged or pledged without his or her consent with any pawnbroker and that the complainant believes the property to be in some house or place within the county where the complaint is made, the judge shall, if satisfied of the reasonableness of that belief, issue a warrant directed to the division of sheriffs, or to either of the town sergeants or town constables in the county, commanding them to search for the property alleged to have been so lodged or pledged and to seize and bring the property before the division of the district court. The warrant shall be issued and served as search warrants are now by law required to be issued and served.
History of Section. G.L. 1896, ch. 105, § 9; G.L. 1909, ch. 126, § 9; G.L. 1923, ch. 131, § 9; G.L. 1938, ch. 364, § 9; G.L. 1956, § 19-26-13; P.L. 1969, ch. 239, § 33; P.L. 2012, ch. 324, § 49; P.L. 2015, ch. 260, § 28; P.L. 2015, ch. 275, § 28.
The court before which any property seized under the provisions of § 19-26-13 shall be brought shall cause the property to be delivered to the person on whose application the warrant was issued, on the execution of a bond as directed in § 19-26-15; and if the bond is not executed within twenty-four (24) hours, exclusive of Sunday, the court shall cause the property to be returned to the person from whose possession it was taken.
History of Section. G.L. 1896, ch. 105, § 10; G.L. 1909, ch. 126, § 10; G.L. 1923, ch. 131, § 10; G.L. 1938, ch. 364, § 10; G.L. 1956, § 19-26-14; P.L. 1989, ch. 542, § 27.
The bond required to be given under § 19-26-14 shall be in double the value of the property claimed, with any surety as the court shall approve, and shall be given to the person from whose possession the property was taken, with condition that the obligor claiming the property will pay all costs and damages that may be recovered by the obligee in any suit brought within ten (10) days from the date thereof.
History of Section. G.L. 1896, ch. 105, § 11; G.L. 1909, ch. 126, § 11; G.L. 1923, ch. 131, § 11; G.L. 1938, ch. 364, § 11; G.L. 1956, § 19-26-15.
No license granted under the provisions of this chapter shall authorize any business to be transacted by pawnbrokers on the first day of the week.
History of Section. G.L. 1896, ch. 105, § 12; G.L. 1909, ch. 126, § 12; G.L. 1923, ch. 131, § 12; G.L. 1938, ch. 364, § 12; G.L. 1956, § 19-26-16.
Whenever, by law, the powers, conferred in this chapter upon city or town councils, have been conferred upon boards or bureaus of police commissioners in any city or town, those powers shall continue to be exercised by the boards or bureaus of police commissioners.
History of Section. G.L. 1909, ch. 126, § 13; G.L. 1923, ch. 131, § 13; G.L. 1938, ch. 364, § 13; G.L. 1956, § 19-26-17.
Pawnbrokers are prohibited from charging, taking, or receiving, directly or indirectly, for the use of money lent on personal property, any more than the following rates of interest: for the use of money exceeding fifty dollars ($50.00) in amount for a period not exceeding three (3) months, five percent (5%) per month; for a period of time exceeding three (3) months, two and one-half percent (2.5%) per month; for the use of money exceeding fifty dollars ($50.00) in amount for any period of time, two and one-half percent (2.5%) per month; provided, that when the interest allowed by this section would amount to less than fifty cents (50¢), a minimum charge of fifty cents (50¢) per month shall be allowed under the provisions of this chapter; and, provided, further, that no charge for the keeping or storage of any article taken in pawn or pledge by any pawnbroker, under the provisions of this chapter, other than is provided in this section shall be permitted. Any person violating the provisions of this section shall be fined not exceeding five hundred dollars ($500) and his or her license shall become void.
History of Section. G.L. 1896, ch. 105, § 14, as enacted by P.L. 1909, ch. 435, § 5; G.L. 1923, ch. 131, § 14; G.L. 1938, ch. 364, § 14; G.L. 1956, § 19-26-18.
Every pawnbroker, licensed and operating under the provisions of this chapter, shall provide a place for the safekeeping of the pledges received by him or her, and this provision shall not be construed to be in reduction of any obligation which rests upon the pawnbroker to properly care for the articles pledged. For every violation of this section the pawnbroker shall be fined one hundred dollars ($100).
History of Section. G.L. 1896, ch. 105, § 15, as enacted by P.L. 1909, ch. 435, § 5; G.L. 1923, ch. 131, § 15; G.L. 1938, ch. 364, § 15; G.L. 1956, § 19-26-19.
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This chapter shall be known and may be cited as the “Rhode Island Franchise Investment Act”.
History of Section. P.L. 1993, ch. 395, § 2.
The legislature finds that franchisees may suffer substantial losses when the franchisor does not provide complete information regarding the franchisor and the franchise relationship. The legislature also finds that many franchisees lack bargaining power and purchase a franchise when they are unfamiliar with operating a business, the franchised business and with industry practices in franchising. The act seeks to ensure that each offeree receives the information necessary to make an informed decision about the offered franchise. Further, it is the intent of this chapter to prohibit the sale of franchises when there is a likelihood that the franchisor’s promises will not be fulfilled.
History of Section. P.L. 1993, ch. 395, § 2.
When used in this act, unless the context otherwise requires:
(1) “Act” means the Rhode Island Franchise Investment Act.
(2) “Advertisement” means a communication published in connection with an offer or sale of a franchise.
(3) “Affiliate” means a person controlling, controlled by, or under common control with another person; every officer or director of the person; and every person occupying a similar status or performing similar functions.
(4) “Calendar day” means every day of the week, including weekends.
(5) “Director” means the director of business regulation.
(6) “Disclosure document” means the uniform franchise offering circular as adopted and amended by the North American Securities Administrators Association, Inc.
(7) “Franchise” means:
(i) An oral or written agreement, either express or implied, that:
(A) Grants the right to distribute goods or provide services under a marketing plan prescribed or suggested in substantial part by the franchisor;
(B) Requires payment of a franchise fee in excess of five hundred dollars ($500) to a franchisor or its affiliate; and
(C) Allows the franchise business to be substantially associated with a trademark, service mark, trade name, logotype, advertising, or other commercial symbol of or designating the franchisor or its affiliate; or
(ii) A master franchise.
(8) “Franchisee” means a person to whom a franchise is granted. Franchisee includes:
(i) A subfranchisor with regard to its relationship with a franchisor; and
(ii) A subfranchisee with regard to its relationship with a subfranchisor.
(9) “Franchise fee” means a direct or indirect payment to purchase or operate a franchise. Franchise fee does not include:
(i) Payment of a reasonable service charge to the issuer of a credit card by an establishment accepting the credit card;
(ii) Payment to a trading stamp company by a person issuing trading stamps in connection with a retail sale; or
(iii) Agreement to purchase at a bona fide wholesale price a reasonable quantity of tangible goods for resale.
(10) “Franchisor” means a person who grants a franchise. Franchisor includes a subfranchisor with regard to its relationship with a franchisee, unless stated otherwise in this act.
(11) “Fraud” and “deceit” are not limited to common law fraud and deceit.
(12) “Marketing plan” means a plan or system concerning a material aspect of conducting business. Indicia of a marketing plan include:
(i) Price specifications, special-pricing systems, or discount plans;
(ii) Sales or display equipment or merchandising devices;
(iii) Sales techniques;
(iv) Promotional or advertising materials or cooperative advertising;
(v) Training regarding the promotion, operation, or management of the business; or
(vi) Operational, managerial, technical, or financial guidelines or assistance.
(13) “Master franchise” means an agreement, express or implied, oral or written, by which a person pays a franchisor for the right to sell or negotiate the sale of franchises.
(14) “Offer” or “offer to sell” means every attempt to offer or to dispose of, or solicitation of an offer to buy, a franchise or interest in a franchise for value.
(15) “Order” means a consent, authorization, approval, or prohibition issued by the director in a specific matter.
(16) “Person” means an individual or any other legal or commercial entity.
(17) “Publish” means to circulate generally by mail, or print media or electronic media, or otherwise to disseminate generally to the public.
(18) “Registration application” means an initial franchise application on the uniform franchise-registration application, as adopted and amended by the North American Securities Administrators Association, Inc. and the amendment or renewal of the application.
(19) “Sale” or “sell” means every contract or agreement of sale of, contract to sell, or a disposition of a franchise or interest in a franchise for value.
(20) “Salesperson” means a person employed by or representing a franchisor in effecting, or attempting to effect, the offer or sale of a franchise.
(21) “Subfranchisee” means a person who is granted a franchise or subfranchise from the subfranchisor.
(22) “Subfranchisor” means a person who is granted a master franchise.
(23) “This state” means Rhode Island.
History of Section. P.L. 1993, ch. 395, § 2; P.L. 2016, ch. 153, § 2; P.L. 2016, ch. 159, § 2.
(a) This act applies to a franchise that is offered or sold in this state.
(b) A franchise is offered for sale in this state if an offer to sell is made or accepted in this state or an offer to buy is accepted in this state.
(c) An offer to sell is made in this state if the offer is directed by the offeror into this state from within or from outside this state and is received where it is directed. An offer to sell is accepted in this state if the offeree communicates acceptance to the offeror in this state and acceptance is received where it is directed.
(d) This act also applies to a franchise offered or sold outside this state if it is offered or sold to a resident of this state and is to be operated in this state.
(e) An offer to sell is not made in this state solely because the offer appears in a newspaper or other publication of general and regular circulation that had more than two thirds (⅔) of its circulation outside this state during the past twelve (12) months or solely because the offer appears in a broadcast or transmission originating outside this state.
History of Section. P.L. 1993, ch. 395, § 2.
It is unlawful for any person to offer or sell a franchise unless the offer is registered under this act or is exempt from registration under § 19-28.1-6.
History of Section. P.L. 1993, ch. 395, § 2.
The following transactions are exempt from the provisions of § 19-28.1-5:
(1) The offer or sale of a franchise if all of the following conditions are satisfied:
(i) Either the franchisor’s most recent audited financial statements show a net worth of at least ten million dollars ($10,000,000) or the franchisor is at least eighty percent (80%) owned by a person that unconditionally guarantees the franchisor’s performance; that consents to service of process in this state; and whose most recent audited financial statements show a net worth of at least ten million dollars ($10,000,000);
(ii) The franchisor or person owning at least eighty percent (80%) of the franchisor had, and currently has, at least twenty-five (25) franchisees that have conducted substantially the same franchised business to be offered or sold at no fewer than twenty-five (25) locations for the entire five-year (5) period immediately preceding the offer or sale of the franchise;
(iii) The offeree receives the disclosure document at least fourteen (14) calendar days prior to the execution by the offeree of any binding agreement or at least fourteen (14) calendar days prior to the direct or indirect receipt of a franchise fee by the franchisor from the offeree, whichever first occurs; and
(iv) The franchisor annually files a notice of exemption with the director. The notice of exemption shall include the disclosure documents and the fee prescribed by § 19-28.1-29 and shall be filed prior to an offer or sale of a franchise in this state. The exemption expires fifteen (15) months from the date of the most recent audited financial statement filed unless the director prescribes a different period by rule or order.
(2) The offer or sale of a franchise by a franchisee who is not an affiliate of the franchisor for the franchisee’s own account if the franchisee’s entire franchise is sold and the sale is not effected by or through the franchisor. A sale is not effected by or through a franchisor merely because a franchisee signs agreements with terms that do not materially differ from the agreements with the existing franchisee or because a franchisor has a right to approve or disapprove the sale or requires payment of a reasonable transfer fee. This exemption applies to the offer or sale of a master franchise if the entire master franchise is sold.
(3) The offer or sale of a franchise to a person who has been, for at least two (2) years, an officer, director, partner, or affiliate of the franchisor for that person’s own account.
(4) The offer or sale of a franchise to a purchaser for the purchaser’s own account who:
(i) Has a net worth of at least one million dollars ($1,000,000) (in the case of a natural person, including the property of the purchaser’s spouse but excluding primary residence, personal vehicles and personal effects) or had an individual income, or joint income, including that person’s spouse, in excess of two hundred thousand dollars ($200,000) in each of the two (2) most recent years and has a reasonable expectation of reaching the same income level in the current year; and
(ii) Has the knowledge and experience in financial and business matters that the person is capable of evaluating the merits and risks of the franchise.
(5) The offer or sale to an existing franchisee of an additional franchise that is substantially the same as the franchise that the franchisee has operated for at least two (2) years at the time of the offer or sale.
(6) The offer or sale of a franchise involving a renewal, extension, modification, or amendment of an existing franchise agreement if there is no interruption in the operation of the franchised business and there is no material change in the franchise relationship. For purposes of this subdivision, an interruption in the operation of the franchised business solely for the purpose of renovating or relocating that business is not a material change in the franchise relationship or an interruption in the operation of the franchise business.
(7) The offer or sale of a franchise by an executor, administrator, sheriff, marshal, receiver, trustee, trustee in bankruptcy, guardian, or conservator on behalf of a person other than the franchisor or the estate of the franchisor.
(8) The offer of a franchise by the franchisor during the period of registration has expired and is pending renewal under § 19-28.1-9 or an application to amend a registration under § 19-28.1-11, if the offeree receives the newly registered disclosure document at least fourteen (14) calendar days before the offeree’s execution of any binding agreement or at least fourteen (14) calendar days prior to the receipt of a franchise fee by the franchisor from the offeree, whichever first occurs. Changes from the documents last registered must be marked to show changes.
(9) The offer or sale of rights to a person to sell goods or services within, or adjacent to, a retail establishment as a department or division; provided that the person is not required to purchase goods or services from the operator of the retail establishment.
(10) The offer and sale of a franchise that the director, by rule or order, exempts when registration is not necessary or appropriate in the public interest or for the protection of prospective franchisees.
History of Section. P.L. 1993, ch. 395, § 2; P.L. 2016, ch. 153, § 2; P.L. 2016, ch. 159, § 2.
An offer or sale of a franchise is exempted from §§ 19-28.1-5, 19-28.1-8, 19-28.1-9, and 19-28.1-13 — 19-28.1-16 if:
(1) It is offered or sold to a nonresident of this state;
(2) The franchise business will not be operated wholly or partly in this state;
(3) The offer or sale does not violate federal law or the law of the foreign jurisdiction; and
(4) The offeree is not actually present in this state during any offer or sale.
History of Section. P.L. 1993, ch. 395, § 2.
(a) It is unlawful to sell any franchise in this state without first providing a copy of a disclosure document reflecting all material changes together with a copy of all proposed agreements relating to the sale of the franchise, unless otherwise provided in subsection (b), to the prospective franchisee, not less than:
(1) [Deleted by P.L. 2016, ch. 153, § 2 and P.L. 2016, ch. 159, § 2].
(2) Fourteen (14) calendar days prior to the execution of an agreement or payment of any consideration relating to the franchise relationship.
(b) The delivery requirements in subsection (a) do not apply to the offer or sale of a franchise that is exempt under § 19-28.1-6(2), (3), (6), or (8).
History of Section. P.L. 1993, ch. 395, § 2; P.L. 2016, ch. 153, § 2; P.L. 2016, ch. 159, § 2.
(a) A registration application must include the disclosure document, the filing fee, and the consent to service of process. The director may require the filing of audited financial statements examined and reported upon by an independent certified public accountant and prepared in accordance with generally accepted accounting principles and of additional documents or disclosures.
(b) If the franchisor fails to demonstrate to the director the franchisor’s financial ability to fulfill its initial obligations to franchisees, the director may require an escrow of funds paid by the franchisee or subfranchisor to the franchisor or its affiliate until the franchisor performs its initial obligations and the franchisee has commenced operations. The director may allow alternatives to escrow.
(c)(1) Except as provided in subsection (c)(2), if no order under § 19-28.1-18 or § 19-28.1-19 is in effect, a franchise registration application is effective on the thirtieth business day after filing of the application of the last amendment to the application or at an earlier time ordered by the director unless the applicant requests postponement of effectiveness of the application or the director has made a good faith effort to communicate why the application does not meet the requirements of this act.
(2) If the director requires the submission of additional information under § 19-28.1-9, 19-28.1-11 — 19-28.1-13, or 19-28.1-26 before the franchise registration application becomes effective under subsection (c)(1) and if no order under § 19-28.1-18 or § 19-28.1-19 is in effect, the application becomes effective on the fifteenth business day after the additional information is filed with the director, or at any earlier time the director determines, unless the applicant requests postponement of the effectiveness of the application.
(d) Registration of a franchise under this act expires one hundred twenty (120) calendar days after the end of the franchisor’s fiscal year following the application date, unless the director prescribes a different period by rule or order. A franchise registration may be renewed for one year or a shorter period if designated by the director by filing an application to renew thirty (30) days prior to the expiration of the registration.
(e) An applicant or registrant may withdraw a franchise registration application, or franchise registration if it files a written request for withdrawal with the director. Withdrawal is effective fifteen (15) business days from the day on which the withdrawal request is filed with the director.
(f) The director may accept the examination of a registration application by another state administrator as complying with this act.
History of Section. P.L. 1993, ch. 395, § 2.
This act does not preclude negotiation of terms and conditions of a franchise before it is sold. After the initial offer, a franchisor need not amend its disclosure document to negotiate with an offeree, or make supplementary disclosure to that offeree, by reason of a change negotiated in the terms and conditions of a franchise.
History of Section. P.L. 1993, ch. 395, § 2.
The franchisor must promptly amend its franchise registration application to reflect every material change in the information filed with the director.
History of Section. P.L. 1993, ch. 395, § 2.
No person may publish in this state any advertisement offering to sell a franchise required to be registered under this act unless they maintain the advertising materials for five (5) years, consistent with § 19-28.1-13.
History of Section. P.L. 1993, ch. 395, § 2; P.L. 2016, ch. 153, § 2; P.L. 2016, ch. 159, § 2.
Every franchisor offering or selling a franchise in this state must maintain a complete and accurate set of books and records of the offers and sales of franchises. The books and records must include disclosure documents, advertising correspondence with franchisees and prospective franchisees, past and present operations manuals, training records, training manuals, copies of executed agreements, and any due diligence records concerning franchisees. These books and records must be maintained at an office readily accessible to the franchisor for five (5) years. The books and records may be kept on photographic or electronic media but must be printed if the director requests. Nothing in this section limits the investigative authority of the director.
History of Section. P.L. 1993, ch. 395, § 2.
A provision of a franchise agreement restricting jurisdiction or venue to a forum outside this state or requiring the application of the laws of another state is void with respect to a claim otherwise enforceable under this act.
History of Section. P.L. 1993, ch. 395, § 2; P.L. 2016, ch. 153, § 2; P.L. 2016, ch. 159, § 2; P.L. 2016, ch. 512, art. 1, § 7.
A condition, stipulation, or provision requiring a franchisee to waive compliance with, or relieving a person of, a duty of liability imposed by or a right provided by this act or a rule or order under this act is void. An acknowledgement provision, disclaimer or integration clause, or a provision having a similar effect in a franchise agreement, does not negate or act to remove from judicial review any statement, misrepresentations, or action that would violate this act or a rule or order under this act. This section shall not affect the settlement of disputes, claims or civil lawsuits arising or brought under this act.
History of Section. P.L. 1993, ch. 395, § 2.
A franchisor shall not restrict a franchisee from associating with other franchisees or from participating in a trade association, or retaliate against a franchisee for engaging in these activities.
History of Section. P.L. 1993, ch. 395, § 2.
In connection with the offer or sale of a franchise it is unlawful for a person, directly or indirectly, to:
(1) Employ a device, scheme, or artifice to defraud;
(2) Make an untrue statement of material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading;
(3) Engage in an act, practice, or course of business that operates or would operate as a fraud or deceit on a person;
(4) Represent to an offeree of a franchise that the filing of a franchise registration application or the registration of a franchise constitutes a finding by the director that a document filed under the act is true, complete, and not misleading or that the director has passed upon the merits of the franchise;
(5) Misrepresent that a franchise is registered or exempted from registration under this act;
(6) Violate an order of the director after the person receives notice that the order was issued;
(7) Fail to notify the director of a material change in the information required in a document required to be filed by this act or a rule or order under this act; or
(8) Omit to state a material fact, or make or cause to be made an untrue statement of a material fact, in any application, notice, or report filed with the director under this act.
History of Section. P.L. 1993, ch. 395, § 2.
(a) The director may by order deny a franchise registration application or suspend or revoke the effectiveness of registration of a franchise if:
(1) The franchisor failed to comply with a provision of this act or a rule, order, or condition of the director under this act;
(2) The registration application is incomplete or inaccurate in any material respect;
(3) The registration application includes a false or misleading statement of a material fact or omits to state a material fact required to be stated or necessary to make a required statement not misleading;
(4) The sale of the franchise would constitute a misrepresentation, deceit, or fraud upon an offeree;
(5) A person is engaging in, has engaged in, or is about to engage in a false, fraudulent, or deceptive practice or a device, scheme, or artifice to defraud in connection with the offer or sale of the franchise;
(6) A partner, officer, or director of the franchisor, or a person who occupies a similar status or performs similar functions, or a person who directly or indirectly controls or is controlled by the franchisor is or has been found guilty or liable in a proceeding required to be described in the registration application and the involvement of the person creates an unreasonable risk to franchisees or offerees;
(7) An advertisement prohibited by the act has been used in connection with the offer or sale of a franchise;
(8) The franchisor’s enterprise or method of business includes activities that are illegal where performed; or
(9) The financial condition of the franchisor impairs, or would impair, the ability of the franchisor to fulfill obligations under the franchise agreement.
(b) The director may by order deny, suspend, or revoke an exemption under § 19-28.1-6 on any of the grounds described in subsection (a).
(c) When it appears to the director that any person has violated, or is about to violate, a provision of this act or a rule or order under this act, the director may do any or all of the following:
(1) Issue an order directing the person to cease and desist from continuing the act or practice;
(2) Bring an action in a court of competent jurisdiction to enjoin the act or practice and to enforce compliance with this act or a rule or order under this act. Upon a proper showing, the court may grant a permanent or preliminary injunction, restraining order, or writ of mandate. The court may grant appropriate ancillary relief, including appointment of a receiver or conservator for the defendant or the defendant’s assets. The court may exercise all powers necessary or appropriate for these purposes. The court may not require the director to post a bond; or
(3) Bring an action on behalf of the state in any court of competent jurisdiction against any officer, director, trustee, manager, or agent of the franchisor or against a franchisor to recover a penalty in a sum not to exceed fifty thousand dollars ($50,000) per violation of this act. The action must be brought within four (4) years after the commission of the act or practice on which it is based.
(d) The director may impose an administrative assessment against a person named in an order issued under subsection (a) or (c) of this section or § 19-28.1-19. The amount of the administrative assessment may not exceed five thousand dollars ($5,000) for each act or omission that constitutes a basis for issuing the order. The administrative assessment may only be imposed:
(1) Following an opportunity for a hearing under § 19-28.1-25 if the notice delivered to all named persons includes notice of the director’s authority to impose an administrative assessment under this section, or
(2) As part of an order issued under subsection (a) or (b) of this section or § 19-28.1-19, if the order is stipulated to by each person subject to the administrative assessment.
(e) When the director prevails in an action under this act, he or she is entitled to recover the costs, expenses, and experts fees’ incurred incident to the action.
(f) In connection with an action or proceeding under this section, the director may exercise any of the powers specified in § 19-28.1-26.
History of Section. P.L. 1993, ch. 395, § 2.
The director upon a finding that it is in the public interest may issue an order summarily under § 19-28.1-18.
History of Section. P.L. 1993, ch. 395, § 2.
(a) The director may refer any evidence that is available concerning any violation of this act or any rule or order made under this act to the attorney general who may, with or without this reference, institute appropriate criminal proceedings under the act.
(b) A person who willfully violates any provision of this act, or any rule under this act, or any order of which the person has notice, commits a felony and upon conviction is subject to the punishment provided by law.
(c) A prosecution for a violation under this act must be commenced within four (4) years after the commission of the violation. Nothing in this act limits the power of the state to punish a person for conduct that constitutes a crime under another statute.
History of Section. P.L. 1993, ch. 395, § 2.
(a) A person who violates any provision of this act is liable to the franchisee for damages, costs, and attorneys and experts fees. In the case of a violation of § 19-28.1-5, § 19-28.1-8, or § 19-28.1-17(1) — (5), the franchisee may also sue for rescission. No person shall be liable under this section if the defendant proves that the plaintiff knew the facts concerning the violation.
(b) Every person who directly or indirectly controls a person liable under this section, every principal executive officer or director of the liable person, every person occupying a similar status or performing similar functions, and every agent or employee of a liable person, who materially aids in the act or transaction constituting the violation, is also liable jointly and severally with and to the same extent as the person liable under this section, unless the agent, employee, officer, or director proves he or she did not know, and in the exercise of reasonable care could not have known, of the existence of the fact by reason of which the liability is alleged to exist.
History of Section. P.L. 1993, ch. 395, § 2.
An action under § 19-28.1-21 must be commenced not later than the earlier of:
(1) Four (4) years after the act or transaction constituting the violation; or
(2) Ninety (90) days after the receipt by the franchisee of a rescission offer in a form approved by the director.
History of Section. P.L. 1993, ch. 395, § 2.
Except as expressly provided in this act, no civil liability arises from a violation or any provision of this act. Nothing in the act limits liability that may exist under another statute or at common law. Prior law governs all actions based on facts occurring before July 22, 1993.
History of Section. P.L. 1993, ch. 395, § 2.
In an administrative, civil, or criminal proceeding arising under this act, the burden of proving an exemption, or an exclusion from a definition, is on the person claiming it.
History of Section. P.L. 1993, ch. 395, § 2.
(a) Except as provided by subsection (c), the director may not enter an order under § 19-28.1-18 or § 19-28.1-19 without appropriate prior notice to all named persons, opportunity for hearing and written findings of fact and conclusion of law.
(b) Notice required by this act is sufficient if delivered personally, or if sent by registered or certified mail and addressed to the person, or the person’s attorney of record at the person’s or attorney’s last known address appearing in the records of the director. Notice served in accordance with § 19-28.1-28 is also sufficient.
(c) A person named in an order may apply to the director for a hearing in respect to any matter determined by the order within 30 days after the director has summarily issued an order. A hearing shall be held within thirty (30) days after the director receives a written request for a hearing unless extended by mutual consent of the parties. During the pendency of any hearing requested under this subsection, the order issued summarily shall remain in effect unless vacated or modified by the director.
(d) After a hearing, the director may issue a final order. The final order may affirm, vacate or modify an order issued summarily in effect during the pendency of the hearing, or may include such other sanctions as are provided for under § 19-28.1-18. An order issued summarily against a person becomes a final order if the person fails to request a hearing under subsection (c) or if the person defaults after requesting a hearing.
(e) Hearings and rehearings shall be public.
(f) Hearings and other official acts of the director are subject to judicial review and will be made in accordance with chapter 35 of title 42.
(g) Orders originally entered without a hearing under § 19-28.1-18 or § 19-28.1-19 may be reviewed only if the person seeking review has requested a hearing within the time provided by subsection (b). Petition for review under this subsection may be filed only after service of the order finally disposing of the person’s request for a hearing under subsection (b).
History of Section. P.L. 1993, ch. 395, § 2.
(a) The director may make public or private investigations inside or outside this state or determine whether a person has violated, is violating, or is about to violate a provision of this act. The director may investigate to aid in the enforcement of this act or in prescribing rules under this act. The director may publish information concerning the violation of this act or a rule or order under this act.
(b) The director may keep confidential any information obtained in the course of an investigation.
(c) The director may investigate suspected criminal violations of this act and may refer evidence to the attorney general or a prosecuting attorney. Upon request of the attorney general or prosecuting attorney, the director and the director’s attorneys, deputies, or assistants may assist in presenting the law or facts at trial.
(d) For the purposes of an investigation or proceeding under this act, the director may subpoena witnesses, compel their attendance, examine them under oath, or require the production of any documents or tangible things that the director deems relevant or material to this investigation or proceeding. The subpoena must state the date, place, and time at which the person is required to appear or produce documentary material.
(e) A director’s subpoena shall be served in accordance with the service of process requirements of civil litigation in this state.
(f) Upon application of the director, a court may compel compliance with a subpoena through a contempt proceeding.
History of Section. P.L. 1993, ch. 395, § 2.
(a) The director may promulgate rules, forms, and orders necessary or appropriate to administer this act and may define terms, whether or not used in this act. The director may classify franchises, persons, and matters within the director’s jurisdiction and prescribe different rules for different classes. The act imposes no liability for an act or omission done in good faith in conformity with an order or rule of the director.
(b) No rule, order, or form may be made unless the director finds that the action is necessary or appropriate in the public interest or for the protection of franchisees and consistent with the purposes fairly intended by the policy and provisions of the act.
(c) The director may honor requests from interested persons for interpretive opinions or may issue determinations that the director will not institute enforcement proceedings against a person for engaging in certain specified activities where the determination is consistent with purposes fairly intended by the policy and provisions of the act.
History of Section. P.L. 1993, ch. 395, § 2.
(a) A person who offers or sells a franchise subject to the registration requirements of this act in this state shall file with the director an irrevocable consent to service of process appointing the director as the person’s agent to receive service of process in a civil action or proceeding arising under this act.
(b) A person who offers or sells a franchise in this state without filing a consent to service of process is deemed to appoint the director as the person’s agent to receive service of process in a civil action or proceeding arising under this act.
(c) A person may effect service of process under this section by service on the director. The time to respond begins to run when the person sends notice of the service and a copy of the process by certified mail to the defendant or respondent or attorney of record at its last address on file with the director. If no address is on file with the director, the time to respond begins to run when the process is served on the director. The plaintiff shall file an affidavit of compliance with the court or tribunal hearing the matter.
History of Section. P.L. 1993, ch. 395, § 2.
(a) The director shall charge and collect the fees fixed by this section. The director shall not refund fees.
(b) The fee for filing an application for initial registration of a franchise under § 19-28.1-9 is six hundred dollars ($600).
(c) The fee for filing a notice of exemption under § 19-28.1-6 is three hundred sixty dollars ($360).
(d) The fee for filing an application for renewal of a registration under § 19-28.1-9 is three hundred dollars ($300).
(e) The fee for filing a request for an amendment to an application under § 19-28.1-11 is one hundred twenty dollars ($120).
(f) The fee for filing a request for an interpretive opinion under § 19-28.1-27(c) is three hundred dollars ($300).
(g) [Deleted by P.L. 2016, ch. 153, § 2 and P.L. 2016, ch. 159, § 2].
History of Section. P.L. 1993, ch. 395, § 2; P.L. 2009, ch. 68, art. 12, § 2; P.L. 2016, ch. 153, § 2; P.L. 2016, ch. 159, § 2.
All fees shall be paid to the state treasurer and are hereby appropriated to the general fund.
History of Section. P.L. 1993, ch. 395, § 2; P.L. 1994, ch. 273, § 1.
To encourage uniform application and interpretation of this act and effective franchise regulation and enforcement, the director may cooperate with federal, state, or foreign agencies or administrators and law enforcement agencies, including:
(1) Conducting joint examinations and investigations;
(2) Holding joint administrative hearings;
(3) Filing and prosecuting joint civil or administrative proceedings;
(4) Sharing and exchanging information and documents subject to the restrictions of this state;
(5) Sharing and exchanging personnel;
(6) Formulating rules, regulations, statements of policy, guidelines, proposed statutory changes, and interpretive opinions and releases; and
(7) Issuing and enforcing subpoenas at the request of the Federal Trade Commission or an agency administering franchise statutes in another jurisdiction if the information sought would also be subject to lawful subpoena for conduct occurring in this state.
History of Section. P.L. 1993, ch. 395, § 2.
A document is filed when it is received by the director.
History of Section. P.L. 1993, ch. 395, § 2.
This act shall be applied and construed with a view to uniformity among states enacting it. This act shall be liberally construed to effectuate its purposes.
History of Section. P.L. 1993, ch. 395, § 2.
If a provision of this act or its application to a person or circumstance is held invalid, the invalidity shall not affect other provisions or applications of this act that can be given effect without the invalid provision of application. To this end the provisions of this act are severable. Further, this chapter shall not apply to entities regulated by chapter 55 of title 5.
History of Section. P.L. 1993, ch. 395, § 2.
[Repealed]
[Repealed]
[Repealed]
(a) The general assembly finds that guaranteed asset-protection waivers are not insurance. All guaranteed asset-protection waivers issued prior to and after the date of enactment of this chapter shall not be construed as insurance.
(b) The purpose of this chapter is to provide a framework within which guaranteed asset-protection waivers are defined and may be offered within this state.
(c) This chapter does not apply to:
(1) An insurance policy offered by an insurer under title 27 including, but not limited to, vendor single interest coverage; or
(2) A debt cancellation or debt suspension contract being offered in compliance with §§ 19-3-1 and 19-5-25 or 12 C.F.R. Part 37 or 12 C.F.R. Part 721 or other federal law.
(d) Guaranteed asset-protection waivers governed under this section are not insurance and are exempt from the insurance laws of this state. Persons marketing, selling, or offering to sell guaranteed asset-protection waivers to borrowers that comply with this section are exempt from this state’s insurance licensing requirements.
History of Section. P.L. 2016, ch. 530, § 1.
The following are terms defined for purposes of this chapter and are not intended to provide actual terms required in guaranteed asset-protection waivers:
(1) “Administrator” means a person, other than an insurer or creditor who performs administrative or operational functions pursuant to guaranteed asset-protection waiver programs.
(2) “Borrower” means a debtor, retail buyer, or lessee, under a finance agreement.
(3) “Creditor” means:
(i) The lender in a loan or credit transaction;
(ii) The lessor in a lease transaction;
(iii) Any dealer of motor vehicles that provides credit to retail buyers of such motor vehicles, provided that such entities comply with the provisions of this section;
(iv) Any retail seller of motor vehicles as defined herein in commercial retail installment transactions; or
(v) The assignees of any of the foregoing to whom the credit obligation is payable.
(4) “Finance agreement” means a loan, lease, or retail installment sales contract for the purchase or lease of a motor vehicle.
(5) “Free-look period” means the period of time from the effective date of the GAP waiver until the date the borrower may cancel the contract without penalty, fees, or costs to the borrower. This period of time must be not less than thirty (30) days.
(6) “Guaranteed asset-protection waiver” or “GAP waiver” means a contractual agreement wherein a creditor agrees, for a separate charge, to cancel or waive all or part of amounts due on a borrower’s finance agreement in the event of a total, physical-damage loss or unrecovered theft of the motor vehicle, which agreement must be part of, or a separate addendum to, the finance agreement.
(7) “Insurer” means an insurance company licensed, registered, or otherwise authorized to do business under title 27.
(8) “Motor vehicle” means self-propelled or towed vehicles designed for personal or commercial use, including, but not limited to: automobiles, trucks, motorcycles, recreational vehicles, all-terrain vehicles, snowmobiles, campers, boats, personal watercraft, and trailers for motorcycles, boats, campers, and personal watercraft.
(9) “Person” includes an individual, company, association, organization, partnership, business trust, corporation, or other legal entity.
History of Section. P.L. 2016, ch. 530, § 1.
(a) GAP waivers may be offered, sold, or provided to borrowers in this state in compliance with this chapter.
(b) GAP waivers may, at the option of the creditor, be sold for a single payment, or may be offered with a monthly or periodic payment option.
(c) Notwithstanding any provision of the general or public laws to the contrary, any cost to the borrower for a guaranteed asset-protection waiver entered into in compliance with the Truth in Lending Act, 15 U.S.C. § 1601 et seq., and its implementing regulations, as they may be amended from time to time, must be separately stated and is not to be considered a finance charge or interest.
(d) A retail seller must insure its GAP waiver obligations under a contractual liability or other insurance policy issued by an insurer. A creditor, other than a retail seller, may insure its GAP waiver obligations under a contractual liability policy or other such policy issued by an insurer. Any such insurance policy may be directly obtained by a creditor, retail seller, or may be procured by an administrator to cover a creditor’s or retail seller’s obligations; provided, that retail sellers that are lessors on motor vehicles are not required to insure obligations related to GAP waivers on such leased vehicles.
(e) The GAP waiver remains a part of the finance agreement upon the assignment, sale, or transfer of such finance agreement by the creditor.
(f) Any creditor that offers a GAP waiver must report the sale of, and forward funds received on all such waivers to the designated party, if any, as prescribed in any applicable administrative services agreement, contractual liability policy, other insurance policy, or other specified program documents.
(g) Funds received or held by a creditor or administrator and belonging to an insurer, creditor, or administrator, pursuant to the terms of a written agreement, must be held by such creditor or administrator in a fiduciary capacity.
History of Section. P.L. 2016, ch. 530, § 1.
(a) Contractual liability or other insurance policies insuring GAP waivers must state the obligation of the insurer to reimburse or pay to the creditor any sums the creditor is legally obligated to waive under the GAP waivers issued by the creditor and purchased or held by the borrower.
(b) Coverage under a contractual liability or other insurance policy insuring a GAP waiver must also cover any subsequent assignee upon the assignment, sale, or transfer of the finance agreement.
(c) Coverage under a contractual liability or other insurance policy insuring a GAP waiver must remain in effect unless cancelled or terminated in compliance with title 27.
(d) The cancellation or termination of a contractual liability or other insurance policy must not reduce the insurer’s responsibility for GAP waivers issued by the creditor prior to the date of cancellation or termination and for which premium has been received by the insurer.
History of Section. P.L. 2016, ch. 530, § 1.
Guaranteed asset-protection waivers must disclose, in writing and in clear, understandable language that is easy to read, the following:
(1) The name and address of the initial creditor and the borrower at the time of sale, and the identity of any administrator if different from the creditor.
(2) The purchase price and the terms of the GAP waiver, including, without limitation, the requirements for protection, conditions, or exclusions associated with the GAP waiver.
(3) That the borrower may cancel the GAP waiver within a free-look period as specified in the waiver, and will be entitled to a full refund of the purchase price, as long as no benefits have been provided; or in the event benefits have been provided, the borrower may receive a full or partial refund pursuant to the terms of the waiver.
(4) The procedure the borrower must follow, if any, to obtain GAP-waiver benefits under the terms and conditions of the waiver, including a telephone number and address where the borrower may apply for waiver benefits.
(5) Whether or not the GAP waiver is cancellable after the free-look period, and the conditions under which it may be cancelled or terminated, including the procedures for requesting any refund due.
(6) That in order to receive any refund due in the event of a borrower’s cancellation of the GAP waiver agreement or early termination of the finance agreement after the free-look period of the GAP waiver, the borrower, in accordance with terms of the waiver, must provide a written request to cancel to the creditor, administrator, or such other party within ninety (90) days of the occurrence of the event terminating the finance agreement.
(7) The methodology for calculating any refund of the unearned purchase price of the GAP waiver due, in the event of cancellation of the GAP waiver or early termination of the finance agreement.
(8) That neither the extension of credit, the terms of the credit, nor the terms of the related motor vehicle sale or lease may be conditioned upon the purchase of the GAP waiver.
History of Section. P.L. 2016, ch. 530, § 1.
(a) GAP-waiver agreements may be cancellable or non-cancellable after the free-look period. GAP waivers must provide that if a borrower cancels a waiver within the free-look period, the borrower will be entitled to a full refund of the purchase price, as long as no benefits have been provided; or in the event benefits have been provided, the borrower may receive a full or partial refund pursuant to the terms of the waiver.
(b) In the event of a borrower’s cancellation of the GAP waiver or early termination of the finance agreement after the agreement has been in effect beyond the free-look period, the borrower may be entitled to a refund of any unearned portion of the purchase price of the waiver, unless the waiver provides otherwise. In order to receive a refund, the borrower, in accordance with any applicable terms of the waiver, must provide a written request to the creditor, administrator, or other party, within ninety (90) days of the event terminating the finance agreement.
(c) If the cancellation of a GAP waiver occurs as a result of a default under the finance agreement or the repossession of the motor vehicle associated with the finance agreement, or any other termination of the finance agreement, any refund due may be paid directly to the creditor or administrator and applied as set forth in subsection (d).
(d) Any cancellation refund under subsection (a), (b), or (c) may be applied by the creditor as a reduction of the amount owed under the finance agreement, unless the borrower can show that the finance agreement has been paid in full.
History of Section. P.L. 2016, ch. 530, § 1.
Sections 19-32-3(c), 19-32-5 and 19-32-8 are not applicable to a GAP waiver offered in connection with a lease or retail installment sale associated with transactions between business entities.
History of Section. P.L. 2016, ch. 530, § 1.
If any provision of this chapter, or the application of the provision to any person or circumstances, is held invalid, the remainder of the chapter, and the application of the provision to persons or circumstances other than those as to which it is held invalid, is not to be affected.
History of Section. P.L. 2016, ch. 530, § 1.
This chapter shall be known and may be cited as the “Student Loan Bill of Rights Act.”
History of Section. P.L. 2019, ch. 199, § 1; P.L. 2019, ch. 265, § 1.
As used in this chapter:
(1) “Commissioner” means the commissioner of postsecondary education.
(2) “Department” means the department of business regulation, division of banking.
(3) “Director” means the director of the department of business regulation or designee.
(4) “Distressed borrower” means a student loan education borrower who is not considered current on their student education loan payments by the student loan servicer.
(5) “Student education loan” means any loan made to a student loan borrower primarily for personal use to finance postsecondary education or other school-related expenses, and does not include an extension of credit under an open-end consumer credit plan, a reverse mortgage transaction, a residential mortgage transaction, or any other loan that is secured by real property or a dwelling.
(6) “Student loan borrower” means:
(i) Any resident of this state who has received or agreed to pay a postsecondary student education loan; or
(ii) Any person who shares responsibility, as a guarantor or by other legal obligation, with such resident for repaying the postsecondary student education loan for another.
(7) “Student loan servicer” means any person or entity who or that engages in student loan servicing as defined in this chapter.
(8) “Student loan servicing” or “servicing” means:
(i)(A) Receiving any scheduled periodic payments from a student loan borrower or notification of such payments; and
(B) Applying payments to the student loan borrower’s account pursuant to the terms of the student education loan or of the contract governing the servicing;
(ii) During a period when no payment is required on a student education loan, maintaining account records for the loan; and
(iii) Communicating with the student loan borrower regarding the loan, on behalf of the loan’s holder; or
(iv) Interactions with a student loan borrower, including activities to help prevent default on obligations arising from student education loans, conducted to facilitate the activities described in this section.
History of Section. P.L. 2019, ch. 199, § 1; P.L. 2019, ch. 265, § 1.
(a) The department of attorney general’s consumer protection unit, in collaboration with the director, general treasurer, and commissioner, shall:
(1) Receive, review, and attempt to resolve complaints from student loan borrowers;
(2) Compile and analyze data on student loan borrower complaints;
(3) Assist student loan borrowers to understand their rights and responsibilities under the terms of student education loans;
(4) Provide information to the public, agencies, the general assembly, and others regarding the problems and concerns of student loan borrowers and make recommendations for resolving those problems and concerns;
(5) Share information concerning the availability of the consumer protection unit to assist student loan borrowers and potential student loan borrowers, as well as public institutions of higher education, student loan servicers, and any other participant in student education loan lending with any student loan servicing concerns; and
(6) Take any other actions necessary to fulfill the borrower assistance, education, and complaints-related duties in this chapter.
(b) The attorney general, the director, the general treasurer, and the commissioner, or designees, shall meet at least once per quarter to coordinate their efforts under this chapter.
History of Section. P.L. 2019, ch. 199, § 1; P.L. 2019, ch. 265, § 1.
(a) Each person or entity who or that services any student education loan issued to a student loan borrower after July 1, 2019, shall register with the department as a student loan servicer no later than September 30, 2019, or within thirty (30) days of conducting servicing of student education loans, whichever is earlier.
(b) The registration provisions of this chapter shall not apply to:
(1) Any person or entity who or that services fewer than six (6) student education loans in this state during any consecutive twelve-month (12) period; and
(2) Any person or entity that services loans for education other than postsecondary education.
(c) As part of that registration, the person or entity shall:
(1) Complete a registration in the form promulgated by the department providing the information requested by the application;
(2) Pay an annual registration fee of one thousand dollars ($1,000);
(3) Provide a bond in which the registrant shall be the obligor and which shall run to the state for the use of the state and of the person who may have a cause of action against the obligor of the bond under the provisions of this chapter. The bond shall be perpetual and shall be conditioned upon the obligor conforming to the provisions of this chapter and all regulations thereunder and the obligor will pay to the state and to any person all money that may become due or owing to the state or to the person from the obligor under the provisions of this chapter. The bond shall provide for notice directly to the department in the manner specified by the department if the bond is canceled by the surety for any reason. The bond shall be in the sum of fifty thousand dollars ($50,000);
(4) Appoint, and thereafter maintain, a resident agent in this state with authority to accept service of process for the registrant in this state, including the process of garnishment:
(i) Service of process upon the agent shall be deemed sufficient service upon the registrant; and
(ii) Any process, including the process of garnishment, may be served upon the director, as agent of the registrant, in the event that no resident agent can be found upon whom service can be made, or the registrant has failed to designate a resident agent as required.
(d) No registration shall be transferable or assignable. A change in ownership of less than twenty-five percent (25%) of the voting stock or equity interests of a registrant shall not be considered a transfer or assignment of the registration. A change in ownership of twenty-five percent (25%) or more of the voting stock or equity interests shall require notification to the department, and registration by the transferee/assignee within fifteen (15) days of the change in ownership. A change in name shall require notification to the department within fifteen (15) days.
(e) Any registrant shall, within twenty-four (24) hours after actual knowledge, notify the department of the occurrence of any of the following events:
(1) The institution of bankruptcy, receivership, reorganization, or insolvency proceedings regarding a registrant;
(2) The institution of any adverse government action against a registrant; or
(3) Any felony indictment or conviction of any registrant or any officers, directors, owners, employees, members, or partners thereof.
(f) Student loan servicers shall designate and provide contact information for an individual to represent the student loan servicer in communications with the department. This information shall be updated within ten (10) days of any change thereto.
(g) Registration shall be valid for one calendar year, and student loan servicers shall be required to renew their registration with the department annually.
(h) The department may assess a fine of ten thousand dollars ($10,000) on any student loan servicer that services student education loans for thirty (30) or more days without registering and complying with the conditions provided in this section.
(i) The department may share any information gathered through its registration or examination of student loan servicers with the attorney general.
History of Section. P.L. 2019, ch. 199, § 1; P.L. 2019, ch. 265, § 1.
There is established a restricted receipt account to be known as the “servicer registration account” which shall be a separate account within the department. Registration fees and other monies, excluding examination fees pursuant to § 19-33-9, received by the department pursuant to the terms of this chapter shall be deposited into the account. Monies deposited in the account shall be transferred to the department of attorney general’s student loan consumer protection account at the request of the attorney general and shall be expended for the purpose of administering the provisions of this chapter.
History of Section. P.L. 2019, ch. 199, § 1; P.L. 2019, ch. 265, § 1.
(a) Each student loan servicer shall maintain complete records of each student education loan transaction, including recordings of communications with borrowers, for not less than two (2) years following the final payment on such student education loan or the assignment of such student education loan, whichever occurs first, or any longer period as may be required by any other provision of the general or public laws.
(b) If requested by the division of banking, each student loan servicer shall make all records available, not later than five (5) business days after requested. Upon request, the department may grant a student loan servicer additional time to make these records available.
History of Section. P.L. 2019, ch. 199, § 1; P.L. 2019, ch. 265, § 1.
Each registrant shall annually, on or before March 31, file a report with the department, giving any relevant information that the department may reasonably require concerning the business and operations during the preceding calendar year of the registrant within the state. At the time of filing each report, the sum of fifty-five dollars ($55.00) per registration shall be paid by the registrant to the department. Any registrant that delays the transmission of any report required by the provisions of this chapter beyond the limit, unless additional time is granted in writing for good cause, the department shall assess a penalty of twenty-five dollars ($25.00) for each day of the delay.
History of Section. P.L. 2019, ch. 199, § 1; P.L. 2019, ch. 265, § 1.
(a) A student loan servicer shall provide annually, and at the request of a student loan borrower, the terms of their loan, progress toward repayment, and eligibility for any loan relief programs including, but not limited to, income-driven repayment plans, public service loan forgiveness, forbearance, and deferment.
(b) A student loan servicer shall establish policies and procedures, and implement them consistently, in order to facilitate evaluation of private student loan alternative repayment arrangement requests, including providing accurate information regarding any private student loan alternative repayment arrangements that may be available to the borrower through the promissory note, or that may have been marketed to the borrower through marketing materials.
(c) A private student loan alternative repayment arrangement shall consider the affordability of repayment plans for a distressed borrower, as well as the investor, guarantor, and insurer guidelines, and previous outcome and performance information.
(d) If a student loan servicer offers private student loan repayment arrangements, a student loan servicer shall consistently present and offer those arrangements to borrowers with similar financial circumstances.
(e) If a borrower inquires of a servicer of private student loans about consolidating or refinancing a federal student loan into a private student loan, the servicer of private student loans must disclose in advance of the refinancing or consolidation, any benefits or protections exclusive to federal student loans that may be lost as a result of the consolidation or refinancing.
(f)(1) A student loan servicer shall respond to a written inquiry from a student loan borrower, or the representative of a student loan borrower, within ten (10) business days after receipt of the request, and provide information relating to the request and, if applicable, the action the student loan servicer will take to correct the account or an explanation for the student loan servicer’s position that the borrower’s account is correct.
(2) The ten-day (10) period described in subsection (f)(1) may be extended for not more than fifteen (15) days, if before the end of the ten-day (10) period the student loan servicer notifies the borrower or the borrower’s representative of the extension and the reasons for the delay in responding.
(3) After receipt of a written request related to a credit reporting dispute on a borrower’s payment on a student education loan, a student loan servicer shall not furnish adverse information to a consumer reporting agency regarding a payment that is the subject of the written inquiry.
(g) Except as provided by federal law or required by a student loan agreement, a student loan servicer shall inquire of a borrower how to apply an overpayment to a student education loan. A borrower’s direction on how to apply an overpayment to a student education loan shall stay in effect for any future overpayments during the term of a student education loan until the borrower provides different directions. For purposes of this section, “overpayment” means a payment on a student education loan in excess of the monthly amount due from a borrower on a student education loan, also commonly referred to as a prepayment.
(h) Where a borrower has multiple loans at the same level of delinquency, a student loan servicer shall apply partial payments in a manner that minimizes late fees and negative credit reporting by applying such payments to satisfy as many individual loan payments as possible on a borrower’s account. For purposes of this section, “partial payment” means a payment on a student loan account that contains multiple individual loans in an amount less than the amount necessary to satisfy the outstanding payment due on all loans in the student loan account, also commonly referred to as an underpayment.
(i) In the event of the sale, assignment, or other transfer of the servicing of a student education loan that results in a change in the identity of the person to whom a student loan borrower is required to send payments or direct any communication concerning the student education loan, the following provisions apply:
(1) As a condition of a sale, an assignment, or any other transfer of the servicing of a student education loan, a student loan lender shall require the new student loan servicer to honor all benefits originally represented as available to a student loan borrower during the repayment of the student education loan and preserve the availability of the benefits, including any benefits for which the student loan borrower has not yet qualified.
(2) A student loan servicer shall transfer to the new student loan servicer all records regarding the student loan borrower, the account of the student loan borrower, and the student education loan of the student loan borrower.
(3) The records required under subsection (i)(2) shall include the repayment status of the student loan borrower and any benefits associated with the student education loan of the student loan borrower.
(4) The student loan servicer shall complete the transfer of records required under subsection (i)(2) within forty-five (45) days after the sale, assignment, or other transfer of the servicing of a student education loan.
(5) The parties shall notify all student loan borrowers impacted by the sale, assignment, or other transfer of the servicing of a student education loan at least seven (7) days before the next payment on the loan is due. Notice must include: The identity of the new loan holder and/or servicer; the effective date of the transfer; the date on which the old servicer will no longer accept payments; the date on which the new servicer will begin to accept payments; and contact and billing information for loan payments.
(j) A student loan servicer that services a student education loan shall adopt policies and procedures to verify that the student loan servicer has received all records regarding the student loan borrower; the account of the student loan borrower; and the student education loan of the student loan borrower, including the repayment status of the student loan borrower and any benefits associated with the student education loan of the student loan borrower.
(k) When a prior student loan servicer receives a payment intended for the new student loan servicer, the prior student loan servicer must promptly transfer the payment to the new servicer, along with the date the prior servicer received the payment.
( l ) When a new servicer receives a payment from a prior servicer under subsection (k), the payment must be applied as of the date received by the prior servicer. A student loan servicer must implement processes and controls to ensure a student loan borrower does not incur additional interest, fees, or delinquency due to complications related to the sale, assignment, or other transfer of the servicing of a student education loan.
(m) A student loan servicer may not withhold student transcripts from borrowers that are or were delinquent in student loan payments.
History of Section. P.L. 2019, ch. 199, § 1; P.L. 2019, ch. 265, § 1; P.L. 2020, ch. 79, art. 2, § 12; P.L. 2024, ch. 316, § 4, effective June 25, 2024; P.L. 2024, ch. 317, § 4, effective June 25, 2024.
(a) In addition to any other authority provided under this chapter, the department shall have the authority to conduct examinations of registrants.
(b) In order to carry out the purposes of this chapter, the department may:
(1) Retain attorneys, accountants or other professionals and specialists as examiners or auditors to conduct or assist in the conduct of examinations. The costs of these persons shall be borne by the registrant;
(2) Enter into agreements or relationships with other government officials or regulatory associations in order to improve efficiencies and reduce regulatory burden by sharing resources, standardized or uniform methods or procedures, and documents, records, information, or evidence obtained under this section;
(3) Use, hire, contract, or employ public or privately available analytical systems, methods, or software to examine the student loan servicer or person subject to the provisions of this chapter. The costs of these systems shall be borne by the registrant;
(4) Accept and rely on examination reports made by other government officials, within or outside of the state; and
(5) Accept audit reports made by an independent certified public accountant for the student loan servicer or person subject to the provisions of this chapter in the course of that part of the examination covering the same general subject matter as the audit and incorporate the audit report in the report of examination or other writing of the department.
(c) The department may at any time examine the student education loans and business and examine the books, accounts, records, and files used therein, of every registrant and person who shall be engaged in any activity that requires a registration under this chapter, whether the person shall act, or claim to act, as principal or agent, or under or without the authority of this chapter. For that purpose, the department shall have free access to the offices and places of business, books, accounts, paper, records, files, and safes, of all such persons. The department shall have authority to require the attendance of, and to examine under oath, any person whose testimony may be required relative to the student education loans or the business or to the subject matter of any examination or hearing.
(d) The department shall make an examination of the affairs, business, office, and records of each registrant as often as is necessary, based upon all relevant factors, including the volume of activity within the state. The total cost of an examination made pursuant to this section shall be paid by the registrant or person being examined and shall include the following expenses:
(1) One hundred fifty percent (150%) of the total salaries and benefits plus one hundred percent (100%) of the travel and transportation expenses for the examining personnel engaged in the examinations. The fees shall be paid to the department to, and for the use of, the state. The examination fees shall be in addition to any taxes and fees otherwise payable to the state;
(2) All reasonable technology costs related to the examination process. Technology costs shall include the actual cost of software and hardware utilized in the examination process and the cost of training examination personnel in the proper use of the software or hardware; and
(3) All necessary and reasonable education and training costs incurred by the state to maintain the proficiency and competence of the examination personnel. All these costs shall be incurred in accordance with appropriate state of Rhode Island regulations, guidelines, and procedures.
(e) The authority of this chapter shall remain in effect, whether the student loan servicer or person subject to the provisions of this chapter acts or claims to act under any licensing or registration law of this state, or claims to act without such authority.
(f) No student loan servicer or person subject to examination under this section may knowingly withhold, abstract, remove, mutilate, destroy, or secrete any books, records, computer records, or other information.
(g) The provisions of § 19-4-3 shall apply to investigatory records and examination reports issued by other state and federal regulatory agencies, and the work papers of examinations or investigations of registrants created by the department; provided, however, the director or designee is authorized to make public all consumer complaints and final examination reports issued by the department as determined by the director or designee.
History of Section. P.L. 2019, ch. 199, § 1; P.L. 2019, ch. 265, § 1.
(a) The director, after an administrative hearing pursuant to chapter 35 of title 42, may issue fines upon a finding that the registrant violated the provisions of this chapter, or any regulation or order lawfully made pursuant to this chapter; or take any other action provided for in this chapter.
(b) Any student loan servicer or the members, officers, directors, agents, and employees of any student loan servicer who or that violate or participate in the violation of any of the applicable provisions of this chapter, or any regulation promulgated thereunder, shall be punished by a fine of not more than two thousand dollars ($2,000) per violation. Each student education loan constitutes a separate offense.
History of Section. P.L. 2019, ch. 199, § 1; P.L. 2019, ch. 265, § 1.
Any student loan servicer aggrieved by an action of the department in imposition of fines shall have the right to appeal the action, order, or decision pursuant to chapter 35 of title 42.
History of Section. P.L. 2019, ch. 199, § 1; P.L. 2019, ch. 265, § 1.
No student loan servicer shall:
(1) Directly or indirectly employ any scheme, device, or artifice to defraud or mislead student loan borrowers;
(2) Engage in any unfair or deceptive practice toward any person or misrepresent or omit any material information in connection with the servicing of a student education loan, including, but not limited to, misrepresenting the amount, nature, or terms of any fee or payment due or claimed to be due on a student education loan, the terms and conditions of the loan agreement, or the borrower’s obligations under the loan;
(3) Obtain property by fraud or misrepresentation;
(4) Knowingly misapply or recklessly apply student education loan payments to the outstanding balance of a student education loan;
(5) Knowingly or recklessly provide inaccurate information to a credit bureau, thereby harming a student loan borrower’s creditworthiness;
(6) Fail to report both the favorable and unfavorable payment history of the student loan borrower to a nationally recognized consumer credit bureau at least annually if the student loan servicer regularly reports information to a credit bureau;
(7) Refuse to communicate with an authorized representative of the student loan borrower who provides a written authorization signed by the student loan borrower, provided the student loan servicer may adopt procedures reasonably related to verifying that the representative is in fact authorized to act on behalf of the student loan borrower;
(8) Negligently make any false statement or knowingly or willfully make any omission of a material fact in connection with any information or reports filed with a governmental agency or in connection with any examination conducted by the department or investigation conducted by the attorney general or other governmental agency; or
(9) Fail to properly evaluate a student loan borrower for an income-driven or other student loan repayment program or for eligibility for a public service loan forgiveness program before placing the student loan borrower in forbearance or default, if an income-driven repayment or other program is available to the student loan borrower except as otherwise provided in federal law, federal student loan agreements, or a contract between the federal government and a student loan servicer.
History of Section. P.L. 2019, ch. 199, § 1; P.L. 2019, ch. 265, § 1.
The attorney general may enforce a violation of § 19-33-12 as an unlawful act or practice under chapter 13.1 of title 6.
History of Section. P.L. 2019, ch. 199, § 1; P.L. 2019, ch. 265, § 1.
Any student loan borrower may bring an action under § 6-13.1-5.2 for a violation of § 19-33-12 as an unlawful act or practice under chapter 13.1 of title 6.
History of Section. P.L. 2019, ch. 199, § 1; P.L. 2019, ch. 265, § 1.
A student loan consumer protection restricted receipt account (the “account”) is hereby created within the department of the attorney general. Monies deposited in the account shall be expended by the attorney general for the purpose of administering the provisions of this chapter.
History of Section. P.L. 2019, ch. 199, § 1; P.L. 2019, ch. 265, § 1.
(a) For the purposes of this chapter, any federal- or state-chartered bank or credit union that originates a student education loan or acts as a servicer, and any wholly owned subsidiary of a bank or credit union, shall be exempt from the provisions of §§ 19-33-4, 19-33-6 through 19-33-11, inclusive, §§ 19-33-12(9), and 19-33-14.
(b) Student loan servicers that are not banks or credit unions operating under federal or state charters, nor wholly owned subsidiaries thereof, that service student loans on behalf of state- or federal-chartered banks and credit unions, shall not be exempt from any section of this chapter.
History of Section. P.L. 2019, ch. 199, § 1; P.L. 2019, ch. 265, § 1.
As used in this chapter:
(1) “Department” means the Rhode Island office of healthy aging.
(2) “Elder adult” means a person who is sixty (60) years of age or older.
(3) “Exploitation” means the fraudulent or otherwise illegal, unauthorized, or improper act or process of an individual, including, but not limited to, a caregiver or fiduciary that uses the resources of an elder adult for monetary or personal benefit, profit, gain, or that results in depriving an elder adult of rightful access to or use of benefits, resources, belongings, or assets by use, undue influence, harassment, duress, deception, false representation or false pretenses, or conduct in violation of § 11-68-2.
(4) “Financial exploitation’' means:
(i) The wrongful or unauthorized taking, withholding, appropriation, or use of the money, assets, or other property or the identifying information of a person; or
(ii) Any act or omission taken by a person, including through the use of a power of attorney, guardianship, or any other legal authority, regarding an elder adult to:
(A) Obtain control through deception, intimidation, fraud, or undue influence, over the other person’s money, assets, or property to deprive the other person of the ownership, use, benefit, or possession of the property; or
(B) Convert the money, assets, or other property of the other person to deprive the other person of the ownership, use, benefit, or possession of the property.
(5) “Regulated institution” means any financial institution, credit union, or other insured deposit-taking institution, that is authorized to do business in this state, including one authorized by operation of an interstate banking statute that allowed it original entry.
History of Section. P.L. 2021, ch. 73, § 1, effective June 23, 2021; P.L. 2021, ch. 74, § 1, effective June 23, 2021.
(a) If an employee of a regulated institution has reasonable cause to believe that financial exploitation of an elder adult who is an account holder with the regulated institution has occurred, is occurring, or has been attempted, the employee shall notify the regulated institution of the suspected financial exploitation.
(b)(1) If a regulated institution is notified of suspected financial exploitation under subsection (a) of this section or otherwise has reasonable cause to believe that financial exploitation of an elder adult who is an account holder with the regulated institution has occurred, is occurring, or has been attempted, the regulated institution shall assess the suspected financial exploitation and submit a report to the department identifying the name, address and, if known, the age of the elder adult; the name and address of any person responsible for the care of the elder adult; the nature and extent of the facts of the suspected activity; the basis of the reporter’s knowledge; and any other relevant information; or any other reporting requirements consistent with the provisions of § 42-66-8.
(2) The regulated institution shall submit the required report no later than the earlier of:
(i) The second business day following the date the regulated institution completes the regulated institution’s assessment of the suspected financial exploitation; or
(ii) The seventh business day after the date the regulated institution is notified of the suspected financial exploitation under subsection (a) of this section or otherwise has reasonable cause to believe that the suspected financial exploitation has occurred, is occurring, or has been attempted.
(c) A regulated institution that submits a report to the department of suspected financial exploitation of an elder adult under subsection (b) of this section is not required to make any additional report of suspected abuse, neglect, or exploitation for the same conduct constituting the reported suspected financial exploitation.
(d) Each regulated institution shall adopt internal policies, programs, plans, or procedures for:
(1) The employees of the regulated institution to make the notification required under subsection (a) of this section; and
(2) The regulated institution to conduct the assessment and submit the report required under subsection (b) of this section.
(e) The policies, programs, plans, or procedures adopted under subsection (d) of this section may authorize the regulated institution to report the suspected financial exploitation to other appropriate agencies and entities in addition to the department, including the attorney general, the Federal Trade Commission, and the appropriate law enforcement agency.
History of Section. P.L. 2021, ch. 73, § 1, effective June 23, 2021; P.L. 2021, ch. 74, § 1, effective June 23, 2021.
lf a regulated institution submits a report of suspected financial exploitation or abuse of an elder adult to the department pursuant to § 19-34-2, the regulated institution may at the time the regulated institution submits the report also notify a third party reasonably associated with the elder adult of the suspected financial exploitation or abuse, unless the regulated institution suspects the third party of financial exploitation or abuse of the elder adult.
History of Section. P.L. 2021, ch. 73, § 1, effective June 23, 2021; P.L. 2021, ch. 74, § 1, effective June 23, 2021.
(a) Notwithstanding any other law, if a regulated institution submits a report of suspected financial exploitation of an elder adult to the department pursuant to § 19-34-2, the regulated institution:
(1) May place a temporary hold on any transaction that:
(i) Involves an account of the elder adult; and
(ii) The regulated institution has reasonable cause to believe that financial exploitation of an elder adult has occurred, is occurring, has been attempted, or will be attempted.
(2) Shall place a hold on any transaction involving the account of the elder adult if the hold is requested by the elder abuse unit of the office of attorney general or a law enforcement agency.
(b) Subject to subsection (c) of this section, a hold placed on any transaction under subsection (a) of this section shall expire on the fifteenth business day after the date the regulated institution submits its report pursuant to § 19-34-2.
(c) The regulated institution may extend a hold placed on any transaction under subsection (a) of this section for a period not to exceed thirty (30) business days after the expiration of the fifteen- business-day (15) period prescribed by subsection (b) of this section if requested by a state or federal agency or a law enforcement agency investigating the suspected financial exploitation. The regulated institution may also petition a court to extend a hold placed on any transaction pursuant to subsection (a) of this section beyond the fifteen-business-day (15) period prescribed by subsection (b) of this section. A court may enter an order extending or shortening a hold or providing other relief.
(d) Each regulated institution shall adopt internal policies, programs, plans, or procedures for placing a hold on a transaction involving an account of an elder adult pursuant to this section.
History of Section. P.L. 2021, ch. 73, § 1, effective June 23, 2021; P.L. 2021, ch. 74, § 1, effective June 23, 2021.
(a) An employee of a regulated institution who makes a notification pursuant to § 19-34-2, or a regulated institution that submits a report pursuant to § 19-34-2 or makes a notification to a third party pursuant to § 19-34-3, or an employee or regulated institution that testifies or otherwise participates in a judicial proceeding arising from a notification or report shall be immune from any civil or criminal liability arising from the notification, report, testimony, or participation in the judicial proceeding, unless the employee or regulated institution acted in bad faith or with a malicious purpose.
(b) A regulated institution that in good faith and with the exercise of reasonable care places or does not place a hold on any transaction pursuant to § 19-34-4 shall be immune from any civil or criminal liability or disciplinary action resulting from that action or failure to act.
History of Section. P.L. 2021, ch. 73, § 1, effective June 23, 2021; P.L. 2021, ch. 74, § 1, effective June 23, 2021.
To the extent permitted by state or federal law, a regulated institution shall provide, on request, access to or copies of records relevant to the suspected financial exploitation of an elder adult to the department, a law enforcement agency, or the office of attorney general, either as part of a report to the department, law enforcement agency, or the elder abuse unit of the office of attorney general or at the request of the department, law enforcement agency, or the office of attorney general in accordance with an investigation. The records may include historical records as well as records relating to the most recent transaction or transactions that may comprise financial exploitation not to exceed sixty (60) calendar days prior to the first transaction that was reported or sixty (60) days after the last transaction that was reported. An extension of the request for records may be made by the department, law enforcement agency, or the office of attorney general if, after receipt of the records, it is determined the suspected financial exploitation has occurred outside the scope of the original request.
History of Section. P.L. 2021, ch. 73, § 1, effective June 23, 2021; P.L. 2021, ch. 74, § 1, effective June 23, 2021.
(a) Commencing no later than 45 days following passage of the Act, regulated institutions shall provide training concerning the financial exploitation of elder adults to employees of regulated institutions as defined in § 19-34-1, and shall provide this training to new employees within the first three (3) months of their employment.
(b) The training shall include recognition of indicators of financial exploitation of an elder adult; the manner in which employees may report suspected financial exploitation to the department and law enforcement as mandatory reporters; and steps employees may take to prevent suspected financial exploitation of an elder adult as authorized by law or agreement between the regulated institution and customers of the regulated institution. The elder abuse unit of the office of attorney general and the department shall develop standardized training that the regulated institutions may offer, or the regulated institutions may develop their own training.
History of Section. P.L. 2021, ch. 73, § 1, effective June 23, 2021; P.L. 2021, ch. 74, § 1, effective June 23, 2021.
Notwithstanding any provision of law, the attorney general and local law enforcement may disclose to a mandated reporter of suspected elder financial abuse, upon request, the general status or final disposition of any investigation that arose from a report made by that mandated reporter of suspected financial abuse of an elder adult pursuant to this chapter.
History of Section. P.L. 2021, ch. 73, § 1, effective June 23, 2021; P.L. 2021, ch. 74, § 1, effective June 23, 2021.
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