SECTION 1. The General Laws are hereby amended by inserting after chapter 140E the following chapter:-
UNSOLICITED LOAN CONSUMER PROTECTION
Section 1. For the purposes of this chapter the following words shall have the following meanings, unless the context clearly requires otherwise:-
"Addressee", the intended recipient of an unsolicited loan instrument.
"Commissioner", the commissioner of banks.
"Unauthorized use", negotiation of an unsolicited loan instrument by a person other than the addressee who does not have actual, implied or apparent authority for the negotiation and from which the addressee receives no benefit.
"Unsolicited loan instrument", a negotiable check, money order, draft or other instrument that may be used by a consumer to activate a loan, which was not solicited by the consumer.
Section 2. No person or entity shall issue an unsolicited loan instrument.
Section 3. An addressee shall not be held liable for any debt incurred by the unauthorized use of an unsolicited loan instrument by a party other than the addressee. In the event of an unauthorized use of an unsolicited loan instrument, the issuing institution shall: (1) provide the addressee with a written statement releasing the addressee of liability for the debt; (2) take steps in accordance with the rules and regulations of the commissioner to repair an adverse effect to the addressee's credit rating as a result of the unauthorized use; and (3) provide the addressee with a written statement informing the addressee that such steps have been or will be taken.
Section 4. A financial institution or lender shall not transfer funds held in an account of the addressee in the financial institution as a consequence of a default of a debt owed to the institution as a result of the unauthorized use of an unsolicited loan instrument.
Section 5. A person or entity that knowingly sends an unsolicited loan instrument shall be punished by a fine of not more than $5,000 for each violation.
Section 6. The commissioner shall adopt rules and regulations to implement this chapter.
Section 7. A violation of this chapter, or any rule or regulation issued hereunder, shall constitute an unfair or deceptive act under chapter 93A.
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