SECTION 1. The General Laws, as appearing in the 2000 Official Edition, are hereby amended by inserting after chapter 140E the following chapter: Chapter 140F Section 1. For the purposes of this chapter the following words shall have the following meanings: "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 such 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 that was not solicited by the consumer.

SECTION 2. No financial institution or lender shall solicit a loan by mailing an unsolicited loan instrument unless: (a) the instrument is not negotiable more than 30 days after the date shown on the instrument; (b) the financial institution or lender has prominently disclosed in easily understood language on the front or back of the instrument clearly and conspicuously: the amount financed, the current annual percentage rate, the number of installments to be paid, and the amount of each installment to be paid; and has printed on the front and back of the instrument the following statements in 14 point type, capitol letters "THIS IS A SOLICITATION FOR A LOAN-- PLEASE READ ALL DISCLOSURES BEFORE SIGNING AND CASHING THIS INSTRUMENT. IF THIS INSTRUMENT IS NOT CASHED, PLEASE DESTROY. BY ENDORSING THIS INSTRUMENT, YOU BECOME LEGALLY LIABLE FOR REPAYING MONEYS, INCLUDING INTEREST, AS SPECIFIED IN THE ENCLOSED LOAN AGREEMENT";

SECTION 3. Any person or entity that willfully or knowingly gives false or inaccurate information or fails to provide information that he or she is required to disclose or enclose under the provisions of this chapter or any regulation issued thereunder or sends an unsolicited loan instrument after an addressee has opted out of future solicitations as provided under section six of this chapter shall be fined not more than $5000 per violation.

SECTION 4. Any paying bank that has paid an endorsed unsolicited loan instrument shall (a) send to the addressee a confirmation statement within five business days that the instrument has been signed and cashed for the amount referenced in section (2)(a) and (b) maintain the original check or a substitute check to allow for easy recovery in the event of a dispute for the duration of the loan.

SECTION 5. In the case of any unsolicited loan instrument negotiation, the obligor shall have the right to rescind the transaction until midnight of the tenth business day following the sending of the confirmation statement from the financial institution or lender, by notifying the financial institution or lender and returning the entire amount of the instrument.

SECTION 6. A financial institution or lender issuing unsolicited loan instruments shall provide the addressee with the option to be excluded from future solicitations for unsolicited loan instruments by providing a telephone number and address that may be contacted for such purpose

SECTION 7. Any financial institution or lender mailing an unsolicited loan instrument shall mail such instrument in a plain envelope. There shall be no indication that an unsolicited loan instrument is enclosed. The envelope shall be marked with instruction for the postal service not to forward if the intended recipient is no longer at the address on the envelope.

SECTION 8. An addressee shall not be held liable for any debt incurred by any unauthorized use or fraudulent negotiation of an unsolicited loan instrument by a party other than the addressee. In the event of an unauthorized use or fraudulent negotiation of an unsolicited loan instrument, the issuing institution shall (a) provide the addressee with a written statement relieving the addressee of liability for the debt, (b) take steps in accordance with the rules and regulations of the commissioner to repair any adverse effect to the addressee's credit rating as a result of such unauthorized use or fraudulent negotiation and (c) provide the addressee with a written statement informing them that such steps have been or will be taken.

SECTION 9. (a) No financial institution or lender shall transfer any funds held in an account of the addressee in the financial institution as a consequence of a default of a debt owed to such institution as a result of the unauthorized use or fraudulent negotiation of an unsolicited loan instrument.

(b) Nothing in this chapter shall prohibit a financial institution from advancing money or credit in accordance with law and pursuant to a customer relationship, as defined in the Gramm-Leach-Bliley Act of 1999, 15 U.S.C. section 6809 (11), or a valid mortgage or loan agreement.”

SECTION 10. The commissioner shall prescribe from time to time rules and regulations as may be necessary and proper to carry out the provisions of this chapter.

SECTION 11. A violation of this chapter, or any rule or regulation issued hereunder, shall constitute a violation of chapter ninety-three A.

SECTION 12. The provisions of this chapter shall apply to all unsolicited loan instruments issued or consummated on or after the effective date of this act.

SECTION 13. Chapter 266 of the General Laws, as so appearing, is hereby amended by inserting after section 33A the following section: Section 33B. Whoever knowingly and fraudulently negotiates or attempts or conspires to fraudulently negotiate an unsolicited loan instrument shall be punished by imprisonment in the state prison for not more than five years, or by a fine not more than $25,000, or both.