It is enacted by the General Assembly as follows:

SECTION 1. Section 6-27-4 of the General Laws in Chapter 6-27 entitled "Truth in Lending and Retail Selling" is hereby amended to read as follows:

{ADD 6-27-4. Maximum charge -- Refunds. -- ADD} (a) No creditor shall impose a finance charge in excess of an amount equal to eighteen percent (18%) simple interest per annum. This subsection shall not apply to any transaction in connection with which the finance charge does not exceed ten dollars ($10.00). Notwithstanding the provision of any retail installment contract to the contrary, a buyer may prepay in full the unpaid balance thereof at any time before its final due date and, if the buyer does so, shall receive a refund credit thereon for the prepayment. The amount of the refund credit shall represent at least as great a proportion of the original finance charge, after deducting therefrom a maximum acquisition cost of ten dollars ($10.00), as (i) the sum of the monthly unpaid balances under the schedule of payments in the contract beginning as of the date after the prepayment which is the next succeeding monthly anniversary date of the due date of the first installment under the contract, or, if the prepayment is prior to the due date of the first installment under the contract, then as of the date after the prepayment which is the next succeeding monthly anniversary date of the date of the contract, bears to (ii) the sum of all the monthly unpaid balances under the schedule of installment payments in the contract.

(b) Where the amount of refund credit is less than one dollar ($1.00), no refund credit need be made.

(c) Notwithstanding any contrary provision of law, the maximum finance charge which may be applied under a revolving or open-end credit plan in connection with a transaction arising out of a retail sale of consumer goods, including the retail sale of gasoline, or services shall not exceed one and one-half (1-1/2%) percent per month, on sales made on or after August 31, 1986, on the average daily balance of the account or the unpaid balance outstanding as of the end of the current billing cycle. Regardless of any agreement to the contrary, a transaction under a revolving or open-end credit plan is subject to this section whenever a solicitation for the extension of credit is made by a creditor whose primary activity in Rhode Island is soliciting Rhode Island customers through the mails, and the solicitation originates outside Rhode Island but is directed to and received by a customer who resides, and responds to such solicitation, in Rhode Island.

(d) This section shall not apply to any person doing business under and as permitted by any general or special law of this state or of the United States relating to banks, savings banks, trust companies, or building and loan associations or credit unions, nor shall this section apply to any transaction covered by chapter 25 of title 19 entitled "Small Loan Business," chapter 25.2 of title 19 of the general laws entitled "Secondary Mortgage Loans," chapter 26 of title 19 of the general laws entitled "Pawnbrokers," chapter 20 of title 19 of the general laws entitled "Loan and Investment Companies," chapter 44 of title 6 entitled "Rental-Purchase Agreements," and section 6-26-2.

{ADD (e) Under each revolving or open-end credit plan a late fee not to exceed twelve dollars ($12) may be assessed on each minimum payment not paid in full within forty (40) days following the billing date of the statement on which such minimum payment first appears. ADD}

SECTION 2. This act shall take effect upon passage.