103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB4100

 

Introduced 5/18/2023, by Rep. Debbie Meyers-Martin

 

SYNOPSIS AS INTRODUCED:
 
See Index

    Amends the Credit Services Organizations Act. Expands the list of prohibitions imposed on a credit services organization to include: (i) charging or receiving any money or other valuable consideration before providing services listed in the contract (rather than charging or receiving any money or other valuable consideration prior to full and complete performance of the services the credit services organization has agreed to perform); (ii) making a guarantee that a buyer's credit score or credit report will be improved through that buyer contracting with the credit services organization; (iii) adding an authorized user to a credit card account for payment of money or other valuable consideration; (iv) seeking an investigation by a third party of a trade line on a credit report without the authorization of the buyer; (v) failing to allow the buyer to cancel a contract with the credit services organization by phone call, email, text message, or a website; and other prohibitions as specified. In a provision concerning written statements a credit services organization must provide to a buyer before executing a contract or other agreement with the buyer, provides that, if a credit services organization agrees to provide services on a periodic basis, the organization must provide a detailed written description of those services that explains how the buyer will be billed in substantially equal periodic payments at fixed time intervals. In a provision requiring each written contract to include certain statements and information, provides that: (i) a statement alerting the buyer of the cancellation notice form attached to the contract must be written in at least 10-point boldface type; and (ii) the written contract must include a complete and detailed description of the services to be performed by the credit services organization and the total cost to the buyer for such services, including a detailed description on how a buyer will be billed for services provided by the credit services organization on a periodic basis. Requires a credit services organization to obtain a surety bond and adhere to certain procedures. Provides that the surety bond shall be maintained for a period of 5 (rather than 2) years after the date that the credit services organization ceases operations. Makes a change to the definition of "credit services organization".


LRB103 31881 SPS 60548 b

 

 

A BILL FOR

 

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1    AN ACT concerning business.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Credit Services Organizations Act is
5amended by changing Sections 3, 5, 6, 7, and 10 as follows:
 
6    (815 ILCS 605/3)  (from Ch. 121 1/2, par. 2103)
7    Sec. 3. As used in this Act:
8    (a) "Buyer" means an individual who is solicited to
9purchase or who purchases the services of a credit services
10organization.
11    (b) "Consumer reporting agency" has the meaning assigned
12by Section 603(f), Fair Credit Reporting Act (15 U.S.C.
13Section 1681a(f)).
14    (c) "Extension of Credit" means the right to defer payment
15of a debt or to incur a debt and defer its payment offered or
16granted primarily for personal, family, or household purposes.
17    (d) "Credit Services Organization" means a person who,
18with respect to the extension of credit by others and in return
19for the payment of money or other valuable consideration,
20provides, or represents that the person can or will provide,
21any of the following services:
22        (i) improving a buyer's credit record, history, or
23    rating;

 

 

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1        (ii) obtaining an extension of credit for a buyer; or
2        (iii) providing advice or assistance to a buyer with
3    regard to either subsection (i) or (ii).
4    "Credit Services Organization" does not include any of the
5following:
6        (i) a person authorized to make loans or extensions of
7    credit under the laws of this State or the United States
8    who is subject to regulation and supervision by this State
9    or the United States, or a lender approved by the United
10    States Secretary of Housing and Urban Development for
11    participation in a mortgage insurance program under the
12    National Housing Act (12 U.S.C. Section 1701 et seq.);
13        (ii) a bank or savings and loan association whose
14    deposits or accounts are eligible for insurance by the
15    Federal Deposit Insurance Corporation or the Federal
16    Savings and Loan Insurance Corporation, or a subsidiary of
17    such a bank or savings and loan association;
18        (iii) a credit union doing business in this State;
19        (iv) a nonprofit organization exempt from taxation
20    under Section 501(c)(3) of the Internal Revenue Code of
21    1986, provided that such organization does not charge or
22    receive any money or other valuable consideration prior to
23    or upon the execution of a contract or other agreement
24    between the buyer and the nonprofit organization;
25        (v) a person licensed as a real estate broker by this
26    state if the person is acting within the course and scope

 

 

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1    of that license;
2        (vi) a person licensed to practice law in this State
3    if rendering services to buyers as clients acting within
4    the course and scope of the person's practice as an
5    attorney;
6        (vii) a broker-dealer registered with the Securities
7    and Exchange Commission or the Commodity Futures Trading
8    Commission acting within the course and scope of that
9    regulation;
10        (viii) a consumer reporting agency; and
11        (ix) a residential mortgage loan broker or banker who
12    is duly licensed under the Illinois Residential Mortgage
13    License Act of 1987.
14    (e) "Person" means an individual, corporation,
15partnership, joint venture or any business entity.
16(Source: P.A. 88-120.)
 
17    (815 ILCS 605/5)  (from Ch. 121 1/2, par. 2105)
18    Sec. 5. No credit services organization, its salespersons,
19agents or representatives, or any independent contractor who
20sells or attempts to sell the services of a credit services
21organization shall:
22    (1) Charge or receive any money or other valuable
23consideration before providing services listed in the contract
24prior to full and complete performance of the services the
25credit services organization has agreed to perform for or on

 

 

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1behalf of the buyer, unless the credit services organization
2has, in conformity with Section 10 of this Act, obtained a
3surety bond issued by a surety company licensed to do business
4in this State. If a credit services organization is in
5compliance with this subsection the salespersons, agents, and
6representatives who sell the services of such organization
7shall not be required to obtain the surety bond provided for by
8this Act.
9    (2) Charge or receive any money or other valuable
10consideration solely for the referral of a buyer to a retail
11seller who will or may extend credit to the buyer if such
12extension of credit is in substantially the same terms as
13those available to the general public.
14    (3) Make, or advise any buyer to make, any statement that
15is untrue or misleading, or that should be known by the
16exercise of reasonable care to be untrue or misleading, with
17respect to a buyer's credit reporting agency or to any person
18who has extended credit to a buyer or to whom a buyer has made
19application for an extension of credit.
20    (4) Make or use any untrue or misleading representations
21in the offer or sale of the services of a credit services
22organization or engage, directly or indirectly, in any act,
23practice or course of business intended to defraud or deceive
24a buyer in connection with the office or sale of such services;
25including but not limited to: the amount or type of credit a
26consumer can expect to receive as a result of the performance

 

 

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1of the services offered; the qualifications, training or
2experience of its personnel; or the amount of credit
3improvement the consumer can expect to receive as a result of
4the services.
5    (5) Guarantee that a buyer's credit score or credit report
6will be improved through that buyer contracting with the
7credit services organization.
8    (6) For payment of money or other valuable consideration,
9add an authorized user to a credit card account.
10    (7) Seek an investigation by a third party of a trade line
11on a credit report without the authorization of the buyer.
12    (8) Make any statement, or counsel or advise any buyer to
13make any statement, the intended effect of which is to alter
14the buyer's identification to prevent the display of the
15buyer's credit record, history, or rating for the purpose of
16concealing adverse information that is fair, accurate, and not
17obsolete to any consumer reporting agency or to any person who
18has extended credit to the buyer or to whom the buyer has
19applied or is applying for an extension of credit.
20    (9) Engage, directly or indirectly, in any act, practice,
21or course of business that constitutes or results in the
22commission of, or an attempt to commit, a fraud or deception on
23any person in connection with the offer or sale of the services
24of the credit services organization.
25    (10) Fail to obtain a bond in the amount of $100,000, which
26shall be filed pursuant to Section 10 of this Act.

 

 

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1    (11) Fail to allow the buyer to cancel a contract with the
2credit services organization by phone call, email, text
3message, or a website.
4    (12) Fail to permit the buyer to cancel a contract with the
5credit services organization without obligation within 5
6business days after the contract was signed by the buyer.
7    (13) Fail to provide the buyer with a copy of the fully
8completed contract and all other documents the credit services
9organization requires the buyer to sign at the time they are
10signed.
11(Source: P.A. 85-1384.)
 
12    (815 ILCS 605/6)  (from Ch. 121 1/2, par. 2106)
13    Sec. 6. Before the execution of a contract or other form of
14agreement between a buyer and a credit services organization
15or before the receipt by any such organization of money or
16other valuable consideration, whichever occurs first, such
17organization shall provide the buyer with a statement, in
18writing, containing the following:
19        (1) a complete and accurate statement of the buyer's
20    right to review any file on the buyer maintained by a
21    consumer reporting agency, as provided under the Fair
22    Credit Reporting Act (15 U.S.C. Section 1681 et seq.);
23        (2) a statement that the buyer may review his consumer
24    reporting agency file at no charge if a request therefor
25    is made to such agency within 30 days after receipt by the

 

 

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1    buyer of notice that credit has been denied and if such
2    request is not made within the allotted time, the
3    approximate charge to the buyer for such review;
4        (3) a complete and accurate statement of the buyer's
5    right to dispute the completeness or accuracy of any item
6    contained in any file on the buyer maintained by a
7    consumer reporting agency;
8        (4) a complete and detailed description of the
9    services to be performed by the credit services
10    organization and the total cost to the buyer for such
11    services, and, if the credit services organization
12    provides services on a periodic basis, the description
13    shall explain how the buyer will be billed in
14    substantially equal periodic payments at fixed time
15    intervals;
16        (5) a statement notifying the buyer that: (i) credit
17    reporting agencies have no obligation to remove
18    information from credit reports unless the information is
19    unfair, inaccurate, or unsubstantiated, erroneous, cannot
20    be verified or is more than 7 years old; and (ii) credit
21    reporting agencies have no obligation to remove
22    information concerning bankruptcies unless such
23    information is more than 10 years old;
24        (6) a statement asserting the buyer's right to proceed
25    against the surety bond required under Section 10; and
26        (7) the name and business address of any such surety

 

 

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1    company together with the name and the number of the
2    account.
3    The credit services organization shall maintain on file,
4for a period of 2 years after the date the statement is
5provided, an exact copy of the statement, signed by the buyer,
6acknowledging receipt of the statement.
7(Source: P.A. 91-357, eff. 7-29-99.)
 
8    (815 ILCS 605/7)  (from Ch. 121 1/2, par. 2107)
9    Sec. 7. (a) Each contract between the buyer and a credit
10services organization for the purchase of the services of the
11credit services organization shall be in writing, dated,
12signed by the buyer, and shall include:
13    (1) a conspicuous statement in size equal to at least
1410-point boldface boldfaced type, in immediate proximity to
15the space reserved for the signature of the buyer, as follows:
16    "You, the buyer, may cancel this contract at any time
17before midnight of the third day after the date of the
18transaction. See the attached notice of cancellation form for
19an explanation of this right";
20    (2) a complete and detailed description of the services to
21be performed by the credit services organization and the total
22cost to the buyer for such services, and, if the credit
23services organization provides services on a periodic basis,
24the description shall explain how the buyer will be billed in
25substantially equal periodic payments at fixed time intervals

 

 

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1the terms and conditions of payment, including the total of
2all payments to be made by the buyer, whether to the credit
3services organization or to another person;
4    (3) (blank); and a full and detailed description of the
5services to be performed by the credit services organization
6for the buyer, including all guarantees and all promises of
7full or partial refunds, and the estimated date by which the
8services are to be performed or the estimated length of time
9for performing the services; and
10    (4) the address of the credit services organization's
11principal place of business and the name and address of its
12agent in the State authorized to receive service of process.
13    (b) The contract must have two easily detachable copies of
14a notice of cancellation. The notice must be in boldface
15boldfaced type and in the following form:
16
"Notice of Cancellation"
17    "You may cancel this contract, without any penalty or
18obligation, within three days after the date the contract is
19signed.
20    If you cancel, any payment made by you under this contract
21will be returned within 10 days after the date of receipt by
22the seller of your cancellation notice.
23    To cancel this contract, mail or deliver a signed, dated
24copy of this cancellation notice, or other written notice to:
25    (name of seller) at (address of seller) (place of
26business) not later than midnight (date)

 

 

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1I hereby cancel this transaction."
2..............................  .............................
3       (date)                      (purchaser's signature)
4    (c) The credit services organization shall give to the
5buyer a copy of the completed contract and all other documents
6the credit services organization requires the buyer to sign at
7the time they are signed.
8(Source: P.A. 85-1384.)
 
9    (815 ILCS 605/10)  (from Ch. 121 1/2, par. 2110)
10    Sec. 10. A If a credit services organization is required
11to obtain a surety bond and must adhere to the following
12procedures pursuant to paragraph (1) of Section 5 of this Act,
13the following procedures shall be applicable:
14    (a) A If a bond is obtained, a copy of the bond it shall be
15filed with the Office of the Secretary of State.
16    (b) The required bond shall be in favor of the State of
17Illinois for the benefit of any person who is damaged by any
18violation of this Act. The bond shall also be in favor of any
19person damaged by such practices. Any person claiming against
20the bond for a violation of this Act may maintain an action at
21law against the credit services organization and against the
22surety. The surety shall be liable only for actual damages and
23not the punitive damages permitted under Section 11(b) of this
24Act. The aggregate liability of the surety to all persons
25damaged by a credit services organization's violation of this

 

 

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1Act shall in no event exceed the amount of the bond.
2    (c) The bond shall be in the amount of $100,000 and shall
3be maintained for a period of 5 2 years after the date that the
4credit services organization ceases operations.
5(Source: P.A. 85-1384.)

 

 

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1 INDEX
2 Statutes amended in order of appearance
3    815 ILCS 605/3from Ch. 121 1/2, par. 2103
4    815 ILCS 605/5from Ch. 121 1/2, par. 2105
5    815 ILCS 605/6from Ch. 121 1/2, par. 2106
6    815 ILCS 605/7from Ch. 121 1/2, par. 2107
7    815 ILCS 605/10from Ch. 121 1/2, par. 2110