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1 | AN ACT concerning business.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Payday Loan Reform Act is amended by | ||||||||||||||||||||||||||||||||
5 | changing Sections 1-10, 2-5, 2-55, 4-5, and 4-30 as follows: | ||||||||||||||||||||||||||||||||
6 | (815 ILCS 122/1-10)
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7 | Sec. 1-10. Definitions. As used in this Act: | ||||||||||||||||||||||||||||||||
8 | "Check" means a "negotiable instrument", as defined in | ||||||||||||||||||||||||||||||||
9 | Article 3 of the Uniform Commercial Code, that is drawn on a | ||||||||||||||||||||||||||||||||
10 | financial institution. | ||||||||||||||||||||||||||||||||
11 | "Commercially reasonable method of verification" or | ||||||||||||||||||||||||||||||||
12 | "certified database" means a consumer reporting service | ||||||||||||||||||||||||||||||||
13 | database certified by the Department as effective in verifying | ||||||||||||||||||||||||||||||||
14 | that a proposed loan agreement is permissible under this Act, | ||||||||||||||||||||||||||||||||
15 | or, in the absence of the Department's certification, any | ||||||||||||||||||||||||||||||||
16 | reasonably reliable written verification by the consumer | ||||||||||||||||||||||||||||||||
17 | concerning (i) whether the consumer has any outstanding payday | ||||||||||||||||||||||||||||||||
18 | loans, (ii) the principal amount of those outstanding payday | ||||||||||||||||||||||||||||||||
19 | loans, and (iii) whether any payday loans have been paid in | ||||||||||||||||||||||||||||||||
20 | full by the consumer in the preceding 7 days. | ||||||||||||||||||||||||||||||||
21 | "Consumer" means any natural person who, singly or jointly | ||||||||||||||||||||||||||||||||
22 | with another consumer, enters into a loan. | ||||||||||||||||||||||||||||||||
23 | "Consumer reporting service" means an entity that provides |
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1 | a database certified by the Department. | ||||||
2 | "Department" means the Department of Financial and | ||||||
3 | Professional Regulation. | ||||||
4 | "Secretary" means the Secretary of Financial and | ||||||
5 | Professional Regulation. | ||||||
6 | "Gross monthly income" means monthly income as | ||||||
7 | demonstrated by official documentation of the income, | ||||||
8 | including, but not limited to, a pay stub or a receipt | ||||||
9 | reflecting payment of government benefits, for the period 30 | ||||||
10 | days prior to the date on which the loan is made. | ||||||
11 | "Lender" and "licensee" mean any person or entity, | ||||||
12 | including any affiliate or subsidiary of a lender or licensee, | ||||||
13 | that offers or makes a payday loan, buys a whole or partial | ||||||
14 | interest in a payday loan, arranges a payday loan for a third | ||||||
15 | party, or acts as an agent for a third party in making a payday | ||||||
16 | loan, regardless of whether approval, acceptance, or | ||||||
17 | ratification by the third party is necessary to create a legal | ||||||
18 | obligation for the third party, and includes any other person | ||||||
19 | or entity if the Department determines that the person or | ||||||
20 | entity is engaged in a transaction that is in substance a | ||||||
21 | disguised payday loan or a subterfuge for the purpose of | ||||||
22 | avoiding this Act. | ||||||
23 | "Loan agreement" means a written agreement between a lender | ||||||
24 | and consumer to make a loan to the consumer, regardless of | ||||||
25 | whether any loan proceeds are actually paid to the consumer on | ||||||
26 | the date on which the loan agreement is made. |
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1 | "Member of the military" means a person serving in the | ||||||
2 | armed forces of the United States, the Illinois National Guard, | ||||||
3 | or any reserve component of the armed forces of the United | ||||||
4 | States. "Member of the military" includes those persons engaged | ||||||
5 | in (i) active duty, (ii) training or education under the | ||||||
6 | supervision of the United States preliminary to induction into | ||||||
7 | military service, or (iii) a period of active duty with the | ||||||
8 | State of Illinois under Title 10 or Title 32 of the United | ||||||
9 | States Code pursuant to order of the President or the Governor | ||||||
10 | of the State of Illinois. | ||||||
11 | "Outstanding balance" means the total amount owed by the | ||||||
12 | consumer on a loan to a lender, including all principal, | ||||||
13 | finance charges, fees, and charges of every kind. | ||||||
14 | "Payday loan" or "loan" means a loan with a finance charge | ||||||
15 | exceeding an annual percentage rate of 36% and with a term that | ||||||
16 | does not exceed 120 days , including any transaction conducted | ||||||
17 | via any medium whatsoever, including, but not limited to, | ||||||
18 | paper, facsimile, Internet, or telephone, in which: | ||||||
19 | (1) A lender accepts one or more checks dated on the | ||||||
20 | date written and agrees to hold them for a period of days | ||||||
21 | before deposit or presentment, or accepts one or more | ||||||
22 | checks dated subsequent to the date written and agrees to | ||||||
23 | hold them for deposit; or | ||||||
24 | (2) A lender accepts one or more authorizations to | ||||||
25 | debit a consumer's bank account; or | ||||||
26 | (3) A lender accepts an interest in a consumer's wages, |
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1 | including, but not limited to, a wage assignment. | ||||||
2 | "Principal amount" means the amount received by the | ||||||
3 | consumer from the lender due and owing on a loan, excluding any | ||||||
4 | finance charges, interest, fees, or other loan-related | ||||||
5 | charges. | ||||||
6 | "Rollover" means to refinance, renew, amend, or extend a | ||||||
7 | loan beyond its original term.
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8 | (Source: P.A. 94-13, eff. 12-6-05.) | ||||||
9 | (815 ILCS 122/2-5)
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10 | Sec. 2-5. Loan terms. | ||||||
11 | (a) Without affecting the right of a consumer to prepay at | ||||||
12 | any time without cost or penalty, no payday loan may have a | ||||||
13 | minimum term of less than 13 days. | ||||||
14 | (b) No payday loan may be made to a consumer if the loan | ||||||
15 | would result in the consumer being indebted to one or more | ||||||
16 | payday lenders for a period in excess of 45 consecutive days. | ||||||
17 | Except as provided under Section 2-40, if a consumer has or has | ||||||
18 | had loans outstanding for a period in excess of 45 consecutive | ||||||
19 | days, no payday lender may offer or make a loan to the consumer | ||||||
20 | for at least 7 calendar days after the date on which the | ||||||
21 | outstanding balance of all payday loans made during the 45 | ||||||
22 | consecutive day period is paid in full. For purposes of this | ||||||
23 | subsection, the term "consecutive days" means a series of | ||||||
24 | continuous calendar days in which the consumer has an | ||||||
25 | outstanding balance on one or more payday loans; however, if a |
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1 | payday loan is made to a consumer within 6 days or less after | ||||||
2 | the outstanding balance of all loans is paid in full, those | ||||||
3 | days are counted as "consecutive days" for purposes of this | ||||||
4 | subsection. | ||||||
5 | (c) No lender may make a payday loan to a consumer if the | ||||||
6 | total principal amount of the loan, when combined with the | ||||||
7 | principal amount of all of the consumer's other outstanding | ||||||
8 | payday loans, exceeds $1,000 or 25% of the consumer's gross | ||||||
9 | monthly income, whichever is less.
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10 | (d) No payday loan may be made to a consumer who has an | ||||||
11 | outstanding balance on 2 payday loans. | ||||||
12 | (e) No lender may charge more than $15.50 per $100 loaned | ||||||
13 | on any payday loan over the term of the loan. Except as | ||||||
14 | provided in Section 2-25, this charge is considered fully | ||||||
15 | earned as of the date on which the loan is made. | ||||||
16 | (f) A lender may not take or attempt to take an interest in | ||||||
17 | any of the consumer's personal property to secure a payday | ||||||
18 | loan. | ||||||
19 | (g) A consumer has the right to redeem a check or any other | ||||||
20 | item described in the definition of payday loan under Section | ||||||
21 | 1-10 issued in connection with a payday loan from the lender | ||||||
22 | holding the check or other item at any time before the payday | ||||||
23 | loan becomes payable by paying the full amount of the check or | ||||||
24 | other item.
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25 | (h) No lender may make a payday loan with periodic payments | ||||||
26 | unless the periodic payments are substantially equal term |
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1 | payments and, if paid as scheduled, result in full payment of | ||||||
2 | the principal and interest owed on the loan at the end of the | ||||||
3 | loan term.
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4 | (Source: P.A. 94-13, eff. 12-6-05.) | ||||||
5 | (815 ILCS 122/2-55)
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6 | Sec. 2-55. Information, reporting, and examination. | ||||||
7 | (a) A licensee shall keep and use books, accounts, and | ||||||
8 | records that
will enable the Secretary to determine if the | ||||||
9 | licensee is complying with the
provisions of this Act and | ||||||
10 | maintain any other records as required by the
Secretary.
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11 | (b) A licensee shall collect and maintain information | ||||||
12 | annually for a report that shall
disclose in detail and under | ||||||
13 | appropriate headings:
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14 | (1) the total number of payday loans made during the
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15 | preceding calendar year;
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16 | (2) the total number of payday loans outstanding as of | ||||||
17 | December 31 of
the preceding calendar year;
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18 | (3) the minimum, maximum, and average dollar amount of | ||||||
19 | payday loans made during the preceding calendar year;
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20 | (4) the average annual percentage rate and the average | ||||||
21 | term of payday loans made during the preceding calendar | ||||||
22 | year; and
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23 | (5) the total number of payday loans paid in full, the | ||||||
24 | total number of loans that went into default, and the
total | ||||||
25 | number of loans written off during the preceding calendar |
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1 | year ; and
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2 | (6) the total number of lawsuits filed by the licensee | ||||||
3 | or its agent against consumers to collect on payday loans | ||||||
4 | from consumers during the preceding calendar year.
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5 | The report shall be verified by the oath or affirmation of | ||||||
6 | the owner,
manager, or president of the licensee. The report | ||||||
7 | must be filed with the
Secretary no later than March 1 of the | ||||||
8 | year following the year for which
the report discloses the | ||||||
9 | information specified in this subsection (b). The
Secretary may | ||||||
10 | impose upon the licensee a fine of $25 per day for each day
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11 | beyond the filing deadline that the report is not filed.
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12 | (c) No later than July 31 of the second year following the | ||||||
13 | effective date of this Act, the Department shall publish an | ||||||
14 | annual
a biennial report that contains a compilation of | ||||||
15 | aggregate data concerning the payday lending industry and shall | ||||||
16 | make the report available to the Governor, the General | ||||||
17 | Assembly, and the general public. | ||||||
18 | (d) The Department shall have the authority to conduct | ||||||
19 | examinations of
the books, records, and loan documents at any | ||||||
20 | time.
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21 | (Source: P.A. 94-13, eff. 12-6-05.) | ||||||
22 | (815 ILCS 122/4-5)
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23 | Sec. 4-5. Prohibited acts. A licensee or unlicensed person | ||||||
24 | or entity making payday
loans may not commit, or have committed | ||||||
25 | on behalf of the
licensee
or unlicensed person or entity, any |
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1 | of the following acts: | ||||||
2 | (1) Threatening to use or using the criminal process in | ||||||
3 | this or any
other state to collect on the loan.
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4 | (2) Using any device or agreement that would have the | ||||||
5 | effect of
charging or collecting more fees or charges than | ||||||
6 | allowed by this
Act, including, but not limited to, | ||||||
7 | entering into a different type of
transaction
with the | ||||||
8 | consumer.
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9 | (3) Engaging in unfair, deceptive, or fraudulent | ||||||
10 | practices in the
making or collecting of a payday loan.
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11 | (4) Using or attempting to use the check provided by | ||||||
12 | the consumer in
a payday loan as collateral for a | ||||||
13 | transaction not related to a payday loan.
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14 | (5) Knowingly accepting payment in whole or in part of | ||||||
15 | a payday
loan through the proceeds of another payday loan | ||||||
16 | provided by any licensee.
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17 | (6) Knowingly accepting any security, other than that | ||||||
18 | specified in the
definition of payday loan in Section 1-10, | ||||||
19 | for a payday loan.
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20 | (7) Charging any fees or charges other than those | ||||||
21 | specifically
authorized by this Act.
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22 | (8) Threatening to take any action against a consumer | ||||||
23 | that is
prohibited by this Act or making any misleading or | ||||||
24 | deceptive statements
regarding the payday loan or any | ||||||
25 | consequences thereof.
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26 | (9) Making a misrepresentation of a material fact by an |
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1 | applicant for licensure in
obtaining or attempting to | ||||||
2 | obtain a license.
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3 | (10) Including any of the following provisions in loan | ||||||
4 | documents
required by subsection (b) of Section 2-20:
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5 | (A) a confession of judgment clause;
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6 | (B) a waiver of the right to a jury trial, if | ||||||
7 | applicable, in any action
brought by or against a | ||||||
8 | consumer, unless the waiver is included in an | ||||||
9 | arbitration clause allowed under
subparagraph (C) of | ||||||
10 | this paragraph (11);
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11 | (C) a mandatory arbitration clause that is | ||||||
12 | oppressive, unfair,
unconscionable, or substantially | ||||||
13 | in derogation of the rights of consumers; or
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14 | (D) a provision in which the consumer agrees not to | ||||||
15 | assert any claim
or defense arising out of the | ||||||
16 | contract.
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17 | (11) Selling any insurance of any kind whether or not | ||||||
18 | sold in
connection with the making or collecting of a | ||||||
19 | payday loan.
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20 | (12) Taking any power of attorney.
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21 | (13) Taking any security interest in real estate.
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22 | (14) Collecting a delinquency or collection charge on | ||||||
23 | any installment
regardless of the period in which it | ||||||
24 | remains in default.
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25 | (15) Collecting treble damages on an amount owing from | ||||||
26 | a payday loan.
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1 | (16) Refusing, or intentionally delaying or
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2 | inhibiting, the consumer's right to enter into a repayment | ||||||
3 | plan pursuant to this
Act. | ||||||
4 | (17) Charging for, or attempting to
collect, | ||||||
5 | attorney's fees, court costs, or arbitration costs | ||||||
6 | incurred in connection with the
collection of a payday | ||||||
7 | loan. | ||||||
8 | (18) Making a loan in violation of this Act. | ||||||
9 | (19) Garnishing the wages or salaries of a consumer who | ||||||
10 | is a member of the military. | ||||||
11 | (20) Failing to suspend or defer collection activity | ||||||
12 | against a consumer who is a member of the military and who | ||||||
13 | has been deployed to a combat or combat-support posting. | ||||||
14 | (21) Contacting the military chain of command of a | ||||||
15 | consumer who is a member of the military in an effort to | ||||||
16 | collect on a payday loan.
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17 | (22) Evading the requirements and prohibitions of this | ||||||
18 | Act by use of a device or subterfuge including, but not | ||||||
19 | limited to, (i) disguising a payday loan as a different | ||||||
20 | type of transaction, or (ii) characterizing a required fee | ||||||
21 | as a purchase of a good or service in connection with a | ||||||
22 | payday loan.
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23 | (Source: P.A. 94-13, eff. 12-6-05.) | ||||||
24 | (815 ILCS 122/4-30)
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25 | Sec. 4-30. Rulemaking; industry review. |
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1 | (a) The Department may make and enforce such reasonable | ||||||
2 | rules, regulations, directions, orders, decisions, and | ||||||
3 | findings as the execution and enforcement of the provisions of | ||||||
4 | this Act require, and as are not inconsistent therewith. The | ||||||
5 | Department may develop rules to determine if any person or | ||||||
6 | entity seeks to evade the applicability of this Act by any | ||||||
7 | device, subterfuge, or pretense. All rules, regulations, and | ||||||
8 | directions of a general character shall be printed and copies | ||||||
9 | thereof mailed to all licensees. | ||||||
10 | (b) Within 6 months after the effective date of this Act, | ||||||
11 | the Department shall promulgate reasonable rules regarding the | ||||||
12 | issuance of payday loans by banks, savings banks, savings and | ||||||
13 | loan associations, credit unions, and insurance companies. | ||||||
14 | These rules shall be consistent with this Act and shall be | ||||||
15 | limited in scope to the actual products and services offered by | ||||||
16 | lenders governed by this Act. | ||||||
17 | (c) After the effective date of this Act, the Department | ||||||
18 | shall, over a 3-year period, conduct a study of the payday loan | ||||||
19 | industry
to determine the impact and effectiveness of this Act. | ||||||
20 | The Department
shall report its findings to the General | ||||||
21 | Assembly within 3 months of the
third anniversary of the | ||||||
22 | effective date of this Act. The study shall
determine the | ||||||
23 | effect of this Act on the protection of consumers in this
State | ||||||
24 | and on the fair and reasonable regulation of the payday loan | ||||||
25 | industry. The
study shall include, but shall not be limited to, | ||||||
26 | an analysis of the ability
of the industry to use private |
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1 | reporting tools that: | ||||||
2 | (1) ensure substantial compliance with this Act, | ||||||
3 | including real time reporting of outstanding payday loans; | ||||||
4 | and | ||||||
5 | (2) provide data to the Department in an appropriate | ||||||
6 | form and with appropriate content to allow the Department | ||||||
7 | to adequately monitor the industry. | ||||||
8 | The report of the Department shall, if necessary, identify | ||||||
9 | and recommend specific amendments to this Act to further | ||||||
10 | protect consumers and to guarantee fair and reasonable | ||||||
11 | regulation of the payday loan industry.
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12 | (Source: P.A. 94-13, eff. 12-6-05.)
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13 | Section 99. Effective date. This Act takes effect upon | ||||||
14 | becoming law.
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