98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
SB2383

 

Introduced 2/15/2013, by Sen. Antonio Muņoz

 

SYNOPSIS AS INTRODUCED:
 
205 ILCS 670/1  from Ch. 17, par. 5401
205 ILCS 670/12  from Ch. 17, par. 5412
205 ILCS 670/19.2
815 ILCS 122/2-5
815 ILCS 122/3-5

    Amends the Consumer Installment Loan Act. Provides that no licensee shall conduct the business of making loans under the Act within any office, suite, room, or other place of business in which any other business is solicited or engaged unless the other business is licensed by any licensing authority in this State or, in the opinion of the Director of Financial Institutions, the other business would not be contrary to the best interests of consumers. Amends the Payday Loan Reform Act. Provides that no licensee shall conduct the business of making loans under the Act within any office, suite, room, or place of business in which any other business is solicited or engaged in unless the other business is licensed by any licensing authority in this State or, in the opinion of the Secretary of Financial and Professional Regulation, the other business would not be contrary to the best interests of consumers and is authorized by the Secretary of in writing. Changes the maximum time period for payday loans to 182 days (was 180 days). Effective immediately.


LRB098 10436 MGM 40648 b

 

 

A BILL FOR

 

SB2383LRB098 10436 MGM 40648 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Consumer Installment Loan Act is amended by
5changing Sections 1, 12, and 19.2 as follows:
 
6    (205 ILCS 670/1)  (from Ch. 17, par. 5401)
7    Sec. 1. License required to engage in business. No person,
8partnership, association, limited liability company, or
9corporation shall engage in the business of making loans of
10money in a principal amount not exceeding $40,000, and charge,
11contract for, or receive on any such loan a greater rate of
12interest, discount, or consideration therefor than the lender
13would be permitted by law to charge if he were not a licensee
14hereunder, except as authorized by this Act after first
15obtaining a license from the Director of Financial Institutions
16(hereinafter called the Director). No licensee, or employee or
17affiliate thereof, that is licensed under the Payday Loan
18Reform Act shall obtain a license under this Act except that a
19licensee under the Payday Loan Reform Act may obtain a license
20under this Act for the exclusive purpose and use of making
21title-secured loans, as defined in subsection (a) of Section 15
22of this Act and governed by Title 38, Section 110.300 of the
23Illinois Administrative Code. For the purpose of this Section,

 

 

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1"affiliate" means any person or entity that directly or
2indirectly controls, is controlled by, or shares control with
3another person or entity. A person or entity has control over
4another if the person or entity has an ownership interest of
525% or more in the other.
6(Source: P.A. 96-936, eff. 3-21-11; 97-420, eff. 1-1-12.)
 
7    (205 ILCS 670/12)  (from Ch. 17, par. 5412)
8    Sec. 12. Other business.
9    (a) No licensee shall conduct the business of making loans
10under this Act within any office, suite, room, or other place
11of business in which any other business is solicited or engaged
12unless the other business is licensed by any licensing
13authority in this State or, in the opinion of the Director, the
14other business would not be contrary to the best interests of
15consumers and is authorized by the Director in writing. Upon
16application by the licensee, and approval by the Director, the
17Director may approve the conduct of other businesses not
18specifically permitted by this Act in the licensee's place of
19business, unless the Director finds that such conduct will
20conceal or facilitate evasion or violation of this Act. Such
21approval shall be in writing and shall describe the other
22businesses which may be conducted in the licensed office.
23    (b) Notwithstanding subsection (a) of this Section, a A
24licensee may, without notice to and approval of the Director,
25in addition to the business permitted by this Act, conduct the

 

 

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1following business:
2        (1) The business of a sales finance agency as defined
3    in the Sales Finance Agency Act.
4        (2) The business of soliciting or selling any type of
5    insurance provided that all such insurance transactions
6    are conducted in accordance with and are regulated under
7    the Illinois Insurance Code.
8        (3) The business of financing premiums for insurance.
9        (4) Making loans pursuant to the Financial Services
10    Development Act.
11The Director shall make and enforce such reasonable rules and
12regulations for the conduct of business under this Act in the
13same office with other businesses as may be necessary to
14prevent evasions or violations of this Act. The Director may
15investigate any business conducted in the licensed office to
16determine whether any evasion or violation of this Act has
17occurred.
18(Source: P.A. 90-437, eff. 1-1-98.)
 
19    (205 ILCS 670/19.2)
20    Sec. 19.2. Licensee; prohibition against accepting certain
21checks. At the time a loan is made under this Act, or within 20
22days after a loan is made, a licensee shall not (i) accept a
23check and agree to hold it for a period of days before deposit
24or presentment or (ii) accept a check dated subsequent to the
25date written.

 

 

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1(Source: P.A. 96-936, eff. 3-21-11.)
 
2    Section 10. The Payday Loan Reform Act is amended by
3changing Sections 2-5 and 3-5 as follows:
 
4    (815 ILCS 122/2-5)
5    Sec. 2-5. Loan terms.
6    (a) Without affecting the right of a consumer to prepay at
7any time without cost or penalty, no payday loan may have a
8minimum term of less than 13 days.
9    (b) Except for an installment payday loan as defined in
10this Section, no payday loan may be made to a consumer if the
11loan would result in the consumer being indebted to one or more
12payday lenders for a period in excess of 45 consecutive days.
13Except as provided under subsection (c) of this Section and
14Section 2-40, if a consumer has or has had loans outstanding
15for a period in excess of 45 consecutive days, no payday lender
16may offer or make a loan to the consumer for at least 7
17calendar days after the date on which the outstanding balance
18of all payday loans made during the 45 consecutive day period
19is paid in full. For purposes of this subsection, the term
20"consecutive days" means a series of continuous calendar days
21in which the consumer has an outstanding balance on one or more
22payday loans; however, if a payday loan is made to a consumer
23within 6 days or less after the outstanding balance of all
24loans is paid in full, those days are counted as "consecutive

 

 

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1days" for purposes of this subsection.
2    (c) Notwithstanding anything in this Act to the contrary, a
3payday loan shall also include any installment loan otherwise
4meeting the definition of payday loan contained in Section
51-10, but that has a term agreed by the parties of not less
6than 112 days and not exceeding 182 180 days; hereinafter an
7"installment payday loan". The following provisions shall
8apply:
9        (i) Any installment payday loan must be fully
10    amortizing, with a finance charge calculated on the
11    principal balances scheduled to be outstanding and be
12    repayable in substantially equal and consecutive
13    installments, according to a payment schedule agreed by the
14    parties with not less than 13 days and not more than one
15    month between payments; except that the first installment
16    period may be longer than the remaining installment periods
17    by not more than 15 days, and the first installment payment
18    may be larger than the remaining installment payments by
19    the amount of finance charges applicable to the extra days.
20    In calculating finance charges under this subsection, when
21    the first installment period is longer than the remaining
22    installment periods, the amount of the finance charges
23    applicable to the extra days shall not be greater than
24    $15.50 per $100 of the original principal balance divided
25    by the number of days in a regularly scheduled installment
26    period and multiplied by the number of extra days

 

 

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1    determined by subtracting the number of days in a regularly
2    scheduled installment period from the number of days in the
3    first installment period.
4        (ii) An installment payday loan may be refinanced by a
5    new installment payday loan one time during the term of the
6    initial loan; provided that the total duration of
7    indebtedness on the initial installment payday loan
8    combined with the total term of indebtedness of the new
9    loan refinancing that initial loan, shall not exceed 182
10    180 days. For purposes of this Act, a refinancing occurs
11    when an existing installment payday loan is paid from the
12    proceeds of a new installment payday loan.
13        (iii) In the event an installment payday loan is paid
14    in full prior to the date on which the last scheduled
15    installment payment before maturity is due, other than
16    through a refinancing, no licensee may offer or make a
17    payday loan to the consumer for at least 2 calendar days
18    thereafter.
19        (iv) No installment payday loan may be made to a
20    consumer if the loan would result in the consumer being
21    indebted to one or more payday lenders for a period in
22    excess of 182 180 consecutive days. The term "consecutive
23    days" does not include the date on which a consumer makes
24    the final installment payment.
25    (d) (Blank).
26    (e) No lender may make a payday loan to a consumer if the

 

 

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1total of all payday loan payments coming due within the first
2calendar month of the loan, when combined with the payment
3amount of all of the consumer's other outstanding payday loans
4coming due within the same month, exceeds the lesser of:
5        (1) $1,000; or
6        (2) in the case of one or more payday loans, 25% of the
7    consumer's gross monthly income; or
8        (3) in the case of one or more installment payday
9    loans, 22.5% of the consumer's gross monthly income; or
10        (4) in the case of a payday loan and an installment
11    payday loan, 22.5% of the consumer's gross monthly income.
12    No loan shall be made to a consumer who has an outstanding
13balance on 2 payday loans, except that, for a period of 12
14months after the effective date of this amendatory Act of the
1596th General Assembly, consumers with an existing CILA loan may
16be issued an installment loan issued under this Act from the
17company from which their CILA loan was issued.
18    (e-5) Except as provided in subsection (c)(i), no lender
19may charge more than $15.50 per $100 loaned on any payday loan,
20or more than $15.50 per $100 on the initial principal balance
21and on the principal balances scheduled to be outstanding
22during any installment period on any installment payday loan.
23Except for installment payday loans and except as provided in
24Section 2-25, this charge is considered fully earned as of the
25date on which the loan is made. For purposes of determining the
26finance charge earned on an installment payday loan, the

 

 

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1disclosed annual percentage rate shall be applied to the
2principal balances outstanding from time to time until the loan
3is paid in full, or until the maturity date, which ever occurs
4first. No finance charge may be imposed after the final
5scheduled maturity date.
6    When any loan contract is paid in full, the licensee shall
7refund any unearned finance charge. The unearned finance charge
8that is refunded shall be calculated based on a method that is
9at least as favorable to the consumer as the actuarial method,
10as defined by the federal Truth in Lending Act. The sum of the
11digits or rule of 78ths method of calculating prepaid interest
12refunds is prohibited.
13    (f) A lender may not take or attempt to take an interest in
14any of the consumer's personal property to secure a payday
15loan.
16    (g) A consumer has the right to redeem a check or any other
17item described in the definition of payday loan under Section
181-10 issued in connection with a payday loan from the lender
19holding the check or other item at any time before the payday
20loan becomes payable by paying the full amount of the check or
21other item.
22(Source: P.A. 96-936, eff. 3-21-11; 97-421, eff. 1-1-12.)
 
23    (815 ILCS 122/3-5)
24    Sec. 3-5. Licensure.
25    (a) A license to make a payday loan shall state the

 

 

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1address, including city and state, at which the business is to
2be conducted and shall state fully the name of the licensee.
3The license shall be conspicuously posted in the place of
4business of the licensee and shall not be transferable or
5assignable.
6    (b) An application for a license shall be in writing and in
7a form prescribed by the Secretary. The Secretary may not issue
8a payday loan license unless and until the following findings
9are made:
10        (1) that the financial responsibility, experience,
11    character, and general fitness of the applicant are such as
12    to command the confidence of the public and to warrant the
13    belief that the business will be operated lawfully and
14    fairly and within the provisions and purposes of this Act;
15    and
16        (2) that the applicant has submitted such other
17    information as the Secretary may deem necessary.
18    (c) A license shall be issued for no longer than one year,
19and no renewal of a license may be provided if a licensee has
20substantially violated this Act and has not cured the violation
21to the satisfaction of the Department.
22    (d) A licensee shall appoint, in writing, the Secretary as
23attorney-in-fact upon whom all lawful process against the
24licensee may be served with the same legal force and validity
25as if served on the licensee. A copy of the written
26appointment, duly certified, shall be filed in the office of

 

 

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1the Secretary, and a copy thereof certified by the Secretary
2shall be sufficient evidence to subject a licensee to
3jurisdiction in a court of law. This appointment shall remain
4in effect while any liability remains outstanding in this State
5against the licensee. When summons is served upon the Secretary
6as attorney-in-fact for a licensee, the Secretary shall
7immediately notify the licensee by registered mail, enclosing
8the summons and specifying the hour and day of service.
9    (e) A licensee must pay an annual fee of $1,000. In
10addition to the license fee, the reasonable expense of any
11examination or hearing by the Secretary under any provisions of
12this Act shall be borne by the licensee. If a licensee fails to
13renew its license by December 31, its license shall
14automatically expire; however, the Secretary, in his or her
15discretion, may reinstate an expired license upon:
16        (1) payment of the annual fee within 30 days of the
17    date of expiration; and
18        (2) proof of good cause for failure to renew.
19    (f) Not more than one place of business shall be maintained
20under the same license, but the Secretary may issue more than
21one license to the same licensee upon compliance with all the
22provisions of this Act governing issuance of a single license.
23The location, except those locations already in existence as of
24June 1, 2005, may not be within one mile of a horse race track
25subject to the Illinois Horse Racing Act of 1975, within one
26mile of a facility at which gambling is conducted under the

 

 

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1Riverboat Gambling Act, within one mile of the location at
2which a riverboat subject to the Riverboat Gambling Act docks,
3or within one mile of any State of Illinois or United States
4military base or naval installation.
5    (g) No licensee shall conduct the business of making loans
6under this Act within any office, suite, room, or place of
7business in which (1) any loans are offered or made under the
8Consumer Installment Loan Act other than title secured loans as
9defined in subsection (a) of Section 15 of the Consumer
10Installment Loan Act and governed by Title 38, Section 110.330
11of the Illinois Administrative Code or (2) any other business
12is solicited or engaged in unless the other business is
13licensed by any licensing authority in this State the
14Department or, in the opinion of the Secretary, the other
15business would not be contrary to the best interests of
16consumers and is authorized by the Secretary in writing.
17    (g-5) (Blank). Notwithstanding subsection (g) of this
18Section, a licensee may obtain a license under the Consumer
19Installment Loan Act (CILA) for the exclusive purpose and use
20of making title secured loans, as defined in subsection (a) of
21Section 15 of CILA and governed by Title 38, Section 110.300 of
22the Illinois Administrative Code. A licensee may continue to
23service Consumer Installment Loan Act loans that were
24outstanding as of the effective date of this amendatory Act of
25the 96th General Assembly.
26    (h) The Secretary shall maintain a list of licensees that

 

 

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1shall be available to interested consumers and lenders and the
2public. The Secretary shall maintain a toll-free number whereby
3consumers may obtain information about licensees. The
4Secretary shall also establish a complaint process under which
5an aggrieved consumer may file a complaint against a licensee
6or non-licensee who violates any provision of this Act.
7(Source: P.A. 96-936, eff. 3-21-11.)
 
8    Section 99. Effective date. This Act takes effect upon
9becoming law.