Illinois General Assembly - Full Text of Public Act 096-1193
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Public Act 096-1193


 

Public Act 1193 96TH GENERAL ASSEMBLY



 


 
Public Act 096-1193
 
HB6412 EnrolledLRB096 21038 MJR 36888 b

    AN ACT concerning regulation.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The Illinois Financial Services Development Act
is amended by changing Sections 3 and 8 and by adding Section
8.5 as follows:
 
    (205 ILCS 675/3)  (from Ch. 17, par. 7003)
    Sec. 3. As used in this Section:
    (a) "Financial institution" means any bank with its main
office or, after May 31, 1997, a branch in this State, any
state or federal savings and loan association or savings bank
with its main office or branch in this State, any state or
federal credit union with its main office in this State, and
any lender licensed under the Consumer Installment Loan Act or
the Sales Finance Agency Act.
    (b) "Revolving credit plan" or "plan" means a plan
contemplating the extension of credit under an account governed
by an agreement between a financial institution and a borrower
who is a natural person pursuant to which:
        (1) The financial institution permits the borrower
    and, if the agreement governing the plan so provides,
    persons acting on behalf of or with authorization from the
    borrower, from time to time to make purchases and to obtain
    loans by any means whatsoever, including use of a credit
    device primarily for personal, family or household
    purposes;
        (2) the amounts of such purchases and loans are charged
    to the borrower's account under the revolving credit plan;
        (3) the borrower is required to pay the financial
    institution the amounts of all purchases and loans charged
    to such borrower's account under the plan but has the
    privilege of paying such amounts outstanding from time to
    time in full or installments; and
        (4) interest may be charged and collected by the
    financial institution from time to time on the outstanding
    unpaid indebtedness under such plan.
    (c) "Credit device" means any card, check, identification
code or other means of identification contemplated by the
agreement governing the plan.
    (d) "Outstanding unpaid indebtedness" means on any day an
amount not in excess of the total amount of purchases and loans
charged to the borrower's account under the plan which is
outstanding and unpaid at the end of the day, after adding the
aggregate amount of any new purchases and loans charged to the
account as of that day and deducting the aggregate amount of
any payments and credits applied to that indebtedness as of
that day and, if the agreement governing the plan so provides,
may include the amount of any billed and unpaid interest and
other charges.
    (e) "Credit card" means any instrument or device, whether
known as a credit card, credit device, credit plate, charge
plate, or any other name, issued with or without fee by an
issuer for the use of the borrower in obtaining money, goods,
services, or anything else of value on credit, but does not
include any negotiable instrument as defined in the Uniform
Commercial Code, as now or hereafter amended, or a debit card
that may indirectly access an overdraft line of credit through
a debit to a deposit account.
    (f) "Credit card account" means a revolving credit plan
accessed by a credit card.
(Source: P.A. 89-208, eff. 9-29-95.)
 
    (205 ILCS 675/8)  (from Ch. 17, par. 7008)
    Sec. 8. Amendment of governing agreement governing
revolving credit plans other than credit card accounts.
    (a) If the agreement governing a revolving credit plan
other than a credit card account so provides or allows, a
financial institution may at any time or from time to time
amend the terms of such agreement in accordance with the
further provisions of this Section 8. The financial institution
shall notify each affected borrower of the amendment in the
manner set forth in the agreement governing the plan and in
compliance with the requirements of the Truth-in-Lending Act
and regulations promulgated thereunder, as in effect from time
to time, if applicable.
    (b) Subject to subsection (c) below, if the terms of the
agreement governing the plan, as originally drawn or as amended
pursuant to this Section so provide, any amendment may, on and
after the date upon which it becomes effective as to a
particular borrower, apply to all then outstanding unpaid
indebtedness in the borrower's account under the plan,
including any such indebtedness which shall have arisen out of
purchases made or loans obtained prior to the effective date of
the amendment.
    (c) If such amendment has the effect of increasing the
interest or other charges to be paid by the borrower, the
financial institution shall mail or deliver to the borrower, at
least 30 days before the effective date of the amendment, a
clear and conspicuous written notice which shall:
        (1) describe the amendment and the existing term or
    terms of the agreement affected by the amendment,
        (2) set forth the effective date of the amendment,
        (3) state whether or not the amendment will apply to
    the outstanding unpaid indebtedness as of the effective
    date of the amendment,
        (4) state that absent the borrower's written notice to
    the financial institution within 30 days of the earlier of
    the mailing or delivery of the notice of amendment that the
    borrower does not agree to accept the amendment, the
    amendment will become effective and apply to the borrower's
    account, and
        (5) provide an address to which the borrower may send
    notice of the borrower's election not to accept the
    amendment and include an addressed postcard that the
    borrower may return to the financial institution for that
    purpose.
    (c-5) If such amendment results in an unfavorable change in
the interest or other charges on a revolving credit plan which:
(i) relates to a change in the borrower's credit standing, (ii)
does not affect all or a substantial portion of a class of the
creditor's accounts, and (iii) does not relate to inactivity,
default, or delinquency on that revolving credit plan, the
financial institution shall include in the notice required by
subsection (c) of this Section 8 a statement that is
substantially similar to the following:
Change in Credit Standing
        The amendment to the terms of your account relates to a
    change in your credit standing. The change in your credit
    standing may have resulted from a default or delinquency on
    other accounts you may have, or other adverse changes in
    your financial circumstances. If you submit the enclosed
    postcard or otherwise notify us in a timely manner as
    provided in this notice that you do not accept the
    amendment, you will be able to pay off your existing
    balance at the rate in effect prior to the amendment.
    However, in that instance, you may not be eligible to
    obtain additional credit under this plan after the
    effective date of the amendment. If you do not provide
    timely notice to us as provided in this notice that you do
    not accept the amendment, the amendment to the terms of
    your account will become effective and apply to your
    account.
    (c-10) As a condition to the effectiveness of the
borrower's notice not to accept the amendment, the financial
institution may require the borrower to return all credit
devices.
    Any borrower who gives a timely notice electing not to
accept the amendment shall be permitted to pay the outstanding
unpaid indebtedness in the borrower's account under the plan in
accordance with the terms of the agreement governing the plan
without giving effect to the amendment.
    Notwithstanding the financial institution's receipt of the
borrower's notice under item (4) of subsection (c) that the
borrower does not accept the amendment, the amendment shall be
deemed to have been accepted and effective with respect to the
borrower and the borrower's account if the borrower uses the
credit device to obtain credit under the credit plan on or
after the effective date of the amendment, and the amendment
shall be deemed effective as of the effective date originally
disclosed by the financial institution.
    (d) For purposes of this Section, the following shall not
be deemed an amendment which has the effect of increasing the
interest to be paid by the borrower:
        (1) a decrease in the required amount of periodic
    installment payments; and
        (2) a change from a daily periodic rate to a periodic
    rate other than daily, or from a periodic rate other than
    daily to a daily periodic rate, provided that there is no
    resulting change in the annual percentage rate as
    determined in accordance with the Truth-in-Lending Act and
    regulations promulgated thereunder, as in effect from time
    to time.
(Source: P.A. 93-287, eff. 1-1-04.)
 
    (205 ILCS 675/8.5 new)
    Sec. 8.5. Amendment of agreement governing credit card
accounts.
    (a) Amendment of terms. If the agreement governing a credit
card account so provides or allows, then a financial
institution may at any time or from time to time amend the
terms of such agreement in accordance with the further
provisions of this Section. The financial institution shall
notify each affected borrower of the amendment in the manner
set forth in the agreement governing the credit card account
and in compliance with the requirements of the Truth-in-Lending
Act and regulations promulgated thereunder, as in effect from
time to time, if applicable. The provisions of Section 8 of
this Act shall not apply to the amendment of the terms of the
agreement governing the credit card account.
    (b) Interest rate increase limited to future transactions.
An agreement governing a credit card account may be amended to
increase the interest rate on future transactions which may
take effect not less than 45 days after notice of the rate
increase is provided to the borrower. The interest rate may
only be applied to transactions that occur more than 14 days
after provision of the notice to the borrower. The notice to
the borrower shall disclose the interest rate applicable to new
transactions, the date the interest rate will commence, the
transactions subject to the increased interest rate, and the
transactions subject to the current interest rate. A financial
institution may not increase the interest rate under this
subsection during the first year after the credit card account
is opened.
    (c) Advance notice and right to reject an increase in fees
or charges. An agreement governing a credit card account may be
amended to increase fees or charges on or after an effective
date that is at least 45 days after provision of a notice to
the borrower, provided a financial institution may not increase
fees or charges on a credit card account during the first year
after the credit card account is opened. The notice to the
borrower shall:
        (1) describe the change in terms contained in the
    amendment;
        (2) set forth the effective date of the amendment;
        (3) state that the borrower may reject the amendment
    prior to the effective date of the amendment;
        (4) provide an address to which the borrower may send
    notice of the borrower's election not to accept the
    amendment and include an addressed postcard that the
    borrower may return to the financial institution for that
    purpose, or provide a toll-free telephone number the
    borrower may use to notify the financial institution of the
    borrower's rejection of the amendment; and
        (5) if applicable, a statement that if the borrower
    rejects the amendment, then the borrower's ability to use
    the account for further advances will be terminated or
    suspended.
    (d) Interest rate increase applicable to current balances.
A financial institution may not increase the interest rate on
the outstanding unpaid indebtedness under a credit card
agreement, except as permitted in the following:
        (1) Temporary rate exception. A financial institution
    may increase a promotional interest rate upon the
    expiration of a specified period of time of at least 6
    months, provided that prior to the commencement of that
    period, the financial institution has disclosed to the
    borrower the length of the period and the increased
    interest rate that would apply after the expiration of the
    period.
        (2) Variable rate exception. A financial institution
    may increase the interest rate of a variable rate credit
    card account, established in accordance with the
    provisions of Section 5 of this Act, resulting from
    increases in an index that is not under the financial
    institution's control and is available to the general
    public.
        (3) Workout and temporary hardship exception. If an
    interest rate is reduced pursuant to a workout or temporary
    hardship arrangement, then the interest rate may be
    increased to the interest rate in effect prior to the
    reduction due to completion of the workout or temporary
    hardship arrangement by the borrower or the failure of the
    borrower to comply with the terms of the workout or
    temporary hardship arrangement, provided the financial
    institution has furnished the borrower with a clear and
    conspicuous disclosure of the terms of the arrangement
    prior to commencement of the arrangement.
        (4) Delinquency exception. A financial institution may
    increase the interest rate if the borrower's required
    minimum payment has not been received by the financial
    institution within 60 days after the due date for the
    payment, provided that after the minimum payment is 60 days
    delinquent a notice is furnished to the borrower 45 days
    prior to the effective date of the increase stating the
    reason for the increase and that the increase will
    terminate not later than 6 months after the effective date
    of the increase if the financial institution receives the
    required minimum payments on time during that 6 month
    period.
        (5) Servicemember's Civil Relief Act exception. If an
    interest rate is decreased due to the provisions of 50
    U.S.C. App. 527 of the Servicemembers Civil Relief Act,
    then the financial institution may increase the interest
    rate once those provisions no longer apply, provided the
    financial institution may not apply to any transactions
    that occurred prior to the decrease an interest rate
    greater than the interest rate applied prior to the
    decrease.
    (e) Universal default prohibited. A financial institution
may not impose an unfavorable change in the interest or other
charges on a credit card account which: (i) relates to a change
in the borrower's credit standing, (ii) does not affect all or
a substantial portion of a class of the creditor's accounts,
and (iii) does not relate to inactivity, default, or
delinquency on that credit card account.
    (f) Any borrower who gives a timely notice under subsection
(c) of this Section rejecting an amendment to increase fees or
charges shall be permitted to pay the outstanding unpaid
indebtedness in the borrower's credit card account, in
accordance with the terms of the agreement governing the credit
card account without giving effect to the amendment.
    (g) For purposes of this Section, the following shall not
be deemed an amendment that has the effect of increasing the
interest to be paid by the borrower:
        (1) a decrease in the required amount of periodic
    installment payments; and
        (2) a change from a daily periodic rate to a periodic
    rate other than daily, or from a periodic rate other than
    daily to a daily periodic rate, provided that there is no
    resulting change in the annual percentage rate as
    determined in accordance with the Truth-in-Lending Act and
    regulations promulgated thereunder, as in effect from time
    to time.
 
    Section 10. The Credit Card Issuance Act is amended by
changing Section 7.2 as follows:
 
    (815 ILCS 140/7.2)
    Sec. 7.2. No credit card issuer shall issue, provide,
assign or deliver in any way a credit card account to and in
the name of any person under the age of 21 unless the person
has submitted a written application and the credit card issuer
has:
        (1) financial information that the person has an
    independent ability to make the required minimum periodic
    payments on the proposed extension of credit; or
        (2) financial information that a cosigner, guarantor,
    or joint applicant who is at least 21 years old has an
    independent ability to make the required minimum periodic
    payments on the proposed extension of credit, and a signed
    agreement of the cosigner, guarantor, or joint applicant to
    be either jointly liable for any debt on the account or
    secondarily liable for any debt on the account incurred by
    the person before the person has attained the age of 21 18
    without the written approval of that person's parent or
    legal guardian.
    Upon delivery of a credit card account to and in the name
of any person under the age of 18, the credit card issuer shall
also include a pamphlet which details the responsible use of a
credit card, an explanation of applicable credit limits,
payment requirements and the penalties for the misuse and
fraudulent use of a credit card.
    A person under the age of 18 may be issued a credit card
account in that person's name without the written approval of a
parent or legal guardian if a person over the age of 18 agrees
to be a joint holder of the credit card account and accepts the
responsibility for any debt or cost associated with the credit
card.
    This Section does not apply to a supplementary card issued
to a person under the age of 21 18 that allows that person to
access a credit card account in the name of a person over the
age of 21 18 if the person over the age of 21 18 requested
orally or in writing that the supplementary card be issued to
the person under the age of 21 18.
(Source: P.A. 88-348.)
 
    Section 99. Effective date. This Act takes effect upon
becoming law.

Effective Date: 7/22/2010