Section 215.10  Definitions

 

"Act" means the Predatory Loan Prevention Act [815 ILCS 123].

 

"Billing cycle" means the interval between the days or dates of regular periodic statements. Intervals are equal and no longer than a quarter of a year and are considered equal if the number of days in the cycle does not vary more than four days from the regular day or date of the periodic statement.

 

"Bureau" means the federal Consumer Financial Protection Bureau or the Bureau of Consumer Financial Protection.

 

"Consumer" means any natural person, including those persons acting jointly.  [815 ILCS 123/15-1-10]

 

"Closed-end credit" means consumer credit other than open-end credit.

 

"Finance charge" means the cost of consumer credit as a dollar amount. It includes any charge payable directly or indirectly by the consumer and imposed directly or indirectly by the lender as an incident to or a condition of the extension of credit. It does not include any charge of a type payable in a comparable cash transaction.

 

"Lender" means any person or entity, including any affiliate or subsidiary of a lender, that:

 

offers or makes a loan;

 

buys a whole or partial interest in a loan;

 

arranges a loan for a third party, or acts as an agent for a third party in making a loan, regardless of whether approval, acceptance, or ratification by the third party is necessary to create a legal obligation for the third party; or

 

the Department determines that the person or entity is engaged in a transaction that is in substance a disguised loan or a subterfuge for the purpose of avoiding the Act.  [815 ILCS 123/15-1-10]

 

"Loan" means money or credit provided to a consumer in exchange for the consumer’s agreement to a certain set of terms, including, but not limited to, any finance charges, interest, or other conditions.  "Loan" includes closed-end and open-end credit, retail installment sales contracts, motor vehicle retail installment sales contracts, and any transaction conducted via any medium (e.g., paper, facsimile, Internet, telephone).  "Loan" does not include a commercial loan.  [815 ILCS 123/15-1-10]

 

"Open-end credit" means consumer credit extended by a lender under a plan in which:

 

"Person" means any natural person.

 

"Predatory Loan Prevention Act APR" or "PLPA APR" is the cost of the consumer credit expressed as an annual rate, and is calculated in accordance with 32 CFR. 232.4(c), as in effect on the effective date of the Act and as incorporated in 38 Ill. Adm. Code 215. 

 

The lender reasonably contemplates repeated transactions;

 

The lender may impose a finance charge from time to time on an outstanding unpaid balance; and

 

The amount of credit that may be extended to the consumer during the term of the plan (up to any limit set by the lender) is generally made available to the extent that any outstanding balance is repaid.

 

"Regulation Z" means 12 CFR 1026 and has the same meaning ascribed in 32 CFR 232, as in effect on March 23, 2021.

 

Words that are not defined in this part have the same meanings ascribed in Regulation Z (12 CFR 1026), including any interpretation by the Bureau or an official or employee of the Bureau duly authorized by the Bureau to issue those interpretations.

 

Words that are not defined in this Part or Regulation Z, or any interpretation of Regulation Z, have the same meanings ascribed in applicable State or federal law.

 

Section 215.20  Terms of Loans Extended to Consumers

 

a)         General conditions.  A lender who extends a loan to a consumer may not require the consumer to pay a PLPA APR for the loan with respect to the extension of a loan, except as:

 

1)         Agreed to under the terms of the loan agreement or promissory note;

 

2)         Authorized by applicable State or federal law; and

 

3)         Not specifically prohibited by this Part.

 

b)         Limit on cost of a loan.  A lender may not impose a PLPA APR greater than 36% in connection with an extension of a loan that is closed-end credit or in any billing cycle for open-end credit.

 

c)         Calculation of the PLPA APR

 

1)         Charges included in the PLPA APR.  The charges for the PLPA APR shall include, as applicable to the extension of the loan:

 

A)        Any credit insurance premium or fee, any charge for single premium credit insurance, any fee for a debt cancellation contract, or any fee for a debt suspension agreement;

 

B)        Any fee for a credit-related ancillary product sold in connection with the credit transaction for closed-end credit or an account for open-end credit; and

 

C)        Except for a bona fide fee (other than a periodic rate), which may be excluded under subsection (d):

 

i)          Finance charges associated with the loan;

 

ii)         Any application fee charged to a consumer who applies for a loan; and

 

iii)        Any fee imposed for participation in any plan or arrangement for a loan, subject to subsection (c)(2)(B)(ii).

 

D)        Certain exclusions of Regulation Z inapplicable.  Any charge set forth in subsections (c)(1)(A) through (C) shall be included in the calculation of the PLPA APR even if that charge would be excluded from the finance charge under Regulation Z.

 

2)         Computing the PLPA APR

 

A)        Closed-end credit.  For closed-end credit, the PLPA APR shall be calculated following the rules for calculating and disclosing the "Annual Percentage Rate (APR)" for credit transactions under Regulation Z based on the charges set forth in subsection (c)(1).

 

B)        Open-end credit

 

i)          In General.  Except as provided in subsection (c)(2)(B)(ii), for open-end credit, the PLPA APR shall be calculated following the rules for calculating the effective annual percentage rate for a billing cycle as set forth in Section 1026.14(c) and (d) of Regulation Z (as if a lender must comply with that Section) based on the charges set forth in subsection (c)(1).  Notwithstanding Section 1026.14(c) and (d) of Regulation Z, the amount of charges related to opening, renewing, or continuing an account must be included in the calculation of the PLPA APR to the extent those charges are set forth in subsection (c)(1).

 

ii)         No balance during a billing cycle.  For open-end credit, if the PLPA APR cannot be calculated in a billing cycle because there is no balance in the billing cycle, a lender may not impose any fee or charge during that billing cycle, except that the lender may impose a fee for participation in any plan or arrangement for that open-end credit so long as the participation fee does not exceed $100 per annum, regardless of the billing cycle in which the participation fee is imposed; provided, however, that the $100-per annum limitation on the amount of the participation fee does not apply to a bona fide participation fee imposed in accordance with subsection (d).

 

d)         Bona Fide Fee Charged to a Credit Card Account

 

1)         In General.  For a loan extended in a credit card account under an open-end (not home-secured) loan plan, a bona fide fee, other than a periodic rate, is not a charge required to be included in the PLPA APR pursuant to subsection (c)(1).  The exclusion provided for any bona fide fee under this subsection (d) applies only to the extent that the charge by the lender is a bona fide fee and must be reasonable for that type of fee.

 

2)         Ineligible items.  The exclusion for bona fide fees in subsection (d)(1) does not apply to:

 

A)        Any credit insurance premium or fee, including any charge for single premium credit insurance, any fee for a debt cancellation contract, or any fee for a debt suspension agreement; or

 

B)        Any fee for a credit-related ancillary product sold in connection with the credit transaction for closed-end credit or an account for open-end credit.

 

3)         Standards Relating to Bona Fide Fees

 

A)        Like-kind fees.  To assess whether a bona fide fee is reasonable under subsection (d)(1), the fee must be compared to fees typically imposed by other lenders for the same or a substantially similar product or service.  For example, when assessing a bona fide cash advance fee, that fee must be compared to fees charged by other lenders for transactions in which consumers receive extensions of credit in the form of cash or its equivalent.  Conversely, when assessing a foreign transaction fee, that fee may not be compared to a cash advance fee because the foreign transaction fee involves the service of exchanging the consumer’s currency (e.g., a reserve currency) for the local currency demanded by a merchant for a good or service, and does not involve the provision of cash to the customer.

 

B)        Safe harbor.  A bona fide fee is reasonable under subsection (d)(1) if the amount of the fee is less than or equal to an average amount of a fee for the same or a substantially similar product or service charged by 5 or more lenders each of whose U.S. credit cards in force is at least $3 billion in an outstanding balance (or at least $3 billion in loans on U.S. credit card accounts initially extended by the lender) at any time during the 3-year period preceding the time such average is computed.

 

C)        Reasonable fee.  A bona fide fee that is higher than an average amount, as calculated under subsection (d)(3)(B), also may be reasonable under subsection (d)(1) depending on other factors relating to the credit card account.  A bona fide fee charged by a lender is not unreasonable solely because other lenders do not charge a fee for the same or a substantially similar product or service.

 

D)        Indicia of reasonableness for a participation fee.  An amount of a bona fide fee for participation in a credit card account may be reasonable under subsection (d)(1) if that amount reasonably corresponds to the credit limit in effect or credit made available when the fee is imposed, to the services offered under the credit card account, or to other factors relating to the credit card account.  For example, even if other lenders typically charge $100 per annum for participation in credit card accounts, a $400 fee nevertheless may be reasonable if (relative to other accounts carrying participation fees) the credit made available to the consumer is significantly higher or additional services or other benefits are offered under that account.

 

4)         Effect of Charging Fees on Bona Fide Fees

 

A)        Bona fide fees treated separately from charges for credit insurance products or credit-related ancillary products.  If a lender imposes a fee described in subsection (c)(1) and imposes a finance charge to a consumer, the total amount of the fees and finance charges shall be included in the PLPA APR pursuant to subsection (c), and the imposition of any fee or finance charge described in subsection (c)(1) shall not affect whether another type of fee may be excluded as a bona fide fee under this subsection (d).

 

B)        Effect of charges for non-bona fide fees.  If a lender imposes any fee (other than a periodic rate or a fee that must be included in the PLPA APR pursuant to subsection (c)(1)) that is not a bona fide fee and imposes a finance charge to a consumer, the total amount of those fees, including any bona fide fees, and other finance charges shall be included in the PLPA APR pursuant to subsection (c).