AUTHORITY: Implementing and authorized by the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1985, ch. 121½, par. 261 et seq.), specifically Section 4 thereof (Ill. Rev. Stat. 1985, ch. 121½, par. 264).

SOURCE: Adopted at 4 Ill. Reg. 37, p. 554, effective October 1, 1980; codified at 7 Ill. Reg. 12887; amended at 10 Ill. Reg. 10957, effective June 6, 1986.

SUBPART A: GENERAL PROVISIONS

 

Section 460.5  Preamble (Repealed)

 

(Source:  Repealed at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.10  Definitions

 

For purposes of this Part, the terms used in this Part have the meanings ascribed herein.

 

            "Attorney General":  means the Attorney General of the State of Illinois or his or her delegate.

 

            "Business Day" means any calendar day except Sunday or the following business holidays:  New Year's Day, Martin Luther King Jr.'s Birthday, Presidents' Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day.

 

            "Buyer" means any person who for consideration obtains the right to purchase club merchandise from a buyers club at discount prices.

 

            "Buyers club" means any person who for consideration provides or purports to provide its buyers with the right to purchase club merchandise at discount prices.

 

            "Buyers club contract" means any contract between a buyer and a buyers club by which the buyer for consideration receives the right to obtain club merchandise from the buyers club at discount prices.

 

            "Club merchandise" means furniture, motor vehicles, carpeting, food for home consumption, or appliances.

 

            "Discount prices" means prices represented to be lower on all or most club merchandise than those generally charged for club merchandise in the locality where the representation is made.

 

            "Person" means any natural person or his legal representative, partnership, corporation (domestic and foreign), company, trust, business entity or association, and any agent, employee, salesman, partner, officer, director, member, stockholder, associate, trustee or cestui que trust thereof.

 

(Source:  Amended at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.20  Application of this Part

 

This Part shall apply to all existing and future buyers clubs located, or with buyers residing, in the State of Illinois.

 

(Source:  Amended at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.30  Transfer of Obligations

 

If a buyers club transfers to another person obligations to provide club merchandise to buyers, that person shall be bound by this Part to the same extent as the transferring buyers club would be bound.

 

(Source:  Amended at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.40  Merchandise Purchasing Entities (Repealed)

 

(Source:  Repealed at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.50  Exceptions from Application

 

This Part shall not apply to:

 

a)         Any buyers club who for $50.00 or less sells the right to purchase club merchandise at discount prices.

 

b)         Any buyers club (including any travel club, motor club, airline travel club, charter group or credit card company) whose total revenue obtained from the sale of club merchandise at discount prices is less than 20% of its annual gross revenue.

 

(Source:  Amended at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.60  Waiver

 

Any waiver by the buyer of any Section or subsection of this Part is contrary to public policy and shall be void and unenforceable.

 

(Source:  Amended at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.70  Effect of this Part

 

This Part shall neither supersede the requirements in applicable statutes and regulations nor eliminate any private right of action of a buyer.

 

(Source:  Amended at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.80  Violations of this Part

 

As provided by Section 4 of the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1985, ch. 121½, par. 264) ("Act"), this Part has the force and effect of law.  Any violation of any Section or subsection of this Part constitutes an unfair or deceptive act or practice within the meaning of Section 2 of the Act (Ill. Rev. Stat. 1985, ch. 121½, par. 262), subject to the remedies contained in Section 7 of the Act (Ill. Rev. Stat. 1985, ch. 121½, par. 267).

 

(Source:  Amended at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.90  Administration of this Part

 

All notices required by this Part shall be made to the Office of the Attorney General, 500 South Second Street, Springfield, Illinois  62706.

 

(Source:  Amended at 10 Ill. Reg. 10957, effective June 6, 1986)

SUBPART B: UNFAIR OR DECEPTIVE ACTS OR PRACTICES

 

Section 460.205  Required Written Disclosures

 

A buyers club engages in an unfair or deceptive act or practice if it fails to provide prospective buyers, before the signing of the buyers club contract, with the following information in writing:

 

a)         A list, current as of the time the buyer signs the buyers club contract, of the names of at least 10 manufacturers for each of the 5 major categories of club merchandise listed in the definition of that term in Section 460.10 and sold by or through the buyers club, unless the buyers club can obtain club merchandise for buyers from fewer than 10 manufacturers in a particular category, in which case all the manufacturers in that category shall be listed.  A buyers club shall not be required to deliver this list if the sales presentation takes place in the buyers club showroom.

 

b)         A list of the names of all manufacturers, other than those listed in subsection (a) above, mentioned orally by the buyers club as ones from which buyers can purchase club merchandise.

 

c)         A statement of the buyers club's policy regarding the following:

 

1)         warranties and guarantees on club merchandise;

 

2)         the return of ordered club merchandise;

 

3)         the cancellation of club merchandise orders;

 

4)         deposit refunds for the cancellation of club merchandise orders.

 

d)         A description of any costs (such as freight costs, handling fees, suppliers' and buyers clubs' markups) that are incidental to the purchase of club merchandise and that are payable by the buyer.

 

e)         A list stating the categories of club merchandise available to buyers from retail merchants granting a discount to buyers, and stating the percentage of the discount from the regular price.

 

f)         If applicable, a statement that the retail installment sales contract signed by the buyer will be transferred, sold or assigned to a third party.

 

(Source:  Amended at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.210  Prohibited Sales Representations or Practices

 

A buyers club engages in an unfair or deceptive act or practice if it:

 

a)         Represents, either explicitly or implicitly, that it has an affiliation with another buyers club, unless an affiliation exists.

 

b)         Represents, either explicitly or implicitly, that the prospective buyer will be entitled to particular club merchandise, unless the buyer is able to obtain that club merchandise.

 

c)         Uses the terms "member," "initiation fee," "dues," or "club" in the sales presentation, the buyers club contract, its business name or elsewhere, unless

 

1)         its buyers have the right to terminate the buyers club contract without obligation to make further payments under the contract, or

 

2)         the buyers club provides prospective buyers with a written disclaimer stating that buyers do not have the right to terminate the buyers club contract without paying the amount remaining under the contract.

 

d)         Represents, either explicitly or implicitly, that it offers its buyers the lowest prices available on any category of club merchandise, unless representation is true.

 

e)         Represents, either explicitly or implicitly, that club merchandise is available to its buyers from a particular manufacturer or supplier, unless that representation is true.

 

f)         Promises, either explicitly or implicitly, that it will provide prospective buyers with gifts or other consideration to attend a sales presentation without providing the promised gifts or other consideration.

 

g)         Fails to inform each prospective buyer orally, at the time he signs the buyers club contract, of his right to cancel pursuant to Section 460.215(b) of this Part.

 

(Source:  Amended at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.215  Execution of the Buyers Club Contract

 

A buyers club engages in an unfair or deceptive act or practice if it fails to provide its buyers with a copy of the buyers club contract containing the following provisions:

 

a)         The date(s) on which the contract was signed by the buyer and the buyers club.

 

b)         Words to the following effect:

 

NOTICE OF CANCELLATION

 

(Enter date of transaction)

 

 

 DATE

 

YOU MAY CANCEL THIS TRANSACTION, WITHOUT ANY PENALTY OR OBLIGATION, WITHIN 3 BUSINESS DAYS FROM THE ABOVE DATE.

 

IF YOU CANCEL, ANY PROPERTY TRADED IN, ANY PAYMENTS YOU MADE, AND ANY NEGOTIABLE INSTRUMENT YOU EXECUTED UNDER THE CONTRACT OR TRANSACTION WILL BE RETURNED WITHIN 10 BUSINESS DAYS FOLLOWING THE BUYERS CLUB'S RECEIPT OF YOUR CANCELLATION NOTICE, AND ANY SECURITY INTEREST ARISING OUT OF THE TRANSACTION WILL BE CANCELLED.

 

TO CANCEL THIS TRANSACTION, MAIL OR DELIVER THE SIGNED AND DATED NOTICE OF CANCELLATION PROVIDED BELOW OR ANY OTHER WRITTEN NOTICE OF CANCELLATION, OR SEND A TELEGRAM TO (Name of Seller) AT (Address of Seller's Place of Business), NOT LATER THAN MIDNIGHT OF (date).

 

YOU MAY CANCEL THIS CONTRACT BY USE OF THE FOLLOWING WORDS OR WORDS TO THE FOLLOWING EFFECT:

 

I HEREBY CANCEL THE CONTRACT ENTERED INTO WITH (insert name of buyers club) ON (insert date contract signed).

 

Buyer

Date

 

YOU MAY ALSO CANCEL THIS CONTRACT BY DELIVERING NOTICE OF CANCELLATION BY TELEPHONE, PROVIDED THAT YOU FOLLOW TELEPHONE NOTICE BY WRITTEN NOTICE WITHIN 2 DAYS OF THE DATE THAT YOU GAVE TELEPHONE NOTICE.

 

Agency Note:  This subsection does not apply to any transaction in which the buyer is accorded the right of rescission by the provisions of the Federal Trade Commission trade regulation rule entitled "Cooling-Off Period For Door-To-Door Sales" (16 Code of Federal Regulations, Part 429, 1985) or by the provisions of Section 2B of the Act (Ill. Rev. Stat. 1985, ch. 121½, par. 262(B)).  No later editions or amendments are included.

 

c)         The percentage of the purchase price required as a down payment on club merchandise orders.

 

d)         The physical location or locations from which the buyer may pick up his or her club merchandise.

 

e)         A statement that, if the original estimated delivery date has passed, the buyers club, upon receiving a request for the status of a buyer's order for club merchandise, shall provide the buyer, within a reasonable time, not to exceed 14 days, following the request's receipt, with the revised estimated delivery date of the buyer's order.

 

f)         The duration of the buyers club contract, stated clearly and conspicuously and in at least 14 point, bold face, type.

 

(Source:  Amended at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.220  Duration of the Buyers Club Contract

 

A buyers club engages in an unfair or deceptive act or practice if it:

 

a)         Writes a buyers club contract for a term in excess of 5 years from the date the contract is signed.

 

b)         Replaces any current buyers club contract with a new buyers club contract for a term in excess of 5 years from the date the new contract is signed by both parties.

 

(Source:  Amended at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.225  Consistency of Contracts

 

A buyers club engages in an unfair or deceptive act or practice if it:

 

a)         Nullifies or modifies, or attempts to nullify or modify, the rights and remedies provided to the buyer by this Part; or

 

b)         Enters into any contract with the buyer in conjunction with the buyers club contract that is inconsistent with the buyers club contract on any material term, including but not limited to terms regarding cancellation and warranties.

 

(Source:  Amended at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.230  Rights and Defenses (Repealed)

 

(Source:  Repealed at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.235  Down Payment Requirements

 

A buyers club engages in an unfair or deceptive act or practice if it requires from a buyer a down payment on a club merchandise order whose percentage of the order amount is in excess of the down payment percentage allowed by the buyers club contract.

 

(Source:  Amended at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.240  Proof of Merchandise Purchasing (Repealed)

 

(Source:  Repealed at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.245  Misuse of Club Merchandise Deposits

 

A buyers club engages in an unfair or deceptive act or practice if it uses any monies (excluding the handling fees, service fees, shipping costs, and sales taxes) deposited with the buyers club by the buyer as partial or full payment for club merchandise except toward the purchase of the ordered club merchandise.  This Section shall not require a buyers club to establish a separate bank account for each individual buyer.

 

(Source:  Amended at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.250  Estimated Delivery Date of Club Merchandise

 

A buyers club engages in an unfair or deceptive act or practice if it, upon receiving any club merchandise order from a buyer, fails to provide the buyer, in writing, with the estimated delivery date of the ordered club merchandise.

 

(Source:  Amended at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.255  Buyers' Rights to Rescission and Refund

 

A buyers club engages in an unfair or deceptive act or practice if it:

 

a)         Transfers to another person its obligation to provide club merchandise to buyers if the result of that transfer would give to buyers substantially less club merchandise to choose from, unless the buyers club, after making full disclosure of the categories of club merchandise to be provided by the new buyers club, allows buyers to rescind their buyers club contracts and obtain a pro rata refund based upon the time remaining on the contract compared with the time on the contract when it was signed.

 

b)         Fails to provide those buyers entitled to rescission, at their last known addresses, with a notice that they have 30 days from the date they receive the notice in which to rescind their contracts and thereby receive a pro rata refund as set forth above.

 

c)         Fails to honor any notice of rescission received within 30 days from a buyer, and within 30 days after the receipt of any valid notice, to rescind the buyer's contract and refund the buyer's pro rata portion as set forth above.

 

d)         Fails, within 10 days of its cessation of business from any of its locations, to notify the Attorney General of its new location.

 

e)         Fails, within 20 days of the transfer to another person of a buyers club's obligations to provide club merchandise to buyers, to notify the Attorney General of the name and address of the person to whom the obligations are to be transferred.

 

(Source:  Amended at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.260  Affiliated Organizations (Repealed)

 

(Source:  Repealed at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.265  Maintaining Books and Records

 

A buyers club engages in an unfair or deceptive act or practice if it:

 

a)         Fails to maintain a record of each buyers club contract for a period of 3 years following the expiration of the contract.

 

b)         Fails to maintain a record of each club merchandise order for a period of 1 year following the disposition of the club merchandise order.

 

(Source:  Renumbered from Section 460.460 and amended at 10 Ill. Reg. 10957, effective June 6, 1986)

SUBPART C: FINANCIAL REQUIREMENTS

 

Section 460.310  Financial Requirements (Repealed)

 

(Source:  Repealed at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.320  Audited Financial Statement (Repealed)

 

(Source:  Repealed at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.330  Escrow of Merchandise Deposit (Repealed)

 

(Source:  Repealed at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.340  Bonds (Repealed)

 

(Source:  Repealed at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.350  Surety Bond (Repealed)

 

(Source:  Repealed at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.360  Liability of Sureties (Repealed)

 

(Source:  Repealed at 10 Ill. Reg. 10957, effective June 6, 1986)

SUBPART D: REQUIRED FILINGS WITH THE ATTORNEY GENERAL

 

Section 460.410  Public Disclosure Statement (Repealed)

 

(Source:  Repealed at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.420  Business Materials (Repealed)

 

(Source:  Repealed at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.430  Buyer Benefit Agreement (Repealed)

 

(Source:  Repealed at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.440  Notification of Relocation (Repealed)

 

(Source:  Repealed at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.450  Notification of Transfer (Repealed)

 

Source:  Repealed at 10 Ill. Reg. 10957, effective June 6, 1986)

 

Section 460.460  Maintaining Books and Records (Renumbered)

 

(Source:  Renumbered to Section 460.265 at 10 Ill. Reg. 10957, effective June 6, 1986)





 

Section 460.APPENDIX A  Sample Bond (Repealed)

 

(Source:  Repealed at 10 Ill. Reg. 10957, effective June 6, 1986)