SB2511 102ND GENERAL ASSEMBLY

LRB102 17225 BMS 22685 b

102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
SB2511

Introduced 2/26/2021, by Sen. Cristina Castro

SYNOPSIS AS INTRODUCED:

See Index

Amends the Pawnbroker Regulation Act. Provides that a pawnbroker may contract for and receive a monthly finance charge for expenses, losses, and services that may not exceed one-fourth (rather than one-fifth) of the loan amount. Provides that title to pledged property transfers to a pawnbroker after the expiration of the default date grace period or upon the expiration of an agreed extension. Provides procedures for a law enforcement officer to return property that was subject to a hold order to a pawnbroker or to return stolen property to its owner. Provides that after the return of stolen property, a pawnbroker shall not be liable to any private person or government entity for any further claims on the returned property. Provides information required to be included in a hold order. Provides that a person who owns or is employed by a pawnbroker licensed under the Act shall annually complete 4 hours of continuing education in a responsible training program approved by the Department of Financial and Professional Regulation. Provides that the license of a pawnbroker whose owners, managers, or employees fail to comply with the continuing education requirement may be suspended, revoked, or may face other disciplinary action. Denies home rule powers to regulate pawnbroker employee training and pawnbroker licensing. Provides that a person seeking approval or re-approval from the Department to offer a responsible training program may apply for approval or re-approval between August 1 and August 15 every 4 years. Establishes a nonrefundable application fee for approval or re-approval from the Department to offer a responsible training program. Provides that denial of approval by the Department shall include a detailed description of the reasons for the denial. Makes other changes.

FISCAL NOTE ACT MAY APPLY

HOME RULE NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning regulation.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Pawnbroker Regulation Act is amended by changing Sections 2, 9, 10, and 12 and by adding Section 13 as follows:

(205 ILCS 510/2) (from Ch. 17, par. 4652)

Sec. 2. It shall be unlawful for any pawnbroker to charge or collect a greater benefit or percentage upon money advanced, and for the use and forbearance thereof, than the rate of 3% per month. Nothing in this Section shall be construed so as to conflict with the law pertaining to usury and the person receiving money so advanced may hold such moneys to pay any fees in addition to interest as herein provided.

Each pawnbroker, when making a loan under this Section, must disclose in printed form on the pawn contract the following information to the persons receiving the loan:

(1) the amount of money advanced, which must be designated as the amount financed;

(2) the maturity date of the pawn, which must be at least 30 days after the date of the pawn;

(3) the total pawn interest and service charge payable on the maturity date, which must be designated as the finance charge;

(4) the total of payments that must be paid to redeem the pledged goods on the maturity date, which must be designated as the total of payments; and

(5) the annual percentage rate, computed according to the regulations adopted by the Board of Governors of the Federal Reserve System under the Federal Truth in Lending Act.

Each pawnbroker may contract for and receive a monthly finance charge including interest and fees not to exceed one-fourth one-fifth of the loan amount, as set forth herein, for appraising, investigating title, storing and insuring the collateral, closing the loan, making daily reports to local law enforcement officers including enhanced computerized reporting, complying with regulatory requirements, and for other expenses and losses of every nature whatsoever and for all other services. Such fees, when made and collected, shall not be deemed interest for any purpose of law.

(Source: P.A. 90-477, eff. 7-1-98.)

(205 ILCS 510/9) (from Ch. 17, par. 4659)

Sec. 9. No pawnbroker shall knowingly purchase or take any article in pawn or pledge from any person appearing to be intoxicated, nor from any person known to have been convicted of theft. A law enforcement officer may provide such criminal conviction information to a pawnbroker. When any person is found to be the owner of stolen property which has been pawned, such property shall be returned to the owner thereof without the payment of the money advanced by the pawnbroker thereon or any costs or charges of any kind which the pawnbroker may have placed upon the same.

(Source: P.A. 84-1308.)

(205 ILCS 510/10) (from Ch. 17, par. 4660)

Sec. 10. Sale of property. No personal property pledged or received on deposit by any pawnbroker shall be permitted to be redeemed from such pawnbroker for a period of 48 hours after the delivery of the copy and statement required by Section 7 of this Act required to be delivered to the officer or officers named therein. No personal property purchased by any pawnbroker shall be sold or removed from the place of business or transferred to another pawnshop location of such pawnbroker for a period of 10 days after the delivery of the copy and statement required by Section 7 of this Act required to be delivered to the officer or officers named therein. If the pawner or pledger fails to repay the loan during the period specified on the pawn ticket, the pawnbroker shall automatically extend a grace period of 30 days from the default date on the loan during which the pawnbroker shall not dispose of or sell the personal property pledged. The parties may agree to extend or renew a loan upon terms agreed upon by the parties, provided the terms comply with the requirements of this Act. Title to the pledged property transfers to the pawnbroker after the default date grace period expires or upon expiration of an agreed extension. A county or municipality, including a home rule unit, may regulate these holding periods in a manner that is more restrictive than the regulation provided in this Section 10. A home rule unit may not regulate these holding periods in a manner less restrictive than the regulation by the State. This Section is a limitation under subsection (i) of Section 6 of Article VII of the Illinois Constitution on the concurrent exercise by home rule units of the powers and functions exercised by the State.

(Source: P.A. 99-188, eff. 1-1-16.)

(205 ILCS 510/12)

Sec. 12. Hold order.

(a) For the purposes of this Section, "hold order" means a written legal instrument issued to a pawnbroker by a law enforcement officer who is commissioned by the law enforcement agency of the municipality or county that licenses and regulates the pawnbroker, evidencing a criminal law enforcement investigation, and ordering the pawnbroker to retain physical possession of pledged goods in the possession of the pawnbroker or property purchased by and in the possession of the pawnbroker and not to not return, sell, or otherwise dispose of such property as such property is believed to be misappropriated goods.

(b) Upon written notice from a law enforcement officer indicating that property in the possession of a pawnbroker and subject to a hold order is needed for the purpose of furthering a criminal investigation and prosecution, the pawnbroker shall release the property subject to the hold order to the custody of the law enforcement officer for such purpose and the law enforcement officer shall provide a written acknowledgment that the property has been released to the law enforcement officer. The release of the property to the custody of the law enforcement officer shall not be considered a waiver or release of the pawnbroker's property rights or interest in the property. Upon completion of the criminal investigation, the property shall be returned to the pawnbroker who consented to its release; except that:

(1) if the criminal investigation took place within counties with a population of less than 300,000 and that investigation: (A) has determined that the property is stolen property, (B) has determined that the fair market value of the stolen property is $500 or less, (C) has identified the rightful owner of the stolen property, and (D) contains a court-admissible sworn statement by the rightful owner that he or she is the true owner of the stolen property, then law enforcement shall return the property to that owner without the payment of the money advanced by the pawnbroker or any costs or charges of any kind that the pawnbroker may have placed upon the same; or

(2) if the criminal investigation took place within counties with a population of more than 300,000 and that investigation: (A) has determined that the property is stolen property, (B) has determined that the then-fair market value of the stolen property is $1,000 or less, (C) has identified the rightful owner of the stolen property, and (D) contains a court-admissible sworn statement by the rightful owner that he or she is the true owner of the stolen property, then law enforcement shall return the property to that owner without the payment of the money advanced by the pawnbroker or any costs or charges of any kind that the pawnbroker may have placed upon the same.

(c) After the return of said property, the pawnbroker shall not be liable to any private person or government entity for any further claims on the returned property.

Law enforcement shall provide all information related to such persons involved in the investigation to the pawnbroker, including the investigative report, without the need for a subpoena, court order, or further legal action or government filing.

The hold order shall expire on the 120th day after it is issued, at which time the pawnbroker may exercise its rights under any applicable pawn ticket or extension. If , if the law enforcement officer has not completed the criminal investigation within 120 days after the issuance of the hold order its release, the officer shall immediately return any the property in law enforcement custody to the pawnbroker or obtain and furnish to the pawnbroker a warrant for a maximum 120-day hold order extension and, as applicable, continued law enforcement the continued custody of the property.

The pawnbroker shall not release or dispose of the property except pursuant to a court order or the expiration of the holding period of the hold order, including all extensions.

In cases where criminal charges have been filed and the property may be needed as evidence, the prosecuting attorney shall notify the pawnbroker in writing. The notice shall contain the case number, the style of the case, and a description of the property. The pawnbroker shall hold any such property in the pawnbroker's custody until receiving notice of the disposition of the case from the prosecuting attorney. The prosecuting attorney shall notify the pawnbroker and claimant in writing within 15 days after the disposition of the case.

(d) A hold order, and a foregoing notice of criminal charges, must specify:

(1) the name and address of the pawnbroker;

(2) the law enforcement investigation number and the name, title, and identification number of the law enforcement officer placing the hold order or the court placing the hold order;

(3) a complete description of the property to be held, including model number and serial number, if applicable;

(4) the name of the alleged owner or person reporting the alleged misappropriated property, unless otherwise prohibited by law;

(5) the mailing address of the pawnbroker where the property is held; and

(6) the issuance and expiration date of the holding period.

(e) The pawnbroker or the pawnbroker's representative must sign and date a copy of the hold order as evidence of receipt of the hold order and the beginning of the 120-day holding period.

(Source: P.A. 96-1365, eff. 7-28-10.)

(205 ILCS 510/13 new)

Sec. 13. Continuing education.

(a) A person who owns or is employed by a pawnbroker licensed under this Act shall annually complete 4 hours of continuing education in a responsible training program approved by the Department of Financial and Professional Regulation.

(b) The responsible training program modules shall consist of training on State and local laws, administrative rules, and regulations that pertain to the business of being a licensed pawnbroker under this Act, including, but not limited to:

(1) the prohibition of a pawn transaction to minors;

(2) acceptable forms of identification, how to check identification, and common mistakes made in verification of identification;

(3) compliance with all pawn inventory requirements;

(4) maintenance of records;

(5) security and surveillance;

(6) inspections by State and local licensing and law enforcement authorities, including hold order procedures; and

(7) other areas as determined by rule.

(c) Upon the successful completion of the responsible training program, the provider shall deliver proof of completion either through United States mail or electronic communication to the employee of the pawnshop and the pawnbroker, who shall retain a copy of the certificate on file at the location of the licensed pawnshop.

(d) The license of a pawnbroker whose owners, managers, or employees fail to comply with this Section may be suspended, revoked, or may face other disciplinary action.

(e) The regulation of pawnbroker employee training and pawnbroker licensing is an exclusive power and function of the State. A home rule unit may not regulate pawnbroker employee training and pawnbroker licensing. This subsection is a denial and limitation of home rule powers and functions under subsection (h) of Section 6 of Article VII of the Illinois Constitution.

(f) Persons seeking Department approval to offer the training required by subsection (b) may apply for such approval between August 1 and August 15 every 4 years in a manner prescribed by the Department.

(g) Persons seeking Department approval to offer the training required by subsection (b) shall submit a nonrefundable application fee of $2,000 to be deposited into the Pawnbroker Regulation Fund or a fee set by rule. Any changes made to the training module shall be approved by the Department.

(h) The Department shall not unreasonably deny approval of a training module, whether in-person or online, that meets all the requirements of subsection (b). A denial of approval shall include a detailed description of the reasons for the denial.

(i) A person approved to provide the training required by subsection (b) shall submit an application for re-approval between August 1 and August 15 of each even-numbered year and include a nonrefundable application fee of $2,000 to be deposited into the Pawnbroker Regulation Fund or a fee set by rule.