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1 | AN ACT concerning regulation.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Illinois Financial Services Development Act | ||||||
5 | is amended by changing Sections 3 and 8 and by adding Section | ||||||
6 | 8.5 as follows: | ||||||
7 | (205 ILCS 675/3) (from Ch. 17, par. 7003) | ||||||
8 | Sec. 3. As used in this Section: | ||||||
9 | (a) "Financial institution" means any bank with its
main | ||||||
10 | office or, after May 31, 1997, a branch in this State, any | ||||||
11 | state or
federal savings and loan
association or savings bank | ||||||
12 | with its main office or branch in this State,
any state or | ||||||
13 | federal credit
union with its main office in this State, and | ||||||
14 | any lender licensed under the
Consumer Installment Loan Act or | ||||||
15 | the Sales Finance Agency Act. | ||||||
16 | (b) "Revolving credit plan" or "plan" means a plan | ||||||
17 | contemplating the
extension of credit under an account governed | ||||||
18 | by an agreement between a
financial institution and a borrower | ||||||
19 | who is a natural person pursuant to which: | ||||||
20 | (1) The financial institution permits the borrower | ||||||
21 | and, if the agreement
governing the plan so provides, | ||||||
22 | persons acting on behalf of or with
authorization from the | ||||||
23 | borrower, from time to time to make purchases and to
obtain |
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1 | loans by any means whatsoever, including use
of a credit | ||||||
2 | device primarily for personal, family or household | ||||||
3 | purposes; | ||||||
4 | (2) the amounts of such purchases and loans are charged | ||||||
5 | to the
borrower's account under the revolving credit plan; | ||||||
6 | (3) the borrower is required to pay the financial | ||||||
7 | institution the
amounts of all purchases and loans charged | ||||||
8 | to such borrower's account under
the plan but has the | ||||||
9 | privilege of paying such amounts outstanding from time
to | ||||||
10 | time in full or installments; and | ||||||
11 | (4) interest may be charged and collected by the | ||||||
12 | financial institution
from time to time on the outstanding | ||||||
13 | unpaid indebtedness under such plan. | ||||||
14 | (c) "Credit device" means any card, check, identification | ||||||
15 | code or other
means of identification contemplated by the | ||||||
16 | agreement governing the plan. | ||||||
17 | (d) "Outstanding unpaid indebtedness" means on any day an | ||||||
18 | amount not in
excess of the total amount of purchases and loans | ||||||
19 | charged to the borrower's
account under the plan which is | ||||||
20 | outstanding and unpaid at the end of the day,
after adding the | ||||||
21 | aggregate amount of any new purchases and loans charged to
the | ||||||
22 | account as of that day and deducting the aggregate amount of | ||||||
23 | any
payments and credits applied to that indebtedness as of | ||||||
24 | that day and, if
the agreement governing the plan so provides, | ||||||
25 | may include the amount of any
billed and unpaid interest and | ||||||
26 | other charges. |
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1 | (e) "Credit card" means any instrument or device, whether | ||||||
2 | known as a credit card, credit device, credit plate, charge | ||||||
3 | plate, or any other name, issued with or without fee by an | ||||||
4 | issuer for the use of the borrower in obtaining money, goods, | ||||||
5 | services, or anything else of value on credit, but does not | ||||||
6 | include any negotiable instrument as defined in the Uniform | ||||||
7 | Commercial Code, as now or hereafter amended, or a debit card | ||||||
8 | that may indirectly access an overdraft line of credit through | ||||||
9 | a debit to a deposit account. | ||||||
10 | (f) "Credit card account" means a revolving credit plan | ||||||
11 | accessed by a credit card. | ||||||
12 | (Source: P.A. 89-208, eff. 9-29-95.) | ||||||
13 | (205 ILCS 675/8) (from Ch. 17, par. 7008) | ||||||
14 | Sec. 8. Amendment of governing agreement governing | ||||||
15 | revolving credit plans other than credit card accounts . | ||||||
16 | (a) If the agreement governing a revolving credit plan | ||||||
17 | other than a credit card account so provides or
allows, a | ||||||
18 | financial institution may at any time or from time to time | ||||||
19 | amend the
terms of such agreement in accordance with the | ||||||
20 | further provisions of this
Section 8. The financial institution | ||||||
21 | shall notify each affected borrower of
the amendment in the | ||||||
22 | manner set forth in the agreement governing the plan and
in | ||||||
23 | compliance with the requirements of the Truth-in-Lending Act | ||||||
24 | and regulations
promulgated thereunder, as in effect from time | ||||||
25 | to time, if applicable. |
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1 | (b) Subject to subsection (c) below, if the terms of the | ||||||
2 | agreement
governing the plan, as originally drawn or as amended | ||||||
3 | pursuant to this
Section so provide, any amendment may, on and | ||||||
4 | after the date upon which it
becomes effective as to a | ||||||
5 | particular borrower, apply to all then
outstanding unpaid | ||||||
6 | indebtedness in the borrower's account under the plan,
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7 | including any such indebtedness which shall have arisen out of | ||||||
8 | purchases
made or loans obtained prior to the effective date of | ||||||
9 | the amendment. | ||||||
10 | (c) If such amendment has the effect of increasing the | ||||||
11 | interest or other
charges to be paid by the borrower, the | ||||||
12 | financial institution shall mail or
deliver to the borrower, at | ||||||
13 | least 30 days before the effective date of the
amendment, a | ||||||
14 | clear and conspicuous written notice which shall: | ||||||
15 | (1) describe the amendment and the existing term or | ||||||
16 | terms of the agreement
affected by the amendment, | ||||||
17 | (2) set forth the effective date of the amendment, | ||||||
18 | (3) state whether or not the amendment will apply to | ||||||
19 | the outstanding
unpaid indebtedness as of the effective | ||||||
20 | date of the amendment, | ||||||
21 | (4) state that absent the borrower's written notice to | ||||||
22 | the financial
institution within 30 days of the earlier of | ||||||
23 | the mailing or delivery of the
notice of amendment that the | ||||||
24 | borrower does not agree to accept the amendment,
the | ||||||
25 | amendment will become effective and apply to the borrower's | ||||||
26 | account, and |
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1 | (5) provide an address to which the borrower may send | ||||||
2 | notice of the
borrower's election not to accept the | ||||||
3 | amendment and include an addressed
postcard that the | ||||||
4 | borrower may return to the financial institution for that
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5 | purpose. | ||||||
6 | (c-5) If such amendment results in an unfavorable change in | ||||||
7 | the
interest or other charges on a revolving credit plan which: | ||||||
8 | (i) relates to a
change in the borrower's credit standing, (ii) | ||||||
9 | does not
affect all or a substantial portion of a class of the | ||||||
10 | creditor's
accounts, and (iii) does not relate to inactivity, | ||||||
11 | default, or delinquency on
that revolving credit plan, the | ||||||
12 | financial institution shall include in
the notice required by | ||||||
13 | subsection (c) of this Section 8 a statement
that is | ||||||
14 | substantially similar to the following: | ||||||
15 | Change in Credit Standing | ||||||
16 | The amendment to the terms of your account relates to a
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17 | change in your credit standing. The change in your credit
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18 | standing may have resulted from a default or delinquency on | ||||||
19 | other
accounts you may have, or other adverse changes in | ||||||
20 | your financial
circumstances. If you submit the enclosed | ||||||
21 | postcard or otherwise
notify us in a timely manner as | ||||||
22 | provided in this notice that you do not accept
the
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23 | amendment, you will be able to pay off your existing | ||||||
24 | balance at
the rate in effect prior to the amendment. | ||||||
25 | However, in that
instance, you may not be eligible to | ||||||
26 | obtain additional credit
under this plan after the |
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1 | effective date of the amendment. If
you do not provide | ||||||
2 | timely notice to us as provided in this notice that you do
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3 | not accept the
amendment, the amendment to the terms of | ||||||
4 | your account will become
effective and apply to your | ||||||
5 | account. | ||||||
6 | (c-10) As a condition to the effectiveness of the | ||||||
7 | borrower's notice not
to accept
the amendment, the financial | ||||||
8 | institution may require the borrower to return all
credit | ||||||
9 | devices. | ||||||
10 | Any borrower who gives a timely notice electing not to | ||||||
11 | accept the
amendment shall be permitted to pay the outstanding | ||||||
12 | unpaid indebtedness in
the borrower's account under the plan in | ||||||
13 | accordance with the terms of the
agreement governing the plan | ||||||
14 | without giving effect to the amendment. | ||||||
15 | Notwithstanding the financial institution's receipt of the | ||||||
16 | borrower's
notice under item (4) of subsection (c) that the | ||||||
17 | borrower does not accept the amendment, the
amendment shall be | ||||||
18 | deemed to have been accepted and effective with respect to
the | ||||||
19 | borrower and the borrower's account if the borrower uses the | ||||||
20 | credit device
to obtain credit under the credit plan on or | ||||||
21 | after the effective date of the
amendment, and the amendment | ||||||
22 | shall be deemed effective as of the effective date
originally | ||||||
23 | disclosed by the financial institution. | ||||||
24 | (d) For purposes of this Section, the following shall not | ||||||
25 | be deemed an
amendment which has the effect of increasing the | ||||||
26 | interest to be paid by the
borrower: |
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1 | (1) a decrease in the required amount of periodic | ||||||
2 | installment payments;
and | ||||||
3 | (2) a change from a daily periodic rate to a periodic | ||||||
4 | rate other than
daily, or from a periodic rate other than | ||||||
5 | daily to a daily periodic rate,
provided that there is no | ||||||
6 | resulting change in the annual percentage rate as
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7 | determined in accordance with the Truth-in-Lending Act and | ||||||
8 | regulations
promulgated thereunder, as in effect from time | ||||||
9 | to time. | ||||||
10 | (Source: P.A. 93-287, eff. 1-1-04.) | ||||||
11 | (205 ILCS 675/8.5 new) | ||||||
12 | Sec. 8.5. Amendment of agreement governing credit card | ||||||
13 | accounts. | ||||||
14 | (a) Amendment of terms. If the agreement governing a credit | ||||||
15 | card account so provides or allows, then a financial | ||||||
16 | institution may at any time or from time to time amend the | ||||||
17 | terms of such agreement in accordance with the further | ||||||
18 | provisions of this Section. The financial institution shall | ||||||
19 | notify each affected borrower of the amendment in the manner | ||||||
20 | set forth in the agreement governing the credit card account | ||||||
21 | and in compliance with the requirements of the Truth-in-Lending | ||||||
22 | Act and regulations promulgated thereunder, as in effect from | ||||||
23 | time to time, if applicable. The provisions of Section 8 of | ||||||
24 | this Act shall not apply to the amendment of the terms of the | ||||||
25 | agreement governing the credit card account. |
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1 | (b) Interest rate increase limited to future transactions. | ||||||
2 | An agreement governing a credit card account may be amended to | ||||||
3 | increase the interest rate on future transactions which may | ||||||
4 | take effect not less than 45 days after notice of the rate | ||||||
5 | increase is provided to the borrower. The interest rate may | ||||||
6 | only be applied to transactions that occur more than 14 days | ||||||
7 | after provision of the notice to the borrower. The notice to | ||||||
8 | the borrower shall disclose the interest rate applicable to new | ||||||
9 | transactions, the date the interest rate will commence, the | ||||||
10 | transactions subject to the increased interest rate, and the | ||||||
11 | transactions subject to the current interest rate. A financial | ||||||
12 | institution may not increase the interest rate under this | ||||||
13 | subsection during the first year after the credit card account | ||||||
14 | is opened. | ||||||
15 | (c) Advance notice and right to reject an increase in fees | ||||||
16 | or charges. An agreement governing a credit card account may be | ||||||
17 | amended to increase fees or charges on or after an effective | ||||||
18 | date that is at least 45 days after provision of a notice to | ||||||
19 | the borrower, provided a financial institution may not increase | ||||||
20 | fees or charges on a credit card account during the first year | ||||||
21 | after the credit card account is opened. The notice to the | ||||||
22 | borrower shall: | ||||||
23 | (1) describe the change in terms contained in the | ||||||
24 | amendment; | ||||||
25 | (2) set forth the effective date of the amendment; | ||||||
26 | (3) state that the borrower may reject the amendment |
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1 | prior to the effective date of the amendment; | ||||||
2 | (4) provide an address to which the borrower may send | ||||||
3 | notice of the borrower's election not to accept the | ||||||
4 | amendment and include an addressed postcard that the | ||||||
5 | borrower may return to the financial institution for that | ||||||
6 | purpose, or provide a toll-free telephone number the | ||||||
7 | borrower may use to notify the financial institution of the | ||||||
8 | borrower's rejection of the amendment; and | ||||||
9 | (5) if applicable, a statement that if the borrower | ||||||
10 | rejects the amendment, then the borrower's ability to use | ||||||
11 | the account for further advances will be terminated or | ||||||
12 | suspended. | ||||||
13 | (d) Interest rate increase applicable to current balances. | ||||||
14 | A financial institution may not increase the interest rate on | ||||||
15 | the outstanding unpaid indebtedness under a credit card | ||||||
16 | agreement, except as permitted in the following: | ||||||
17 | (1) Temporary rate exception. A financial institution | ||||||
18 | may increase a promotional interest rate upon the | ||||||
19 | expiration of a specified period of time of at least 6 | ||||||
20 | months, provided that prior to the commencement of that | ||||||
21 | period, the financial institution has disclosed to the | ||||||
22 | borrower the length of the period and the increased | ||||||
23 | interest rate that would apply after the expiration of the | ||||||
24 | period. | ||||||
25 | (2) Variable rate exception. A financial institution | ||||||
26 | may increase the interest rate of a variable rate credit |
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1 | card account, established in accordance with the | ||||||
2 | provisions of Section 5 of this Act, resulting from | ||||||
3 | increases in an index that is not under the financial | ||||||
4 | institution's control and is available to the general | ||||||
5 | public. | ||||||
6 | (3) Workout and temporary hardship exception. If an | ||||||
7 | interest rate is reduced pursuant to a workout or temporary | ||||||
8 | hardship arrangement, then the interest rate may be | ||||||
9 | increased to the interest rate in effect prior to the | ||||||
10 | reduction due to completion of the workout or temporary | ||||||
11 | hardship arrangement by the borrower or the failure of the | ||||||
12 | borrower to comply with the terms of the workout or | ||||||
13 | temporary hardship arrangement, provided the financial | ||||||
14 | institution has furnished the borrower with a clear and | ||||||
15 | conspicuous disclosure of the terms of the arrangement | ||||||
16 | prior to commencement of the arrangement. | ||||||
17 | (4) Delinquency exception. A financial institution may | ||||||
18 | increase the interest rate if the borrower's required | ||||||
19 | minimum payment has not been received by the financial | ||||||
20 | institution within 60 days after the due date for the | ||||||
21 | payment, provided that after the minimum payment is 60 days | ||||||
22 | delinquent a notice is furnished to the borrower 45 days | ||||||
23 | prior to the effective date of the increase stating the | ||||||
24 | reason for the increase and that the increase will | ||||||
25 | terminate not later than 6 months after the effective date | ||||||
26 | of the increase if the financial institution receives the |
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1 | required minimum payments on time during that 6 month | ||||||
2 | period. | ||||||
3 | (5) Servicemember's Civil Relief Act exception. If an | ||||||
4 | interest rate is decreased due to the provisions of 50 | ||||||
5 | U.S.C. App. 527 of the Servicemembers Civil Relief Act, | ||||||
6 | then the financial institution may increase the interest | ||||||
7 | rate once those provisions no longer apply, provided the | ||||||
8 | financial institution may not apply to any transactions | ||||||
9 | that occurred prior to the decrease an interest rate | ||||||
10 | greater than the interest rate applied prior to the | ||||||
11 | decrease. | ||||||
12 | (e) Universal default prohibited. A financial institution | ||||||
13 | may not impose an unfavorable change in the interest or other | ||||||
14 | charges on a credit card account which: (i) relates to a change | ||||||
15 | in the borrower's credit standing, (ii) does not affect all or | ||||||
16 | a substantial portion of a class of the creditor's accounts, | ||||||
17 | and (iii) does not relate to inactivity, default, or | ||||||
18 | delinquency on that credit card account. | ||||||
19 | (f) Any borrower who gives a timely notice under subsection | ||||||
20 | (c) of this Section rejecting an amendment to increase fees or | ||||||
21 | charges shall be permitted to pay the outstanding unpaid | ||||||
22 | indebtedness in the borrower's credit card account, in | ||||||
23 | accordance with the terms of the agreement governing the credit | ||||||
24 | card account without giving effect to the amendment. | ||||||
25 | (g) For purposes of this Section, the following shall not | ||||||
26 | be deemed an amendment that has the effect of increasing the |
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1 | interest to be paid by the borrower: | ||||||
2 | (1) a decrease in the required amount of periodic | ||||||
3 | installment payments; and | ||||||
4 | (2) a change from a daily periodic rate to a periodic | ||||||
5 | rate other than daily, or from a periodic rate other than | ||||||
6 | daily to a daily periodic rate, provided that there is no | ||||||
7 | resulting change in the annual percentage rate as | ||||||
8 | determined in accordance with the Truth-in-Lending Act and | ||||||
9 | regulations promulgated thereunder, as in effect from time | ||||||
10 | to time. | ||||||
11 | Section 10. The Credit Card Issuance Act is amended by | ||||||
12 | changing Section 7.2 as follows: | ||||||
13 | (815 ILCS 140/7.2) | ||||||
14 | Sec. 7.2. No credit card issuer shall issue, provide, | ||||||
15 | assign or deliver
in any way a credit card account to and in | ||||||
16 | the name of any person under the age
of 21 unless the person | ||||||
17 | has submitted a written application and the credit card issuer | ||||||
18 | has: | ||||||
19 | (1) financial information that the person has an | ||||||
20 | independent ability to make the required minimum periodic | ||||||
21 | payments on the proposed extension of credit; or | ||||||
22 | (2) financial information that a cosigner, guarantor, | ||||||
23 | or joint applicant who is at least 21 years old has an | ||||||
24 | independent ability to make the required minimum periodic |
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1 | payments on the proposed extension of credit, and a signed | ||||||
2 | agreement of the cosigner, guarantor, or joint applicant to | ||||||
3 | be either jointly liable for any debt on the account or | ||||||
4 | secondarily liable for any debt on the account incurred by | ||||||
5 | the person before the person has attained the age of 21 18
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6 | without the written approval of that person's parent or | ||||||
7 | legal guardian . | ||||||
8 | Upon delivery of a credit card account to and in the name | ||||||
9 | of any person under
the age of
18, the credit card issuer shall | ||||||
10 | also include a pamphlet which details the
responsible use of a | ||||||
11 | credit card, an explanation of applicable
credit limits, | ||||||
12 | payment requirements and the penalties for the misuse and
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13 | fraudulent use of a credit card. | ||||||
14 | A person under the age of 18 may be issued a credit card | ||||||
15 | account in that
person's name without
the written approval of a | ||||||
16 | parent or legal guardian if a person over the age of
18 agrees | ||||||
17 | to be a joint holder of the credit card account and accepts the
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18 | responsibility for any debt or cost associated with the credit | ||||||
19 | card. | ||||||
20 | This Section does not apply to a supplementary card issued | ||||||
21 | to a person under
the age of 21 18 that allows that person to | ||||||
22 | access a credit card account in the
name of a person over the | ||||||
23 | age of 21 18 if the person over the age of 21 18 requested
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24 | orally or in writing that the supplementary card be issued to | ||||||
25 | the person under
the age of 21 18 . | ||||||
26 | (Source: P.A. 88-348.)
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1 | Section 99. Effective date. This Act takes effect upon | ||||||
2 | becoming law.
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