97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB1219

 

Introduced 02/08/11, by Rep. Michael J. Zalewski

 

SYNOPSIS AS INTRODUCED:
 
See Index

    Amends the Collection Agency Act. Provides that in any action initiated by a debt buyer or debt collector to enforce the collection of a debt shall include (i) a copy of the contract or other writing evidencing the original debt, which must contain a signature of the defendant and (ii) a copy of the assignment or other writing establishing that the plaintiff is the owner of the debt. Provides that in any action brought by a debt buyer or debt collector to enforce the collection of a debt, the plaintiff shall affirmatively state in his or her complaint that the claim is within the statutory period of limitation for the cause of action. Permits that any aggrieved person may bring a civil action to enforce this Act for actual damages sustained by a person as a result of the defendant's failure to adhere to the provisions of this Act and an injunction prohibiting further violations. Provides that in an action brought by an individual, additional damages, as the court may allow, shall not exceed $5,000 per violation. Provides that in an action brought by class action, the court may allow the amount for each named plaintiff as could be recovered if the action was brought as an individual, and the amount as for all other class members, without regard to a minimum individual recovery, shall not exceed $1,000,000. Permits the recovery of attorney's fees and costs if the court finds an action was brought in bad faith and for the purposes of harassment. Provides guidelines for the court to consider in determining damages for a violation of this Act. Provides that a debt collector may not be held liable in any action if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error. Makes other changes.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB1219LRB097 06683 CEL 46769 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Collection Agency Act is amended by changing
5Sections 2 and 9 and by adding Sections 8b-1, 8b-2, and 14c as
6follows:
 
7    (225 ILCS 425/2)  (from Ch. 111, par. 2002)
8    (Section scheduled to be repealed on January 1, 2016)
9    Sec. 2. Definitions. In this Act:
10    "Consumer credit transaction" means a transaction between
11a natural person and another person in which property, service,
12or money is acquired on credit by that natural person from such
13other person primarily for personal, family, or household
14purposes.
15    "Consumer debt" or "consumer credit" means money,
16property, or their equivalent, due or owing or alleged to be
17due or owing from a natural person by reason of a consumer
18credit transaction.
19    "Creditor" means a person who extends consumer credit to a
20debtor.
21    "Debt" means money, property, or their equivalent which is
22due or owing or alleged to be due or owing from a natural
23person to another person.

 

 

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1    "Debt collection" means any act or practice in connection
2with the collection of consumer debts.
3    "Debt collector", "collection agency", or "agency" means
4any person who, in the ordinary course of business, regularly,
5on behalf of himself or herself or others, engages in debt
6collection.
7    "Debtor" means a natural person from whom a debt collector
8seeks to collect a consumer debt that is due and owing or
9alleged to be due and owing from such person.
10    "Department" means Division of Professional Regulation
11within the Department of Financial and Professional
12Regulation.
13    "Director" means the Director of the Division of
14Professional Regulation within the Department of Financial and
15Professional Regulation.
16    "Person" means a natural person, partnership, corporation,
17limited liability company, trust, estate, cooperative,
18association, or other similar entity.
19(Source: P.A. 95-437, eff. 1-1-08.)
 
20    (225 ILCS 425/8b-1 new)
21    Sec. 8b-1. Required attachments. In any action initiated by
22a debt buyer or debt collector to enforce the collection of a
23debt, the following materials shall be attached to the
24complaint:
25        (1) A copy of the contract or other writing evidencing

 

 

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1    the original debt, which must contain a signature of the
2    defendant. If a claim is based on credit card debt and no
3    signed writing is evident that the original debt ever
4    existed, then copies of documents generated when the credit
5    card was actually used to incur the debt must be attached.
6        (2) A copy of the assignment or other writing
7    establishing that the plaintiff is the owner of the debt.
8    If the debt has been assigned more than once, then each
9    assignment or other writing evidencing transfer of
10    ownership must be attached to establish an unbroken chain
11    of ownership. Each assignment or other writing evidencing
12    transfer of ownership must contain the original account
13    number of the debt purchased and must clearly show the
14    debtor's name associated with that account number.
 
15    (225 ILCS 425/8b-2 new)
16    Sec. 8b-2. Pleading timeliness. In any action brought by a
17debt buyer or debt collector to enforce the collection of a
18debt, the plaintiff shall affirmatively state in his or her
19complaint that the claim is within the statutory period of
20limitation for the cause of action.
 
21    (225 ILCS 425/9)  (from Ch. 111, par. 2012)
22    (Section scheduled to be repealed on January 1, 2016)
23    Sec. 9. (a) The Department may refuse to issue or renew, or
24may revoke, suspend, place on probation, reprimand or take

 

 

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1other disciplinary action as the Department may deem proper,
2including fines not to exceed $5,000 for a first violation and
3not to exceed $10,000 for a second or subsequent violation, for
4any one or any combination of the following causes:
5        (1) Violations of this Act or of the rules promulgated
6    hereunder.
7        (2) Conviction of the collection agency or the
8    principals of the agency of any crime under the laws of any
9    U.S. jurisdiction which is a felony, a misdemeanor an
10    essential element of which is dishonesty, or of any crime
11    which directly relates to the practice of the profession.
12        (3) Making any misrepresentation for the purpose of
13    obtaining a license or certificate.
14        (4) Habitual or excessive use or addiction to alcohol,
15    narcotics, stimulants or any other chemical agent or drug
16    which results in the inability to practice with reasonable
17    judgment, skill, or safety by any of the principals of a
18    collection agency.
19        (5) Discipline by another U.S. jurisdiction or foreign
20    nation, if at least one of the grounds for the discipline
21    is the same or substantially equivalent to those set forth
22    in this Act.
23        (6) A finding by the Department that the licensee,
24    after having his license placed on probationary status, has
25    violated the terms of probation.
26        (7) Practicing or attempting to practice under a name

 

 

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1    other than the name as shown on his or her license or any
2    other legally authorized name.
3        (8) A finding by the Federal Trade Commission that a
4    licensee violated the Federal Fair Debt and Collection Act
5    or its rules.
6        (9) Failure to file a return, or to pay the tax,
7    penalty or interest shown in a filed return, or to pay any
8    final assessment of tax, penalty or interest, as required
9    by any tax Act administered by the Illinois Department of
10    Revenue until such time as the requirements of any such tax
11    Act are satisfied.
12        (10) Using or threatening to use force or violence to
13    cause physical harm to a debtor, his family or his
14    property.
15        (11) Threatening to instigate an arrest or criminal
16    prosecution where no basis for a criminal complaint
17    lawfully exists.
18        (12) Threatening the seizure, attachment or sale of a
19    debtor's property where such action can only be taken
20    pursuant to court order without disclosing that prior court
21    proceedings are required.
22        (13) Disclosing or threatening to disclose information
23    adversely affecting a debtor's reputation for credit
24    worthiness with knowledge the information is false.
25        (14) Initiating or threatening to initiate
26    communication with a debtor's employer unless there has

 

 

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1    been a default of the payment of the obligation for at
2    least 30 days and at least 5 days prior written notice, to
3    the last known address of the debtor, of the intention to
4    communicate with the employer has been given to the
5    employee, except as expressly permitted by law or court
6    order.
7        (15) Communicating with the debtor or any member of the
8    debtor's family at such a time of day or night and with
9    such frequency as to constitute harassment of the debtor or
10    any member of the debtor's family. For purposes of this
11    Section the following conduct shall constitute harassment:
12            (A) Communicating with the debtor or any member of
13        his or her family in connection with the collection of
14        any debt without the prior consent of the debtor given
15        directly to the debt collector, or the express
16        permission of a court of competent jurisdiction, at any
17        unusual time or place or a time or place known or which
18        should be known to be inconvenient to the debtor. In
19        the absence of knowledge of circumstances to the
20        contrary, a debt collector shall assume that the
21        convenient time for communicating with a consumer is
22        after 8 o'clock a.m. and before 9 o'clock p.m. local
23        time at the debtor's location.
24            (B) The threat of publication or publication of a
25        list of consumers who allegedly refuse to pay debts,
26        except to a consumer reporting agency.

 

 

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1            (C) The threat of advertisement or advertisement
2        for sale of any debt to coerce payment of the debt.
3            (D) Causing a telephone to ring or engaging any
4        person in telephone conversation repeatedly or
5        continuously with intent to annoy, abuse, or harass any
6        person at the called number.
7        (16) Using profane, obscene or abusive language in
8    communicating with a debtor, his or her family or others.
9        (17) Disclosing or threatening to disclose information
10    relating to a debtor's indebtedness to any other person
11    except where such other person has a legitimate business
12    need for the information or except where such disclosure is
13    regulated by law.
14        (18) Disclosing or threatening to disclose information
15    concerning the existence of a debt which the debt collector
16    knows to be reasonably disputed by the debtor without
17    disclosing the fact that the debtor disputes the debt.
18        (19) Engaging in any conduct which the Director finds
19    was intended to cause and did cause mental or physical
20    illness to the debtor or his or her family.
21        (20) Attempting or threatening to enforce a right or
22    remedy with knowledge or reason to know that the right or
23    remedy does not exist.
24        (21) Failing to disclose to the debtor or his or her
25    family the corporate, partnership or proprietary name, or
26    other trade or business name, under which the debt

 

 

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1    collector is engaging in debt collections and which he or
2    she is legally authorized to use.
3        (22) Using any form of communication which simulates
4    legal or judicial process or which gives the appearance of
5    being authorized, issued or approved by a governmental
6    agency or official or by an attorney at law when it is not.
7        (23) Using any badge, uniform, or other indicia of any
8    governmental agency or official except as authorized by
9    law.
10        (24) Conducting business under any name or in any
11    manner which suggests or implies that a debt collector is
12    bonded if such collector is or is a branch of or is
13    affiliated with any governmental agency or court if such
14    collector is not.
15        (25) Failing to disclose, at the time of making any
16    demand for payment, the name of the person to whom the
17    claim is owed and at the request of the debtor, the address
18    where payment is to be made and the address of the person
19    to whom the claim is owed.
20        (26) Misrepresenting the amount of the claim or debt
21    alleged to be owed.
22        (27) Representing that an existing debt may be
23    increased by the addition of attorney's fees,
24    investigation fees or any other fees or charges when such
25    fees or charges may not legally be added to the existing
26    debt.

 

 

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1        (28) Representing that the debt collector is an
2    attorney at law or an agent for an attorney if he is not.
3        (29) Collecting or attempting to collect any interest
4    or other charge or fee in excess of the actual debt or
5    claim unless such interest or other charge or fee is
6    expressly authorized by the agreement creating the debt or
7    claim unless expressly authorized by law or unless in a
8    commercial transaction such interest or other charge or fee
9    is expressly authorized in a subsequent agreement. If a
10    contingency or hourly fee arrangement (i) is established
11    under an agreement between a collection agency and a
12    creditor to collect a debt and (ii) is paid by a debtor
13    pursuant to a contract between the debtor and the creditor,
14    then that fee arrangement does not violate this Section
15    unless the fee is unreasonable. The Department shall
16    determine what constitutes a reasonable collection fee.
17        (30) Communicating or threatening to communicate with
18    a debtor when the debt collector is informed in writing by
19    an attorney that the attorney represents the debtor
20    concerning the claim, unless authorized by the attorney. If
21    the attorney fails to respond within a reasonable period of
22    time, the collector may communicate with the debtor. The
23    collector may communicate with the debtor when the attorney
24    gives his consent.
25        (31) Engaging in dishonorable, unethical, or
26    unprofessional conduct of a character likely to deceive,

 

 

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1    defraud, or harm the public.
2        (32) Filing a false affidavit, including, but not
3    limited to, a false affidavit of service.
4    (b) The Department shall deny any license or renewal
5authorized by this Act to any person who has defaulted on an
6educational loan guaranteed by the Illinois State Scholarship
7Commission; however, the Department may issue a license or
8renewal if the person in default has established a satisfactory
9repayment record as determined by the Illinois State
10Scholarship Commission.
11    No debt collector while collecting or attempting to collect
12a debt shall engage in any of the Acts specified in this
13Section, each of which shall be unlawful practice.
14(Source: P.A. 94-414, eff. 12-31-05.)
 
15    (225 ILCS 425/14c new)
16    Sec. 14c. Violations; civil liability.
17    (a) Except as otherwise provided by this Section, any
18aggrieved person may bring a civil action to enforce this Act
19for:
20        (1) any actual damages sustained by a person as a
21    result of the defendant's failure to adhere to the
22    provisions of this Act; and
23        (2) an injunction prohibiting further violations.
24    In the case of any action by an individual, the court may
25allow additional damages, which may not exceed $5,000 per

 

 

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1violation.
2    In the case of a class action, the court may allow the
3amount for each named plaintiff as could be recovered if the
4action was brought as an individual, and the amount as for all
5other class members, without regard to a minimum individual
6recovery, shall not exceed $1,000,000.
7    In the case of any successful action to enforce this Act,
8the defendant or defendants may recover the costs of the
9action, together with reasonable attorney's fees as determined
10by the court. On a finding by the court that an action under
11this subsection (a) was brought in bad faith and for the
12purpose of harassment, the court may award to the defendant
13attorney's fees reasonable in relation to the work expended and
14costs.
15    (b) In determining damages for a violation of this Act, the
16court shall consider the following:
17        (1) in any individual action under subsection (a), the
18    frequency and persistence of noncompliance by the debt
19    buyer or collector, the nature of the noncompliance, and
20    the extent that the noncompliance was intentional; or
21        (2) in any class action under subsection (a), the
22    frequency and persistence of noncompliance by the debt
23    collector, the nature of the noncompliance, the resources
24    of the debt collector, the number of persons adversely
25    affected, and the extent that the debt collector's
26    noncompliance was intentional.

 

 

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1    (c) A debt collector may not be held liable in any action
2brought under this Section if the debt collector shows by a
3preponderance of evidence that the violation was not
4intentional and resulted from a bona fide error notwithstanding
5the maintenance of procedures reasonably adapted to avoid any
6such error.

 

 

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1 INDEX
2 Statutes amended in order of appearance
3    225 ILCS 425/2from Ch. 111, par. 2002
4    225 ILCS 425/8b-1 new
5    225 ILCS 425/8b-2 new
6    225 ILCS 425/9from Ch. 111, par. 2012
7    225 ILCS 425/14c new