SB3314 103RD GENERAL ASSEMBLY

LRB103 39360 SPS 69523 b

103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB3314

Introduced 2/7/2024, by Sen. Bill Cunningham

SYNOPSIS AS INTRODUCED:

815 ILCS 121/25
815 ILCS 121/30
815 ILCS 121/165

Amends the Consumer Legal Funding Act. Provides that, notwithstanding any other law, a consumer legal funding may be refinanced as authorized by rule. Provides that the Department of Financial and Professional Regulation shall publish first notice of a rule concerning the refinancing of consumer legal fundings in the Illinois Register in accordance with the Illinois Administrative Procedure Act within 120 days after the effective date of the amendatory Act. Authorizes the Department to adopt rules to permit the refinancing of consumer legal fundings. Makes conforming changes to contract disclosures.

A BILL FOR

AN ACT concerning business.

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

Section 5. The Consumer Legal Funding Act is amended by changing Sections 25, 30, and 165 as follows:

(815 ILCS 121/25)

Sec. 25. Fees.

(a) The fee charged by a consumer legal funding company to the consumer shall be calculated as not more than 18% of the funded amount, assessed on the outset of every 6 months.

(b) In addition, a consumer legal funding company may charge a document preparation fee not to exceed $75, which may be deducted from the funded amount. This fee is to be used to defray the ordinary cost of opening, administering, and terminating a consumer legal funding.

(c) A consumer legal funding company shall not collect any additional fees unless otherwise specified in this Act.

(d) No charges may accrue on a consumer legal funding for more than 42 months after the funding date of the consumer legal funding. No consumer legal funding may be refinanced except as authorized by rule. Notwithstanding the foregoing, a consumer legal funding company may assess charges on any additional amounts provided after the funding date for 42 months after the additional funding date.

(e) Notwithstanding any other law, a consumer legal funding may be refinanced as authorized by rule. The Department shall publish first notice of a rule concerning the refinancing of consumer legal fundings in the Illinois Register in accordance with the Illinois Administrative Procedure Act within 120 days after the effective date of this amendatory Act of the 103rd General Assembly.

(Source: P.A. 102-987, eff. 5-27-22.)

(815 ILCS 121/30)

Sec. 30. Disclosures. All consumer legal funding contracts shall contain the disclosures specified in this Section, which shall constitute material terms of the contract. Unless otherwise specified, the disclosures shall be typed in at least 12-point bold-type font and be placed clearly and conspicuously within the contract as follows:

(1) On the front page under appropriate headings, language specifying:

(A) the funded amount to be paid to the consumer or on the consumer's behalf by the consumer legal funding company;

(B) an itemization of charges;

(C) the maximum total amount to be paid by the consumer to the company, including the funded amount and all fees; and

(D) a payment schedule to include the resolution amount, listing dates, and the amount due at the end of each 6-month period from the funding date, until the date the maximum amount is due to the company by the consumer to satisfy the amount due pursuant to the contract.

(2) Pursuant to the provisions set forth in paragraph (2) of subsection (a) of Section 10, within the body of the contract: "CONSUMER'S RIGHT TO CANCELLATION: You may cancel this contract without penalty or further obligation within 14 business days after the funding date if you either:

(A) return to the consumer legal funding company the full amount of the funds disbursed to you or on your behalf by delivering the company's uncashed check to the company's office in person; or

(B) place in the mail, by mail service materially equivalent to United States Postal Service certified mail, addressed to the company at the address specified in the contract, a notice of cancellation and include in such mailing a return of the full amount of funds disbursed to you or on your behalf in the form of the company's uncashed check or a registered or certified check or money order."

(3) Within the body of the contract: "The consumer legal funding company shall have no role in deciding whether, when, and how much the legal claim is settled for, however, the consumer and consumer's attorney must notify the company of the outcome of the legal claim by settlement or adjudication before the resolution date. The company may seek updated information about the status of the legal claim but in no event shall the company interfere with the independent professional judgment of the attorney in the handling of the legal claim or any settlement thereof."

(4) Within the body of the contract, in all capital letters in at least 12-point bold-type font contained within a box: "THE FUNDED AMOUNT AND AGREED-UPON CHARGES SHALL BE PAID ONLY FROM THE PROCEEDS OF YOUR LEGAL CLAIM, AND SHALL BE PAID ONLY TO THE EXTENT THAT THERE ARE AVAILABLE PROCEEDS FROM YOUR LEGAL CLAIM. YOU WILL NOT OWE [INSERT NAME OF THE CONSUMER LEGAL FUNDING COMPANY] ANYTHING IF THERE ARE NO REMAINING PROCEEDS AVAILABLE FROM YOUR LEGAL CLAIM, UNLESS YOU OR YOUR ATTORNEY HAVE COMMITTED FRAUD AGAINST THE CONSUMER LEGAL FUNDING COMPANY. NOTWITHSTANDING ANYTHING TO THE CONTRARY, YOU MAY REFINANCE THE FUNDED AMOUNT AND AGREED UPON CHARGES AS AUTHORIZED BY RULE."

(5) Located immediately above the place on the contract where the consumer's signature is required, in 12-point font: "Do not sign this contract before you read it completely or if it contains any blank spaces. You are entitled to a completely filled-in copy of the contract. Before you sign this contract, you should obtain the advice of an attorney. Depending on the circumstances, you may want to consult a tax, public or private benefits planning, or financial professional. You acknowledge that your attorney in the legal claim has provided no tax, public or private benefit planning, or financial advice regarding this transaction."

(6) The consumer legal funding company shall provide the consumer with information on accessing a financial coaching program no later than the funding date.

(Source: P.A. 102-987, eff. 5-27-22.)

(815 ILCS 121/165)

Sec. 165. Rules of the Department.

(a) In addition to such powers as may be prescribed by this Act, the Department is hereby authorized and empowered to adopt rules consistent with the purposes of this Act, including, but not limited to:

(1) rules in connection with the activities of licensees or unlicensed consumer legal funding companies as may be necessary and appropriate for the protection of consumers in this State;

(2) rules as may be necessary and appropriate to define improper or fraudulent business practices in connection with the activities of licensees in servicing consumer legal fundings;

(3) rules that define the terms used in this Act and as may be necessary and appropriate to interpret and implement the provisions of this Act; and

(4) rules as may be necessary for the enforcement and administration of this Act; and .

(5) rules to permit the refinancing of consumer legal fundings.

(b) The Secretary is hereby authorized and empowered to make specific rulings, demands, and findings that he or she deems necessary for the proper conduct of the consumer legal funding company industry.

(Source: P.A. 102-987, eff. 5-27-22.)