093_HB2566

 
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 1        AN ACT concerning certain lending practices.

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

 4        Section  1.  Short  title.  This  Act may be cited as the
 5    Illinois Affordable Loan Act.

 6        Section 5.  Purpose;  construction.  This  Act  shall  be
 7    liberally construed to effectuate its purpose. The purpose of
 8    the  Act  is  to protect consumers who enter into short-term,
 9    high  rate  loans  from  abuses  that  occur  in  the  credit
10    marketplace when such lenders are unregulated. This Act is to
11    be  construed  as  a  consumer  protection  statute  for  all
12    purposes.

13        Section 10.  Definitions. As used in this Act:
14        "Check" means  a  negotiable  instrument  as  defined  in
15    Article  3 of the Uniform Commercial Code which is drawn on a
16    financial institution and is  to  be  payable  on  demand  at
17    maturity of the short-term or title-secured loan.
18        "Consumer"  means  any  natural  person  who,  singly  or
19    jointly  with another consumer, enters into a short-term loan
20    or title-secured loan.
21        "Department"   means   the   Department   of    Financial
22    Institutions.
23        "Director"  means  the  Director  of  the  Department  of
24    Financial Institutions.
25        "Local   government  authorization  form"  means  a  form
26    prescribed by the Director and signed by the clerk  or  chief
27    executive  officer of the county or municipality in which the
28    licensee is  to  be  located  certifying  that  the  licensed
29    location  complies  with  the zoning and all other applicable
30    county or municipal ordinances and regulations.
 
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 1        "Person" includes any natural person, firm,  partnership,
 2    association  or  corporation,  or  other  entity that makes a
 3    short-term loan or title-secured loan in this  State  or  any
 4    facilitator as described in subsection (b) of Section 15.
 5        "Short-term  loan"  means a loan payable in less than one
 6    year and includes any transaction via any  medium  including,
 7    but  not  limited  to,  mail,  telephone,  internet,  or at a
 8    location licensed under this Act in which:
 9             (1)  a person accepts a check dated on the  date  it
10        was  written  and  agrees to hold it for a period of days
11        prior to deposit or presentment, or accepts a check dated
12        subsequent to the date it was written, and agrees to hold
13        the check for deposit  until  the  date  written  on  the
14        check; or
15             (2)  a  person  accepts  authorization  to  debit  a
16        consumer's  bank  account  by  up  to  the amount of each
17        pledged check, executed on the date of the contract; or
18             (3)  a person  accepts  future  wages  by  the  wage
19        assignment executed on the contract
20        "Title-secured  loan"  means  a loan payable in less than
21    one year wherein, at commencement, a consumer provides to the
22    licensee at that time, as security  for  the  loan,  physical
23    possession of the obligor's title to a motor vehicle.

24        Section 15.  Applicability.
25        (a)  Except  as  otherwise provided in this Section, this
26    Act applies to any person, partnership, association,  limited
27    liability  company,  or corporation doing business who, for a
28    fee, service charge, or other  consideration  (1)  accepts  a
29    check  dated on the date it was written and agrees to hold it
30    for a period of days prior to  deposit  or  presentment,  (2)
31    accepts  a  check dated subsequent to the date it was written
32    and agrees to hold it for deposit until the date  written  on
33    the  check,  (3)  accepts authorization to debit a consumer's
 
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 1    bank account by up to  the  amount  of  each  pledged  check,
 2    executed  on  the  date  of  the contract, (4) accepts future
 3    wages by the wage assignment executed on the contract, or (5)
 4    accepts physical possession of  the  consumer's  title  to  a
 5    motor vehicle.
 6        (b)  This  Act  applies  to  any  person who facilitates,
 7    enables, or acts as a conduit for another person, who  is  or
 8    may  be  exempt from licensing, who makes short-term loans or
 9    title-secured loans.
10        (c)  The provisions of this Act apply to any  person  who
11    seeks  to  evade its applicability by any device, subterfuge,
12    or pretense whatsoever.

13        Section 20.  Exceptions.
14        (a)  Retail sellers who  cash  checks  incidental  to  or
15    independent  of  a  sale  and  who charge no more than $2 per
16    check for the service are exempt from the provisions of  this
17    Act.
18        (b)  To   the   extent   that  banks,  savings  and  loan
19    associations, credit unions,  or  other  state  or  federally
20    regulated  financial  institutions  are  exempt  by virtue of
21    other state or federal laws from the provisions of  this  Act
22    regarding  limitations  on interest rates, all other Sections
23    of this Act apply except Section 25.

24        Section 25.  Licensing.
25        (a)  A license shall state the  address,  including  city
26    and state, at which the business is to be conducted and shall
27    state  fully  the  name of the licensee. The license shall be
28    conspicuously posted in the place of business of the licensee
29    and shall not be transferable or assignable.
30        (b)  An application for license shall be in  writing  and
31    in  a form prescribed by the Director. No person shall engage
32    in or offer to engage in the business regulated by  this  Act
 
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 1    unless  and  until a license has been issued by the Director.
 2    The Director shall not issue or renew any such license unless
 3    and until the following findings are made:
 4             (1)  that authorizing the  applicant  to  engage  in
 5        such  business will promote the convenience and advantage
 6        of the community  in  which  the  applicant  proposes  to
 7        engage in business;
 8             (2)  that  the financial responsibility, experience,
 9        character, and general fitness of the applicant are  such
10        as to command the confidence of the public and to warrant
11        the  belief  that  the business will be operated lawfully
12        and fairly, and within the  provisions  and  purposes  of
13        this Act;
14             (3)  that neither the applicant or any principals of
15        the  applicant  including managers of a limited liability
16        company, partners, owners, officers,  or  directors  have
17        been convicted of any crimes;
18             (4)  that  the  applicant has unencumbered assets of
19        at least $25,000, per location;
20             (5)  that  the  applicant  has  provided   a   sworn
21        statement that the applicant has not used in the past nor
22        will  in  the  future,  directly  or  indirectly, use the
23        criminal process to collect  the  payment  of  short-term
24        loans;
25             (6)  that the location has conformed to local zoning
26        laws  with respect to location, structural, aesthetic, or
27        other requirements;
28             (7)  that the licensee  has  submitted  a  completed
29        local government authorization form; and
30             (8)  such other information as the Director may deem
31        necessary.
32        (c)  No license shall be issued for longer than one year,
33    and no renewal of a license may be provided if a licensee has
34    violated this Act.
 
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 1        (d)  A  licensee  shall appoint, in writing, the Director
 2    as attorney-in-fact upon whom all lawful process against  the
 3    licensee may be served with the same legal force and validity
 4    as  if  served  on  the  licensee.  A  copy  of  the  written
 5    appointment,  duly certified, shall be filed in the office of
 6    the Director; and a copy thereof certified  by  the  Director
 7    shall  be  sufficient evidence. This appointment shall remain
 8    in effect while any liability  remains  outstanding  in  this
 9    State  against  the licensee. When summons is served upon the
10    Director as attorney-in-fact for  a  licensee,  the  Director
11    shall  immediately  notify  the  licensee by registered mail,
12    enclosing the summons and specifying  the  hour  and  day  of
13    service.
14        (e)  A  public  hearing  shall  be held for each original
15    application and for renewals if one is requested  in  writing
16    by 5 or more members of the public or the Director.
17        (f)  A licensee must post a bond in the amount of $50,000
18    per  location which must continue in effect for 5 years after
19    the licensee ceases operation in this State. The bond must be
20    available to pay damages and penalties to consumers harmed by
21    any violation of this Act.
22        (g)  A licensee must pay an application fee of  $300  and
23    an  annual  fee  of $300. In addition to the license fee, the
24    reasonable expense  of  any  examination,  investigation,  or
25    custody  by  the  Director  under  any provisions of this Act
26    shall be borne by the licensee. If a licensee fails to  renew
27    his  or  her  license  by December 31, it shall automatically
28    expire and the licensee shall not be entitled to  a  hearing;
29    however,   the  Director,  in  his  or  her  discretion,  may
30    reinstate an expired  license  upon  payment  of  the  annual
31    renewal fee and proof of good cause for failure to renew.
32        (h)  Not  more  than  one  place  of  business  shall  be
33    maintained under the same license, but the Director may issue
34    more  than  one  license to the same licensee upon compliance
 
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 1    with all the provisions of this Act governing issuance  of  a
 2    single  license.  The location cannot be within one mile of a
 3    facility  operated  by  an  inter-track   wagering   location
 4    licensee  or  an organization license subject to the Illinois
 5    Horse Racing Act of 1975, within one mile of  a  facility  at
 6    which gambling is conducted under the Riverboat Gambling Act,
 7    within  one mile of the location at which a riverboat subject
 8    to the Riverboat Gambling Act docks, or within  one  mile  of
 9    the  main  or branch campus of a public or private college or
10    university  that  provides   student   housing   or   student
11    residences.
12        (i)  No  licensee  shall  conduct  the business of making
13    loans under this Act with any office, suite , room, or  place
14    of  business  in  which  any  other  business is solicited or
15    engaged in unless in the opinion of the Director,  the  other
16    business  would  not  be  contrary  to  the best interests of
17    consumers and is authorized by the Director in writing.
18        (j)  If the Director finds, after due notice and hearing,
19    or opportunity for hearing, that a licensee, or  an  officer,
20    agent,  employee, or representative thereof, has violated any
21    of the provisions of this Act, has failed to comply with  the
22    rules,  instructions,  or orders promulgated by the Director,
23    has failed or refused to make its reports to the Director, or
24    has furnished false information to the Director, the Director
25    may issue an order revoking or suspending the  right  of  the
26    licensee  and the officer, agent, employee, or representative
27    to do business in this State as a  licensee.  No  revocation,
28    suspension,  or  surrender  of  any license shall relieve the
29    licensee from civil or criminal liability for acts  committed
30    prior to the revocation, suspension, or surrender.
31        (k)  The Director shall maintain a list of licensees that
32    shall  be available to interested persons and the public. The
33    Director shall create a toll-free  number  whereby  consumers
34    may  obtain  information  about licensees. The Director shall
 
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 1    also establish  a  complaint  process  whereby  an  aggrieved
 2    consumer  or  any  member  of the public may file a complaint
 3    against a licensee or non-licensee who violates any provision
 4    of this Act.  The  Director  shall  hold  hearings  upon  the
 5    request  of  a party to the complaint, make findings of fact,
 6    conclusions of law, issue cease and desist orders, refer  the
 7    matter   to   the  appropriate  law  enforcement  agency  for
 8    prosecution under this Act, and suspend or revoke  a  license
 9    granted  under this Act. All proceedings shall be open to the
10    public.
11        (l)  The Department may make and enforce such  reasonable
12    rules,   regulations,   directions,  orders,  decisions,  and
13    findings as the execution and enforcement of  the  provisions
14    of  this  Act require, and as are not inconsistent therewith.
15    In  addition,  the  Department  may   promulgate   rules   in
16    connection   with   the  activities  of  licensees  that  are
17    necessary and appropriate for the protection of consumers  in
18    this  State.  All rules and directions of a general character
19    shall be printed and copies thereof mailed to all licensees.

20        Section 30.  Information and reporting.
21        (a)  A licensee shall keep and use books,  accounts,  and
22    records  that  will  enable  the Director to determine if the
23    licensee is complying with the provisions  of  this  Act  and
24    maintain  any  other records as required by the Director. The
25    Director, or designee, is authorized to examine those records
26    at  any  reasonable  time.  The  Director   shall   make   an
27    examination  of the affairs, business, office, and records of
28    each licensee at least once a year. All records must be  kept
29    for  4 years following the last entry on a loan and according
30    to generally accepted accounting procedures, which means that
31    an examiner must be able to review  the  record  keeping  and
32    reconcile each consumer loan with documentation maintained in
33    the  consumer's  loan  file  records. The Director may at any
 
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 1    time investigate the  loans  and  business  and  examine  the
 2    books,  accounts,  records,  and files used therein, of every
 3    licensee  and  of  every  person,  partnership,  association,
 4    limited liability company, and  corporation  engaged  in  the
 5    business   described   in   this  Act,  whether  the  person,
 6    partnership,  association,  limited  liability  company,   or
 7    corporation  shall  act or claim to act as principal or agent
 8    or within or without the authority  of  this  Act.  For  such
 9    purpose  the  Director  shall have free access to the offices
10    and places of business,  books,  accounts,  papers,  records,
11    files,  safes,  and  vaults  of  such  persons, partnerships,
12    associations, limited liability companies, and  corporations.
13    The  Director may require the attendance of and examine under
14    oath all persons  whose  testimony  he  or  she  may  require
15    relative  to  such  loans or such business, and in such cases
16    the Director shall have power  to  administer  oaths  to  all
17    persons  called  as  witnesses;  and the Director may conduct
18    such examinations.
19        (b)  A licensee shall collect information  annually  that
20    shall disclose in detail and under appropriate headings:
21             (1)  the  resources,  assets, and liabilities of the
22        licensee at the beginning and the end of the period;
23             (2)  the  income,  expense,  gain,   loss,   and   a
24        reconciliation  of  surplus or net worth with the balance
25        sheets, and the ratios  of  the  profits  to  the  assets
26        reported;
27             (3)  the  total  number  of short-term loans made in
28        the calendar  year  ending  as  of  December  31  of  the
29        previous year;
30             (4)  the  total  number of such loans outstanding as
31        of December 31 of the previous year;
32             (5)  the minimum, maximum, and average dollar amount
33        of checks whose deposits were deferred  in  the  calendar
34        year ending as of December 31 of the previous year;
 
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 1             (6)  the  average  annual  percentage  rate  and the
 2        average number of days a deposit of a check  is  deferred
 3        during  the calendar year ending as of December 31 of the
 4        previous year;
 5             (7)  the total of  returned  checks,  the  total  of
 6        checks  recovered,  and  the  total of checks charged off
 7        during the calendar year ending as of December 31 of  the
 8        previous year;
 9             (8)  the  total  number  of  loans  made  that  were
10        secured by the title to a motor vehicle;
11             (9)  the  total number of vehicle repossessions as a
12        result of default on a loan secured by a title to a motor
13        vehicle; and
14             (10)  verification that the licensee  has  not  used
15        the criminal process or caused the criminal process to be
16        used in the collection of any short-term or title-secured
17        loans  during  the calendar year ending as of December 31
18        of the previous year.
19        The reports shall be verified by the oath or  affirmation
20    of  the  owner,  manager,  or  president of the licensee. The
21    reports must be filed with the Director no later than January
22    31. The Director may fine each  licensee  $25  for  each  day
23    beyond January 31 the report is filed.
24        (c)  If  a  licensee  conducts  another  business  or  is
25    affiliated  with  other  licensees  under this Act, or if any
26    other situation exits under which allocations of expense  are
27    necessary,  the  licensee shall make the allocation according
28    to  appropriate  and  reasonable  accounting  principles   as
29    approved  by  the  Director. Information about other business
30    conducted on the same premises as that of short-term loans or
31    title-secured loans shall be  provided  as  required  by  the
32    Director.
33        (d)  A  licensee  shall  file  a  copy  of  the  contract
34    described  in  subsection  (b)  of  Section  40  and  the fee
 
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 1    schedule described in subsection (c) of Section 40  with  the
 2    Director  prior  to  the  date of commencement of business at
 3    each location, at the  time  any  changes  are  made  to  the
 4    documents  or  schedule, and annually thereafter upon renewal
 5    of license. These documents shall be available to  interested
 6    parties and to the general public.

 7        Section 35.  Required act.
 8        (a)  A  short-term  loan  must  have a minimum term of no
 9    less than 2 weeks for each $100  owed  on  the  loan  with  a
10    maximum of 8 weeks.
11        (b)  A  consumer  shall  be  permitted  to  make  partial
12    payments  (in amounts equal to no less than $5 increments) on
13    the loan at any time, without charge.
14        (c)  A  consumer  may  rescind  a  short-term   loan   or
15    title-secured  loan  agreement without cost no later than the
16    end of the business day  immediately  following  the  day  on
17    which  the  loan  was  made.  To  rescind  the  short-term or
18    title-secured loan, the consumer must inform the lender  that
19    the  consumer wants to rescind the loan and return cash in an
20    amount equal to the amount loaned  pursuant  to  the  written
21    agreement.
22        (d)  The  maximum  amount of the loan may not exceed $400
23    for a short-term loan and $2000 for a title-secured loan. The
24    minimum amount of a short-term loan or title-secured loan  is
25    $50.
26        (e)  After  each  payment made in full or in part, on any
27    loan, the licensee shall  give  to  the  person  making  such
28    payment  a  signed, dated receipt showing the amount paid and
29    the balance due on the loan.
30        (f)  The check written by the consumer  in  a  short-term
31    loan must be made payable to the licensee.
32        (g)  Upon  receipt  of  the check from the consumer for a
33    short-term  or  title-secured   loan,   the   licensee   must
 
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 1    immediately  stamp  the back of the check with an endorsement
 2    that states: "This check is being negotiated  as  part  of  a
 3    short-term loan pursuant to the Illinois Affordable Loan Act,
 4    and  any  holder of this check takes it subject to all claims
 5    and defenses of the maker.".
 6        (h)  A  facilitator  is  subject  to  enforcement   under
 7    Section  25 and the civil remedies provision of Section 65 if
 8    the person making the short-term loan fails  to  comply  with
 9    the requirements of this Act.
10        (i)  The  licensee  must  provide  the  consumer, or each
11    consumer if there is more than one, with a copy of  the  loan
12    documents  described  in Section 40 prior to the consummation
13    of the loan.
14        (j)  The holder or assignee of any  check  written  by  a
15    consumer  in  connection  with  a  short-term  loan takes the
16    instrument  subject  to  all  claims  and  defenses  of   the
17    consumer.

18        Section 40.  Required disclosures.
19        (a)  Before   entering   into   a   short-term   loan  or
20    title-secured loan, a licensee shall deliver to the  consumer
21    a pamphlet prepared by the Director which explains, in simple
22    English  and  Spanish,  all  of  the  consumer's  rights  and
23    responsibilities   in  a  short-term  or  title-secured  loan
24    transaction, includes a toll-free number  to  the  Director's
25    office  to  handle  concerns  or complaints by consumers, and
26    informs consumers that  the  Director's  office  can  provide
27    information  about  whether  a  lender  is  licensed, whether
28    complaints  have  been  filed  with  the  Director,  and  the
29    resolution of those complaints.
30        (b)  Licensees shall provide  consumers  with  a  written
31    agreement  on  a  form  specified or approved by the Director
32    that can be kept  by  the  consumer,  and  must  include  the
33    following information in English and in the language in which
 
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 1    the loan was negotiated:
 2             (1)  the  name,  address,  telephone  number  of the
 3        licensee making  the  short-term  loan  or  title-secured
 4        loan,  and  the name and title of the individual employee
 5        who signs the agreement on behalf of the licensee;
 6             (2)  an itemization of the fees and interest charges
 7        to be paid by the consumer;
 8             (3)  disclosures required by the  federal  Truth  in
 9        Lending Act;
10             (4)  disclosures required under any other State law;
11             (5)  a  clear  description of the consumer's payment
12        obligations under the loan;
13             (6)  a notice that the licensee may take  possession
14        of  a vehicle used to secure a loan if the borrower fails
15        to repay the loan and that the borrower shall be entitled
16        to any proceeds from the sale of the vehicle in excess of
17        the amount owed on the loan; and
18             (7)  the statement, in at least 14-point  bold  type
19        face, that "You cannot be prosecuted in criminal court to
20        collect this loan.".
21        The  information  required  to  be  disclosed  under this
22    subsection must  be  disclosed  in  a  manner  that  is  more
23    conspicuous  than  the other information provided in the loan
24    document and  shall  be  located  immediately  preceding  the
25    signature of the consumer.
26        (d)  The  following  notices  in  English and Spanish, as
27    well as other languages in  which  a  significant  amount  of
28    short-term  loan or title-secured loan business is conducted,
29    must be conspicuously posted by a licensee in  each  location
30    of  a  business  providing  short-term loans or title-secured
31    loans:
32             (1)  A  notice  that  informs  consumers  that   the
33        licensee  cannot  use  the  criminal  process  against  a
34        consumer  to collect any short-term loan or title-secured
 
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 1        loan.
 2             (2)  The schedule of all interest  and  fees  to  be
 3        charged  on  loans  with  an  example of the amounts that
 4        would be charged on a $100 loan payable in 14  days,  and
 5        $200  loan  payable  in 30 days, giving the corresponding
 6        annual percentage rate.
 7        (e)  Financial institutions making  short-term  loans  or
 8    title-secured  loans,  which,  because  of the application of
 9    other  state  or  federal  law,  are  exempt  from  the   fee
10    limitations of Section 45 of this Act, and which charge fees,
11    interest, and charges greater than that authorized in Section
12    45  of  this  Act,  must  post, in a conspicuous place in the
13    branch in which the short-term loans or  title-secured  loans
14    are  entered into, the notice set forth in this subsection. A
15    single instance of charging a consumer more  than  the  fees,
16    interest,  and other charges permitted in Section 45 requires
17    the financial institution to post this notice.
18    "WARNING: The fees and interest charged on  short-term  loans
19    or  title-secured  loans  made at this institution are higher
20    than those charged at other financial institutions."

21        Section 45.  Advertising.
22        (a)  Advertising for loans transacted under this Act  may
23    not  be false, misleading, or deceptive. That advertising, if
24    it states a rate or amount of charge for a loan,  must  state
25    the  rate  as  an  annual  percentage  rate.  No licensee may
26    advertise in any manner so as to indicate or imply  that  its
27    interest   rates   or  charges  for  loans  are  in  any  way
28    "recommended", "approved",  "set"  or  "established"  by  the
29    State government or by this Act.
30        (b)  If  any  advertisement to which this Section applies
31    states the amount of  any  installment  payment,  the  dollar
32    amount  of  any finance charge, or the number of installments
33    or the period of  repayment,  then  the  advertisement  shall
 
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 1    state all of the following items:
 2             (1)  The amount of the loan.
 3             (2)  The  number, amount, and due dates or period of
 4        payments scheduled  to  repay  the  indebtedness  if  the
 5        credit is extended.
 6             (3)  The  rate of the finance charge expressed as an
 7        annual percentage rate.

 8        Section 50.  Incentives. A licensee may not pay money  or
 9    any  other  thing  of  value to any person as an incentive or
10    inducement to apply for a loan, to borrow money, or to  refer
11    potential borrowers to the licensee.

12        Section 55.  Permitted charges.
13        (a)  No  licensee  shall  charge  or receive, directly or
14    indirectly, any  interest,  fees,  or  charges  except  those
15    specifically authorized by this Section.
16        (b)  A  licensee may charge a one time administrative fee
17    of no more than $5 for each short-term loan entered into with
18    a consumer. The administrative fee may not  be  imposed  upon
19    refinancing of an existing short-term loan.
20        (c)  In  addition to the administrative fee, the licensee
21    may charge interest on the amount of cash  delivered  to  the
22    consumer  in  a  short-term loan in an amount no greater than
23    36% per year (defined as a 365-day year). The rate charged on
24    the outstanding balance after maturity  may  not  be  greater
25    than  the rate charged during the loan term. Charges on loans
26    shall be computed and paid only as a percentage of the unpaid
27    principle balance. Principal balance means  the  balance  due
28    and owed exclusive of any interest, service charges, or other
29    loan-related charges.
30        (d)  If  there  are  insufficient funds to pay a check on
31    the date of presentment, a licensee may charge a fee, not  to
32    exceed the lesser of $15 or the fee imposed upon the licensee
 
                            -15-     LRB093 04048 JLS 04087 b
 1    by  the  financial  institution.  Only  one  such  fee may be
 2    collected with respect to a particular check even if  it  has
 3    been  redeposited and returned more than once. A licensee may
 4    only present the check  for  payment  twice.  A  fee  charged
 5    pursuant  to this subsection is a licensee's exclusive charge
 6    for late payment.
 7        (e)  When a loan is repaid before its due date,  unearned
 8    interest  charges  must be rebated to the consumer based on a
 9    method at least as favorable to the consumer as the actuarial
10    method.

11        Section  60.  Prohibited   acts.   No   licensee   making
12    short-term loans or title-secured loans shall commit, or have
13    committed  on  behalf  of  the licensee, any of the following
14    prohibitions:
15             (1)  Engaging in the business of short-term  lending
16        or  title-secured  lending, unless the Director has first
17        issued a valid license.
18             (2)  Threatening  to  use  or  using  the   criminal
19        process  in  this  or  any  other state to collect on the
20        loan.
21             (3)  Altering the date or any other information on a
22        check.
23             (4)  Using any device or agreement that  would  have
24        the  effect of charging or collecting more fees, charges,
25        or interest than allowed by this Act including,  but  not
26        limited to, entering into a different type of transaction
27        with the consumer.
28             (5)  Engaging  in  unfair,  deceptive, or fraudulent
29        practices in the making or collecting of a short-term  or
30        title-secured loan.
31             (6)  Entering  into  a  short-term  or title-secured
32        loan where the loan amount exceeds 25% of the  consumer's
33        gross income for the term of the loan.
 
                            -16-     LRB093 04048 JLS 04087 b
 1             (7)  Charging  to  cash  a  check  representing  the
 2        proceeds of the short-term or title-secured loan.
 3             (8)  Using  or  attempting to use the check provided
 4        by the consumer in a  short-term  loan  as  security  for
 5        purposes of any State or federal law.
 6             (9)  Accepting  payment  in  whole or in part of the
 7        short-term  loan  through   the   proceeds   of   another
 8        short-term loan provided by any licensee
 9             (10)  A  short-term  or  title-secured  loan  may be
10        refinanced a maximum number of two times, but  only  when
11        the  principal outstanding balance has been reduced by at
12        least 20%.
13             (11)  Upon termination of a  deferred  deposit  loan
14        through the payment of the consumer's check by the drawee
15        bank,  the return of a check to a consumer who redeems it
16        for consideration, or any other method of termination, no
17        loan,  other  than  the  refinancing   of   an   existing
18        short-term  or  title-secured  loan,  may  be  made to an
19        obligor  who  has  had  an  outstanding   short-term   or
20        title-secured  loan  with  the  preceding  15  days.  The
21        licensee  shall  verify the statement by using a database
22        created by or approved by the Director for that  purpose,
23        or  if  no  such  database  exists,  by  using  available
24        information bases.
25             (12)  Accepting  any  collateral  for  a  short-term
26        loan.
27             (13)  Charging  any interest, fees, or charges other
28        than  those  specifically   authorized   by   this   Act,
29        including, but not limited to:
30                  (A)  charges for insurance; or
31                  (B)  attorneys fees or other collection costs.
32             (14)  Threatening  to  take  any  action  against  a
33        consumer  that  is  prohibited by this Act, or making any
34        misleading  or   deceptive   statements   regarding   the
 
                            -17-     LRB093 04048 JLS 04087 b
 1        short-term  or  title-secured  loan  or  any consequences
 2        thereof.
 3             (15)  Making a misrepresentation of a material  fact
 4        by  an  applicant  in obtaining or attempting to obtain a
 5        license.
 6             (16)  Including any of the following  provisions  in
 7        loan documents required by subsection (b) of Section 40:
 8                  (A)  a hold harmless clause;
 9                  (B)  a confession of judgment clause;
10                  (C)  a  waiver of the right to a jury trial, if
11             applicable, in any action brought by  or  against  a
12             consumer;
13                  (D)  a mandatory arbitration clause;
14                  (E)  any  assignment of or order for payment of
15             wages or other compensation for services;
16                  (F)  a provision in which the  consumer  agrees
17             not  to  assert  any claim or defense arising out of
18             the contract; or
19                  (G)  a waiver of any provision of this Act.
20             (17)  Selling any insurance of any kind  whether  or
21        not sold in connection with the making or collecting of a
22        short-term or title-secured loan.
23             (18)  The   provisions   of  Section  17-1a  of  the
24        Criminal Code of 1961 do  not  apply  to  any  negotiable
25        instrument used under this Act.
26             (19)  No licensee may take any power of attorney.
27             (20)  No  licensee may take any security interest in
28        real estate.
29             (21)  No  licensee  may  collect  a  delinquency  or
30        collection charge on any installment  regardless  of  the
31        period in during which it remains in default.
32             (22)  No  licensee  or  other  person  shall pledge,
33        hypothecate, or  sell  a  note  entered  into  under  the
34        provisions  of  this  Act by an obligor except to another
 
                            -18-     LRB093 04048 JLS 04087 b
 1        licensee under this  Act,  a  licensee  under  the  Sales
 2        Finance  Agency  Act,  a  bank, savings bank, savings and
 3        loan association, or credit union created under the  laws
 4        of  this  State or the United States, or to other persons
 5        or entities authorized by the Director in writing.  Sales
 6        of  such  notes  by  licensees  under  this  Act or other
 7        persons shall be made by agreement in writing  and  shall
 8        authorize  the  Director to examine the loan documents so
 9        hypothecated, pledged, or sold.
10             (23)  When a licensee repossesses  a  motor  vehicle
11        that  was  used as collateral and which is used primarily
12        for  the  obligor's  personal,   family,   or   household
13        purposes,   the   licensee   shall   be  subject  to  the
14        requirements of and shall  transfer  the  certificate  of
15        title  pursuant  to Section 3-114 of the Illinois Vehicle
16        Code.
17             (24)  No licensee may take possession of  a  vehicle
18        without  first  giving  written  notice  by  regular  and
19        certified  mail  to  the borrower; affording the borrower
20        the opportunity to make  the  vehicle  available  to  the
21        lender  at  a place, date, and time reasonably convenient
22        to the lender and borrower; and permitting  the  borrower
23        to  remove  from  the  vehicle  any  personal  belongings
24        without charge or additional cost to the borrower.
25             (25)  No licensee may dispose of the vehicle without
26        first  giving  at  least  10  days  written notice to the
27        borrower prior to the sale and the opportunity  to  cure.
28        The  notice  shall state the date, time, and place of the
29        sale and provide the borrower with a  written  accounting
30        of  the  amount  owed  on the loan. A loan contract shall
31        advise the borrower that matters involving  improprieties
32        in the making of the loan or in loan collecting practices
33        may  be  referred to the Department and shall prominently
34        disclose the Department's address and telephone number.
 
                            -19-     LRB093 04048 JLS 04087 b
 1             (26)  No licensee may take possession of  a  vehicle
 2        for  a  loan  default  and  lease the vehicle back to the
 3        borrower.
 4             (27)  No licensee may use any appraisal to secure  a
 5        loan  other  than  the vehicle's Kelly Blue Book Used Car
 6        Guide value.

 7        Section 65.  Enforcement.
 8        (a)  The remedies  provided  herein  are  cumulative  and
 9    apply  to  licensees  and unlicensed persons to whom this Act
10    applies and who failed to obtain a license:
11             (1)  Any violation  of  any  State  law  prohibiting
12        unfair   or   deceptive  trade  practices  constitutes  a
13        violation of this Act.
14             (2)  Any  violation  of  this  Act   constitutes   a
15        violation   of   any  State  law  prohibiting  unfair  or
16        deceptive trade practices.
17             (3)  The violation of any provision of this Act,  or
18        any  order,  decision, finding, rule, or direction of the
19        Director lawfully made pursuant to the authority of  this
20        Act,  except  as  the  result  of accidental or bona fide
21        error of computation, renders  the  loan  void,  and  the
22        person shall have no right to collect, receive, or retain
23        any principal, interest, or other charges whatsoever with
24        respect to the loan.
25             (4)  Any  person  found  to  have  violated this Act
26        shall   be   liable   to   the   consumer   for   actual,
27        consequential,  and  punitive  damages,  plus   statutory
28        damages  of  $1000 for each violation (to be increased by
29        the Director  to  reflect  inflation),  plus  costs,  and
30        attorneys  fees.  The Directory may, after 10 days notice
31        by registered mail to the licensee  at  the  address  set
32        forth in the license, stating the contemplated action and
33        in  general  the  grounds therefor, revoke or suspend any
 
                            -20-     LRB093 04048 JLS 04087 b
 1        license issued under this Act.  The  Director  may  fine,
 2        suspend,  or  revoke  only  the  particular  license with
 3        respect to which grounds for  the  fine,  revocation,  or
 4        suspension occur or exist, but if the Director shall find
 5        that grounds for revocation are of general application to
 6        all  offices  or to more than one office of the licensee,
 7        the Director shall fine, suspend, or revoke every license
 8        to which such grounds apply.
 9             (5)  A consumer may sue  for  injunctive  and  other
10        appropriate  equitable  relief  to  stop  any person from
11        violating any provisions of this Act.
12             (6)  The remedies provided in this Section  are  not
13        intended  to  be  the  exclusive  remedies available to a
14        consumer nor must the consumer exhaust any administrative
15        remedies provided under this Act or any other  applicable
16        law.
17             (7)  An order assessing a fine, an order revoking or
18        suspending  a  license,  or an order denying renewal of a
19        license shall take  effect  upon  service  of  the  order
20        unless  the licensee requests, in writing, within 10 days
21        after the date of service, a  hearing.  In  the  event  a
22        hearing  is  requested, the order shall be stayed until a
23        final administrative order is entered.
24             (8)  If  the  licensee  requests  a   hearing,   the
25        Director  shall  schedule  a hearing within 30 days after
26        the request for a hearing unless otherwise agreed  to  by
27        the  parties.  The  hearing shall be held at the time and
28        place designated by the Director. The  Director  and  any
29        administrative  law  judge designated by him or her shall
30        have the power  to  administer  oaths  and  affirmations,
31        subpoena  witnesses  and  compel  their  attendance, take
32        evidence, and require the production  of  books,  papers,
33        correspondence,  and other records or information that he
34        or she considers relevant or material to the inquiry. The
 
                            -21-     LRB093 04048 JLS 04087 b
 1        costs for the administrative  hearing  shall  be  set  by
 2        rule.  The Director shall have the authority to prescribe
 3        rules for the administration of this Section.
 4        (b)  Any  person,  including   members,   officers,   and
 5    directors  of  the  person who knowingly violates this Act is
 6    guilty of a misdemeanor and, on conviction, is subject  to  a
 7    fine  not  exceeding $1,000 or is subject to imprisonment not
 8    exceeding 6 months, or both.

 9        Section 70.  Closing of business; surrender  of  license.
10    At  least 10 days before a licensee ceases operations, closes
11    the business, or files for bankruptcy, the licensee shall:
12             (1)  Notify the Department of its action in writing.
13             (2)  With the exception of  filing  for  bankruptcy,
14        surrender  its  license to the Director for cancellation.
15        The  surrender  of  the  license  shall  not  affect  the
16        licensee's civil or criminal liability for acts committed
17        prior to surrender or entitle the licensee to a return of
18        any part of the annual license fee.
19             (3)  The licensee shall notify the Department of the
20        location  where  the  books,  accounts,  contracts,   and
21        records  will  be  maintained and the procedure to ensure
22        prompt return of contracts, titles, and releases  to  the
23        customers.
24             (4)  The  accounts,  books,  records,  and contracts
25        shall be maintained and serviced by the licensee, another
26        licensee  under  this  Act,  or  an  entity  exempt  from
27        licensing under this Act.
28             (5)  The Department  shall  have  the  authority  to
29        conduct  examinations  of  the  books,  records, and loan
30        documents at any time after  surrender  of  the  license,
31        filing of bankruptcy, or the cessation of operations.

32        Section 75.  Recording or releasing a lien.
 
                            -22-     LRB093 04048 JLS 04087 b
 1        (a)  Upon  making  a  loan  secured by a title to a motor
 2    vehicle, the licensee must immediately take  into  possession
 3    evidence  of the debtor's ownership in the motor vehicle that
 4    has been registered with the Office of the Illinois Secretary
 5    of State and shall note on the face of the loan contract  the
 6    vehicle's  make,  model,  year  of  manufacture,  and vehicle
 7    identification number.
 8        (b)  Within 24 hours after payment in full, the  licensee
 9    must release any filed liens, provide evidence of the release
10    to  the  debtor,  and return the title to the debtor or cause
11    the title to be returned to the debtor.
12        (c)  The  licensee  shall   not   charge,   directly   or
13    indirectly,  fees associated with the repossession of a motor
14    vehicle.

15        Section 80.  Judicial review.  All  final  administrative
16    decisions  of  the  Department  under this Act are subject to
17    judicial  review  pursuant   to   the   provisions   of   the
18    Administrative   Review   Law,   and   all   amendments   and
19    modifications   thereof,   and  any  rules  adopted  pursuant
20    thereto.

21        Section 85.  Injunction;  civil  penalty;  costs.  If  it
22    appears  to  the  Director  that  a  person or any entity has
23    committed or is about to commit a violation of  this  Act,  a
24    rule promulgated under this Act, or an order of the Director,
25    the  Director  may  apply  to  the circuit court for an order
26    enjoining the person or entity from violating  or  continuing
27    to violate this Act, the rule, or order and for injunctive or
28    other relief that the nature of the case may require and may,
29    in  addition,  request the court to assess a civil penalty up
30    to $1,000 along with costs and attorney's fees.

31        Section 97.  Severability. The provisions of this Act are
 
                            -23-     LRB093 04048 JLS 04087 b
 1    severable under Section 1.31 of the Statute on Statutes.