SB2939 97TH GENERAL ASSEMBLY

LRB097 14481 CEL 59335 b

97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB2939

Introduced 2/1/2012, by Sen. Emil Jones, III

SYNOPSIS AS INTRODUCED:

205 ILCS 657/5
205 ILCS 657/65
205 ILCS 657/66 new
205 ILCS 657/76 new

Amends the Transmitters of Money Act. Creates a provision concerning general-use prepaid cards. Provides that all vendors of general-use prepaid cards must be licensees or authorized sellers of a licensee under the Act. Provides that the permitted fees a vendor may charge includes an activation fee not to exceed the greater of $1 or 1% of the value of the general-use prepaid card. Provides that a prohibition on the imposition of certain fees or charges shall provide that it is unlawful for any person to impose a reloading fee, balance check fee, overdraft protection fee, dormancy fee, inactivity charge or fee, or service fee with respect to a general-use prepaid card. Provides that there are exceptions to the prohibition on imposition of certain fees or charges and the prohibitions shall not apply to any general-use prepaid card (i) that is distributed pursuant to an award, loyalty, or promotional program and (ii) with respect to which, there is no money or other value exchanged. Creates a provision concerning check-cashing. Provides that any vendor issuing, selling, or offering for sale general-use prepaid cards may not commit, or have committed on behalf of the vendor, certain specified acts. Provides that all vendors must comply with all State and federal requirements applicable to general-use prepaid cards to be in compliance. Provides that no licensee under the Act or an authorized seller of a licensee may cash checks for a fee unless licensed under the Currency Exchange Act or unless the licensee or authorized seller is an entity exempt under the Currency Exchange Act and operating in compliance with the Check Cashing Act. Makes changes to the provisions concerning definitions and notice of source of instrument and transaction records.

A BILL FOR

AN ACT concerning regulation.

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

Section 5. The Transmitters of Money Act is amended by changing Sections 5 and 65 and by adding Sections 66 and 76 as follows:

(205 ILCS 657/5)

Sec. 5. Definitions. As used in this Act, unless the context otherwise requires, the words and phrases defined in this Section have the meanings set forth in this Section.

"Authorized seller" means a person not an employee of a licensee who engages in the business regulated by this Act on behalf of a licensee under a contract between that person and the licensee.

"Balance check fee" means a fee assessed to a consumer for checking the balance on a general-use prepaid card.

"Bill payment service" means the business of transmitting money on behalf of an Illinois resident for the purpose of paying the resident's bills.

"Controlling person" means a person owning or holding the power to vote 25% or more of the outstanding voting securities of a licensee or the power to vote the securities of another controlling person of the licensee. For purposes of determining the percentage of a licensee controlled by a controlling person, the person's interest shall be combined with the interest of any other person controlled, directly or indirectly, by that person or by a spouse, parent, or child of that person.

"Department" means the Department of Financial and Professional Regulation Institutions.

"Director" means the Director of the Division of Financial Institutions.

"Dormancy fee" or "inactivity charge or fee" means a fee, charge, or penalty for non-use or inactivity of a general-use prepaid card.

"General-use prepaid card" or "stored value card" means an electronic promise, plastic card, or other payment code or device, not marketed or labeled as a gift card, issued by any person that is:

(1) redeemable or honored, upon presentation, at multiple, unaffiliated merchants or service providers or automated teller machines;

(2) issued in a requested amount, whether or not that amount may, at the option of the issuer, be increased in value or reloaded if requested by the holder;

(3) purchased or loaded on a prepaid basis; and

(4) used to withdraw cash at automated teller machines or by other means, including cash back transactions whereby an amount is added to the total purchase price of a transaction and a consumer receives that amount in cash along with the purchase.

The term "general-use prepaid card" does not include an electronic promise, plastic card, or payment code or device that is:

(1) used solely for telephone services;

(2) a loyalty, award, or promotional gift card;

(3) not marketed to the general public;

(4) issued in paper form only, including for tickets and events;

(5) not redeemable at automated teller machines or for cash back; or

(6) redeemable solely for admission to events or venues at a particular location or group of affiliated locations, which may also include services or goods obtainable:

(i) at the event or venue after admission; or

(ii) in conjunction with admission to such events or venues at specific locations affiliated with and in geographic proximity to the event or venue.

"Licensee" means a person licensed under this Act.

"Location" means a place of business at which activity regulated by this Act occurs.

"Material litigation" means any litigation that, according to generally accepted accounting principles, is deemed significant to a licensee's financial health and would be required to be referenced in a licensee's annual audited financial statements, reports to shareholders, or similar documents.

"Money" means a medium of exchange that is authorized or adopted by a domestic or foreign government as a part of its currency and that is customarily used and accepted as a medium of exchange in the country of issuance.

"Money transmitter" means a person who is located in or doing business in this State and who directly or through authorized sellers does any of the following in this State:

(1) Sells or issues payment instruments.

(2) Engages in the business of receiving money for transmission or transmitting money.

(3) Engages in the business of exchanging, for compensation, money of the United States Government or a foreign government to or from money of another government.

"Outstanding payment instrument" means, unless otherwise treated by or accounted for under generally accepted accounting principles on the books of the licensee, a payment instrument issued by the licensee that has been sold in the United States directly by the licensee or has been sold in the United States by an authorized seller of the licensee and reported to the licensee as having been sold, but has not been paid by or for the licensee.

"Overdraft protection" means a credit arrangement under which an issuer of general use prepaid cards automatically extends a loan to cover an amount that exceeds the general-use prepaid card account balance.

"Overdraft protection fee" means a fee charged by a licensee for overdraft protection.

"Payment instrument" means a check, draft, money order, traveler's check, general-use prepaid stored value card, or other instrument or memorandum, written order or written receipt for the transmission or payment of money sold or issued to one or more persons whether or not that instrument or order is negotiable. Payment instrument does not include an instrument that is redeemable by the issuer in merchandise or service, a credit card voucher, or a letter of credit. A written order for the transmission or payment of money that results in the issuance of a check, draft, money order, traveler's check, or other instrument or memorandum is not a payment instrument.

"Person" means an individual, partnership, association, joint stock association, corporation, or any other form of business organization.

"Reloading fee" means a fee charged to load cash or value to a general-use prepaid card.

"Service fee" means a periodic fee, charge, or penalty for holding or use of a general-use prepaid card. The term "service fee" does not include a one-time initial issuance fee.

"Stored value card" means any magnetic stripe card or other electronic payment instrument given in exchange for money and other similar consideration, including but not limited to checks, debit payments, money orders, drafts, credit payments, and traveler's checks, where the card or other electronic payment instrument represents a dollar value that the consumer can either use or give to another individual.

"Transmitting money" means the transmission of money by any means, including transmissions to or from locations within the United States or to and from locations outside of the United States by payment instrument, facsimile or electronic transfer, or otherwise, and includes bill payment services.

"Vendor" means a licensee or an authorized seller of a licensee that sells or offers to sell general-use prepaid cards to consumers.

(Source: P.A. 92-400, eff. 1-1-02; 93-535, eff. 1-1-04.)

(205 ILCS 657/65)

Sec. 65. Notice of source of instrument; transaction records.

(a) Every payment instrument other than a general-use prepaid stored value card sold through an authorized seller shall bear the name of the licensee and a unique consecutive number clearly stamped or imprinted on it. When an order for the transmission of money results in the issuance of a payment instrument, both the order and the payment instrument may bear the same unique number.

(b) A licensee or authorized seller shall create a record, which may be reduced to computer or other electronic medium, upon receiving any money from a customer.

(c) For each payment instrument other than a general-use prepaid stored value card sold, the licensee shall require the authorized seller to record the face amount of the payment instrument and the serial number of the payment instrument.

(d) For each transmission of money, the licensee or authorized seller shall record the date the money was received, the face amount of the payment instrument, the name of the customer, the manner of transmission, including the identity and location of any bank or other financial institution receiving or otherwise involved in accomplishing the transmission, the location to which the money is transmitted if different from the bank or other financial institution required to be recorded, the name of the intended recipient, and the date the transmission was accomplished or the money was refunded to the customer due to an inability to transmit or failure of the intended recipient to receive or obtain the money transmitted. The transmission shall be made by the licensee or authorized seller within 3 business days after the receipt of the money to be transmitted. The licensee or authorized seller, in addition to the records required to be kept, shall issue a receipt to each person delivering or depositing money with the licensee or authorized seller indicating the date of the transaction, the face amount of the payment instrument, to whom the money is to be transmitted, the service charge, and the name and address of the licensee or authorized seller. The receipt or a separate disclosure at the time of the money transmission shall also include a statement of the licensee's refund procedures as well as a toll-free telephone number for customer assistance. An inadvertent or non-wilful failure to give a consumer the disclosure provided for in this Section shall not constitute a violation of this Act. The licensee or authorized seller shall keep a copy of every receipt in a permanent record book or maintain the data embodied in the receipt using photographic, electronic, or other means.

(e) For each exchange of money of the United States government or a foreign government to or from money of another government, the licensee or authorized seller shall record the date of the transaction, the amount of the transaction, the amount of funds stated in currency received by the recipient, and the rate of exchange at the time of the transaction. The licensee or authorized seller, in addition to the records required to be kept, shall issue a receipt to each person delivering or depositing money with the licensee or authorized seller indicating the date of the transaction, the amount of the transaction, the service charge, and the name and address of the licensee or authorized seller making the transaction. The licensee or authorized seller shall keep a copy of every receipt in a permanent record book or maintain data embodied in the receipt using photographic, electronic, or other means.

(f) Records required to be kept by the licensee or authorized seller under this Act shall be preserved for at least 5 years or as required to comply with any other Act the administration of which is vested in the Director. The records shall be made available for examination in accordance with Sections 55 and 60 of this Act.

(Source: P.A. 93-535, eff. 1-1-04.)

(205 ILCS 657/66 new)

Sec. 66. General-use prepaid cards.

(a) Except as otherwise provided in this Act, this Section applies to all persons that issue, sell, or offer for sale general-use prepaid cards as defined by this Act to consumers. All vendors of general-use prepaid cards must be licensees or authorized sellers of a licensee pursuant to Section 75 of this Act, unless otherwise exempt from the requirements of this Act.

(b) The permitted fees a vendor may charge includes an activation fee not to exceed the greater of $1 or 1% of the value of the general-use prepaid card. Only one activation fee may be charged per general-use prepaid card. No vendor shall charge or collect any sum in excess of those allowed by this Act.

The schedule of fees and charges permitted under this Section shall be conspicuously disclosed on the face of the general-use prepaid card or on any packaging.

(c) Except as provided under subsections (d) and (e) of this Section, it is unlawful for any person to impose a reloading fee, balance check fee, overdraft protection fee, dormancy fee, inactivity charge or fee, or service fee with respect to a general-use prepaid card.

(d) A dormancy fee, inactivity charge or fee, or service fee may be charged with respect to a general-use prepaid card, if:

(1) there has been no activity with respect to the general-use prepaid card in the 18-month period ending on the date that the charge or fee is imposed;

(2) the following disclosure requirements are met:

(A) the general-use prepaid card clearly and conspicuously states:

(i) that a dormancy fee, inactivity charge or fee, or service fee may be charged;

(ii) the amount of such fee or charge;

(iii) how often such fee or charge may be assessed; and

(iv) that such fee or charge may be assessed for inactivity; and

(B) the vendor of such general-use prepaid card informs the purchaser of such charge or fee before such general-use prepaid card is purchased, regardless of whether the general-use prepaid card is purchased in person, over the internet, or by telephone;

(3) not more than one dormancy, inactivity charge or fee, or service fee may be charged per month of inactivity, not to exceed $1 or 1% of the value of the card, whichever is less, on the date of assessment; and

(4) any additional requirements that the Secretary may deem necessary.

(e) The prohibition under subsection (b) shall not apply to any general-use prepaid card:

(1) that is distributed pursuant to an award, loyalty, or promotional program; and

(2) with respect to which, there is no money or other value exchanged.

(f) Any vendor issuing, selling, or offering for sale general–use prepaid cards may not commit, or have committed on behalf of the vendor, any of the following acts:

(1) sell or issue a general-use prepaid card that is subject to an expiration date;

(2) use any device or agreement that may have the effect of charging or collecting more fees or charges than allowed by this Act, including, but not limited to, entering into a different type of transaction with the consumer;

(3) engage in unfair, deceptive, or fraudulent practices in the issuing or selling of a general-use prepaid card;

(4) use or cause to be published or disseminated any advertising communication that contains false, misleading, or deceptive statements or representations;

(5) make loans of money, discounting notes, bills of exchange, or other evidences of debt, including overdraft protection;

(6) extend credit; or

(7) charge any fees or charges other than those specifically authorized by this Act.

(g) In addition to the requirements of this Act, all vendors must comply with all State and federal requirements applicable to general-use prepaid cards to be in compliance with this Section.

(205 ILCS 657/76 new)

Sec. 76. Check cashing. No licensee under this Act or authorized seller of a licensee may cash checks for a fee unless licensed pursuant to the Currency Exchange Act or unless the licensee or authorized seller is an entity exempt under subsection (b) of Section 1 of the Currency Exchange Act and operating in compliance with the Check Cashing Act. This Section does not apply to any transaction where a customer presents a check for the exact amount of any purchase.