SB3523 EngrossedLRB097 18601 JLS 65596 b

1    AN ACT concerning tax refunds.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Currency Exchange Act is amended by changing
5Section 3.1 as follows:
 
6    (205 ILCS 405/3.1)  (from Ch. 17, par. 4805)
7    Sec. 3.1. Nothing in this Act shall prevent a currency
8exchange from rendering State or Federal income tax service;
9nor shall the rendering of such service be considered a
10violation of this Act if such service be rendered either by the
11proprietor, any of his employees, or a licensed, regulated tax
12service approved by the Internal Revenue Service. For the
13purpose of this Section, "tax service" does not mean to make or
14offer to make a refund anticipation loan as defined by the Tax
15Refund Anticipation Loan Reform Disclosure Act.
16(Source: P.A. 97-315, eff. 1-1-12.)
 
17    Section 10. The Tax Refund Anticipation Loan Disclosure Act
18is amended by changing Sections 1, 5, 10, and 15 and by adding
19Sections 20, 25, 30, 35, and 40 as follows:
 
20    (815 ILCS 177/1)
21    Sec. 1. Short title. This Act may be cited as the Tax

 

 

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1Refund Anticipation Loan Reform Disclosure Act.
2(Source: P.A. 92-664, eff. 1-1-03.)
 
3    (815 ILCS 177/5)
4    Sec. 5. Definitions. The following definitions apply in
5this Act:
6    "Consumer" means any natural person who, singly or jointly
7with another consumer, is solicited for, applies for, or
8receives the proceeds of a refund anticipation loan or refund
9anticipation check.
10    "Creditor" means any person who makes a refund anticipation
11loan or who takes an assignment of a refund anticipation loan.
12    "Facilitator" means a person who individually or in
13conjunction or cooperation with another person: (i) solicits
14the execution of makes a refund anticipation loan, processes,
15receives, or accepts for delivery an application or agreement
16for a refund anticipation loan or refund anticipation check;
17(ii) services or collects upon , issues a check in payment of
18refund anticipation loan or refund anticipation check;
19proceeds, or (iii) in any other manner facilitates acts to
20allow the making of a refund anticipation loan or refund
21anticipation check. If there is no third party facilitator
22because a creditor directly solicits the execution of,
23receives, or accepts an application or agreement for a refund
24anticipation loan or refund anticipation check, that creditor
25shall be considered a facilitator. "Facilitator" does not

 

 

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1include a bank, savings bank, savings and loan association, or
2credit union, or licensee under the Consumer Installment Loan
3Act operating under the laws of the United States or this State
4and does not include any person who acts solely as an
5intermediary and does not deal with the public in the making of
6the refund anticipation loan.
7    "Person" means an individual, a firm, a partnership, an
8association, a corporation, or another entity. "Person" does
9not, however, mean a bank, savings bank, savings and loan
10association, or credit union operating under the laws of the
11United States or this State.
12    "Refund anticipation check" means a check, stored value
13card, or other payment mechanism: (i) representing the proceeds
14of the consumer's tax refund; (ii) which was issued by a
15depository institution or other person that received a direct
16deposit of the consumer's tax refund or tax credits; and (iii)
17for which the consumer has paid a fee or other consideration
18for such payment mechanism.
19    "Borrower" means a person who receives the proceeds of a
20refund anticipation loan.
21    "Refund anticipation loan" means a loan that is secured by
22or that the creditor arranges arranged to be repaid directly
23from the proceeds of the consumer's a borrower's income tax
24refund or tax credits refunds. "Refund anticipation loan" also
25includes any sale, assignment, or purchase of a consumer's tax
26refund at a discount or for a fee, whether or not the consumer

 

 

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1is required to repay the buyer or assignee if the Internal
2Revenue Service denies or reduces the consumer's tax refund.
3    "Refund anticipation loan fee" means the charges, fees, or
4other consideration charged or imposed directly or indirectly
5by the creditor facilitator for the making of or in connection
6with a refund anticipation loan. This term includes any charge,
7fee, or other consideration for a deposit account, if the
8deposit account is used for receipt of the consumer's tax
9refund to repay the amount owed on the loan. A "refund
10anticipation loan fee" does not include charges, fees, or other
11consideration charged or imposed in the ordinary course of
12business by a facilitator for services that do not result in
13the making of a loan, including fees for tax return preparation
14and fees for electronic filing of tax returns.
15    "Refund anticipation loan interest rate" means the
16interest rate for a refund anticipation loan calculated as
17follows: the total amount of refund anticipation loan fees
18divided by the loan amount (minus any loan fees), then divided
19by the number of days in the loan term, then multiplied by 365
20and expressed as a percentage. The total amount of the refund
21anticipation loan fee used in this calculation shall include
22all refund anticipation loan fees as defined in this Section.
23If a deposit account is established or maintained in whole or
24in part for the purpose of receiving the consumer's tax refund
25to repay the amount owed on a refund anticipation loan: (i) the
26maturity of the loan for the purpose of determining the refund

 

 

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1anticipation loan interest rate shall be assumed to be the
2estimated date when the tax refund will be deposited in the
3deposit account; and (ii) any fee charged to the consumer for
4such deposit account shall be considered a loan fee and shall
5be included in the calculation of the refund anticipation loan
6interest rate. If no deposit account is established or
7maintained for the repayment of the loan, the maturity of the
8loan shall be assumed to be the estimated date when the tax
9refund is received by the creditor.
10(Source: P.A. 92-664, eff. 1-1-03.)
 
11    (815 ILCS 177/10)
12    Sec. 10. Disclosure requirements. At the time a consumer
13borrower applies for a refund anticipation loan or check, a
14facilitator shall disclose to the consumer borrower on a
15document that is separate from the loan application:
16        (1) the fee for the refund anticipation loan or refund
17    anticipation check fee schedule;
18        (1.5) for refund anticipation loans, disclosure of the
19    refund anticipation loan interest rate. The refund
20    anticipation loan interest rate shall be calculated as set
21    forth in Section 5 the Annual Percentage Rate utilizing a
22    10-day time period;
23        (2) the estimated fee for preparing and electronically
24    filing a tax return;
25        (2.5) for refund anticipation loans, the total cost to

 

 

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1    the consumer borrower for utilizing a refund anticipation
2    loan;
3        (3) for refund anticipation loans, the estimated date
4    that the loan proceeds will be paid to the consumer
5    borrower if the loan is approved;
6        (4) for refund anticipation loans, that the consumer
7    borrower is responsible for repayment of the loan and
8    related fees in the event the tax refund is not paid or not
9    paid in full; and
10        (5) for refund anticipation loans, the availability of
11    electronic filing for the income tax return of the consumer
12    borrower and the average time announced by the federal
13    Internal Revenue Service within which the consumer
14    borrower can expect to receive a refund if the consumer's
15    borrower's return is filed electronically and the consumer
16    borrower does not obtain a refund anticipation loan.
17(Source: P.A. 92-664, eff. 1-1-03; 93-287, eff. 1-1-04.)
 
18    (815 ILCS 177/15)
19    Sec. 15. Posting of fee schedule and disclosures. Penalty.
20    (a) A facilitator shall display a schedule showing the
21current fees for refund anticipation loans, if refund
22anticipation loans are offered, or refund anticipation checks,
23if refund anticipation checks are offered, facilitated at the
24office.
25    (b) A facilitator who offers refund anticipation loans

 

 

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1shall display on each fee schedule examples of the refund
2anticipation loan interest rates for refund anticipation loans
3of at least 5 different amounts, such as $300, $500, $1,000,
4$1,500, $2,000, and $5,000. The refund anticipation loan
5interest rate shall be calculated as set forth in Section 5 of
6this Act.
7    (c) A facilitator who offers refund anticipation loans
8shall also prominently display on each fee schedule: (i) a
9legend, centered, in bold, capital letters, and in one-inch
10letters stating: "NOTICE CONCERNING REFUND ANTICIPATION LOANS"
11and (ii) the following verbatim statement: "When you take out a
12refund anticipation loan, you are borrowing money against your
13tax refund. If your tax refund is less than expected, you will
14still owe the entire amount of the loan. If your refund is
15delayed, you may have to pay additional costs. YOU CAN GET YOUR
16REFUND IN 8 TO 15 DAYS WITHOUT PAYING ANY EXTRA FEES AND TAKING
17OUT A LOAN. You can have your tax return filed electronically
18and your refund direct deposited into your own financial
19institution account without obtaining a loan or paying fees for
20an extra product.".
21    (d) The postings required by this Section shall be made in
22no less than 28-point type on a document measuring no less than
2316 inches by 20 inches. The postings required by this Section
24shall be displayed in a prominent location at each office where
25the facilitator is facilitating refund anticipation loans.
26    (e) A facilitator may not facilitate a refund anticipation

 

 

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1loan or refund anticipation check unless (i) the disclosures
2required by this Section are displayed and (ii) the fee
3actually charged for the refund anticipation loan or refund
4anticipation check is the same as the fee displayed on the
5schedule.
6    Any person who violates this Act is guilty of a petty
7offense and shall be fined $500 for each offense. In addition,
8a facilitator who violates this Act shall be liable to any
9aggrieved borrower in an amount equal to 3 times the refund
10anticipation loan fee, plus a reasonable attorney's fee, in a
11civil action brought in the circuit court by the aggrieved
12borrower or by the Attorney General on behalf of the aggrieved
13borrower.
14(Source: P.A. 92-664, eff. 1-1-03.)
 
15    (815 ILCS 177/20 new)
16    Sec. 20. Advertising and marketing.
17    (a) A facilitator may not market or advertise a refund
18anticipation loan without including this language verbatim:
19    "(Name of product) is a loan. You can get your refund in 8
20to 15 days without a loan or extra fees if you use e-file and
21direct deposit.".
22    For print advertisements, this information must be printed
23in type size one-half as large as the largest type size in the
24advertisement. For radio and television advertisements, this
25information must receive at least 7 seconds of airtime.

 

 

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1    (b) A facilitator may not market or advertise a refund
2anticipation check without including this language verbatim:
3    "The (name of product) costs (fee for RAC). You can get
4your refund in the same amount of time without this fee if you
5use e-file and direct deposit.".
6    For print advertisements, this information must be in type
7size one-half as large as the largest type size in the
8advertisement. For radio and television advertisements, this
9information must receive at least 7 seconds of airtime.
 
10    (815 ILCS 177/25 new)
11    Sec. 25. Prohibited activities. No person, including any
12officer, agent, employee, or representative, shall:
13    (a) Charge or impose any fee, charge, or other
14consideration in the making or facilitating of a refund
15anticipation loan or refund anticipation check apart from the
16fee charged by the creditor or financial institution that
17provides the loan or check. This prohibition does not include
18any charge or fee imposed by the facilitator to all of its
19customers, such as fees for tax return preparation, if the same
20fee in the same amount is charged to the customers who do not
21receive refund anticipation loans, refund anticipation checks,
22or any other tax related financial product.
23    (b) Fail to comply with any provision of this Act.
24    (c) Directly or indirectly arrange for any third party to
25charge any interest, fee, or charge related to a refund

 

 

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1anticipation loan or refund anticipation check, other than the
2refund anticipation loan or refund anticipation check fee
3imposed by the creditor, including but not limited to: (i)
4charges for insurance; (ii) attorneys fees or other collection
5costs; or (iii) check cashing.
6    (d) Include any of the following provisions in any document
7provided or signed in connection with a refund anticipation
8loan or refund anticipation check, including the loan
9application or agreement:
10        (i) A hold harmless clause;
11        (ii) A waiver of the right to a jury trial, if
12    applicable, in any action brought by or against the
13    consumer;
14        (iii) Any assignment of wages or of other compensation
15    for services;
16        (iv) A provision in which the consumer agrees not to
17    assert any claim or defense arising out of the contract, or
18    to seek any remedies pursuant to Section 35 of this Act;
19        (v) A waiver of any provision of this Act. Any such
20    waiver shall be deemed null, void, and of no effect;
21        (vi) A waiver of the right to injunctive, declaratory,
22    or other equitable relief; or
23        (vii) A provision requiring that any aspect of a
24    resolution of a dispute between the parties to the
25    agreement be kept confidential. This provision shall not
26    affect the right of the parties to agree that certain

 

 

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1    specified information is a trade secret or otherwise
2    confidential, or to later agree, after the dispute arises,
3    to keep a resolution confidential.
4    (e) Take or arrange for a creditor to take a security
5interest in any property of the consumer other than the
6proceeds of the consumer's tax refund to secure payment of a
7refund anticipation loan.
8    (f) Directly or indirectly, individually or in conjunction
9or cooperation with another person, engage in the collection of
10an outstanding or delinquent refund anticipation loan for any
11creditor or assignee, including soliciting the execution of,
12processing, receiving, or accepting an application or
13agreement for a refund anticipation loan or refund anticipation
14check that contains a provision permitting the creditor to
15repay, by offset or other means, an outstanding or delinquent
16refund anticipation loan for that creditor or any creditor from
17the proceeds of the consumer's tax refund.
18    (g) Facilitate any loan that is secured by or that the
19creditor arranges to be repaid directly from the proceeds of
20the consumer's State tax refund from the Illinois State
21treasury.
 
22    (815 ILCS 177/30 new)
23    Sec. 30. Rate limits for non-bank refund anticipation
24loans.
25    (a) No person shall make or facilitate a refund

 

 

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1anticipation loan for which the refund anticipation loan
2interest rate is greater than 36% per annum. The refund
3anticipation loan interest rate shall be calculated as set
4forth in Section 5. Any refund anticipation loan for which the
5refund anticipation loan interest rate exceeds 36% per annum
6shall be void ab initio.
7    (b) This Section does not apply to persons facilitating for
8or doing business as a bank, savings bank, savings and loan
9association, or credit union chartered under the laws of the
10United States or this State.
 
11    (815 ILCS 177/35 new)
12    Sec. 35. Applicability to certain entities. No obligation
13or prohibition imposed upon a creditor, a person, or a
14facilitator by this Act shall apply to a bank, savings bank,
15savings and loan association, or credit union operating under
16the laws of the United States or this State.
 
17    (815 ILCS 177/40 new)
18    Sec. 40. Violation. A violation of this Act constitutes an
19unlawful practice under the Consumer Fraud and Deceptive
20Business Practices Act.
 
21    Section 15. The Consumer Fraud and Deceptive Business
22Practices Act is amended by adding Section 2NNN as follows:
 

 

 

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1    (815 ILCS 505/2NNN new)
2    Sec. 2NNN. Violations of the Tax Refund Anticipation Loan
3Reform Act. Any person who violates the Tax Refund Anticipation
4Loan Reform Act commits an unlawful practice within the meaning
5of this Act.
 
6    Section 97. Severability. The provisions of this Act are
7severable under Section 1.31 of the Statute on Statutes.
 
8    Section 99. Effective date. This Act takes effect upon
9becoming law.