Full Text of HB1100 94th General Assembly
HB1100enr 94TH GENERAL ASSEMBLY
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| AN ACT concerning regulation.
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| Be it enacted by the People of the State of Illinois,
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| represented in the General Assembly:
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| Article 1. General Provisions | 5 |
| Section 1-1. Short title. This Act may be cited as the | 6 |
| Payday Loan Reform Act. | 7 |
| Section 1-5. Purpose and construction. The purpose of this | 8 |
| Act is to protect consumers who enter into payday loans and to | 9 |
| regulate the lenders of payday loans. This Act shall be | 10 |
| construed as a consumer protection law for all purposes. This | 11 |
| Act shall be liberally construed to effectuate its purpose. | 12 |
| Section 1-10. Definitions. As used in this Act: | 13 |
| "Check" means a "negotiable instrument", as defined in | 14 |
| Article 3 of the Uniform Commercial Code, that is drawn on a | 15 |
| financial institution. | 16 |
| "Commercially reasonable method of verification" or | 17 |
| "certified database" means a consumer reporting service | 18 |
| database certified by the Department as effective in verifying | 19 |
| that a proposed loan agreement is permissible under this Act, | 20 |
| or, in the absence of the Department's certification, any | 21 |
| reasonably reliable written verification by the consumer | 22 |
| concerning (i) whether the consumer has any outstanding payday | 23 |
| loans, (ii) the principal amount of those outstanding payday | 24 |
| loans, and (iii) whether any payday loans have been paid in | 25 |
| full by the consumer in the preceding 7 days. | 26 |
| "Consumer" means any natural person who, singly or jointly | 27 |
| with another consumer, enters into a loan. | 28 |
| "Consumer reporting service" means an entity that provides | 29 |
| a database certified by the Department. | 30 |
| "Department" means the Department of Financial and |
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| Professional Regulation. | 2 |
| "Secretary" means the Secretary of Financial and | 3 |
| Professional Regulation. | 4 |
| "Gross monthly income" means monthly income as | 5 |
| demonstrated by official documentation of the income, | 6 |
| including, but not limited to, a pay stub or a receipt | 7 |
| reflecting payment of government benefits, for the period 30 | 8 |
| days prior to the date on which the loan is made. | 9 |
| "Lender" and "licensee" mean any person or entity, | 10 |
| including any affiliate or subsidiary of a lender or licensee, | 11 |
| that offers or makes a payday loan, buys a whole or partial | 12 |
| interest in a payday loan, arranges a payday loan for a third | 13 |
| party, or acts as an agent for a third party in making a payday | 14 |
| loan, regardless of whether approval, acceptance, or | 15 |
| ratification by the third party is necessary to create a legal | 16 |
| obligation for the third party, and includes any other person | 17 |
| or entity if the Department determines that the person or | 18 |
| entity is engaged in a transaction that is in substance a | 19 |
| disguised payday loan or a subterfuge for the purpose of | 20 |
| avoiding this Act. | 21 |
| "Loan agreement" means a written agreement between a lender | 22 |
| and consumer to make a loan to the consumer, regardless of | 23 |
| whether any loan proceeds are actually paid to the consumer on | 24 |
| the date on which the loan agreement is made. | 25 |
| "Member of the military" means a person serving in the | 26 |
| armed forces of the United States, the Illinois National Guard, | 27 |
| or any reserve component of the armed forces of the United | 28 |
| States. "Member of the military" includes those persons engaged | 29 |
| in (i) active duty, (ii) training or education under the | 30 |
| supervision of the United States preliminary to induction into | 31 |
| military service, or (iii) a period of active duty with the | 32 |
| State of Illinois under Title 10 or Title 32 of the United | 33 |
| States Code pursuant to order of the President or the Governor | 34 |
| of the State of Illinois. | 35 |
| "Outstanding balance" means the total amount owed by the | 36 |
| consumer on a loan to a lender, including all principal, |
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| finance charges, fees, and charges of every kind. | 2 |
| "Payday loan" or "loan" means a loan with a finance charge | 3 |
| exceeding an annual percentage rate of 36% and with a term that | 4 |
| does not exceed 120 days, including any transaction conducted | 5 |
| via any medium whatsoever, including, but not limited to, | 6 |
| paper, facsimile, Internet, or telephone, in which: | 7 |
| (1) A lender accepts one or more checks dated on the | 8 |
| date written and agrees to hold them for a period of days | 9 |
| before deposit or presentment, or accepts one or more | 10 |
| checks dated subsequent to the date written and agrees to | 11 |
| hold them for deposit; or | 12 |
| (2) A lender accepts one or more authorizations to | 13 |
| debit a consumer's bank account; or | 14 |
| (3) A lender accepts an interest in a consumer's wages, | 15 |
| including, but not limited to, a wage assignment. | 16 |
| "Principal amount" means the amount received by the | 17 |
| consumer from the lender due and owing on a loan, excluding any | 18 |
| finance charges, interest, fees, or other loan-related | 19 |
| charges. | 20 |
| "Rollover" means to refinance, renew, amend, or extend a | 21 |
| loan beyond its original term. | 22 |
| Section 1-15. Applicability. | 23 |
| (a) Except as otherwise provided in this Section, this Act | 24 |
| applies to any lender that offers or makes a payday loan to a | 25 |
| consumer in Illinois. | 26 |
| (b) The provisions of this Act apply to any person or | 27 |
| entity that seeks to evade its applicability by any device, | 28 |
| subterfuge, or pretense whatsoever. | 29 |
| (c) Retail sellers who cash checks incidental to a retail | 30 |
| sale and who charge no more than the fees as provided by the | 31 |
| Check Cashing Act per check for the service are exempt from the | 32 |
| provisions of this Act.
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| (d) Banks, savings banks, savings and loan associations, | 34 |
| credit unions, and insurance companies organized, chartered, | 35 |
| or holding a certificate of authority to do business under the |
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| laws of this State or any other state or under the laws of the | 2 |
| United States are exempt from the provisions of this Act. | 3 |
| (e) A lender, as defined in Section 1-10, that is an agent | 4 |
| for a bank, savings bank, savings and loan association, credit | 5 |
| union, or insurance company for the purpose of brokering, | 6 |
| selling, or otherwise offering payday loans made by the bank, | 7 |
| savings bank, savings and loan association, credit union, or | 8 |
| insurance company shall be subject to all of the provisions of | 9 |
| this Act, except those provisions related to finance charges. | 10 |
| Article 2. Payday Loans | 11 |
| Section 2-5. Loan terms. | 12 |
| (a) Without affecting the right of a consumer to prepay at | 13 |
| any time without cost or penalty, no payday loan may have a | 14 |
| minimum term of less than 13 days. | 15 |
| (b) No payday loan may be made to a consumer if the loan | 16 |
| would result in the consumer being indebted to one or more | 17 |
| payday lenders for a period in excess of 45 consecutive days. | 18 |
| Except as provided under Section 2-40, if a consumer has or has | 19 |
| had loans outstanding for a period in excess of 45 consecutive | 20 |
| days, no payday lender may offer or make a loan to the consumer | 21 |
| for at least 7 calendar days after the date on which the | 22 |
| outstanding balance of all payday loans made during the 45 | 23 |
| consecutive day period is paid in full. For purposes of this | 24 |
| subsection, the term "consecutive days" means a series of | 25 |
| continuous calendar days in which the consumer has an | 26 |
| outstanding balance on one or more payday loans; however, if a | 27 |
| payday loan is made to a consumer within 6 days or less after | 28 |
| the outstanding balance of all loans is paid in full, those | 29 |
| days are counted as "consecutive days" for purposes of this | 30 |
| subsection. | 31 |
| (c) No lender may make a payday loan to a consumer if the | 32 |
| total principal amount of the loan, when combined with the | 33 |
| principal amount of all of the consumer's other outstanding | 34 |
| payday loans, exceeds $1,000 or 25% of the consumer's gross |
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| monthly income, whichever is less.
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| (d) No payday loan may be made to a consumer who has an | 3 |
| outstanding balance on 2 payday loans. | 4 |
| (e) No lender may charge more than $15.50 per $100 loaned | 5 |
| on any payday loan over the term of the loan. Except as | 6 |
| provided in Section 2-25, this charge is considered fully | 7 |
| earned as of the date on which the loan is made. | 8 |
| (f) A lender may not take or attempt to take an interest in | 9 |
| any of the consumer's personal property to secure a payday | 10 |
| loan. | 11 |
| (g) A consumer has the right to redeem a check or any other | 12 |
| item described in the definition of payday loan under Section | 13 |
| 1-10 issued in connection with a payday loan from the lender | 14 |
| holding the check or other item at any time before the payday | 15 |
| loan becomes payable by paying the full amount of the check or | 16 |
| other item.
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| Section 2-7. Wage assignments. Any payday loan that is a | 18 |
| transaction in which the lender accepts a wage assignment must | 19 |
| meet the requirements of this Act, the requirements of the | 20 |
| Illinois Wage Assignment Act, and the requirements of 16 C.F.R. | 21 |
| 444.2(a)(3)(i)(2003, no subsequent amendments or editions are | 22 |
| included). A violation of this Section constitutes a material | 23 |
| violation of the Payday Loan Reform Act. | 24 |
| Section 2-10. Permitted fees. | 25 |
| (a) If there are insufficient funds to pay a check, | 26 |
| Automatic Clearing House (ACH) debit, or any other item | 27 |
| described in the definition of payday loan under Section 1-10 | 28 |
| on the day of presentment and only after the lender has | 29 |
| incurred an expense, a lender may charge a fee not to exceed | 30 |
| $25. Only one such fee may be collected by the lender with | 31 |
| respect to a particular check, ACH debit, or item even if it | 32 |
| has been deposited and returned more than once. A lender shall | 33 |
| present the check, ACH debit, or other item described in the | 34 |
| definition of payday loan under Section 1-10 for payment not |
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| more than twice. A fee charged under this subsection (a) is a | 2 |
| lender's exclusive charge for late payment. | 3 |
| (b) Except for the finance charges described in Section 2-5 | 4 |
| and as specifically allowed by this Section, a lender may not | 5 |
| impose on a consumer any additional finance charges, interest, | 6 |
| fees, or charges of any sort for any purpose. | 7 |
| Section 2-15. Verification. | 8 |
| (a) Before entering into a loan agreement with a consumer, | 9 |
| a lender must use a commercially reasonable method of | 10 |
| verification to verify that the proposed loan agreement is | 11 |
| permissible under this Act. | 12 |
| (b) Within 6 months after the effective date of this Act, | 13 |
| the Department shall certify that one or more consumer | 14 |
| reporting service databases are commercially reasonable | 15 |
| methods of verification. Upon certifying that a consumer | 16 |
| reporting service database is a commercially reasonable method | 17 |
| of verification, the Department shall:
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| (1) provide reasonable notice to all licensees | 19 |
| identifying the commercially reasonable methods of | 20 |
| verification that are available; and
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| (2) immediately upon certification, require each | 22 |
| licensee to use a commercially reasonable method of | 23 |
| verification as a means of complying with subsection (a) of | 24 |
| this Section. | 25 |
| (c) Except as otherwise provided in this Section, all | 26 |
| personally identifiable information regarding any consumer | 27 |
| obtained by way of the certified database and maintained by the | 28 |
| Department is strictly confidential and shall be exempt from | 29 |
| disclosure under Section 7(1)(b)(i) of the Freedom of | 30 |
| Information Act. | 31 |
| (d) Notwithstanding any other provision of law to the | 32 |
| contrary, a consumer seeking a payday loan may make a direct | 33 |
| inquiry to the consumer reporting service to request a more | 34 |
| detailed explanation of the basis for a consumer reporting | 35 |
| service's determination that the consumer is ineligible for a |
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| new payday loan. | 2 |
| (e) In certifying a commercially reasonable method of | 3 |
| verification, the Department shall ensure that the certified | 4 |
| database: | 5 |
| (1) provides real-time access through an Internet | 6 |
| connection or, if real-time access through an Internet | 7 |
| connection becomes unavailable to lenders due to a consumer | 8 |
| reporting service's technical problems incurred by the | 9 |
| consumer reporting service, through alternative | 10 |
| verification mechanisms, including, but not limited to, | 11 |
| verification by telephone; | 12 |
| (2) is accessible to the Department and to licensees in | 13 |
| order to ensure
compliance with this Act and in order to | 14 |
| provide any other information that the Department deems | 15 |
| necessary; | 16 |
| (3) requires licensees to input whatever information | 17 |
| is required by the Department; | 18 |
| (4) maintains a real-time copy of the required | 19 |
| reporting information that is available to the Department | 20 |
| at all times and is the property of the Department; | 21 |
| (5) provides licensees only with a statement that a | 22 |
| consumer is eligible or ineligible for a new payday loan | 23 |
| and a description of the reason for the determination; and | 24 |
| (6) contains safeguards to ensure that all information | 25 |
| contained in the database regarding consumers is kept | 26 |
| strictly confidential.
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| (f) The licensee shall update the certified database by | 28 |
| inputting all information required under item (3) of subsection | 29 |
| (e): | 30 |
| (1) on the same day that a payday loan is made; | 31 |
| (2) on the same day that a consumer elects a repayment | 32 |
| plan, as provided in Section 2-40; and | 33 |
| (3) on the same day that a consumer's payday loan is | 34 |
| paid in full. | 35 |
| (g) A licensee may rely on the information contained in the | 36 |
| certified database as accurate and is not subject to any |
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| administrative penalty or liability as a result of relying on | 2 |
| inaccurate information contained in the database. | 3 |
| (h) The certified consumer reporting service shall | 4 |
| indemnify the licensee against all claims and actions arising | 5 |
| from illegal or willful or wanton acts on the part of the | 6 |
| certified consumer reporting service. | 7 |
| Section 2-17. Consumer reporting services qualification | 8 |
| and bonding. | 9 |
| (a) Each consumer reporting service shall have at all times | 10 |
| a net worth of not less than $1,000,000 calculated in | 11 |
| accordance with generally accepted accounting principles. | 12 |
| (b) Each application for certification under this Act shall | 13 |
| be accompanied by a surety bond acceptable to the Department in | 14 |
| the amount of $1,000,000. The surety bond shall be in a form | 15 |
| satisfactory to the Department and shall run to the State of | 16 |
| Illinois for the benefit of any claimants against the consumer | 17 |
| reporting service to secure the faithful performance of its | 18 |
| obligations under this Act. The aggregate liability of the | 19 |
| surety may exceed the principal sum of the bond. Claimants | 20 |
| against the consumer reporting service may themselves bring | 21 |
| suit directly on the surety bond or the Department may bring | 22 |
| suit on behalf of claimants, either in one action or in | 23 |
| successive actions. | 24 |
| (c) The surety bond shall remain in effect until | 25 |
| cancellation, which may occur only after 90 days' written | 26 |
| notice to the Department. Cancellation shall not affect any | 27 |
| liability incurred or accrued during that period. | 28 |
| (d) The surety bond shall remain in place for 5 years after | 29 |
| the consumer reporting service ceases operation in the State. | 30 |
| (e) The surety bond proceeds and any cash or other | 31 |
| collateral posted as security by a consumer reporting service | 32 |
| shall be deemed by operation of law to be held in trust for any | 33 |
| claimants under this Act in the event of the bankruptcy of the | 34 |
| consumer reporting service. | 35 |
| (f) To the extent that any indemnity or fine exceeds the |
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| amount of the surety bond described under this Section, the | 2 |
| consumer reporting service shall be liable for that amount. | 3 |
| (g) Each application for certification under this Act shall | 4 |
| be accompanied by a nonrefundable investigation fee of $2,500, | 5 |
| together with an initial certification fee of $1,000. | 6 |
| (h) On or before March 1 of each year, each consumer | 7 |
| reporting service qualified under this Section shall pay to the | 8 |
| Department a certification fee in the amount of $1,000. | 9 |
| Section 2-20. Required disclosures. | 10 |
| (a) Before a payday loan is made, a lender shall
deliver to | 11 |
| the consumer a pamphlet prepared by the Secretary that:
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| (1) explains, in simple English and Spanish, all of the | 13 |
| consumer's
rights and responsibilities in a payday loan | 14 |
| transaction;
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| (2) includes a toll-free number to the Secretary's | 16 |
| office to handle
concerns or provide information about | 17 |
| whether a lender is licensed, whether
complaints have been | 18 |
| filed with the Secretary, and the resolution of those
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| complaints; and
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| (3) provides information regarding the availability of | 21 |
| debt
management services.
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| (b) Lenders shall provide consumers with a written | 23 |
| agreement that may be kept by the
consumer. The written | 24 |
| agreement must include the following information in
English and | 25 |
| in the language in which the loan was negotiated:
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| (1) the name and address of the lender making the | 27 |
| payday loan, and the name and title of the individual | 28 |
| employee who signs the
agreement on behalf of the lender;
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| (2) disclosures required by the federal Truth in | 30 |
| Lending Act;
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| (3) a clear description of the consumer's payment | 32 |
| obligations under
the loan;
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| (4) the following statement, in at least 14-point bold | 34 |
| type face: "You
cannot be prosecuted in criminal court to | 35 |
| collect this loan." The
information required to be |
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| disclosed under this subdivision (4) must be
conspicuously | 2 |
| disclosed
in the loan document and shall be located | 3 |
| immediately preceding
the signature of the consumer; and
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| (5) the following statement, in at least 14-point bold | 5 |
| type face:
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| "WARNING: This loan is not intended to meet long-term | 7 |
| financial needs. This
loan should be used only to meet | 8 |
| short-term cash needs. The cost of your loan may be higher | 9 |
| than loans offered by other lending
institutions. This loan | 10 |
| is regulated by the Department of Financial
and | 11 |
| Professional Regulation." | 12 |
| (c) The following notices in English and Spanish must be | 13 |
| conspicuously posted by a lender in each location of
a business | 14 |
| providing payday loans:
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| (1) A notice that informs consumers that the lender | 16 |
| cannot use the
criminal process against a consumer to | 17 |
| collect any payday loan.
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| (2) The schedule of all finance charges to be charged | 19 |
| on loans with an
example of the amounts that would be | 20 |
| charged on a $100 loan payable in 13
days and a $400 loan | 21 |
| payable in 30 days, giving the corresponding annual
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| percentage rate.
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| (3) In one-inch bold type, a notice to the public in | 24 |
| the lending
area of each business location containing the | 25 |
| following
statement:
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| "WARNING: This loan is not intended to meet long-term | 27 |
| financial needs. This
loan should be used only to meet | 28 |
| short-term cash needs. The cost of your loan may be higher | 29 |
| than loans offered by other lending
institutions. This loan | 30 |
| is regulated by the Department of Financial
and | 31 |
| Professional Regulation." | 32 |
| (4) In one-inch bold type, a notice to the public in | 33 |
| the lending area of each business location containing the | 34 |
| following statement: | 35 |
| "INTEREST-FREE REPAYMENT PLAN: If you still owe on one | 36 |
| or more payday loans after 35 days, you are entitled to |
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| enter into a repayment plan. The repayment plan will give | 2 |
| you at least 55 days to repay your loan in installments | 3 |
| with no additional finance charges, interest, fees, or | 4 |
| other charges of any kind." | 5 |
| Section 2-25. Right to cancel future payment obligations. A | 6 |
| consumer may cancel future payment obligations on a payday | 7 |
| loan, without cost or finance charges, no later than the end of | 8 |
| the second business day immediately following the day on which | 9 |
| the payday loan agreement was executed. To cancel future | 10 |
| payment obligations on a payday loan, the consumer must inform | 11 |
| the lender in writing that the consumer wants to cancel the | 12 |
| future payment obligations on the payday loan and must return | 13 |
| the uncashed proceeds, check or cash, in an amount equal to the | 14 |
| principal amount of the loan. | 15 |
| Section 2-30. Rollovers prohibited. Rollover of a payday | 16 |
| loan by any lender is prohibited. This Section does not | 17 |
| prohibit entering into a repayment plan, as provided under | 18 |
| Section 2-40. | 19 |
| Section 2-35. Proceeds and payments. | 20 |
| (a) A lender may issue the proceeds of a loan in the form | 21 |
| of a check drawn on the lender's bank account, in cash, by | 22 |
| money order, by debit card, or by electronic funds transfer. | 23 |
| When the proceeds are issued in the form of a check drawn on | 24 |
| the lender's bank account, by money order, or by electronic | 25 |
| funds transfer, the lender may not charge a fee for cashing the | 26 |
| check, money order, or electronic funds transfer. When the | 27 |
| proceeds are issued in cash, the lender must provide the | 28 |
| consumer with written verification of the cash transaction and | 29 |
| shall maintain a record of the transaction for at least 3 | 30 |
| years.
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| (b) After each payment made in full or in part on any loan, | 32 |
| the lender shall give the consumer making the payment either a | 33 |
| signed, dated receipt or a signed, computer-generated receipt |
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| showing the amount paid and the balance due on the loan. | 2 |
| (c) Before a loan is made, the lender must provide the | 3 |
| consumer, or each consumer if there is more than one, with a | 4 |
| copy of the loan documents described in Section 2-20. | 5 |
| (d) The holder or assignee of any loan agreement or of any | 6 |
| check written by a consumer in connection with a payday loan | 7 |
| takes the loan agreement or check subject to all claims and | 8 |
| defenses of the consumer against the maker. | 9 |
| (e) Upon receipt of a check from a consumer for a loan, the | 10 |
| lender must immediately stamp the back of the check with an | 11 |
| endorsement that states: "This check is being negotiated as | 12 |
| part of a loan under the Payday Loan Reform Act, and any holder | 13 |
| of this check takes it subject to all claims and defenses of | 14 |
| the maker." | 15 |
| (f) Loan payments may be electronically debited from the | 16 |
| consumer's bank account. Except as provided by federal law, the | 17 |
| lender must obtain prior written approval from the consumer. | 18 |
| (g) A consumer may prepay on a loan in increments of $5 or | 19 |
| more at any time without cost or penalty. | 20 |
| (h) A loan is made on the date on which a loan agreement is | 21 |
| signed by both parties, regardless of whether the lender gives | 22 |
| any moneys to the consumer on that date. | 23 |
| Section 2-40. Repayment plan. | 24 |
| (a) At the time a payday loan is made, the lender must | 25 |
| provide the consumer with a separate written notice signed by | 26 |
| the consumer of the consumer's right to request a repayment | 27 |
| plan. The written notice must comply with the requirements of | 28 |
| subsection (c). | 29 |
| (b) The loan agreement must include the following language | 30 |
| in at least 14-point bold type: IF YOU STILL OWE ON ONE OR MORE | 31 |
| PAYDAY LOANS AFTER 35 DAYS, YOU ARE ENTITLED TO ENTER INTO A | 32 |
| REPAYMENT PLAN. THE REPAYMENT PLAN WILL GIVE YOU AT LEAST 55 | 33 |
| DAYS TO REPAY YOUR LOAN IN INSTALLMENTS WITH NO ADDITIONAL | 34 |
| FINANCE CHARGES, INTEREST, FEES, OR OTHER CHARGES OF ANY KIND. | 35 |
| (c) At the time a payday loan is made, on the first page of |
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| the loan agreement and in a separate document signed by the | 2 |
| consumer, the following shall be inserted in at least 14-point | 3 |
| bold type: I UNDERSTAND THAT IF I STILL OWE ON ONE OR MORE | 4 |
| PAYDAY LOANS AFTER 35 DAYS, I AM ENTITLED TO ENTER INTO A | 5 |
| REPAYMENT PLAN THAT WILL GIVE ME AT LEAST 55 DAYS TO REPAY THE | 6 |
| LOAN IN INSTALLMENTS WITH NO ADDITIONAL FINANCE CHARGES, | 7 |
| INTEREST, FEES, OR OTHER CHARGES OF ANY KIND. | 8 |
| (d) If the consumer has or has had one or more payday loans | 9 |
| outstanding for 35 consecutive days, any payday loan | 10 |
| outstanding on the 35th consecutive day shall be payable under | 11 |
| the terms of a repayment plan as provided for in this Section, | 12 |
| if the consumer requests the repayment plan. As to any loan | 13 |
| that becomes eligible for a repayment plan under this | 14 |
| subsection, the consumer has until 28 days after the default | 15 |
| date of the loan to request a repayment plan. Within 48 hours | 16 |
| after the request for a repayment plan is made, the lender must | 17 |
| prepare the repayment plan agreement and both parties must | 18 |
| execute the agreement. Execution of the repayment plan | 19 |
| agreement shall be made in the same manner in which the loan | 20 |
| was made and shall be evidenced in writing. | 21 |
| (e) The terms of the repayment plan for a payday loan must | 22 |
| include the following: | 23 |
| (1) The lender may not impose any charge on the | 24 |
| consumer for requesting or using a repayment plan. | 25 |
| Performance of the terms of the repayment plan extinguishes | 26 |
| the consumer's obligation on the loan. | 27 |
| (2) No lender shall charge the consumer any finance | 28 |
| charges, interest, fees, or other charges of any kind, | 29 |
| except a fee for insufficient funds, as provided under | 30 |
| Section 2-10.
| 31 |
| (3) The consumer shall be allowed to repay the loan in | 32 |
| at least 4 equal installments with at least 13 days between | 33 |
| installments, provided that the term of the repayment plan | 34 |
| does not exceed 90 days. The first payment under the | 35 |
| repayment plan shall not be due before at least 13 days | 36 |
| after the repayment plan is signed by both parties. The |
|
|
|
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| consumer may prepay the amount due under the repayment plan | 2 |
| at any time, without charge or penalty. | 3 |
| (4) The length of time between installments may be | 4 |
| extended by the parties so long as the total period of | 5 |
| repayment does not exceed 90 days. Any such modification | 6 |
| must be in writing and signed by both parties. | 7 |
| (f) Notwithstanding any provision of law to the contrary, a | 8 |
| lender is prohibited from making a payday loan to a consumer | 9 |
| who has a payday loan outstanding under a repayment plan and | 10 |
| for at least 14 days after the outstanding balance of the loan | 11 |
| under the repayment plan and the outstanding balance of all | 12 |
| other payday loans outstanding during the term of the repayment | 13 |
| plan are paid in full. | 14 |
| (g) A lender may not accept postdated checks for payments | 15 |
| under a repayment plan. | 16 |
| (h) Notwithstanding any provision of law to the contrary, a | 17 |
| lender may voluntarily agree to enter into a repayment plan | 18 |
| with a consumer at any time.
If a consumer is eligible for a | 19 |
| repayment plan under subsection (d), any repayment agreement | 20 |
| constitutes a repayment plan under this Section and all | 21 |
| provisions of this Section apply to that agreement. | 22 |
| Section 2-45. Default. | 23 |
| (a) No legal proceeding of any kind, including, but not | 24 |
| limited to, a lawsuit or arbitration, may be filed or initiated | 25 |
| against a consumer to collect on a payday loan until 28 days | 26 |
| after the default date of the loan, or, in the case of a payday | 27 |
| loan under a repayment plan, for 28 days after the default date | 28 |
| under the terms of the repayment plan. | 29 |
| (b) Upon and after default, a lender shall not charge the | 30 |
| consumer any finance charges, interest, fees, or charges of any | 31 |
| kind, other than the insufficient fund fee described in Section | 32 |
| 2-10.
| 33 |
| (c) Notwithstanding whether a loan is or has been in | 34 |
| default, once the loan becomes subject to a repayment plan, the | 35 |
| loan shall not be construed to be in default until the default |
|
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LRB094 09280 MKM 39518 b |
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| date provided under the terms of the repayment plan. | 2 |
| Section 2-50. Practices concerning members of the | 3 |
| military. | 4 |
| (a) A lender may not garnish the wages or salaries of a | 5 |
| consumer who is a member of the military. | 6 |
| (b) In addition to any rights and obligations provided | 7 |
| under the federal Servicemembers Civil Relief Act, a lender | 8 |
| shall suspend and defer collection activity against a consumer | 9 |
| who is a member of the military and who has been deployed to a | 10 |
| combat or combat support posting for the duration of the | 11 |
| deployment. | 12 |
| (c) A lender may not knowingly contact the military chain | 13 |
| of command of a consumer who is a member of the military in an | 14 |
| effort to collect on a payday loan. | 15 |
| (d) Lenders must honor the terms of any repayment plan that | 16 |
| they have entered into with any consumer, including a repayment | 17 |
| agreement negotiated through military counselors or | 18 |
| third-party credit counselors. | 19 |
| Section 2-55. Information, reporting, and examination. | 20 |
| (a) A licensee shall keep and use books, accounts, and | 21 |
| records that
will enable the Secretary to determine if the | 22 |
| licensee is complying with the
provisions of this Act and | 23 |
| maintain any other records as required by the
Secretary.
| 24 |
| (b) A licensee shall collect and maintain information | 25 |
| annually for a report that shall
disclose in detail and under | 26 |
| appropriate headings:
| 27 |
| (1) the total number of payday loans made during the
| 28 |
| preceding calendar year;
| 29 |
| (2) the total number of payday loans outstanding as of | 30 |
| December 31 of
the preceding calendar year;
| 31 |
| (3) the minimum, maximum, and average dollar amount of | 32 |
| payday loans made during the preceding calendar year;
| 33 |
| (4) the average annual percentage rate and the average | 34 |
| term of payday loans made during the preceding calendar |
|
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LRB094 09280 MKM 39518 b |
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| 1 |
| year; and
| 2 |
| (5) the total number of payday loans paid in full, the | 3 |
| total number of loans that went into default, and the
total | 4 |
| number of loans written off during the preceding calendar | 5 |
| year.
| 6 |
| The report shall be verified by the oath or affirmation of | 7 |
| the owner,
manager, or president of the licensee. The report | 8 |
| must be filed with the
Secretary no later than March 1 of the | 9 |
| year following the year for which
the report discloses the | 10 |
| information specified in this subsection (b). The
Secretary may | 11 |
| impose upon the licensee a fine of $25 per day for each day
| 12 |
| beyond the filing deadline that the report is not filed.
| 13 |
| (c) No later than July 31 of the second year following the | 14 |
| effective date of this Act, the Department shall publish a | 15 |
| biennial report that contains a compilation of aggregate data | 16 |
| concerning the payday lending industry and shall make the | 17 |
| report available to the Governor, the General Assembly, and the | 18 |
| general public. | 19 |
| (d) The Department shall have the authority to conduct | 20 |
| examinations of
the books, records, and loan documents at any | 21 |
| time. | 22 |
| Section 2-60. Advertising. | 23 |
| (a) Advertising for loans transacted under this Act may not | 24 |
| be false,
misleading, or deceptive. Payday loan advertising, if | 25 |
| it states a rate or amount of
charge for a loan, must state the | 26 |
| rate as an annual percentage rate. No
licensee may advertise in | 27 |
| any manner so as to indicate or imply that its
rates or charges | 28 |
| for loans are in any way recommended, approved,
set, or | 29 |
| established by the 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 amount | 32 |
| of any finance charge,
or the number of installments or the | 33 |
| period of repayment, then the
advertisement shall state all of | 34 |
| the following items:
| 35 |
| (1) The amount of the loan.
|
|
|
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| (2) The number, amount, and due dates or period of | 2 |
| payments
scheduled to repay the indebtedness if the credit | 3 |
| is extended.
| 4 |
| (3) The finance charge expressed as an annual | 5 |
| percentage
rate. | 6 |
| Article 3. Licensure | 7 |
| Section 3-3. Licensure requirement. | 8 |
| (a) Except as provided in subsection (b), on and after the | 9 |
| effective date of this Act, a person or entity acting as a | 10 |
| payday lender must be licensed by the Department as provided in | 11 |
| this Article. | 12 |
| (b) A person or entity acting as a payday lender who is | 13 |
| licensed on the effective date of this Act under the Consumer | 14 |
| Installment Loan Act need not comply with subsection (a) until | 15 |
| the Department takes action on the person's or entity's | 16 |
| application for a payday loan license. The application must be | 17 |
| submitted to the Department within 9 months after the effective | 18 |
| date of this Act. If the application is not submitted within 9 | 19 |
| months after the effective date of this Act, the person or | 20 |
| entity acting as a payday lender is subject to subsection (a). | 21 |
| Section 3-5. Licensure. | 22 |
| (a) A license to make a payday loan shall state the | 23 |
| address,
including city and state, at which
the business is to | 24 |
| be conducted and shall state fully the name of the licensee.
| 25 |
| The license shall be conspicuously posted in the place of | 26 |
| business of the
licensee and shall not be transferable or | 27 |
| assignable.
| 28 |
| (b) An application for a license shall be in writing and in | 29 |
| a form
prescribed by the Secretary. The Secretary may not issue | 30 |
| a payday loan
license unless and until the following findings | 31 |
| are made:
| 32 |
| (1) that the financial responsibility, experience, | 33 |
| character, and general
fitness of the applicant are such as |
|
|
|
HB1100 Enrolled |
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LRB094 09280 MKM 39518 b |
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| 1 |
| to command the confidence of the public
and to warrant the | 2 |
| belief that the business will be operated lawfully and
| 3 |
| fairly and within the provisions and purposes of this Act; | 4 |
| and
| 5 |
| (2) that the applicant has submitted such other | 6 |
| information as the
Secretary may deem necessary.
| 7 |
| (c) A license shall be issued for no longer than one year, | 8 |
| and no renewal
of a license may be provided if a licensee has | 9 |
| substantially violated this
Act and has not cured the violation | 10 |
| to the satisfaction of the Department.
| 11 |
| (d) A licensee shall appoint, in writing, the Secretary as | 12 |
| attorney-in-fact
upon whom all lawful process against the | 13 |
| licensee may be served with the
same legal force and validity | 14 |
| as if served on the licensee. A copy of the
written | 15 |
| appointment, duly certified, shall be filed in the office of | 16 |
| the
Secretary, and a copy thereof certified by the Secretary | 17 |
| shall be sufficient
evidence to subject a licensee to | 18 |
| jurisdiction in a court of law. This appointment shall remain | 19 |
| in effect while any liability remains
outstanding in this State | 20 |
| against the licensee. When summons is served upon
the Secretary | 21 |
| as attorney-in-fact for a licensee, the Secretary shall | 22 |
| immediately
notify the licensee by registered mail, enclosing | 23 |
| the summons and specifying
the hour and day of service.
| 24 |
| (e) A licensee must pay an annual fee of $1,000. In | 25 |
| addition to the
license fee, the reasonable expense of any | 26 |
| examination or hearing
by the Secretary under any provisions of | 27 |
| this Act shall be borne by
the licensee. If a licensee fails to | 28 |
| renew its license by December 31,
its license
shall | 29 |
| automatically expire; however, the Secretary, in his or her | 30 |
| discretion,
may reinstate an expired license upon:
| 31 |
| (1) payment of the annual fee within 30 days of the | 32 |
| date of
expiration; and
| 33 |
| (2) proof of good cause for failure to renew.
| 34 |
| (f) Not more than one place of business shall be maintained | 35 |
| under the
same license, but the Secretary may issue more than | 36 |
| one license to the same
licensee upon compliance with all the |
|
|
|
HB1100 Enrolled |
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LRB094 09280 MKM 39518 b |
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| 1 |
| provisions of this Act governing
issuance of a single license. | 2 |
| The location, except those locations already in
existence as of | 3 |
| June 1, 2005, may not be within one mile of a
horse race track | 4 |
| subject to the Illinois Horse Racing Act of 1975,
within one | 5 |
| mile of a facility at which gambling is conducted under the
| 6 |
| Riverboat Gambling Act, within one mile of the location at | 7 |
| which a
riverboat subject to the Riverboat Gambling Act docks, | 8 |
| or within one mile of
any State of Illinois or United States | 9 |
| military base or naval installation.
| 10 |
| (g) No licensee shall conduct the business of making loans | 11 |
| under this
Act within any office, suite, room, or place of | 12 |
| business in which any other
business is solicited or engaged in | 13 |
| unless the other business is licensed by the Department or, in | 14 |
| the opinion of the Secretary, the
other business would not be | 15 |
| contrary to the best interests of consumers and
is authorized | 16 |
| by the Secretary in writing.
| 17 |
| (h) The Secretary shall maintain a list of licensees that | 18 |
| shall be
available to interested consumers and lenders and the | 19 |
| public. The Secretary
shall maintain a toll-free number whereby | 20 |
| consumers may obtain
information about licensees. The | 21 |
| Secretary shall also establish a complaint
process under which | 22 |
| an aggrieved consumer
may file a complaint against a licensee | 23 |
| or non-licensee who violates any
provision of this Act.
| 24 |
| Section 3-10. Closing of business; surrender of license. At | 25 |
| least 10 days
before a licensee ceases operations, closes the | 26 |
| business, or files for
bankruptcy, the licensee shall: | 27 |
| (1) Notify the Department of its intended action in | 28 |
| writing.
| 29 |
| (2) With the exception of filing for bankruptcy, | 30 |
| surrender its license to
the Secretary for cancellation. | 31 |
| The surrender of the license shall not affect
the
| 32 |
| licensee's civil or criminal liability for acts committed | 33 |
| before or after the surrender
or entitle the licensee to a | 34 |
| return of any part of the annual license fee.
| 35 |
| (3) Notify the Department of the location where the |
|
|
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HB1100 Enrolled |
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LRB094 09280 MKM 39518 b |
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| 1 |
| books, accounts,
contracts, and records will be | 2 |
| maintained.
| 3 |
| The accounts, books, records, and contracts shall be | 4 |
| maintained and
serviced by the licensee, by another licensee | 5 |
| under this Act, or by the Department.
| 6 |
| Article 4. Administrative Provisions | 7 |
| Section 4-5. Prohibited acts. A licensee or unlicensed | 8 |
| person or entity making payday
loans may not commit, or have | 9 |
| committed on behalf of the
licensee
or unlicensed person or | 10 |
| entity, any of the following acts: | 11 |
| (1) Threatening to use or using the criminal process in | 12 |
| this or any
other state to collect on the loan.
| 13 |
| (2) Using any device or agreement that would have the | 14 |
| effect of
charging or collecting more fees or charges than | 15 |
| allowed by this
Act, including, but not limited to, | 16 |
| entering into a different type of
transaction
with the | 17 |
| consumer.
| 18 |
| (3) Engaging in unfair, deceptive, or fraudulent | 19 |
| practices in the
making or collecting of a payday loan.
| 20 |
| (4) Using or attempting to use the check provided by | 21 |
| the consumer in
a payday loan as collateral for a | 22 |
| transaction not related to a payday loan.
| 23 |
| (5) Knowingly accepting payment in whole or in part of | 24 |
| a payday
loan through the proceeds of another payday loan | 25 |
| provided by any licensee.
| 26 |
| (6) Knowingly accepting any security, other than that | 27 |
| specified in the
definition of payday loan in Section 1-10, | 28 |
| for a payday loan.
| 29 |
| (7) Charging any fees or charges other than those | 30 |
| specifically
authorized by this Act.
| 31 |
| (8) Threatening to take any action against a consumer | 32 |
| that is
prohibited by this Act or making any misleading or | 33 |
| deceptive statements
regarding the payday loan or any | 34 |
| consequences thereof.
|
|
|
|
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LRB094 09280 MKM 39518 b |
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| 1 |
| (9) Making a misrepresentation of a material fact by an | 2 |
| applicant for licensure in
obtaining or attempting to | 3 |
| obtain a license.
| 4 |
| (10) Including any of the following provisions in loan | 5 |
| documents
required by subsection (b) of Section 2-20:
| 6 |
| (A) a confession of judgment clause;
| 7 |
| (B) a waiver of the right to a jury trial, if | 8 |
| applicable, in any action
brought by or against a | 9 |
| consumer, unless the waiver is included in an | 10 |
| arbitration clause allowed under
subparagraph (C) of | 11 |
| this paragraph (11);
| 12 |
| (C) a mandatory arbitration clause that is | 13 |
| oppressive, unfair,
unconscionable, or substantially | 14 |
| in derogation of the rights of consumers; or
| 15 |
| (D) a provision in which the consumer agrees not to | 16 |
| assert any claim
or defense arising out of the | 17 |
| contract.
| 18 |
| (11) Selling any insurance of any kind whether or not | 19 |
| sold in
connection with the making or collecting of a | 20 |
| payday loan.
| 21 |
| (12) Taking any power of attorney.
| 22 |
| (13) Taking any security interest in real estate.
| 23 |
| (14) Collecting a delinquency or collection charge on | 24 |
| any installment
regardless of the period in which it | 25 |
| remains in default.
| 26 |
| (15) Collecting treble damages on an amount owing from | 27 |
| a payday loan.
| 28 |
| (16) Refusing, or intentionally delaying or
| 29 |
| inhibiting, the consumer's right to enter into a repayment | 30 |
| plan pursuant to this
Act. | 31 |
| (17) Charging for, or attempting to
collect, | 32 |
| attorney's fees, court costs, or arbitration costs | 33 |
| incurred in connection with the
collection of a payday | 34 |
| loan. | 35 |
| (18) Making a loan in violation of this Act. | 36 |
| (19) Garnishing the wages or salaries of a consumer who |
|
|
|
HB1100 Enrolled |
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LRB094 09280 MKM 39518 b |
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| 1 |
| is a member of the military. | 2 |
| (20) Failing to suspend or defer collection activity | 3 |
| against a consumer who is a member of the military and who | 4 |
| has been deployed to a combat or combat-support posting. | 5 |
| (21) Contacting the military chain of command of a | 6 |
| consumer who is a member of the military in an effort to | 7 |
| collect on a payday loan. | 8 |
| Section 4-10. Enforcement and remedies. | 9 |
| (a) The remedies provided in this Act are cumulative and | 10 |
| apply to persons
or entities subject to this Act.
| 11 |
| (b) Any material violation of this Act, including the | 12 |
| commission of an act prohibited under Section 4-5, constitutes | 13 |
| a violation of the Consumer Fraud
and Deceptive Business | 14 |
| Practices Act.
| 15 |
| (c) If any provision of the written agreement described in | 16 |
| subsection (b) of
Section 2-20 violates this Act, then that | 17 |
| provision is unenforceable against the consumer. | 18 |
| (d) Subject to the Illinois Administrative Procedure Act, | 19 |
| the Secretary may hold hearings, make findings of fact, | 20 |
| conclusions of law, issue cease
and desist orders, have the | 21 |
| power to issue fines of up to $10,000 per violation, refer the | 22 |
| matter to the appropriate law enforcement agency
for | 23 |
| prosecution under this Act, and suspend or revoke a license | 24 |
| granted
under this Act. All proceedings shall be open to the | 25 |
| public. | 26 |
| (e) The Secretary may issue a cease and desist order to any | 27 |
| licensee or other person doing business without the required | 28 |
| license, when in the opinion of the Secretary the licensee or | 29 |
| other person is violating or is about to violate any provision | 30 |
| of this Act or any rule or requirement imposed in writing by | 31 |
| the Department as a condition of granting any authorization | 32 |
| permitted by this Act. The cease and desist order permitted by | 33 |
| this subsection (e) may be issued prior to a hearing. | 34 |
| The Secretary shall serve notice of his or her action, | 35 |
| including, but not limited to, a statement of the reasons for |
|
|
|
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LRB094 09280 MKM 39518 b |
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| 1 |
| the action, either personally or by certified mail, return | 2 |
| receipt requested. Service by certified mail shall be deemed | 3 |
| completed when the notice is deposited in the U.S. Mail. | 4 |
| Within 10 days of service of the cease and desist order, | 5 |
| the licensee or other person may request a hearing in writing.
| 6 |
| The Secretary shall schedule a hearing within 30 days after the | 7 |
| request for a hearing unless otherwise agreed to by the | 8 |
| parties. | 9 |
| If it is determined that the Secretary had the authority to | 10 |
| issue the cease and desist order, he or she may issue such | 11 |
| orders as may be reasonably necessary to correct, eliminate, or | 12 |
| remedy the conduct. | 13 |
| The powers vested in the Secretary by this subsection (e) | 14 |
| are additional to any and all other powers and remedies vested | 15 |
| in the Secretary by law, and nothing in this subsection (e) | 16 |
| shall be construed as requiring that the Secretary shall employ | 17 |
| the power conferred in this subsection instead of or as a | 18 |
| condition precedent to the exercise of any other power or | 19 |
| remedy vested in the Secretary. | 20 |
| (f) The Secretary may, after 10 days notice by registered | 21 |
| mail to the licensee at the address set forth in the license | 22 |
| stating the contemplated action and in general the grounds | 23 |
| therefore, fine the licensee an amount not exceeding $10,000 | 24 |
| per violation, or revoke or suspend any license issued | 25 |
| hereunder if he or she finds that: | 26 |
| (1) the licensee has failed to comply with any | 27 |
| provision of this Act or any order, decision, finding, | 28 |
| rule, regulation, or direction of the Secretary lawfully | 29 |
| made pursuant to the authority of this Act; or | 30 |
| (2) any fact or condition exists which, if it had | 31 |
| existed at the time of the original application for the | 32 |
| license, clearly would have warranted the Secretary in | 33 |
| refusing to issue the license. | 34 |
| The Secretary may fine, suspend, or revoke only the | 35 |
| particular license with respect to which grounds for the fine, | 36 |
| revocation, or suspension occur or exist, but if the Secretary |
|
|
|
HB1100 Enrolled |
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LRB094 09280 MKM 39518 b |
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| 1 |
| finds that grounds for revocation are of general application to | 2 |
| all offices or to more than one office of the licensee, the | 3 |
| Secretary shall fine, suspend, or revoke every license to which | 4 |
| the grounds apply. | 5 |
| No revocation, suspension, or surrender of any license | 6 |
| shall impair or affect the obligation of any pre-existing | 7 |
| lawful contract between the licensee and any obligor. | 8 |
| The Secretary may issue a new license to a licensee whose | 9 |
| license has been revoked when facts or conditions which clearly | 10 |
| would have warranted the Secretary in refusing originally to | 11 |
| issue the license no longer exist. | 12 |
| In every case in which a license is suspended or revoked or | 13 |
| an application for a license or renewal of a license is denied, | 14 |
| the Secretary shall serve the licensee with notice of his or | 15 |
| her action, including a statement of the reasons for his or her | 16 |
| actions, either personally, or by certified mail, return | 17 |
| receipt requested. Service by certified mail shall be deemed | 18 |
| completed when the notice is deposited in the U.S. Mail. | 19 |
| An order assessing a fine, an order revoking or suspending | 20 |
| a license, or an order denying renewal of a license shall take | 21 |
| effect upon service of the order unless the licensee requests a | 22 |
| hearing, in writing, within 10 days after the date of service. | 23 |
| In the event a hearing is requested, the order shall be stayed | 24 |
| until a final administrative order is entered. | 25 |
| If the licensee requests a hearing, the Secretary shall | 26 |
| schedule a hearing within 30 days after the request for a | 27 |
| hearing unless otherwise agreed to by the parties. | 28 |
| The hearing shall be held at the time and place designated | 29 |
| by the Secretary. The Secretary and any administrative law | 30 |
| judge designated by him or her shall have the power to | 31 |
| administer oaths and affirmations, subpoena witnesses and | 32 |
| compel their attendance, take evidence, and require the | 33 |
| production of books, papers, correspondence, and other records | 34 |
| or information that he or she considers relevant or material to | 35 |
| the inquiry. | 36 |
| (g) The costs of administrative hearings conducted |
|
|
|
HB1100 Enrolled |
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LRB094 09280 MKM 39518 b |
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| 1 |
| pursuant to this Section shall be paid by the licensee. | 2 |
| Section 4-15. Bonding. | 3 |
| (a) A person or entity engaged in making payday loans under
| 4 |
| this Act shall post a bond to the Department in the amount of | 5 |
| $50,000 for
each location where loans will be made, up to a | 6 |
| maximum bond amount of
$500,000.
| 7 |
| (b) A bond posted under subsection (a) must continue in | 8 |
| effect for the period of licensure and for 3 additional years | 9 |
| if the bond is still available. The bond must be
available to | 10 |
| pay damages and penalties to a consumer harmed by a violation
| 11 |
| of this Act. | 12 |
| (c) From time to time the Secretary may require a licensee | 13 |
| to file a bond in an additional sum if the Secretary determines | 14 |
| it to be necessary. In no case shall the bond be more than the | 15 |
| outstanding liabilities of the licensee. | 16 |
| Section 4-20. Preemption of administrative rules. Any
| 17 |
| administrative rule
promulgated prior to the effective
date of | 18 |
| this Act by the Department regarding payday loans is
preempted. | 19 |
| Section 4-25. Reporting of violations. The Department | 20 |
| shall report to the
Attorney General all material violations of | 21 |
| this Act of which it becomes aware. | 22 |
| Section 4-30. Rulemaking; industry review. | 23 |
| (a) The Department may make and enforce such reasonable | 24 |
| rules, regulations, directions, orders, decisions, and | 25 |
| findings as the execution and enforcement of the provisions of | 26 |
| this Act require, and as are not inconsistent therewith. All | 27 |
| rules, regulations, and directions of a general character shall | 28 |
| be printed and copies thereof mailed to all licensees. | 29 |
| (b) Within 6 months after the effective date of this Act, | 30 |
| the Department shall promulgate reasonable rules regarding the | 31 |
| issuance of payday loans by banks, savings banks, savings and | 32 |
| loan associations, credit unions, and insurance companies. |
|
|
|
HB1100 Enrolled |
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LRB094 09280 MKM 39518 b |
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| 1 |
| These rules shall be consistent with this Act and shall be | 2 |
| limited in scope to the actual products and services offered by | 3 |
| lenders governed by this Act. | 4 |
| (c) After the effective date of this Act, the Department | 5 |
| shall, over a 3-year period, conduct a study of the payday loan | 6 |
| industry
to determine the impact and effectiveness of this Act. | 7 |
| The Department
shall report its findings to the General | 8 |
| Assembly within 3 months of the
third anniversary of the | 9 |
| effective date of this Act. The study shall
determine the | 10 |
| effect of this Act on the protection of consumers in this
State | 11 |
| and on the fair and reasonable regulation of the payday loan | 12 |
| industry. The
study shall include, but shall not be limited to, | 13 |
| an analysis of the ability
of the industry to use private | 14 |
| reporting tools that: | 15 |
| (1) ensure substantial compliance with this Act, | 16 |
| including real time reporting of outstanding payday loans; | 17 |
| and | 18 |
| (2) provide data to the Department in an appropriate | 19 |
| form and with appropriate content to allow the Department | 20 |
| to adequately monitor the industry. | 21 |
| The report of the Department shall, if necessary, identify | 22 |
| and recommend specific amendments to this Act to further | 23 |
| protect consumers and to guarantee fair and reasonable | 24 |
| regulation of the payday loan industry.
| 25 |
| Section 4-35. Judicial review. All final administrative | 26 |
| decisions of the
Department under this Act are subject to | 27 |
| judicial review pursuant to the
provisions of the | 28 |
| Administrative Review Law and any rules adopted pursuant
| 29 |
| thereto. | 30 |
| Section 4-40. No waivers. There shall be no waiver of any | 31 |
| provision of
this Act. | 32 |
| Section 4-45. Superiority of Act. To the extent this Act | 33 |
| conflicts with
any other State financial regulation laws, this |
|
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|
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LRB094 09280 MKM 39518 b |
|
| 1 |
| Act is superior and
supersedes those laws for the
purposes of | 2 |
| regulating payday loans in Illinois, provided that nothing | 3 |
| herein shall apply to any lender that is a bank, savings bank, | 4 |
| savings and loan association, credit union, or insurance | 5 |
| company organized, chartered, or holding a certificate of | 6 |
| authority to do business under the laws of this State or any | 7 |
| other state or under the laws of the United States. | 8 |
| Section 4-50. Severability. The provisions of this Act are | 9 |
| severable under Section 1.31 of the Statute
on Statutes. | 10 |
| Article 90. Amendatory Provisions | 11 |
| Section 90-5. The Financial Institutions Code is amended by | 12 |
| changing Sections 4 and 6 as follows:
| 13 |
| (20 ILCS 1205/4) (from Ch. 17, par. 104)
| 14 |
| Sec. 4. As used in this Act:
| 15 |
| (a) "Department" means the Department of Financial | 16 |
| Institutions.
| 17 |
| (b) "Director" means the Director of Financial | 18 |
| Institutions.
| 19 |
| (c) "Person" means any individual, partnership, joint | 20 |
| venture, trust,
estate, firm, corporation, association or | 21 |
| cooperative society or
association.
| 22 |
| (d) "Financial institutions" means ambulatory and | 23 |
| community currency
exchanges, credit unions, guaranteed credit | 24 |
| unions, persons engaged in the
business of transmitting money | 25 |
| to foreign countries or buying and selling
foreign money, | 26 |
| pawners' societies, title insuring or guaranteeing
companies, | 27 |
| and persons engaged in the business of making loans of $800 or
| 28 |
| less, all as respectively defined in the laws referred to in | 29 |
| Section 6 of
this Act. The term includes sales finance | 30 |
| agencies, as defined in the
"Sales Finance Agency Act", enacted | 31 |
| by the 75th General Assembly.
| 32 |
| (e) "Payday loan" has the meaning ascribed to that
term in |
|
|
|
HB1100 Enrolled |
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LRB094 09280 MKM 39518 b |
|
| 1 |
| the Payday Loan Reform Act.
| 2 |
| (Source: Laws 1967, p. 2211.)
| 3 |
| (20 ILCS 1205/6) (from Ch. 17, par. 106)
| 4 |
| Sec. 6. In addition to the duties imposed elsewhere in this | 5 |
| Act, the
Department has the following powers:
| 6 |
| (1) To exercise the rights, powers and duties vested by law | 7 |
| in the
Auditor of Public Accounts under "An Act to provide for | 8 |
| the incorporation,
management and regulation of pawners' | 9 |
| societies and limiting the rate of
compensation to be paid for | 10 |
| advances, storage and insurance on pawns and
pledges and to | 11 |
| allow the loaning of money upon personal property", approved
| 12 |
| March 29, 1899, as amended.
| 13 |
| (2) To exercise the rights, powers and duties vested by law | 14 |
| in the
Auditor of Public Accounts under "An Act in relation to | 15 |
| the definition,
licensing and regulation of community currency | 16 |
| exchanges and ambulatory
currency exchanges, and the operators | 17 |
| and employees thereof, and to make an
appropriation therefor, | 18 |
| and to provide penalties and remedies for the
violation | 19 |
| thereof", approved June 30, 1943, as amended.
| 20 |
| (3) To exercise the rights, powers, and duties vested by | 21 |
| law in the
Auditor of Public Accounts under "An Act in relation | 22 |
| to the buying and
selling of foreign exchange and the | 23 |
| transmission or transfer of money to
foreign countries", | 24 |
| approved June 28, 1923, as amended.
| 25 |
| (4) To exercise the rights, powers, and duties vested by | 26 |
| law in the
Auditor of Public Accounts under "An Act to provide | 27 |
| for and regulate the
business of guaranteeing titles to real | 28 |
| estate by corporations", approved
May 13, 1901, as amended.
| 29 |
| (5) To exercise the rights, powers and duties vested by law | 30 |
| in the
Department of Insurance under "An Act to define, | 31 |
| license, and regulate the
business of making loans of eight | 32 |
| hundred dollars or less, permitting an
interest charge thereon | 33 |
| greater than otherwise allowed by law, authorizing
and | 34 |
| regulating the assignment of wages or salary when taken as | 35 |
| security for
any such loan or as consideration for a payment of |
|
|
|
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LRB094 09280 MKM 39518 b |
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| 1 |
| eight hundred dollars or
less, providing penalties, and to | 2 |
| repeal Acts therein named", approved July
11, 1935, as amended.
| 3 |
| (6) To administer and enforce "An Act to license and | 4 |
| regulate the
keeping and letting of safety deposit boxes, | 5 |
| safes, and vaults, and the
opening thereof, and to repeal a | 6 |
| certain Act therein named", approved June
13, 1945, as amended.
| 7 |
| (7) Whenever the Department is authorized or required by | 8 |
| law to consider
some aspect of criminal history record | 9 |
| information for the purpose of
carrying out its statutory | 10 |
| powers and responsibilities, then, upon request
and payment of | 11 |
| fees in conformance with the requirements of Section 2605-400 | 12 |
| of the Department of State Police Law
(20 ILCS 2605/2605-400), | 13 |
| the
Department of State Police is authorized to furnish, | 14 |
| pursuant to positive
identification, such information | 15 |
| contained in State files as is necessary
to fulfill the | 16 |
| request.
| 17 |
| (8) To administer the Payday Loan Reform Act.
| 18 |
| (Source: P.A. 91-239, eff. 1-1-00.)
| 19 |
| Section 90-10. The Consumer Installment Loan Act is amended | 20 |
| by changing Section 21 as follows:
| 21 |
| (205 ILCS 670/21) (from Ch. 17, par. 5427)
| 22 |
| Sec. 21. Application of act. This Act does not apply to any | 23 |
| person, partnership,
association, limited liability company, | 24 |
| or
corporation doing business under and as permitted by any law | 25 |
| of this State
or of the United States relating to banks, | 26 |
| savings and
loan
associations, savings banks, credit unions, or
| 27 |
| licensees under the Residential Mortgage License Act for | 28 |
| residential mortgage
loans made pursuant to that Act. This Act | 29 |
| does
not apply to
business loans. This Act does not apply to | 30 |
| payday loans.
| 31 |
| (Source: P.A. 90-437, eff. 1-1-98.)
| 32 |
| Section 90-12. The Interest Act is amended by changing | 33 |
| Section 4 as follows:
|
|
|
|
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| 1 |
| (815 ILCS 205/4) (from Ch. 17, par. 6404)
| 2 |
| Sec. 4. General interest rate.
| 3 |
| (1) In all written contracts it shall be lawful for the | 4 |
| parties to
stipulate or agree that 9% per annum, or any less | 5 |
| sum of interest, shall be
taken and paid upon every $100 of | 6 |
| money loaned or in any manner due and
owing from any person to | 7 |
| any other person or corporation in this state, and
after that | 8 |
| rate for a greater or less sum, or for a longer or shorter | 9 |
| time,
except as herein provided.
| 10 |
| The maximum rate of interest that may lawfully be | 11 |
| contracted for is
determined by the law applicable thereto at | 12 |
| the time the contract is
made. Any provision in any contract, | 13 |
| whether made before or after July
1, 1969, which provides for | 14 |
| or purports to authorize, contingent upon a
change in the | 15 |
| Illinois law after the contract is made, any rate of
interest | 16 |
| greater than the maximum lawful rate at the time the contract
| 17 |
| is made, is void.
| 18 |
| It is lawful for a state bank or a branch of an | 19 |
| out-of-state bank, as those
terms are defined in Section 2 of | 20 |
| the Illinois Banking Act, to receive or to
contract to receive
| 21 |
| and collect interest and charges at any rate or rates agreed | 22 |
| upon by
the bank or branch and the borrower.
It is lawful for a | 23 |
| savings bank chartered under the Savings Bank Act or a
savings | 24 |
| association chartered under the Illinois Savings and Loan Act | 25 |
| of 1985
to receive or contract to receive and collect interest | 26 |
| and charges at any rate
agreed upon by the savings bank or | 27 |
| savings association and the borrower.
| 28 |
| It is lawful to receive or to contract to receive and | 29 |
| collect
interest and charges as authorized by this Act and as | 30 |
| authorized by the
Consumer Installment Loan Act and by the | 31 |
| "Consumer Finance Act", approved July
10,
1935, as now or | 32 |
| hereafter amended , or by the Payday Loan Reform Act . It is | 33 |
| lawful to charge, contract
for, and receive any rate or amount | 34 |
| of interest or compensation with
respect to the following | 35 |
| transactions:
|
|
|
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HB1100 Enrolled |
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LRB094 09280 MKM 39518 b |
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| 1 |
| (a) Any loan made to a corporation;
| 2 |
| (b) Advances of money, repayable on demand, to an | 3 |
| amount not less
than $5,000, which are made upon warehouse | 4 |
| receipts, bills of lading,
certificates of stock, | 5 |
| certificates of deposit, bills of exchange, bonds
or other | 6 |
| negotiable instruments pledged as collateral security for | 7 |
| such
repayment, if evidenced by a writing;
| 8 |
| (c) Any credit transaction between a merchandise | 9 |
| wholesaler and
retailer; any business loan to a business | 10 |
| association or copartnership
or to a person owning and | 11 |
| operating a business as sole proprietor or to
any persons | 12 |
| owning and operating a business as joint venturers, joint
| 13 |
| tenants or tenants in common, or to any limited | 14 |
| partnership, or to any
trustee owning and operating a | 15 |
| business or whose beneficiaries own and
operate a business, | 16 |
| except that any loan which is secured (1) by an
assignment | 17 |
| of an individual obligor's salary, wages, commissions or
| 18 |
| other compensation for services, or (2) by his household | 19 |
| furniture or
other goods used for his personal, family or | 20 |
| household purposes shall be
deemed not to be a loan within | 21 |
| the meaning of this subsection; and
provided further that a | 22 |
| loan which otherwise qualifies as a business
loan within | 23 |
| the meaning of this subsection shall not be deemed as not | 24 |
| so
qualifying because of the inclusion, with other security | 25 |
| consisting of
business assets of any such obligor, of real | 26 |
| estate occupied by an
individual obligor solely as his | 27 |
| residence. The term "business" shall
be deemed to mean a | 28 |
| commercial, agricultural or industrial enterprise
which is | 29 |
| carried on for the purpose of investment or profit, but | 30 |
| shall
not be deemed to mean the ownership or maintenance of | 31 |
| real estate
occupied by an individual obligor solely as his | 32 |
| residence;
| 33 |
| (d) Any loan made in accordance with the provisions of | 34 |
| Subchapter I
of Chapter 13 of Title 12 of the United States | 35 |
| Code, which is designated
as "Housing Renovation and | 36 |
| Modernization";
|
|
|
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LRB094 09280 MKM 39518 b |
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| 1 |
| (e) Any mortgage loan insured or upon which a | 2 |
| commitment to insure
has been issued under the provisions | 3 |
| of the National Housing Act,
Chapter 13 of Title 12 of the | 4 |
| United States Code;
| 5 |
| (f) Any mortgage loan guaranteed or upon which a | 6 |
| commitment to
guaranty has been issued under the provisions | 7 |
| of the Veterans' Benefits
Act, Subchapter II of Chapter 37 | 8 |
| of Title 38 of the United States Code;
| 9 |
| (g) Interest charged by a broker or dealer registered | 10 |
| under the
Securities Exchange Act of 1934, as amended, or | 11 |
| registered under the
Illinois Securities Law of 1953, | 12 |
| approved July 13, 1953, as now or
hereafter amended, on a | 13 |
| debit balance in an account for a customer if
such debit | 14 |
| balance is payable at will without penalty and is secured | 15 |
| by
securities as defined in Uniform Commercial | 16 |
| Code-Investment Securities;
| 17 |
| (h) Any loan made by a participating bank as part of | 18 |
| any loan
guarantee program which provides for loans and for | 19 |
| the refinancing of
such loans to medical students, interns | 20 |
| and residents and which are
guaranteed by the American | 21 |
| Medical Association Education and Research
Foundation;
| 22 |
| (i) Any loan made, guaranteed, or insured in accordance | 23 |
| with the
provisions of the Housing Act of 1949, Subchapter | 24 |
| III of Chapter 8A of
Title 42 of the United States Code and | 25 |
| the Consolidated Farm and Rural
Development Act, | 26 |
| Subchapters I, II, and III of Chapter 50 of Title 7 of
the | 27 |
| United States Code;
| 28 |
| (j) Any loan by an employee pension benefit plan, as | 29 |
| defined in Section
3 (2) of the Employee Retirement Income | 30 |
| Security Act of 1974 (29 U.S.C.A.
Sec. 1002), to an | 31 |
| individual participating in such plan, provided that such
| 32 |
| loan satisfies the prohibited transaction exemption | 33 |
| requirements of Section
408 (b) (1) (29 U.S.C.A. Sec. 1108 | 34 |
| (b) (1)) or Section 2003 (a) (26 U.S.C.A.
Sec. 4975 (d) | 35 |
| (1)) of the Employee Retirement Income Security Act of | 36 |
| 1974;
|
|
|
|
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LRB094 09280 MKM 39518 b |
|
| 1 |
| (k) Written contracts, agreements or bonds for deed | 2 |
| providing for
installment purchase of real estate;
| 3 |
| (1) Loans secured by a mortgage on real estate;
| 4 |
| (m) Loans made by a sole proprietorship, partnership, | 5 |
| or corporation to
an employee or to a person who has been | 6 |
| offered employment by such sole
proprietorship, | 7 |
| partnership, or corporation made for the sole purpose of
| 8 |
| transferring an employee or person who has been offered | 9 |
| employment to another
office maintained and operated by the | 10 |
| same sole proprietorship, partnership,
or corporation;
| 11 |
| (n) Loans to or for the benefit of students made by an | 12 |
| institution of
higher education.
| 13 |
| (2) Except for loans described in subparagraph (a), (c), | 14 |
| (d),
(e), (f) or (i) of subsection (1) of this Section, and | 15 |
| except to the
extent permitted by the applicable statute for | 16 |
| loans made pursuant to
Section 4a or pursuant to the Consumer | 17 |
| Installment Loan Act:
| 18 |
| (a) Whenever the rate of interest exceeds 8% per annum | 19 |
| on any
written contract, agreement or bond for deed | 20 |
| providing for the installment
purchase of residential real | 21 |
| estate, or on any loan secured by a mortgage
on residential | 22 |
| real estate, it shall be unlawful to provide for a
| 23 |
| prepayment penalty or other charge for prepayment.
| 24 |
| (b) No agreement, note or other instrument evidencing a | 25 |
| loan
secured by a mortgage on residential real estate, or | 26 |
| written contract,
agreement or bond for deed providing for | 27 |
| the installment purchase of
residential real estate, may | 28 |
| provide for any change in the contract rate of
interest | 29 |
| during the term thereof. However, if the Congress of the | 30 |
| United
States or any federal agency authorizes any class of | 31 |
| lender to enter, within
limitations, into mortgage | 32 |
| contracts or written contracts, agreements or
bonds for | 33 |
| deed in which the rate of interest may be changed during | 34 |
| the
term of the contract, any person, firm, corporation or | 35 |
| other entity
not otherwise prohibited from entering into | 36 |
| mortgage contracts or
written contracts, agreements or |
|
|
|
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LRB094 09280 MKM 39518 b |
|
| 1 |
| bonds for deed in Illinois may enter
into mortgage | 2 |
| contracts or written contracts, agreements or bonds
for | 3 |
| deed in which the rate of interest may be changed during | 4 |
| the term
of the contract, within the same limitations.
| 5 |
| (3) In any contract or loan which is secured by a mortgage, | 6 |
| deed of
trust, or conveyance in the nature of a mortgage, on | 7 |
| residential real
estate, the interest which is computed, | 8 |
| calculated, charged, or collected
pursuant to such contract or | 9 |
| loan, or pursuant to any regulation or rule
promulgated | 10 |
| pursuant to this Act, may not be computed, calculated, charged
| 11 |
| or collected for any period of time occurring after the date on | 12 |
| which the
total indebtedness, with the exception of late | 13 |
| payment penalties, is paid
in full.
| 14 |
| For purposes of this Section, a prepayment shall mean the | 15 |
| payment of the
total indebtedness, with the exception of late | 16 |
| payment penalties if
incurred or charged, on any date before | 17 |
| the date specified in the contract
or loan agreement on which | 18 |
| the total indebtedness shall be paid in full, or
before the | 19 |
| date on which all payments, if timely made, shall have been
| 20 |
| made. In the event of a prepayment of the indebtedness which is | 21 |
| made on a
date after the date on which interest on the | 22 |
| indebtedness was last
computed, calculated, charged, or | 23 |
| collected but before the next date on
which interest on the | 24 |
| indebtedness was to be calculated, computed, charged,
or | 25 |
| collected, the lender may calculate, charge and collect | 26 |
| interest on the
indebtedness for the period which elapsed | 27 |
| between the date on which the
prepayment is made and the date | 28 |
| on which interest on the indebtedness was
last computed, | 29 |
| calculated, charged or collected at a rate equal to 1/360 of
| 30 |
| the annual rate for each day which so elapsed, which rate shall | 31 |
| be applied
to the indebtedness outstanding as of the date of | 32 |
| prepayment. The lender
shall refund to the borrower any | 33 |
| interest charged or collected which
exceeds that which the | 34 |
| lender may charge or collect pursuant to the
preceding | 35 |
| sentence. The provisions of this amendatory Act of 1985 shall
| 36 |
| apply only to contracts or loans entered into on or after the |
|
|
|
HB1100 Enrolled |
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LRB094 09280 MKM 39518 b |
|
| 1 |
| effective
date of this amendatory Act, but shall not apply to | 2 |
| contracts or loans
entered into on or after that date that are | 3 |
| subject to Section 4a of this
Act, the Consumer Installment | 4 |
| Loan Act, the Payday Loan Reform Act, or the Retail Installment | 5 |
| Sales
Act, or that provide for the refund of precomputed | 6 |
| interest on prepayment
in the manner provided by such Act.
| 7 |
| (Source: P.A. 92-483, eff. 8-23-01.)
| 8 |
| Section 90-15. The Consumer Fraud and Deceptive Business | 9 |
| Practices Act is amended by changing Section 2Z as follows:
| 10 |
| (815 ILCS 505/2Z) (from Ch. 121 1/2, par. 262Z)
| 11 |
| Sec. 2Z. Violations of other Acts. Any person who knowingly | 12 |
| violates
the Automotive Repair Act,
the Home Repair and | 13 |
| Remodeling Act,
the Dance Studio Act,
the Physical Fitness | 14 |
| Services Act,
the Hearing Instrument Consumer Protection Act,
| 15 |
| the Illinois Union Label Act,
the Job Referral and Job Listing | 16 |
| Services Consumer Protection Act,
the Travel Promotion | 17 |
| Consumer Protection Act,
the Credit Services Organizations | 18 |
| Act,
the Automatic Telephone Dialers Act,
the Pay-Per-Call | 19 |
| Services Consumer Protection Act,
the Telephone Solicitations | 20 |
| Act,
the Illinois Funeral or Burial Funds Act,
the Cemetery | 21 |
| Care Act,
the Safe and Hygienic Bed Act,
the Pre-Need Cemetery | 22 |
| Sales Act,
the High Risk Home Loan Act, the Payday Loan Reform | 23 |
| Act, subsection (a) or (b) of Section 3-10 of the
Cigarette Tax | 24 |
| Act, subsection
(a) or (b) of Section 3-10 of the Cigarette Use | 25 |
| Tax Act, the Electronic
Mail Act, paragraph (6)
of
subsection | 26 |
| (k) of Section 6-305 of the Illinois Vehicle Code, or the | 27 |
| Automatic Contract Renewal Act commits an unlawful practice | 28 |
| within the meaning of this Act.
| 29 |
| (Source: P.A. 92-426, eff. 1-1-02; 93-561, eff. 1-1-04; 93-950, | 30 |
| eff. 1-1-05.)
| 31 |
| Article 99. Effective Date | 32 |
| Section 99. Effective date. This Act takes effect 180 days |
|
|
|
HB1100 Enrolled |
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LRB094 09280 MKM 39518 b |
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| 1 |
| after becoming law. |
|