Full Text of SB1993 95th General Assembly
SB1993eng 95TH GENERAL ASSEMBLY
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| AN ACT concerning business.
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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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| Section 5. The Payday Loan Reform Act is amended by | 5 |
| changing Sections 1-10, 2-5, 4-5, and 4-30 as follows: | 6 |
| (815 ILCS 122/1-10)
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| Sec. 1-10. Definitions. As used in this Act: | 8 |
| "Check" means a "negotiable instrument", as defined in | 9 |
| Article 3 of the Uniform Commercial Code, that is drawn on a | 10 |
| financial institution. | 11 |
| "Commercially reasonable method of verification" or | 12 |
| "certified database" means a consumer reporting service | 13 |
| database certified by the Department as effective in verifying | 14 |
| that a proposed loan agreement is permissible under this Act, | 15 |
| or, in the absence of the Department's certification, any | 16 |
| reasonably reliable written verification by the consumer | 17 |
| concerning (i) whether the consumer has any outstanding payday | 18 |
| loans, (ii) the principal amount of those outstanding payday | 19 |
| loans, and (iii) whether any payday loans have been paid in | 20 |
| full by the consumer in the preceding 7 days. | 21 |
| "Consumer" means any natural person who, singly or jointly | 22 |
| with another consumer, enters into a loan. | 23 |
| "Consumer reporting service" means an entity that provides |
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| a database certified by the Department. | 2 |
| "Department" means the Department of Financial and | 3 |
| Professional Regulation. | 4 |
| "Secretary" means the Secretary of Financial and | 5 |
| Professional Regulation. | 6 |
| "Gross monthly income" means monthly income as | 7 |
| demonstrated by official documentation of the income, | 8 |
| including, but not limited to, a pay stub or a receipt | 9 |
| reflecting payment of government benefits, for the period 30 | 10 |
| days prior to the date on which the loan is made. | 11 |
| "Lender" and "licensee" mean any person or entity, | 12 |
| including any affiliate or subsidiary of a lender or licensee, | 13 |
| that offers or makes a payday loan, buys a whole or partial | 14 |
| interest in a payday loan, arranges a payday loan for a third | 15 |
| party, or acts as an agent for a third party in making a payday | 16 |
| loan, regardless of whether approval, acceptance, or | 17 |
| ratification by the third party is necessary to create a legal | 18 |
| obligation for the third party, and includes any other person | 19 |
| or entity if the Department determines that the person or | 20 |
| entity is engaged in a transaction that is in substance a | 21 |
| disguised payday loan or a subterfuge for the purpose of | 22 |
| avoiding this Act. | 23 |
| "Loan agreement" means a written agreement between a lender | 24 |
| and consumer to make a loan to the consumer, regardless of | 25 |
| whether any loan proceeds are actually paid to the consumer on | 26 |
| the date on which the loan agreement is made. |
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| "Member of the military" means a person serving in the | 2 |
| armed forces of the United States, the Illinois National Guard, | 3 |
| or any reserve component of the armed forces of the United | 4 |
| States. "Member of the military" includes those persons engaged | 5 |
| in (i) active duty, (ii) training or education under the | 6 |
| supervision of the United States preliminary to induction into | 7 |
| military service, or (iii) a period of active duty with the | 8 |
| State of Illinois under Title 10 or Title 32 of the United | 9 |
| States Code pursuant to order of the President or the Governor | 10 |
| of the State of Illinois. | 11 |
| "Outstanding balance" means the total amount owed by the | 12 |
| consumer on a loan to a lender, including all principal, | 13 |
| finance charges, fees, and charges of every kind. | 14 |
| "Payday loan" or "loan" means a loan with a finance charge | 15 |
| exceeding an annual percentage rate of 36% and with a term that | 16 |
| does not exceed 120 days , including any transaction conducted | 17 |
| via any medium whatsoever, including, but not limited to, | 18 |
| paper, facsimile, Internet, or telephone, in which: | 19 |
| (1) A lender accepts one or more checks dated on the | 20 |
| date written and agrees to hold them for a period of days | 21 |
| before deposit or presentment, or accepts one or more | 22 |
| checks dated subsequent to the date written and agrees to | 23 |
| hold them for deposit; or | 24 |
| (2) A lender accepts one or more authorizations to | 25 |
| debit a consumer's bank account; or | 26 |
| (3) A lender accepts an interest in a consumer's wages, |
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| including, but not limited to, a wage assignment. | 2 |
| "Principal amount" means the amount received by the | 3 |
| consumer from the lender due and owing on a loan, excluding any | 4 |
| finance charges, interest, fees, or other loan-related | 5 |
| charges. | 6 |
| "Rollover" means to refinance, renew, amend, or extend a | 7 |
| loan beyond its original term.
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| (Source: P.A. 94-13, eff. 12-6-05.) | 9 |
| (815 ILCS 122/2-5)
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| Sec. 2-5. Loan terms. | 11 |
| (a) Without affecting the right of a consumer to prepay at | 12 |
| any time without cost or penalty, no payday loan may have a | 13 |
| minimum term of less than 13 days. | 14 |
| (b) No payday loan may be made to a consumer if the loan | 15 |
| would result in the consumer being indebted to one or more | 16 |
| payday lenders for a period in excess of 45 consecutive days. | 17 |
| Except as provided under Section 2-40, if a consumer has or has | 18 |
| had loans outstanding for a period in excess of 45 consecutive | 19 |
| days, no payday lender may offer or make a loan to the consumer | 20 |
| for at least 7 calendar days after the date on which the | 21 |
| outstanding balance of all payday loans made during the 45 | 22 |
| consecutive day period is paid in full. For purposes of this | 23 |
| subsection, the term "consecutive days" means a series of | 24 |
| continuous calendar days in which the consumer has an | 25 |
| outstanding balance on one or more payday loans; however, if a |
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| payday loan is made to a consumer within 6 days or less after | 2 |
| the outstanding balance of all loans is paid in full, those | 3 |
| days are counted as "consecutive days" for purposes of this | 4 |
| subsection. | 5 |
| (c) No lender may make a payday loan to a consumer if the | 6 |
| total principal amount of the loan, when combined with the | 7 |
| principal amount of all of the consumer's other outstanding | 8 |
| payday loans, exceeds $1,000 or 25% of the consumer's gross | 9 |
| monthly income, whichever is less.
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| (d) No payday loan may be made to a consumer who has an | 11 |
| outstanding balance on 2 payday loans. | 12 |
| (e) No lender may charge more than $15.50 per $100 loaned | 13 |
| on any payday loan over the term of the loan. Except as | 14 |
| provided in Section 2-25, this charge is considered fully | 15 |
| earned as of the date on which the loan is made. | 16 |
| (f) A lender may not take or attempt to take an interest in | 17 |
| any of the consumer's personal property to secure a payday | 18 |
| loan. | 19 |
| (g) A consumer has the right to redeem a check or any other | 20 |
| item described in the definition of payday loan under Section | 21 |
| 1-10 issued in connection with a payday loan from the lender | 22 |
| holding the check or other item at any time before the payday | 23 |
| loan becomes payable by paying the full amount of the check or | 24 |
| other item.
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| (h) When a consumer repays a payday loan in full before its | 26 |
| due date, the lender shall rebate the unearned finance charges |
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| to the consumer on a straight-line amortization basis as of the | 2 |
| date of repayment.
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| (Source: P.A. 94-13, eff. 12-6-05.) | 4 |
| (815 ILCS 122/4-5)
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| Sec. 4-5. Prohibited acts. A licensee or unlicensed person | 6 |
| or entity making payday
loans may not commit, or have committed | 7 |
| on behalf of the
licensee
or unlicensed person or entity, any | 8 |
| of the following acts: | 9 |
| (1) Threatening to use or using the criminal process in | 10 |
| this or any
other state to collect on the loan.
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| (2) Using any device or agreement that would have the | 12 |
| effect of
charging or collecting more fees or charges than | 13 |
| allowed by this
Act, including, but not limited to, | 14 |
| entering into a different type of
transaction
with the | 15 |
| consumer.
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| (3) Engaging in unfair, deceptive, or fraudulent | 17 |
| practices in the
making or collecting of a payday loan.
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| (4) Using or attempting to use the check provided by | 19 |
| the consumer in
a payday loan as collateral for a | 20 |
| transaction not related to a payday loan.
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| (5) Knowingly accepting payment in whole or in part of | 22 |
| a payday
loan through the proceeds of another payday loan | 23 |
| provided by any licensee.
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| (6) Knowingly accepting any security, other than that | 25 |
| specified in the
definition of payday loan in Section 1-10, |
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| for a payday loan.
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| (7) Charging any fees or charges other than those | 3 |
| specifically
authorized by this Act.
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| (8) Threatening to take any action against a consumer | 5 |
| that is
prohibited by this Act or making any misleading or | 6 |
| deceptive statements
regarding the payday loan or any | 7 |
| consequences thereof.
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| (9) Making a misrepresentation of a material fact by an | 9 |
| applicant for licensure in
obtaining or attempting to | 10 |
| obtain a license.
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| (10) Including any of the following provisions in loan | 12 |
| documents
required by subsection (b) of Section 2-20:
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| (A) a confession of judgment clause;
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| (B) a waiver of the right to a jury trial, if | 15 |
| applicable, in any action
brought by or against a | 16 |
| consumer, unless the waiver is included in an | 17 |
| arbitration clause allowed under
subparagraph (C) of | 18 |
| this paragraph (11);
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| (C) a mandatory arbitration clause that is | 20 |
| oppressive, unfair,
unconscionable, or substantially | 21 |
| in derogation of the rights of consumers; or
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| (D) a provision in which the consumer agrees not to | 23 |
| assert any claim
or defense arising out of the | 24 |
| contract.
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| (11) Selling any insurance of any kind whether or not | 26 |
| sold in
connection with the making or collecting of a |
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| payday loan.
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| (12) Taking any power of attorney.
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| (13) Taking any security interest in real estate.
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| (14) Collecting a delinquency or collection charge on | 5 |
| any installment
regardless of the period in which it | 6 |
| remains in default.
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| (15) Collecting treble damages on an amount owing from | 8 |
| a payday loan.
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| (16) Refusing, or intentionally delaying or
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| inhibiting, the consumer's right to enter into a repayment | 11 |
| plan pursuant to this
Act. | 12 |
| (17) Charging for, or attempting to
collect, | 13 |
| attorney's fees, court costs, or arbitration costs | 14 |
| incurred in connection with the
collection of a payday | 15 |
| loan. | 16 |
| (18) Making a loan in violation of this Act. | 17 |
| (19) Garnishing the wages or salaries of a consumer who | 18 |
| is a member of the military. | 19 |
| (20) Failing to suspend or defer collection activity | 20 |
| against a consumer who is a member of the military and who | 21 |
| has been deployed to a combat or combat-support posting. | 22 |
| (21) Contacting the military chain of command of a | 23 |
| consumer who is a member of the military in an effort to | 24 |
| collect on a payday loan.
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| (22) Evading the requirements and prohibitions of this | 26 |
| Act by use of a device or subterfuge including, but not |
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| limited to, (i) disguising a payday loan as a different | 2 |
| type of transaction, or (ii) characterizing a required fee | 3 |
| as a purchase of a good or service in connection with a | 4 |
| payday loan.
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| (Source: P.A. 94-13, eff. 12-6-05.) | 6 |
| (815 ILCS 122/4-30)
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| Sec. 4-30. Rulemaking; industry review. | 8 |
| (a) The Department may make and enforce such reasonable | 9 |
| rules, regulations, directions, orders, decisions, and | 10 |
| findings as the execution and enforcement of the provisions of | 11 |
| this Act require, and as are not inconsistent therewith. The | 12 |
| Department may develop rules to determine if any person or | 13 |
| entity seeks to evade the applicability of this Act by any | 14 |
| device, subterfuge, or pretense. All rules, regulations, and | 15 |
| directions of a general character shall be printed and copies | 16 |
| thereof mailed to all licensees. | 17 |
| (b) Within 6 months after the effective date of this Act, | 18 |
| the Department shall promulgate reasonable rules regarding the | 19 |
| issuance of payday loans by banks, savings banks, savings and | 20 |
| loan associations, credit unions, and insurance companies. | 21 |
| These rules shall be consistent with this Act and shall be | 22 |
| limited in scope to the actual products and services offered by | 23 |
| lenders governed by this Act. | 24 |
| (c) After the effective date of this Act, the Department | 25 |
| shall, over a 3-year period, conduct a study of the payday loan |
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| industry
to determine the impact and effectiveness of this Act. | 2 |
| The Department
shall report its findings to the General | 3 |
| Assembly within 3 months of the
third anniversary of the | 4 |
| effective date of this Act. The study shall
determine the | 5 |
| effect of this Act on the protection of consumers in this
State | 6 |
| and on the fair and reasonable regulation of the payday loan | 7 |
| industry. The
study shall include, but shall not be limited to, | 8 |
| an analysis of the ability
of the industry to use private | 9 |
| reporting tools that: | 10 |
| (1) ensure substantial compliance with this Act, | 11 |
| including real time reporting of outstanding payday loans; | 12 |
| and | 13 |
| (2) provide data to the Department in an appropriate | 14 |
| form and with appropriate content to allow the Department | 15 |
| to adequately monitor the industry. | 16 |
| The report of the Department shall, if necessary, identify | 17 |
| and recommend specific amendments to this Act to further | 18 |
| protect consumers and to guarantee fair and reasonable | 19 |
| regulation of the payday loan industry.
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| (Source: P.A. 94-13, eff. 12-6-05.)
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| Section 99. Effective date. This Act takes effect upon | 22 |
| becoming law.
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