Full Text of HB0531 98th General Assembly
HB0531ham001 98TH GENERAL ASSEMBLY | Rep. André M. Thapedi Filed: 4/12/2013
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| 1 | | AMENDMENT TO HOUSE BILL 531
| 2 | | AMENDMENT NO. ______. Amend House Bill 531 by replacing | 3 | | everything after the enacting clause with the following:
| 4 | | "Section 1-1. Short title. This Act may be cited as the | 5 | | Non-Recourse Consumer Lawsuit Funding Act. | 6 | | Section 1-5. Definitions. In this Act: | 7 | | "Non-recourse consumer lawsuit funding company" means a | 8 | | person or entity that enters into a non-recourse consumer | 9 | | lawsuit funding transaction with a consumer. "Non-recourse | 10 | | consumer lawsuit funding company" includes any affiliate or | 11 | | subsidiary of a non-recourse consumer lawsuit funding company; | 12 | | an entity or person who buys a whole or partial interest in a | 13 | | non-recourse consumer lawsuit funding, acts as an agent to | 14 | | provide non-recourse consumer lawsuit funding from a third | 15 | | party for a fee, or acts as an agent for a third party in | 16 | | providing non-recourse consumer lawsuit funding for a fee, |
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| 1 | | regardless of whether approval or acceptance by the third party | 2 | | is necessary to create a legal obligation for the third party; | 3 | | and any other person or entity if the Department determines | 4 | | that the person or entity is engaged in a transaction that is | 5 | | in substance a disguised non-recourse consumer lawsuit funding | 6 | | or a subterfuge for the purpose of avoiding this Act. | 7 | | Notwithstanding anything to the contrary contained in this Act, | 8 | | a bank, lender, financing entity, or any other special purpose | 9 | | entity that provides financing to a non-recourse consumer | 10 | | lawsuit funding company or to which a non-recourse consumer | 11 | | lawsuit funding company grants a security interest or transfers | 12 | | any rights or interest in non-recourse consumer lawsuit funding | 13 | | shall not cause the bank, lender, financing entity, or special | 14 | | purpose entity to be deemed a non-recourse consumer lawsuit | 15 | | funding company. Notwithstanding anything to the contrary | 16 | | contained in this Act, an attorney or accountant who provides | 17 | | services to a consumer shall not be deemed a non-recourse | 18 | | consumer lawsuit funding company. | 19 | | "Consumer" means a natural person residing or domiciled in | 20 | | Illinois or who elects to enter into a transaction under this | 21 | | Act in Illinois, whether it be in-person, over the internet, by | 22 | | facsimile, or any other electronic means, and who has a pending | 23 | | legal claim and is represented by an attorney at the time he or | 24 | | she enters into a contract for non-recourse consumer lawsuit | 25 | | funding. | 26 | | "Contract" means a written agreement between a consumer and |
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| 1 | | a non-recourse consumer lawsuit funding company that the | 2 | | non-recourse consumer lawsuit funding company agrees to | 3 | | provide non-recourse consumer lawsuit funding to the consumer | 4 | | in compliance with Article 2. | 5 | | "Department" means the Illinois Department of Financial | 6 | | and Professional Regulation. | 7 | | "Funding amount" means the dollar amount of funds provided | 8 | | to the consumer by the non-recourse consumer lawsuit funding | 9 | | company subsequent to the execution of the contract as | 10 | | consideration for the assignment of or purchase of a contingent | 11 | | right to receive a portion of the proceeds of the legal claim. | 12 | | "Funding date" means the date on which the funding amount | 13 | | is paid to the consumer by the non-recourse consumer lawsuit | 14 | | funding company. | 15 | | "Legal claim" means a civil or statutory claim or action.
| 16 | | "Licensee" means any non-recourse consumer lawsuit funding | 17 | | company licensed in accordance with Article 3. | 18 | | "Non-recourse consumer lawsuit funding" means a | 19 | | transaction of any amount in which a non-recourse consumer | 20 | | lawsuit funding company purchases and a consumer assigns to the | 21 | | non-recourse consumer lawsuit funding company the contingent | 22 | | right to receive a portion of the potential proceeds of a | 23 | | settlement, judgment, award, or verdict obtained in the | 24 | | consumer's legal claim.
| 25 | | "Proceeds" means those funds available for payment to the | 26 | | non-recourse consumer lawsuit funding company that are |
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| 1 | | remaining from any settlement, verdict, final judgment, | 2 | | insurance payment, or award obtained in the consumer's legal | 3 | | claim after reductions are made under Section 2-15 of this Act. | 4 | | "Resolution date" means the date the funding amount plus | 5 | | the agreed upon fees from the legal claim are received by the | 6 | | non-recourse consumer lawsuit funding company. | 7 | | "Secretary" means the Illinois Secretary of Financial and | 8 | | Professional Regulation. | 9 | | Article 2. Non-Recourse Consumer Lawsuit Funding | 10 | | Section 2-5. Contract provisions. All contracts for | 11 | | non-recourse consumer lawsuit funding shall be in writing and | 12 | | comply with all of the following requirements: | 13 | | (1) The contract shall contain on the front page, | 14 | | appropriately headed and in at least 12-point, bold face type, | 15 | | a chart that clearly contains the following disclosures: | 16 | | (A) the total funding amount paid to the consumer; | 17 | | (B) an itemization of one-time fees; | 18 | | (C) the total dollar amount owed by the consumer to the | 19 | | non-recourse consumer lawsuit funding company, set forth | 20 | | up to 1,080 days beginning at the 11th business day after | 21 | | the funding date, then at 30 days after the funding date | 22 | | and at every 30 days thereafter; the total dollar amount | 23 | | shall be calculated using the identical methodology used by | 24 | | the non-recourse consumer lawsuit funding company to |
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| 1 | | calculate the contracted fee amount under Section 2-10. | 2 | | The Secretary shall prescribe by rule the format of the | 3 | | chart that clearly discloses to the consumer all the | 4 | | information in this subsection. Until the Secretary makes such | 5 | | a rule, each non-recourse consumer lawsuit funding company must | 6 | | have a chart format approved for distribution by the Secretary. | 7 | | No contract for non-recourse consumer lawsuit funding | 8 | | shall be enforceable against the consumer unless it complies | 9 | | entirely with this subsection. | 10 | | (2) The contract shall provide that the consumer may cancel | 11 | | the contract within 10 business days following the consumer's | 12 | | receipt of the funding amount, without penalty or further | 13 | | obligation. The contract shall contain the following notice | 14 | | written in at least 12-point, bold face type: | 15 | | "Consumer's right to cancellation: You may cancel this | 16 | | contract without penalty or further obligation within 10 | 17 | | business days after the funding date.". | 18 | | The contract must also specify that in order for the | 19 | | cancellation to be effective, the consumer must either return | 20 | | to the non-recourse consumer lawsuit funding company the total | 21 | | amount of the funding amount by (a) delivering the non-recourse | 22 | | consumer lawsuit funding company's uncashed check to the | 23 | | non-recourse consumer lawsuit company's offices in person | 24 | | within 10 business days after receipt of the funding amount, | 25 | | (b) sending a notice of cancellation via registered or | 26 | | certified mail and include in the mailing a return of the total |
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| 1 | | amount of funding amount in the form of the non-recourse | 2 | | consumer lawsuit funding company's uncashed check within 10 | 3 | | business days after receipt of the funding amount, or (c) | 4 | | sending a registered, certified or cashier's check or money | 5 | | order, by insured, registered, or certified United States mail, | 6 | | postmarked within 10 business days after receipt of the funding | 7 | | amount, to the address specified in the contract for | 8 | | cancellation. | 9 | | (3) The contract shall contain all of the following | 10 | | statements in at least 12-point, bold face type: | 11 | | "(A) [Insert name of the non-recourse consumer lawsuit | 12 | | funding company] agrees that it shall have no right to and | 13 | | will not make any decisions with respect to the conduct of | 14 | | the legal claim or any settlement or resolution thereof and | 15 | | that the right to make those decisions remains solely with | 16 | | you and your attorney in the legal claim. [Insert name of | 17 | | the non-recourse consumer lawsuit funding company] further | 18 | | agrees that it shall have no right to pursue the legal | 19 | | claim on your behalf. | 20 | | (B) [Insert name of the non-recourse consumer lawsuit | 21 | | funding company] agrees that it shall only accept: (i) an | 22 | | assignment of a contingent right to receive a portion of | 23 | | the potential proceeds; (ii) the contracted return of the | 24 | | funding amount; and (iii) any agreed upon fees. Any agreed | 25 | | upon fees to [insert name of the non-recourse consumer | 26 | | lawsuit funding company] shall not be determined as a |
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| 1 | | percentage of your recovery from the legal claim but shall | 2 | | be set as a contractually determined amount based upon | 3 | | intervals of time from the funding date through the | 4 | | resolution date. [Insert name of the non-recourse consumer | 5 | | lawsuit funding company] is not accepting an assignment of | 6 | | your legal claim. | 7 | | (C) [Insert name of the non-recourse consumer lawsuit | 8 | | funding company] agrees that you may make payments on a | 9 | | funding at any time without additional cost or penalty. | 10 | | (D) [Insert name of the non-recourse consumer lawsuit | 11 | | funding company] is not a law firm and is prohibited from | 12 | | rendering legal advice. Advice about the conduct of the | 13 | | legal claim or any settlement or resolution shall be | 14 | | directed to a properly licensed attorney.".
| 15 | | (4) All contracts with the consumer must contain the | 16 | | following statement, in plain language in a box with 15-point, | 17 | | bold face type, in all capitalized letters, stating the | 18 | | following: | 19 | | "THE FUNDING AMOUNT AND AGREED UPON FEES SHALL ONLY BE PAID | 20 | | FROM THE PROCEEDS OF YOUR LEGAL CLAIM AND SHALL ONLY BE | 21 | | PAID TO THE EXTENT THAT THERE ARE AVAILABLE PROCEEDS FROM | 22 | | YOUR LEGAL CLAIM. YOU WILL NOT OWE [INSERT NAME OF THE | 23 | | NON-RECOURSE CONSUMER LAWSUIT FUNDING COMPANY] ANYTHING IF | 24 | | THERE ARE NO PROCEEDS FROM YOUR LEGAL CLAIM.". | 25 | | (5) The contract shall contain the following statement in | 26 | | at least 12-point, bold face type located immediately above the |
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| 1 | | space where the consumer's signature is required: | 2 | | "Do not sign this Agreement before you read it completely | 3 | | or if it contains any blank spaces. You are entitled to a | 4 | | completely filled-in copy of this Agreement. Before you | 5 | | sign this Agreement you should obtain the advice of an | 6 | | attorney. Depending on the circumstances, you may want to | 7 | | consult a tax, public, or private benefit planning or | 8 | | financial professional. You acknowledge that your attorney | 9 | | in the legal claim has provided no tax, public, or private | 10 | | benefit planning regarding this transaction. You further | 11 | | understand and agree that the funds you receive from | 12 | | [insert name of the non-recourse consumer lawsuit funding | 13 | | company] shall not be used to pay for or applied to the | 14 | | payment of attorney's fees or litigation costs related to | 15 | | your legal claim.". | 16 | | (6) The executed contract shall contain a written | 17 | | acknowledgment by the consumer that he or she has reviewed the | 18 | | contract in its entirety. | 19 | | (7) The non-recourse consumer lawsuit funding company | 20 | | shall provide the consumer's attorney with a written | 21 | | notification of the non-recourse consumer lawsuit funding | 22 | | provided to the consumer 3 business days before the funding | 23 | | date by way of postal mail, courier service, facsimile, e-mail | 24 | | return receipt acknowledged, or other means of proof of | 25 | | delivery method unless there is a written acknowledgment by the | 26 | | attorney representing the consumer in the legal claim as to the |
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| 1 | | terms of the contract. Notwithstanding notice of the | 2 | | non-recourse consumer lawsuit funding, the consumer's attorney | 3 | | is not responsible for paying or ensuring payment of the | 4 | | consumer's obligation. | 5 | | (8) The contracted return of the funding amount, plus any | 6 | | agreed upon fees assigned to the non-recourse consumer lawsuit | 7 | | funding company on the resolution date shall not be determined | 8 | | as a percentage of the recovery from the legal claim but shall | 9 | | be set as a contractually determined amount based upon | 10 | | intervals of time from the funding date through the resolution | 11 | | date. | 12 | | Section 2-10. Contracted fee amount. | 13 | | (a) The non-recourse consumer lawsuit funding company | 14 | | shall offer the consumer the option of either entering into a | 15 | | conventional loan under the Consumer Installment Loan Act or | 16 | | entering into non-recourse consumer lawsuit funding. | 17 | | If the consumer elects to enter into a conventional loan | 18 | | agreement under the Consumer Installment Loan Act, the interest | 19 | | charged shall not exceed an annual percentage rate of 36%. | 20 | | If the consumer elects to enter into non-recourse consumer | 21 | | lawsuit funding, the company shall not charge a fee in excess | 22 | | of 36% annual percentage rate plus a deferment fee not to | 23 | | exceed 1.5% for each month the funding is outstanding with | 24 | | compounding to occur no more often than bi-monthly. | 25 | | (b) No additional fees shall be applied for any period of |
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| 1 | | time beyond 1080 days from the funding date. | 2 | | (c) Except for the fees set forth in this Section and | 3 | | Section 20, the non-recourse consumer lawsuit funding company | 4 | | shall not impose on a consumer any additional finance charges, | 5 | | interest, fees, or charges of any sort for any purpose. | 6 | | (d) Under no circumstances shall the total amount of | 7 | | finance charges, interest, fees, or any other charges, when | 8 | | taken together, exceed the award to the consumer. | 9 | | Section 2-12. Charges permitted. | 10 | | (a) A licensee may charge an acquisition charge not to | 11 | | exceed 8% of the amount funded or $100, whichever is less. | 12 | | (b) A licensee may charge an expedited funds delivery | 13 | | option charge not to exceed the actual cost of delivery or $20, | 14 | | whichever is less. Expedited funds delivery options, | 15 | | including, but not limited to, overnight delivery, electronic | 16 | | fund transfers, and Automated Clearing House (ACH) | 17 | | transactions may be offered to the consumer as a choice of the | 18 | | method of the delivery of funds. The fund delivery charge is | 19 | | fully earned at the time that each funding transaction is made | 20 | | and shall not be subject to refund. Details and receipts of | 21 | | delivery shall be provided in an invoice to the consumer no | 22 | | more than 10 business days after the funding date. A no-charge | 23 | | delivery option must be offered to the consumer as a choice. | 24 | | Section 2-15. Claim priorities. Any lien arising out of the |
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| 1 | | underlying consumer's legal claim for subrogation claims, | 2 | | attorney fees, attorney liens, and litigation costs, health | 3 | | care providers, employers in worker's compensation | 4 | | proceedings, health insurers, employers with self-funded | 5 | | health care plans, Medicare, and Public Aid shall be satisfied | 6 | | before and take priority over any claim of the non-recourse | 7 | | consumer lawsuit funding company. All other holders of liens, | 8 | | security interests, or subrogation claims shall take priority | 9 | | over the non-recourse consumer lawsuit funding company to the | 10 | | extent allowed by law. | 11 | | Section 2-20. Standards and practices. Each non-recourse | 12 | | consumer lawsuit funding company shall adhere to the following: | 13 | | (1) The non-recourse consumer lawsuit funding company | 14 | | shall not pay or offer to pay any compensation to any attorney, | 15 | | law firm, medical provider, chiropractor, physical therapist, | 16 | | or any of their employees for referring a consumer to the | 17 | | non-recourse consumer lawsuit funding company. The | 18 | | non-recourse consumer lawsuit funding company agrees not to | 19 | | accept any compensation from any attorney, law firm, medical | 20 | | provider, chiropractor, physical therapist, or any of their | 21 | | employees, other than the funding amount and any agreed upon | 22 | | fees the consumer assigned to the non-recourse consumer lawsuit | 23 | | funding company out of the potential proceeds of the legal | 24 | | claim. If a lawyer or law firm represents one or more consumers | 25 | | with outstanding non-recourse consumer lawsuit fundings from |
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| 1 | | the same non-recourse consumer lawsuit funding company, that | 2 | | non-recourse consumer lawsuit funding company may not provide | 3 | | any type of funding to the lawyer or law firm.
| 4 | | (2) The non-recourse consumer lawsuit funding company | 5 | | shall not advertise false or intentionally misleading | 6 | | information regarding its product or services. | 7 | | (3) The non-recourse consumer lawsuit funding company | 8 | | shall not knowingly provide funding to a consumer who has | 9 | | previously sold and assigned an amount of the potential | 10 | | proceeds of his or her legal claim to another non-recourse | 11 | | consumer lawsuit funding company without first purchasing that | 12 | | non-recourse consumer lawsuit funding company's entire accrued | 13 | | balance unless otherwise agreed to in writing by the consumer | 14 | | and all non-recourse consumer lawsuit funding companies that | 15 | | provided non-recourse consumer lawsuit funding to the | 16 | | consumer. | 17 | | (4) The non-recourse consumer lawsuit funding company | 18 | | shall not offer single premium credit life, disability, or | 19 | | unemployment insurance that will be financed through a | 20 | | non-recourse consumer lawsuit funding transaction. | 21 | | (5) For non-English speaking consumers, the principal | 22 | | terms of the contract must be translated in writing into the | 23 | | consumer's primary language. The consumer must sign the | 24 | | translated document containing the principal terms and initial | 25 | | each page and the translator must sign an affirmation | 26 | | confirming that the principal terms have been presented to the |
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| 1 | | consumer in the consumer's primary language and acknowledged by | 2 | | the consumer. Principal terms shall include all items that must | 3 | | be disclosed by Section 2-5. | 4 | | (6) The non-recourse consumer lawsuit funding company | 5 | | shall not knowingly enter into a non-recourse consumer lawsuit | 6 | | funding contract with a consumer where the consumer's legal | 7 | | claim is a pending class action lawsuit at the time of the | 8 | | funding. The non-recourse consumer lawsuit funding company may | 9 | | not discuss a consumer's choice to join a class action lawsuit | 10 | | other than to confirm that a consumer has or has not chosen to | 11 | | join a class action lawsuit. Should any legal claim in which a | 12 | | plaintiff has received non-recourse consumer lawsuit funding | 13 | | become a class action matter, no further funding shall be | 14 | | permitted. The non-recourse consumer lawsuit funding company | 15 | | is prohibited from advancing, loaning, assigning, or otherwise | 16 | | providing funds, directly or indirectly, to any attorney, law | 17 | | firm, or related entity for the purposes of researching, | 18 | | investigating, developing, prosecuting, or otherwise | 19 | | representing parties in class action mass tort litigation. | 20 | | (7) No communication between a consumer's attorney and a | 21 | | non-recourse consumer lawsuit funding company pertaining to a | 22 | | consumer's non-recourse consumer lawsuit funding transaction | 23 | | shall limit, waive, or abrogate any statutory or common-law | 24 | | privilege, including the attorney-client privilege or the | 25 | | work-product doctrine. | 26 | | (8) The return of the funding amount to the non-recourse |
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| 1 | | consumer lawsuit funding company, plus any agreed upon fees, | 2 | | shall be rendered only out of the funds, if any, of the | 3 | | realized settlement, judgment, award, or verdict the consumer | 4 | | may receive from the legal claim. Under no circumstances shall | 5 | | the non-recourse consumer lawsuit funding company have | 6 | | recourse for the funding amount beyond the consumer's proceeds | 7 | | from the legal claim.
| 8 | | (9) The non-recourse consumer lawsuit funding company | 9 | | shall have no authority to advise the consumer on any legal | 10 | | matters or to make any decisions with respect to the conduct of | 11 | | the litigation of the legal claim or any settlement or | 12 | | resolution thereof. The right to make those decisions remains | 13 | | solely with the consumer and the consumer's attorney | 14 | | representing the consumer in the legal claim. The non-recourse | 15 | | consumer lawsuit funding company shall have no right to pursue | 16 | | the legal claim on the consumer's behalf. | 17 | | (10) The non-recourse consumer lawsuit funding company | 18 | | shall only accept an assignment of a contingent right to | 19 | | receive a portion of the potential proceeds, rather than an | 20 | | assignment of the legal claim. The contracted return of the | 21 | | funding amount, plus any agreed upon fees assigned to the | 22 | | non-recourse consumer lawsuit funding company, shall not be | 23 | | determined as a percentage of the total recovery from the legal | 24 | | claim, but shall be set as a contractually determined amount | 25 | | based upon intervals of time from the funding date through the | 26 | | resolution date. |
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| 1 | | (11) Notwithstanding subsection (9) of this Section, the | 2 | | non-recourse consumer lawsuit funding company shall allow the | 3 | | consumer to make payments on a funding at any time without | 4 | | additional cost or penalty. | 5 | | (12) Contact between the non-recourse consumer lawsuit | 6 | | funding company and the consumer shall be subject to the | 7 | | following limitations:
| 8 | | (A) Neither a non-recourse consumer lawsuit funding | 9 | | company, nor any person acting on behalf of a non-recourse | 10 | | consumer lawsuit funding company, shall contact a consumer | 11 | | prior to the consumer obtaining legal representation and | 12 | | initiating a legal claim. | 13 | | (B) Neither a non-recourse consumer lawsuit funding | 14 | | company, nor any person acting on behalf of a non-recourse | 15 | | consumer lawsuit funding company, shall contact the | 16 | | consumer after the funding date in order to influence any | 17 | | decisions with respect to the conduct of the legal claim or | 18 | | any settlement or resolution thereof. Notwithstanding the | 19 | | foregoing, the non-recourse consumer lawsuit funding | 20 | | company may contact the consumer to obtain the status of | 21 | | the legal claim and updated attorney contact information. | 22 | | (C) After the resolution date, neither a non-recourse | 23 | | consumer lawsuit funding company, nor any person acting on | 24 | | behalf of a non-recourse consumer lawsuit funding company, | 25 | | shall seek to collect additional funds or threaten civil | 26 | | action for any deficiency. |
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| 1 | | Section 2-25. Information; reporting and examination. | 2 | | (a) A licensee shall keep and use books, accounts, and | 3 | | records that will enable the Secretary to determine if the | 4 | | licensee is complying with the provisions of this Act and | 5 | | maintain any other records as required by the Secretary. | 6 | | (b) A licensee shall collect and maintain information | 7 | | annually for a report that shall disclose in detail and under | 8 | | appropriate headings: | 9 | | (1) the total number of non-recourse consumer lawsuit | 10 | | fundings made during the previous calendar year; | 11 | | (2) the total number of non-recourse consumer lawsuit | 12 | | fundings outstanding as of December 31st of the preceding | 13 | | calendar year; | 14 | | (3) the minimum, maximum, and average amount of | 15 | | non-recourse consumer lawsuit fundings made during the | 16 | | preceding calendar year; | 17 | | (4) the average annual fee rate of the non-recourse | 18 | | consumer lawsuit fundings made during the preceding year; | 19 | | and | 20 | | (5) the total number of non-recourse consumer lawsuit | 21 | | funding transactions in which the non-recourse consumer | 22 | | lawsuit funding company received the return of the funding | 23 | | amount, plus any agreed upon fees; the total number of | 24 | | non-recourse consumer lawsuit funding transactions for | 25 | | which the non-recourse consumer lawsuit funding company |
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| 1 | | received no return of the funding amount or any fees; and | 2 | | the total number of non-recourse consumer lawsuit funding | 3 | | transactions in which the non-recourse consumer lawsuit | 4 | | funding company received an amount less than the contracted | 5 | | amount. | 6 | | The report shall be verified by the oath or affirmation of | 7 | | the Chief Executive Officer, Chief Financial Officer, or other | 8 | | duly authorized representative of the licensee. The report must | 9 | | be filed with the Secretary no later than March 1 of the year | 10 | | following the year for which the report discloses the | 11 | | information specified in this subsection (b). The Secretary may | 12 | | impose a fine of $50 per day upon the licensee for each day | 13 | | beyond the filing deadline that the report is not filed. | 14 | | (c) The Department shall have the authority to conduct | 15 | | examinations at any time of the books, records, and | 16 | | non-recourse consumer lawsuit funding documents of a licensee | 17 | | or other company or person doing business without the required | 18 | | license. Any licensee being examined must provide to the | 19 | | Department convenient and free access at all reasonable hours | 20 | | at its office or location to all books, records, non-recourse | 21 | | consumer lawsuit funding documents. The officers, directors, | 22 | | and agents of the non-recourse consumer lawsuit funding company | 23 | | must facilitate the examination and aid in the examination so | 24 | | far as it is in their power to do so. | 25 | | Section 2-30. Applicability.
The contingent right to |
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| 1 | | receive a portion of the potential proceeds of a legal claim is | 2 | | assignable and valid for the purposes of obtaining funding from | 3 | | a licensee under this Section. | 4 | | Article 3. Licensure. | 5 | | Section 3-1. Licensure requirement.
| 6 | | (a) Except as provided in subsection (b), on and after the | 7 | | effective date of this Act, a non-recourse consumer lawsuit | 8 | | funding company as defined by Section 1-5 must be licensed by | 9 | | the Department as provided in this Article. | 10 | | (b) A non-recourse consumer lawsuit funding company | 11 | | licensed on the effective date of this Act under the Consumer | 12 | | Installment Loan Act need not comply with subsection (a) until | 13 | | the Department takes action on the non-recourse consumer | 14 | | lawsuit funding company's application for a non-recourse | 15 | | consumer lawsuit funding license. The application must be | 16 | | submitted to the Department within 3 months after the effective | 17 | | date of this Act. If the application is not submitted within 3 | 18 | | months after the effective date of this Act, the non-recourse | 19 | | consumer lawsuit funding company is subject to subsection (a). | 20 | | Section 3-5. Licensure. | 21 | | (a) An application for a license shall be in writing and in | 22 | | a form prescribed by the Secretary. Applicants must also submit | 23 | | a non-refundable application fee of $2,500, due at the time of |
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| 1 | | the application. The Secretary may not issue a non-recourse | 2 | | consumer lawsuit funding license unless and until the following | 3 | | findings are made: | 4 | | (1) that the financial responsibility, experience, | 5 | | character, and general fitness of the applicant are such as | 6 | | to command the confidence of the public and to warrant the | 7 | | belief that the business will be operated lawfully and | 8 | | fairly and within the provisions and purpose of this Act; | 9 | | (2) that the applicant has submitted such other | 10 | | information as the Secretary may deem necessary; and | 11 | | (3) that the applicant is a current licensee under the | 12 | | Consumer Installment Loan Act. | 13 | | (b) A license shall be issued for no longer than one year | 14 | | and no renewal of a license may be provided if a licensee has | 15 | | substantially violated this Act and has not cured the violation | 16 | | to the satisfaction of the Department. | 17 | | (c) A licensee shall appoint, in writing, the Secretary as | 18 | | attorney-in-fact upon whom all lawful process against the | 19 | | licensee may be served with the same legal force and validity | 20 | | as if served on the licensee. A copy of the written | 21 | | appointment, duly certified, shall be filed in the office of | 22 | | the Secretary, and a copy thereof certified by the Secretary | 23 | | shall be sufficient evidence to subject a licensee to | 24 | | jurisdiction in a court of law. This appointment shall remain | 25 | | in effect while any liability remains outstanding in this State | 26 | | against the licensee. When summons is served upon the Secretary |
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| 1 | | as attorney-in-fact for a licensee, the Secretary shall | 2 | | immediately notify the licensee by registered mail, enclosing | 3 | | the summons and specifying the day of service. | 4 | | (d) A licensee must pay an annual fee of $1,000. In | 5 | | addition to the annual license fee, the reasonable expense of | 6 | | any examination or hearing by the Secretary under any | 7 | | provisions of this Act shall be borne by the licensee. If a | 8 | | licensee fails to submit an application for renewal by December | 9 | | 31st of the then current year, its license shall automatically | 10 | | expire; however, the Secretary, in his or her discretion, may | 11 | | reinstate an expired license upon: | 12 | | (1) payment of the annual fee within 30 days of the | 13 | | date of expiration; and
| 14 | | (2) proof of good cause for failure to renew. | 15 | | (3) that the applicant is a current licensee under the | 16 | | Consumer Installment Loan Act. | 17 | | (e) No licensee shall conduct the business of providing | 18 | | non-recourse consumer lawsuit funding under this Act within any | 19 | | office, suite, room, or place of business in which any other | 20 | | business is solicited or engaged unless the other business is | 21 | | licensed by the Department and, in the opinion of the | 22 | | Secretary, the other business would not be contrary to the best | 23 | | interests of consumers and is authorized by the Secretary in | 24 | | writing. | 25 | | (f) The Secretary shall maintain a list of licensees that | 26 | | shall be available to interested consumers and lenders and the |
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| 1 | | public. The Secretary shall maintain a toll-free number whereby | 2 | | consumers may obtain information about licensees. The | 3 | | Secretary shall also establish a complaint process under which | 4 | | an aggrieved consumer may file a complaint against a licensee | 5 | | or non-licensee who violates any provision of this Act. | 6 | | Section 3-10. Closing of business; surrender of license. At | 7 | | least 10 days before a licensee ceases operations, closes the | 8 | | business, or files for bankruptcy, the licensee shall: | 9 | | (1) Notify the Department of its intended action in | 10 | | writing. | 11 | | (2) With the exception of filing for bankruptcy, surrender | 12 | | its license to the Secretary for cancellation. The surrender of | 13 | | the license shall not affect the licensee's civil or criminal | 14 | | liability for acts committed before or after the surrender or | 15 | | entitle the licensee to a return of any part of the annual | 16 | | license fee. | 17 | | (3) Notify the Department of the location where the books, | 18 | | accounts, contracts, and records will be maintained. | 19 | | The accounts, books, records, and contracts shall be | 20 | | maintained and serviced by the licensee, by another licensee | 21 | | under this Act, or by the Department. | 22 | | Article 4. Administrative Provisions | 23 | | Section 4-5. Prohibited acts. A licensee or unlicensed |
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| 1 | | person or entity entering into non-recourse consumer lawsuit | 2 | | funding may not commit, or have committed, on behalf of the | 3 | | licensee or unlicensed person or entity, any of the following | 4 | | acts: | 5 | | (1) Threatening to use or using the criminal process in | 6 | | this or any other state to collect the assignment.
| 7 | | (2) Using any device or agreement that would have the | 8 | | effect of charging or collecting more fees or charges than | 9 | | allowed in this Act, including, but not limited to, entering | 10 | | into a different type of transaction with the consumer.
| 11 | | (3) Engaging in unfair, deceptive, or fraudulent practices | 12 | | related to the non-recourse consumer lawsuit funding. | 13 | | (4) Threatening to take any action against a consumer that | 14 | | is prohibited by this Act or making any misleading or deceptive | 15 | | statements regarding the non-recourse consumer lawsuit | 16 | | funding. | 17 | | (5) Making a misrepresentation of a material fact by an | 18 | | applicant for licensure in obtaining or attempting to obtain a | 19 | | license. | 20 | | (6) Including any of the following provisions in | 21 | | non-recourse consumer lawsuit funding contracts: | 22 | | (A) a confession of judgment clause; | 23 | | (B) a mandatory arbitration clause that is oppressive, | 24 | | unfair, unconscionable, or substantially in derogation of | 25 | | the rights of consumers; or | 26 | | (C) a provision that the consumer agrees not to assert |
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| 1 | | any claim or defense arising out of the contract. | 2 | | (7) Taking any power of attorney. | 3 | | Section 4-10. Enforcement and remedies. | 4 | | (a) The remedies provided in this Act are cumulative and | 5 | | apply to persons or entities subject to this Act.
| 6 | | (b) Any material violation of this Act, including the | 7 | | commission of an act prohibited under Section 4-5, constitutes | 8 | | a violation of the Consumer Fraud and Deceptive Business | 9 | | Practices Act. | 10 | | (c) If any provision of the written agreement described in | 11 | | Section 2-5 violates this Act, then that provision is | 12 | | unenforceable against the consumer. | 13 | | (d) Subject to the Illinois Administrative Procedures Act, | 14 | | the Secretary may hold hearings, make findings of fact, | 15 | | conclusions of law, issue cease and desist orders, have the | 16 | | power to issue fines of up to $10,000 per violation, refer the | 17 | | matter to the appropriate law enforcement agency for | 18 | | prosecution under this Act, and suspend or revoke a license | 19 | | granted under this Act. All proceedings shall be open to the | 20 | | public. | 21 | | (e) The Secretary may issue a cease and desist order to any | 22 | | licensee or other person doing business without the required | 23 | | license, when in the opinion of the Secretary the licensee or | 24 | | other person is violating or is about to violate any provisions | 25 | | of this Act or any rule or requirement imposed in writing by |
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| 1 | | the Department as a condition of granting any authorization | 2 | | permitted by this Act. In addition to any other action | 3 | | authorized by this Act, if the Secretary determines that a | 4 | | non-recourse consumer lawsuit funding company is engaged in or | 5 | | is believed to be engaged in activities that may constitute a | 6 | | violation of this Act and the Secretary is able to show that an | 7 | | emergency exists, the Secretary may suspend the non-recourse | 8 | | consumer lawsuit funding company's license for a period not | 9 | | exceeding 180 calendar days. The cease and desist order and | 10 | | emergency suspension permitted by this subsection (e) may be | 11 | | issued prior to a hearing. | 12 | | The Secretary shall serve notice of his or her action, | 13 | | including, but not limited to, a statement of the reasons for | 14 | | the action, either personally or by certified mail, return | 15 | | receipt requested. Service by certified mail shall be deemed | 16 | | completed when the notice is deposited in the U.S. Mail. | 17 | | Within 10 business days after service of the cease and | 18 | | desist order, the licensee or other person may request a | 19 | | hearing in writing. The Secretary shall schedule a hearing | 20 | | within 30 days after the request for a hearing unless otherwise | 21 | | agreed to by the parties. The Secretary shall have the | 22 | | authority to adopt rules for the administration of this | 23 | | Section. | 24 | | If it is determined that the Secretary had the authority to | 25 | | issue the cease and desist order, he or she may issue such | 26 | | orders as may be reasonably necessary to correct, eliminate, or |
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| 1 | | remedy the conduct. | 2 | | The powers vested in the Secretary by the subsection (e) | 3 | | are additional to any and all other powers and remedies vested | 4 | | in the Secretary by law, and nothing in this subsection (e) | 5 | | shall be construed as requiring that the Secretary shall employ | 6 | | the power conferred in this subsection instead of or as a | 7 | | condition precedent to the exercise of any other power or | 8 | | remedy vested in the Secretary. | 9 | | (f) The Secretary may, after 10 business days notice by | 10 | | registered mail to the licensee at the address set forth in the | 11 | | license stating the contemplated action an in general the | 12 | | grounds therefore, fine the licensee an amount not exceeding | 13 | | $10,000 per violation, or revoke or suspend any license issued | 14 | | by the Department if found that: | 15 | | (1) the licensee has failed to comply with any | 16 | | provision of this Act or any order, decision, finding, | 17 | | rule, regulation, or direction of the Secretary lawfully | 18 | | made under the authority of this Act; or | 19 | | (2) any fact or condition exists that, if it had | 20 | | existed at the time of the original application for the | 21 | | license, clearly would have warranted the Secretary in | 22 | | refusing to issue the license. | 23 | | No revocation, suspension, or surrender of any license | 24 | | shall impair or affect the obligation of any pre-existing | 25 | | lawful contract between the non-recourse consumer lawsuit | 26 | | funding company and a consumer. |
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| 1 | | The Secretary may issue a new license to a licensee | 2 | | whose license has been revoked when facts or conditions | 3 | | that clearly would have warranted the Secretary in refusing | 4 | | originally to issue the license no longer exist. | 5 | | In every case in which a license or renewal of a | 6 | | license is denied, the Secretary shall serve the licensee | 7 | | with notice of his or her action, including a statement of | 8 | | the reasons for his or her actions, either personally, or | 9 | | by certified mail, return receipt requested. Service by | 10 | | certified mail shall be deemed completed when the notice is | 11 | | deposited in the U.S. Mail. | 12 | | An order assessing a fine, an order revoking or | 13 | | suspending a license, or an order denying or refusing to | 14 | | renew a license shall take effect upon service of the order | 15 | | unless the licensee requests a hearing, in writing, within | 16 | | 10 days after the date of service. In the event a hearing | 17 | | is requested, the order shall be stayed until final | 18 | | administrative order is entered. | 19 | | If the licensee requests a hearing, the Secretary shall | 20 | | schedule a hearing within 30 days after the request for a | 21 | | hearing unless otherwise agreed to by the parties. | 22 | | The hearing shall be held at a time and place | 23 | | designated by the Secretary. The Secretary, and any | 24 | | administrative law judge designated by him or her, shall | 25 | | have the power to administer oaths and affirmations, | 26 | | subpoena witnesses and compel their attendance, take |
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| 1 | | evidence, and require the production of books, papers, | 2 | | correspondence, and other records or information that he or | 3 | | she considers relevant or material to the inquiry. | 4 | | The costs of administrative hearings conducted under | 5 | | this Section shall be paid by the licensee. | 6 | | (g) All moneys received by the Department under this Act | 7 | | shall be deposited in the Financial Institutions Fund. | 8 | | Section 4-15. Bonding.
| 9 | | (a) A person or entity engaged in non-recourse consumer | 10 | | lawsuit funding under this Act shall post a bond to the | 11 | | Department in the amount of $50,000 per license or irrevocable | 12 | | letter of credit issued and confirmed by a financial | 13 | | institution authorized by law to transact business in the State | 14 | | of Illinois. | 15 | | (b) A bond posted under subsection (a) must continue in | 16 | | effect for the period of licensure and for 3 additional years | 17 | | if the bond is still available. The bond must be available to | 18 | | pay damages and penalties to be a consumer harmed by a | 19 | | violation of this Act. | 20 | | (c) From time to time the Secretary may require a licensee | 21 | | to file a bond in an additional sum if the Secretary determines | 22 | | it to be necessary. In no case shall the bond be more than the | 23 | | outstanding liabilities of the licensee.
| 24 | | Section 4-20. Reporting of violations. The Department |
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| 1 | | shall report to the Attorney General all material violations of | 2 | | this Act of which it becomes aware. | 3 | | Section 4-25. Rulemaking. | 4 | | (a) The Department may make and enforce such reasonable | 5 | | rules, regulations, directions, orders, decisions, and | 6 | | findings as the execution and enforcement of the provisions of | 7 | | this Act require, and as are not inconsistent therewith. All | 8 | | rules, regulations, and directions of a general character shall | 9 | | be made available to all licensees in an electronic format. | 10 | | (b) The Department may adopt rules in connection with the | 11 | | activities of licensees that are necessary and appropriate for | 12 | | the protection of the consumers in this State. These rules | 13 | | shall be consistent with this Act. | 14 | | Section 4-28. Confidentiality. All information collected | 15 | | by the Department under an examination or investigation of a | 16 | | non-recourse consumer lawsuit funding company, including, but | 17 | | not limited to, information collected to investigate any | 18 | | complaint against a non-recourse consumer lawsuit funding | 19 | | company filed with the Department, shall be maintained for the | 20 | | confidential use of the Department and shall not be disclosed. | 21 | | The Department may not disclose such information to anyone | 22 | | other than the licensee, law enforcement officials, or other | 23 | | regulatory agencies that have an appropriate regulatory | 24 | | interest as determined by the Secretary, or to a party |
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| 1 | | presenting a lawful subpoena to the Department. Information and | 2 | | documents disclosed to a federal, State, county, or local law | 3 | | enforcement agency shall not be disclosed by the agency for any | 4 | | purpose to any other agency or person. An order issued by the | 5 | | Department against a non-recourse consumer lawsuit funding | 6 | | company shall be a public record and any documents produced in | 7 | | discovery, filed with the administrative law judge, or | 8 | | introduced at hearing shall be a public record, except as | 9 | | otherwise prohibited by law. | 10 | | Section 4-30. Judicial review. All final administrative | 11 | | decisions of the Department under this Act are subject to | 12 | | judicial review under the provisions of the Administrative | 13 | | Review Law and any rules adopted pursuant thereto.
| 14 | | Section 4-35. Waivers. There shall be no waiver of any | 15 | | provision of this Act. | 16 | | Section 4-45. Severability. The provisions of this Act are | 17 | | severable under Section 1.31 of the Statute of Statutes. | 18 | | Section 4-48. Consumer protection study. The Department | 19 | | shall conduct a study to be reported to the Governor and the | 20 | | leaders of the General Assembly no later than February 1, 2015, | 21 | | addressing the adequacy of the consumer protections contained | 22 | | in this Act. The study shall include, but not be limited to: |
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| 1 | | (1) an analysis of the average percentage of a consumer's | 2 | | settlement that is used to return the funding amount in each | 3 | | transaction; (2) a survey of consumer complaints filed against | 4 | | non-recourse consumer lawsuit funding companies; (3) a | 5 | | description of the benefits and shortcomings of non-recourse | 6 | | consumer lawsuit funding to consumers; and (4) any reforms that | 7 | | the Secretary recommends to better regulate non-recourse | 8 | | consumer lawsuit funding companies.
| 9 | | Article 90. Amendatory Provisions | 10 | | Section 90-1. The Regulatory Sunset Act is amended by | 11 | | changing Section 4.25 as follows: | 12 | | (5 ILCS 80/4.25)
| 13 | | Sec. 4.25. Acts Act repealed on January 1, 2015 and May 31, | 14 | | 2015 . | 15 | | (a) The following Act is repealed on January 1, 2015:
| 16 | | The Genetic Counselor Licensing Act.
| 17 | | (b) The following Act is repealed on May 31, 2015: | 18 | | The Non-Recourse Consumer Lawsuit Funding Act. | 19 | | (Source: P.A. 93-1041, eff. 9-29-04.) | 20 | | Section 90-10. The Consumer Fraud and Deceptive Business | 21 | | Practices Act is amended by changing Section 2Z as follows:
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| 1 | | (815 ILCS 505/2Z) (from Ch. 121 1/2, par. 262Z)
| 2 | | Sec. 2Z. Violations of other Acts. Any person who knowingly | 3 | | violates
the Automotive Repair Act, the Automotive Collision | 4 | | Repair Act,
the Home Repair and Remodeling Act,
the Dance | 5 | | Studio Act,
the Physical Fitness Services Act,
the Hearing | 6 | | Instrument Consumer Protection Act,
the Illinois Union Label | 7 | | Act,
the Job Referral and Job Listing Services Consumer | 8 | | Protection Act,
the Travel Promotion Consumer Protection Act,
| 9 | | the Credit Services Organizations Act,
the Automatic Telephone | 10 | | Dialers Act,
the Pay-Per-Call Services Consumer Protection | 11 | | Act,
the Telephone Solicitations Act,
the Illinois Funeral or | 12 | | Burial Funds Act,
the Cemetery Oversight Act, the Cemetery Care | 13 | | Act,
the Safe and Hygienic Bed Act,
the Pre-Need Cemetery Sales | 14 | | Act,
the High Risk Home Loan Act, the Payday Loan Reform Act, | 15 | | the Mortgage Rescue Fraud Act, subsection (a) or (b) of Section | 16 | | 3-10 of the
Cigarette Tax Act, subsection
(a) or (b) of Section | 17 | | 3-10 of the Cigarette Use Tax Act, the Electronic
Mail Act, the | 18 | | Internet Caller Identification Act, paragraph (6)
of
| 19 | | subsection (k) of Section 6-305 of the Illinois Vehicle Code, | 20 | | Section 11-1431, 18d-115, 18d-120, 18d-125, 18d-135, 18d-150, | 21 | | or 18d-153 of the Illinois Vehicle Code, Article 3 of the | 22 | | Residential Real Property Disclosure Act, the Automatic | 23 | | Contract Renewal Act, the Non-Recourse Consumer Lawsuit | 24 | | Funding Act, or the Personal Information Protection Act commits | 25 | | an unlawful practice within the meaning of this Act.
| 26 | | (Source: P.A. 96-863, eff. 1-19-10; 96-1369, eff. 1-1-11; |
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| 1 | | 96-1376, eff. 7-29-10; 97-333, eff. 8-12-11.) | 2 | | Section 99. Effective date. This Act takes effect 180 days | 3 | | after becoming law.".
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