Full Text of HB0531 98th General Assembly
HB0531ham002 98TH GENERAL ASSEMBLY | Rep. André M. Thapedi Filed: 4/17/2013
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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 Litigation Funding Act. | 6 | | Section 1-5. Definitions. In this Act: | 7 | | "Non-recourse consumer litigation funding company" means a | 8 | | person or entity that enters into a non-recourse consumer | 9 | | litigation funding transaction with a consumer. "Non-recourse | 10 | | consumer litigation funding company" includes any affiliate or | 11 | | subsidiary of a non-recourse consumer litigation funding | 12 | | company; an entity or person who buys a whole or partial | 13 | | interest in a non-recourse consumer litigation funding, acts as | 14 | | an agent to provide non-recourse consumer litigation funding | 15 | | from a third party for a fee, or acts as an agent for a third | 16 | | party in providing non-recourse consumer litigation funding |
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| 1 | | for a fee, regardless of whether approval or acceptance by the | 2 | | third party is necessary to create a legal obligation for the | 3 | | third party; and any other person or entity if the Department | 4 | | determines that the person or entity is engaged in a | 5 | | transaction that is in substance a disguised non-recourse | 6 | | consumer litigation funding or a subterfuge for the purpose of | 7 | | avoiding this Act. Notwithstanding anything to the contrary | 8 | | contained in this Act, a bank, lender, financing entity, or any | 9 | | other special purpose entity that provides financing to a | 10 | | non-recourse consumer litigation funding company or to which a | 11 | | non-recourse consumer litigation funding company grants a | 12 | | security interest or transfers any rights or interest in | 13 | | non-recourse consumer litigation funding shall not cause the | 14 | | bank, lender, financing entity, or special purpose entity to be | 15 | | deemed a non-recourse consumer litigation funding company. | 16 | | Notwithstanding anything to the contrary contained in this Act, | 17 | | an attorney or accountant who provides services to a consumer | 18 | | shall not be deemed a non-recourse consumer litigation funding | 19 | | company. | 20 | | "Consumer" means a natural person residing or domiciled in | 21 | | Illinois or who elects to enter into a transaction under this | 22 | | Act in Illinois, whether it be in-person, over the internet, by | 23 | | facsimile, or any other electronic means, and who has a pending | 24 | | legal claim and is represented by an attorney at the time he or | 25 | | she enters into a contract for non-recourse consumer litigation | 26 | | funding. |
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| 1 | | "Contract" means a written agreement between a consumer and | 2 | | a non-recourse consumer litigation funding company that the | 3 | | non-recourse consumer litigation funding company agrees to | 4 | | provide non-recourse consumer litigation funding to the | 5 | | consumer in compliance with Article 2. | 6 | | "Department" means the Illinois Department of Financial | 7 | | and Professional Regulation. | 8 | | "Funding amount" means the dollar amount of funds provided | 9 | | to the consumer by the non-recourse consumer litigation funding | 10 | | company subsequent to the execution of the contract as | 11 | | consideration for the assignment of or purchase of a contingent | 12 | | right to receive a portion of the proceeds of the legal claim. | 13 | | "Funding date" means the date on which the funding amount | 14 | | is paid to the consumer by the non-recourse consumer litigation | 15 | | funding company. | 16 | | "Legal claim" means a civil or statutory claim or action.
| 17 | | "Licensee" means any non-recourse consumer litigation | 18 | | funding company licensed in accordance with Article 3. | 19 | | "Non-recourse consumer litigation funding" means a | 20 | | transaction of any amount in which a non-recourse consumer | 21 | | litigation funding company purchases and a consumer assigns to | 22 | | the non-recourse consumer litigation funding company the | 23 | | contingent right to receive a portion of the potential proceeds | 24 | | of a settlement, judgment, award, or verdict obtained in the | 25 | | consumer's legal claim.
"Non-recourse consumer litigation | 26 | | funding" does not include entities that engage in a commercial |
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| 1 | | to commercial business transaction. | 2 | | "Proceeds" means those funds available for payment to the | 3 | | non-recourse consumer litigation funding company that are | 4 | | remaining from any settlement, verdict, final judgment, | 5 | | insurance payment, or award obtained in the consumer's legal | 6 | | claim after reductions are made under Section 2-15 of this Act. | 7 | | "Resolution date" means the date the funding amount plus | 8 | | the agreed upon fees from the legal claim are received by the | 9 | | non-recourse consumer litigation funding company. | 10 | | "Secretary" means the Illinois Secretary of Financial and | 11 | | Professional Regulation. | 12 | | Article 2. Non-Recourse Consumer Litigation Funding | 13 | | Section 2-5. Contract provisions. All contracts for | 14 | | non-recourse consumer litigation funding shall be in writing | 15 | | and comply with all of the following requirements: | 16 | | (1) The contract shall contain on the front page, | 17 | | appropriately headed and in at least 12-point, bold face type, | 18 | | a chart that clearly contains the following disclosures: | 19 | | (A) the total funding amount paid to the consumer; | 20 | | (B) an itemization of one-time fees; | 21 | | (C) the total dollar amount owed by the consumer to the | 22 | | non-recourse consumer litigation funding company, set | 23 | | forth up to 1,080 days beginning at the 11th business day | 24 | | after the funding date, then at 180 days after the funding |
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| 1 | | date and at every 180 days thereafter; the total dollar | 2 | | amount shall be calculated using the identical methodology | 3 | | used by the non-recourse consumer litigation funding | 4 | | company to calculate the contracted fee amount under | 5 | | Section 2-10. | 6 | | The Secretary shall prescribe by rule the format of the | 7 | | chart that clearly discloses to the consumer all the | 8 | | information in this subsection. Until the Secretary makes such | 9 | | a rule, each non-recourse consumer litigation funding company | 10 | | must have a chart format approved for distribution by the | 11 | | Secretary. | 12 | | No contract for non-recourse consumer litigation funding | 13 | | shall be enforceable against the consumer unless it complies | 14 | | entirely with this subsection. | 15 | | (2) The contract shall provide that the consumer may cancel | 16 | | the contract within 7 business days following the consumer's | 17 | | receipt of the funding amount, without penalty or further | 18 | | obligation. The contract shall contain the following notice | 19 | | written in at least 12-point, bold face type: | 20 | | "Consumer's right to cancellation: You may cancel this | 21 | | contract without penalty or further obligation within 10 | 22 | | business days after the funding date.". | 23 | | The contract must also specify that in order for the | 24 | | cancellation to be effective, the consumer must either return | 25 | | to the non-recourse consumer litigation funding company the | 26 | | total amount of the funding amount by (a) delivering the |
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| 1 | | non-recourse consumer litigation funding company's uncashed | 2 | | check to the non-recourse consumer litigation company's | 3 | | offices in person within 10 business days after receipt of the | 4 | | funding amount, (b) sending a notice of cancellation via | 5 | | registered or certified mail and include in the mailing a | 6 | | return of the total amount of funding amount in the form of the | 7 | | non-recourse consumer litigation funding company's uncashed | 8 | | check within 10 business days after receipt of the funding | 9 | | amount, or (c) sending a registered, certified or cashier's | 10 | | check or money order, by insured, registered, or certified | 11 | | United States mail, postmarked within 10 business days after | 12 | | receipt of the funding amount, to the address specified in the | 13 | | contract for cancellation. | 14 | | (3) The contract shall contain all of the following | 15 | | statements in at least 12-point, bold face type: | 16 | | "(A) [Insert name of the non-recourse consumer | 17 | | litigation funding company] agrees that it shall have no | 18 | | right to and will not make any decisions with respect to | 19 | | the conduct of the legal claim or any settlement or | 20 | | resolution thereof and that the right to make those | 21 | | decisions remains solely with you and your attorney in the | 22 | | legal claim. [Insert name of the non-recourse consumer | 23 | | litigation funding company] further agrees that it shall | 24 | | have no right to pursue the legal claim on your behalf. | 25 | | (B) [Insert name of the non-recourse consumer | 26 | | litigation funding company] agrees that it shall only |
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| 1 | | accept: (i) an assignment of a contingent right to receive | 2 | | a portion of the potential proceeds; (ii) the contracted | 3 | | return of the funding amount; and (iii) any agreed upon | 4 | | fees. Any agreed upon fees to [insert name of the | 5 | | non-recourse consumer litigation funding company] shall | 6 | | not be determined as a percentage of your recovery from the | 7 | | legal claim but shall be set as a contractually determined | 8 | | amount based upon intervals of time from the funding date | 9 | | through the resolution date. [Insert name of the | 10 | | non-recourse consumer litigation funding company] is not | 11 | | accepting an assignment of your legal claim. | 12 | | (C) [Insert name of the non-recourse consumer | 13 | | litigation funding company] agrees that you may make | 14 | | payments on a funding at any time without additional cost | 15 | | or penalty. | 16 | | (D) [Insert name of the non-recourse consumer | 17 | | litigation funding company] is not a law firm and is | 18 | | prohibited from rendering legal advice. Advice about the | 19 | | conduct of the legal claim or any settlement or resolution | 20 | | shall be directed to a properly licensed attorney.".
| 21 | | (4) All contracts with the consumer must contain the | 22 | | following statement, in plain language in a box with 15-point, | 23 | | bold face type, in all capitalized letters, stating the | 24 | | following: | 25 | | "THE FUNDING AMOUNT AND AGREED UPON FEES SHALL ONLY BE PAID | 26 | | FROM THE PROCEEDS OF YOUR LEGAL CLAIM AND SHALL ONLY BE |
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| 1 | | PAID TO THE EXTENT THAT THERE ARE AVAILABLE PROCEEDS FROM | 2 | | YOUR LEGAL CLAIM. YOU WILL NOT OWE [INSERT NAME OF THE | 3 | | NON-RECOURSE CONSUMER LITIGATION FUNDING COMPANY] ANYTHING | 4 | | IF THERE ARE NO PROCEEDS FROM YOUR LEGAL CLAIM.". | 5 | | (5) The contract shall contain the following statement in | 6 | | at least 12-point, bold face type located immediately above the | 7 | | space where the consumer's signature is required: | 8 | | "Do not sign this Agreement before you read it completely | 9 | | or if it contains any blank spaces. You are entitled to a | 10 | | completely filled-in copy of this Agreement. Before you | 11 | | sign this Agreement you should obtain the advice of an | 12 | | attorney. Depending on the circumstances, you may want to | 13 | | consult a tax, public, or private benefit planning or | 14 | | financial professional. You acknowledge that your attorney | 15 | | in the legal claim has provided no tax, public, or private | 16 | | benefit planning regarding this transaction. You further | 17 | | understand and agree that the funds you receive from | 18 | | [insert name of the non-recourse consumer litigation | 19 | | funding company] shall not be used to pay for or applied to | 20 | | the payment of attorney's fees or litigation costs related | 21 | | to your legal claim.". | 22 | | (6) The executed contract shall contain a written | 23 | | acknowledgment by the consumer that he or she has reviewed the | 24 | | contract in its entirety. | 25 | | (7) The non-recourse consumer litigation funding company | 26 | | shall provide the consumer's attorney with a written |
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| 1 | | notification of the non-recourse consumer litigation funding | 2 | | provided to the consumer 3 business days before the funding | 3 | | date by way of postal mail, courier service, facsimile, e-mail | 4 | | return receipt acknowledged, or other means of proof of | 5 | | delivery method unless there is a written acknowledgment by the | 6 | | attorney representing the consumer in the legal claim as to the | 7 | | terms of the contract. | 8 | | (8) The contracted return of the funding amount, plus any | 9 | | agreed upon fees assigned to the non-recourse consumer | 10 | | litigation funding company on the resolution date shall not be | 11 | | determined as a percentage of the recovery from the legal claim | 12 | | but shall be set as a contractually determined amount based | 13 | | upon intervals of time from the funding date through the | 14 | | resolution date. | 15 | | Section 2-10. Contracted fee amount. | 16 | | (a) The non-recourse consumer litigation funding company | 17 | | shall offer the consumer the option of either entering into a | 18 | | conventional loan under the Consumer Installment Loan Act or | 19 | | entering into non-recourse consumer litigation funding. | 20 | | If the consumer elects to enter into a conventional loan | 21 | | agreement under the Consumer Installment Loan Act, the interest | 22 | | charged shall not exceed an annual percentage rate of 36%. | 23 | | If the consumer elects to enter into non-recourse consumer | 24 | | litigation funding, the company shall not charge a fee in | 25 | | excess of 36% annual percentage rate plus a deferment fee not |
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| 1 | | to exceed 3% for each month the funding is outstanding with | 2 | | compounding to occur no more often than quarterly. | 3 | | (b) No additional fees shall be applied for any period of | 4 | | time beyond 1,080 days from the funding date. | 5 | | (c) Except for the fees set forth in this Section and | 6 | | Section 20, the non-recourse consumer litigation funding | 7 | | company shall not impose on a consumer any additional finance | 8 | | charges, interest, fees, or charges of any sort for any | 9 | | purpose. | 10 | | (d) Under no circumstances shall the total amount of | 11 | | finance charges, interest, fees, or any other charges, when | 12 | | taken together, exceed the award to the consumer. | 13 | | Section 2-12. Charges permitted. | 14 | | (a) A licensee may charge an acquisition charge not to | 15 | | exceed 8% of the amount funded or $100, whichever is less. | 16 | | (b) A licensee may charge an expedited funds delivery | 17 | | option charge not to exceed the actual cost of delivery or $20, | 18 | | whichever is less. Expedited funds delivery options, | 19 | | including, but not limited to, overnight delivery, electronic | 20 | | fund transfers, and Automated Clearing House (ACH) | 21 | | transactions may be offered to the consumer as a choice of the | 22 | | method of the delivery of funds. The fund delivery charge is | 23 | | fully earned at the time that each funding transaction is made | 24 | | and shall not be subject to refund. Details and receipts of | 25 | | delivery shall be provided in an invoice to the consumer no |
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| 1 | | more than 10 business days after the funding date. A no-charge | 2 | | delivery option must be offered to the consumer as a choice. | 3 | | Section 2-15. Claim priorities. Any lien arising out of the | 4 | | underlying consumer's legal claim for subrogation claims, | 5 | | attorney fees, attorney liens, and litigation costs, health | 6 | | care providers, employers in worker's compensation | 7 | | proceedings, health insurers, employers with self-funded | 8 | | health care plans, Medicare, and Public Aid shall be satisfied | 9 | | before and take priority over any claim of the non-recourse | 10 | | consumer litigation funding company. All other holders of | 11 | | liens, security interests, or subrogation claims shall take | 12 | | priority over the non-recourse consumer litigation funding | 13 | | company to the extent allowed by law. | 14 | | Section 2-20. Standards and practices. Each non-recourse | 15 | | consumer litigation funding company shall adhere to the | 16 | | following: | 17 | | (1) The non-recourse consumer litigation funding company | 18 | | shall not pay or offer to pay any compensation to any attorney, | 19 | | law firm, medical provider, chiropractor, physical therapist, | 20 | | or any of their employees for referring a consumer to the | 21 | | non-recourse consumer litigation funding company. The | 22 | | non-recourse consumer litigation funding company agrees not to | 23 | | accept any compensation from any attorney, law firm, medical | 24 | | provider, chiropractor, physical therapist, or any of their |
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| 1 | | employees, other than the funding amount and any agreed upon | 2 | | fees the consumer assigned to the non-recourse consumer | 3 | | litigation funding company out of the potential proceeds of the | 4 | | legal claim. If a lawyer or law firm represents one or more | 5 | | consumers with outstanding non-recourse consumer litigation | 6 | | fundings from the same non-recourse consumer litigation | 7 | | funding company, that non-recourse consumer litigation funding | 8 | | company may not provide any type of funding to the lawyer or | 9 | | law firm.
| 10 | | (2) The non-recourse consumer litigation funding company | 11 | | shall not advertise false or intentionally misleading | 12 | | information regarding its product or services. | 13 | | (3) The non-recourse consumer litigation funding company | 14 | | shall not knowingly provide funding to a consumer who has | 15 | | previously sold and assigned an amount of the potential | 16 | | proceeds of his or her legal claim to another non-recourse | 17 | | consumer litigation funding company without first purchasing | 18 | | that non-recourse consumer litigation funding company's entire | 19 | | accrued balance unless otherwise agreed to in writing by the | 20 | | consumer and all non-recourse consumer litigation funding | 21 | | companies that provided non-recourse consumer litigation | 22 | | funding to the consumer. | 23 | | (4) The non-recourse consumer litigation funding company | 24 | | shall not offer single premium credit life, disability, or | 25 | | unemployment insurance that will be financed through a | 26 | | non-recourse consumer litigation funding transaction. |
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| 1 | | (5) For non-English speaking consumers, the principal | 2 | | terms of the contract must be translated in writing into the | 3 | | consumer's primary language. The consumer must sign the | 4 | | translated document containing the principal terms and initial | 5 | | each page and the translator must sign an affirmation | 6 | | confirming that the principal terms have been presented to the | 7 | | consumer in the consumer's primary language and acknowledged by | 8 | | the consumer. Principal terms shall include all items that must | 9 | | be disclosed by Section 2-5. | 10 | | (6) No communication between a consumer's attorney and a | 11 | | non-recourse consumer litigation funding company pertaining to | 12 | | a consumer's non-recourse consumer litigation funding | 13 | | transaction shall limit, waive, or abrogate any statutory or | 14 | | common-law privilege, including the attorney-client privilege | 15 | | or the work-product doctrine. | 16 | | (7) The return of the funding amount to the non-recourse | 17 | | consumer litigation funding company, plus any agreed upon fees, | 18 | | shall be rendered only out of the funds, if any, of the | 19 | | realized settlement, judgment, award, or verdict the consumer | 20 | | may receive from the legal claim. Under no circumstances shall | 21 | | the non-recourse consumer litigation funding company have | 22 | | recourse for the funding amount beyond the consumer's proceeds | 23 | | from the legal claim.
| 24 | | (8) The non-recourse consumer litigation funding company | 25 | | shall have no authority to advise the consumer on any legal | 26 | | matters or to make any decisions with respect to the conduct of |
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| 1 | | the litigation of the legal claim or any settlement or | 2 | | resolution thereof. The right to make those decisions remains | 3 | | solely with the consumer and the consumer's attorney | 4 | | representing the consumer in the legal claim. The non-recourse | 5 | | consumer litigation funding company shall have no right to | 6 | | pursue the legal claim on the consumer's behalf. | 7 | | (9) The non-recourse consumer litigation funding company | 8 | | shall only accept an assignment of a contingent right to | 9 | | receive a portion of the potential proceeds, rather than an | 10 | | assignment of the legal claim. The contracted return of the | 11 | | funding amount, plus any agreed upon fees assigned to the | 12 | | non-recourse consumer litigation funding company, shall not be | 13 | | determined as a percentage of the total recovery from the legal | 14 | | claim, but shall be set as a contractually determined amount | 15 | | based upon intervals of time from the funding date through the | 16 | | resolution date. | 17 | | (10) Notwithstanding subsection (8) of this Section, the | 18 | | non-recourse consumer litigation funding company shall allow | 19 | | the consumer to make payments on a funding at any time without | 20 | | additional cost or penalty. | 21 | | (11) Contact between the non-recourse consumer litigation | 22 | | funding company and the consumer shall be subject to the | 23 | | following limitations:
| 24 | | (A) Neither a non-recourse consumer litigation funding | 25 | | company, nor any person acting on behalf of a non-recourse | 26 | | consumer litigation funding company, shall contact a |
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| 1 | | consumer prior to the consumer obtaining legal | 2 | | representation and initiating a legal claim. | 3 | | (B) Neither a non-recourse consumer litigation funding | 4 | | company, nor any person acting on behalf of a non-recourse | 5 | | consumer litigation funding company, shall contact the | 6 | | consumer after the funding date in order to influence any | 7 | | decisions with respect to the conduct of the legal claim or | 8 | | any settlement or resolution thereof. Notwithstanding the | 9 | | foregoing, the non-recourse consumer litigation funding | 10 | | company may contact the consumer to obtain the status of | 11 | | the legal claim and updated attorney contact information. | 12 | | (C) After the resolution date, neither a non-recourse | 13 | | consumer litigation funding company, nor any person acting | 14 | | on behalf of a non-recourse consumer litigation funding | 15 | | company, shall seek to collect additional funds or threaten | 16 | | civil action for any deficiency. | 17 | | Section 2-25. Information; reporting and examination. | 18 | | (a) A licensee shall keep and use books, accounts, and | 19 | | records that will enable the Secretary to determine if the | 20 | | licensee is complying with the provisions of this Act and | 21 | | maintain any other records as required by the Secretary. | 22 | | (b) A licensee shall collect and maintain information | 23 | | annually for a report that shall disclose in detail and under | 24 | | appropriate headings: | 25 | | (1) the total number of non-recourse consumer |
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| 1 | | litigation fundings made during the previous calendar | 2 | | year; | 3 | | (2) the total number of non-recourse consumer | 4 | | litigation fundings outstanding as of December 31st of the | 5 | | preceding calendar year; | 6 | | (3) the minimum, maximum, and average amount of | 7 | | non-recourse consumer litigation fundings made during the | 8 | | preceding calendar year; | 9 | | (4) the average annual fee rate of the non-recourse | 10 | | consumer litigation fundings made during the preceding | 11 | | year; and | 12 | | (5) the total number of non-recourse consumer | 13 | | litigation funding transactions in which the non-recourse | 14 | | consumer litigation funding company received the return of | 15 | | the funding amount, plus any agreed upon fees; the total | 16 | | number of non-recourse consumer litigation funding | 17 | | transactions for which the non-recourse consumer | 18 | | litigation funding company received no return of the | 19 | | funding amount or any fees; and the total number of | 20 | | non-recourse consumer litigation funding transactions in | 21 | | which the non-recourse consumer litigation funding company | 22 | | received an amount less than the contracted amount. | 23 | | The report shall be verified by the oath or affirmation of | 24 | | the Chief Executive Officer, Chief Financial Officer, or other | 25 | | duly authorized representative of the licensee. The report must | 26 | | be filed with the Secretary no later than March 1 of the year |
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| 1 | | following the year for which the report discloses the | 2 | | information specified in this subsection (b). The Secretary may | 3 | | impose a fine of $50 per day upon the licensee for each day | 4 | | beyond the filing deadline that the report is not filed. | 5 | | (c) The Department shall have the authority to conduct | 6 | | examinations at any time of the books, records, and | 7 | | non-recourse consumer litigation funding documents of a | 8 | | licensee or other company or person doing business without the | 9 | | required license. Any licensee being examined must provide to | 10 | | the Department convenient and free access at all reasonable | 11 | | hours at its office or location to all books, records, | 12 | | non-recourse consumer litigation funding documents. The | 13 | | officers, directors, and agents of the non-recourse consumer | 14 | | litigation funding company must facilitate the examination and | 15 | | aid in the examination so far as it is in their power to do so. | 16 | | Section 2-30. Applicability.
| 17 | | (a) The contingent right to receive a portion of the | 18 | | potential proceeds of a legal claim is assignable and valid for | 19 | | the purposes of obtaining funding from a licensee under this | 20 | | Section. | 21 | | (b) Nothing in this Act shall cause any non-recourse civil | 22 | | litigation funding transaction conforming to this Act to be | 23 | | deemed to be a loan or investment contract or subject to the | 24 | | restrictions or provisions governing loans or investment | 25 | | contracts set forth in the Interest Act, the Consumer |
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| 1 | | Installment Loan Act, or any other provisions of State law. | 2 | | Article 3. Licensure. | 3 | | Section 3-1. Licensure requirement.
| 4 | | (a) Except as provided in subsection (b), on and after the | 5 | | effective date of this Act, a non-recourse consumer litigation | 6 | | funding company as defined by Section 1-5 must be licensed by | 7 | | the Department as provided in this Article. | 8 | | (b) A non-recourse consumer litigation funding company | 9 | | licensed on the effective date of this Act under the Consumer | 10 | | Installment Loan Act need not comply with subsection (a) until | 11 | | the Department takes action on the non-recourse consumer | 12 | | litigation funding company's application for a non-recourse | 13 | | consumer litigation funding license. The application must be | 14 | | submitted to the Department within 3 months after the effective | 15 | | date of this Act. If the application is not submitted within 3 | 16 | | months after the effective date of this Act, the non-recourse | 17 | | consumer litigation funding company is subject to subsection | 18 | | (a). | 19 | | Section 3-5. Licensure. | 20 | | (a) An application for a license shall be in writing and in | 21 | | a form prescribed by the Secretary. Applicants must also submit | 22 | | a non-refundable application fee of $2,500, due at the time of | 23 | | the application. The Secretary may not issue a non-recourse |
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| 1 | | consumer litigation funding license unless and until the | 2 | | following findings are made: | 3 | | (1) that the financial responsibility, experience, | 4 | | character, and general fitness of the applicant are such as | 5 | | to command the confidence of the public and to warrant the | 6 | | belief that the business will be operated lawfully and | 7 | | fairly and within the provisions and purpose of this Act; | 8 | | (2) that the applicant has submitted such other | 9 | | information as the Secretary may deem necessary; and | 10 | | (3) that the applicant is a current licensee under the | 11 | | Consumer Installment Loan Act. | 12 | | (b) A license shall be issued for no longer than one year | 13 | | and no renewal of a license may be provided if a licensee has | 14 | | substantially violated this Act and has not cured the violation | 15 | | to the satisfaction of the Department. | 16 | | (c) A licensee shall appoint, in writing, the Secretary as | 17 | | attorney-in-fact upon whom all lawful process against the | 18 | | licensee may be served with the same legal force and validity | 19 | | as if served on the licensee. A copy of the written | 20 | | appointment, duly certified, shall be filed in the office of | 21 | | the Secretary, and a copy thereof certified by the Secretary | 22 | | shall be sufficient evidence to subject a licensee to | 23 | | jurisdiction in a court of law. This appointment shall remain | 24 | | in effect while any liability remains outstanding in this State | 25 | | against the licensee. When summons is served upon the Secretary | 26 | | as attorney-in-fact for a licensee, the Secretary shall |
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| 1 | | immediately notify the licensee by registered mail, enclosing | 2 | | the summons and specifying the day of service. | 3 | | (d) A licensee must pay an annual fee of $1,000. In | 4 | | addition to the annual license fee, the reasonable expense of | 5 | | any examination or hearing by the Secretary under any | 6 | | provisions of this Act shall be borne by the licensee. If a | 7 | | licensee fails to submit an application for renewal by December | 8 | | 31st of the then current year, its license shall automatically | 9 | | expire; however, the Secretary, in his or her discretion, may | 10 | | reinstate an expired license upon: | 11 | | (1) payment of the annual fee within 30 days of the | 12 | | date of expiration; and
| 13 | | (2) proof of good cause for failure to renew. | 14 | | (3) that the applicant is a current licensee under the | 15 | | Consumer Installment Loan Act. | 16 | | (e) No licensee shall conduct the business of providing | 17 | | non-recourse consumer litigation funding under this Act within | 18 | | any office, suite, room, or place of business in which any | 19 | | other business is solicited or engaged unless the other | 20 | | business is licensed by the Department and, in the opinion of | 21 | | the Secretary, the other business would not be contrary to the | 22 | | best interests of consumers and is authorized by the Secretary | 23 | | in writing. | 24 | | (f) The Secretary shall maintain a list of licensees that | 25 | | shall be available to interested consumers and lenders and the | 26 | | public. The Secretary shall maintain a toll-free number whereby |
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| 1 | | consumers may obtain information about licensees. The | 2 | | Secretary shall also establish a complaint process under which | 3 | | an aggrieved consumer may file a complaint against a licensee | 4 | | or non-licensee who violates any provision of this Act. | 5 | | Section 3-10. Closing of business; surrender of license. At | 6 | | least 10 days before a licensee ceases operations, closes the | 7 | | business, or files for bankruptcy, the licensee shall: | 8 | | (1) Notify the Department of its intended action in | 9 | | writing. | 10 | | (2) With the exception of filing for bankruptcy, surrender | 11 | | its license to the Secretary for cancellation. The surrender of | 12 | | the license shall not affect the licensee's civil or criminal | 13 | | liability for acts committed before or after the surrender or | 14 | | entitle the licensee to a return of any part of the annual | 15 | | license fee. | 16 | | (3) Notify the Department of the location where the books, | 17 | | accounts, contracts, and records will be maintained. | 18 | | The accounts, books, records, and contracts shall be | 19 | | maintained and serviced by the licensee, by another licensee | 20 | | under this Act, or by the Department. | 21 | | Article 4. Administrative Provisions | 22 | | Section 4-5. Prohibited acts. A licensee or unlicensed | 23 | | person or entity entering into non-recourse consumer |
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| 1 | | litigation funding may not commit, or have committed, on behalf | 2 | | of the licensee or unlicensed person or entity, any of the | 3 | | following acts: | 4 | | (1) Threatening to use or using the criminal process in | 5 | | this or any other state to collect the assignment.
| 6 | | (2) Using any device or agreement that would have the | 7 | | effect of charging or collecting more fees or charges than | 8 | | allowed in this Act, including, but not limited to, entering | 9 | | into a different type of transaction with the consumer.
| 10 | | (3) Engaging in unfair, deceptive, or fraudulent practices | 11 | | related to the non-recourse consumer litigation funding. | 12 | | (4) Threatening to take any action against a consumer that | 13 | | is prohibited by this Act or making any misleading or deceptive | 14 | | statements regarding the non-recourse consumer litigation | 15 | | funding. | 16 | | (5) Making a misrepresentation of a material fact by an | 17 | | applicant for licensure in obtaining or attempting to obtain a | 18 | | license. | 19 | | (6) Including any of the following provisions in | 20 | | non-recourse consumer litigation funding contracts: | 21 | | (A) a confession of judgment clause; | 22 | | (B) a mandatory arbitration clause that is oppressive, | 23 | | unfair, unconscionable, or substantially in derogation of | 24 | | the rights of consumers; or | 25 | | (C) a provision that the consumer agrees not to assert | 26 | | any claim or defense arising out of the contract. |
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| 1 | | (7) Taking any power of attorney. | 2 | | Section 4-10. Enforcement and remedies. | 3 | | (a) The remedies provided in this Act are cumulative and | 4 | | apply to persons or entities subject to this Act.
| 5 | | (b) Any material violation of this Act, including the | 6 | | commission of an act prohibited under Section 4-5, constitutes | 7 | | a violation of the Consumer Fraud and Deceptive Business | 8 | | Practices Act. | 9 | | (c) If any provision of the written agreement described in | 10 | | Section 2-5 violates this Act, then that provision is | 11 | | unenforceable against the consumer. | 12 | | (d) Subject to the Illinois Administrative Procedures Act, | 13 | | the Secretary may hold hearings, make findings of fact, | 14 | | conclusions of law, issue cease and desist orders, have the | 15 | | power to issue fines of up to $10,000 per violation, refer the | 16 | | matter to the appropriate law enforcement agency for | 17 | | prosecution under this Act, and suspend or revoke a license | 18 | | granted under this Act. All proceedings shall be open to the | 19 | | public. | 20 | | (e) The Secretary may issue a cease and desist order to any | 21 | | licensee or other person doing business without the required | 22 | | license, when in the opinion of the Secretary the licensee or | 23 | | other person is violating or is about to violate any provisions | 24 | | of this Act or any rule or requirement imposed in writing by | 25 | | the Department as a condition of granting any authorization |
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| 1 | | permitted by this Act. In addition to any other action | 2 | | authorized by this Act, if the Secretary determines that a | 3 | | non-recourse consumer litigation funding company is engaged in | 4 | | or is believed to be engaged in activities that may constitute | 5 | | a violation of this Act and the Secretary is able to show that | 6 | | an emergency exists, the Secretary may suspend the non-recourse | 7 | | consumer litigation funding company's license for a period not | 8 | | exceeding 180 calendar days. The cease and desist order and | 9 | | emergency suspension permitted by this subsection (e) may be | 10 | | issued prior to a hearing. | 11 | | The Secretary shall serve notice of his or her action, | 12 | | including, but not limited to, a statement of the reasons for | 13 | | the action, either personally or by certified mail, return | 14 | | receipt requested. Service by certified mail shall be deemed | 15 | | completed when the notice is deposited in the U.S. Mail. | 16 | | Within 10 business days after service of the cease and | 17 | | desist order, the licensee or other person may request a | 18 | | hearing in writing. The Secretary shall schedule a hearing | 19 | | within 30 days after the request for a hearing unless otherwise | 20 | | agreed to by the parties. The Secretary shall have the | 21 | | authority to adopt rules for the administration of this | 22 | | Section. | 23 | | If it is determined that the Secretary had the authority to | 24 | | issue the cease and desist order, he or she may issue such | 25 | | orders as may be reasonably necessary to correct, eliminate, or | 26 | | remedy the conduct. |
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| 1 | | The powers vested in the Secretary by the subsection (e) | 2 | | are additional to any and all other powers and remedies vested | 3 | | in the Secretary by law, and nothing in this subsection (e) | 4 | | shall be construed as requiring that the Secretary shall employ | 5 | | the power conferred in this subsection instead of or as a | 6 | | condition precedent to the exercise of any other power or | 7 | | remedy vested in the Secretary. | 8 | | (f) The Secretary may, after 10 business days notice by | 9 | | registered mail to the licensee at the address set forth in the | 10 | | license stating the contemplated action an in general the | 11 | | grounds therefore, fine the licensee an amount not exceeding | 12 | | $10,000 per violation, or revoke or suspend any license issued | 13 | | by the Department if found that: | 14 | | (1) the licensee has failed to comply with any | 15 | | provision of this Act or any order, decision, finding, | 16 | | rule, regulation, or direction of the Secretary lawfully | 17 | | made under the authority of this Act; or | 18 | | (2) any fact or condition exists that, if it had | 19 | | existed at the time of the original application for the | 20 | | license, clearly would have warranted the Secretary in | 21 | | refusing to issue the license. | 22 | | No revocation, suspension, or surrender of any license | 23 | | shall impair or affect the obligation of any pre-existing | 24 | | lawful contract between the non-recourse consumer | 25 | | litigation funding company and a consumer. | 26 | | The Secretary may issue a new license to a licensee |
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| 1 | | whose license has been revoked when facts or conditions | 2 | | that clearly would have warranted the Secretary in refusing | 3 | | originally to issue the license no longer exist. | 4 | | In every case in which a license or renewal of a | 5 | | license is denied, the Secretary shall serve the licensee | 6 | | with notice of his or her action, including a statement of | 7 | | the reasons for his or her actions, either personally, or | 8 | | by certified mail, return receipt requested. Service by | 9 | | certified mail shall be deemed completed when the notice is | 10 | | deposited in the U.S. Mail. | 11 | | An order assessing a fine, an order revoking or | 12 | | suspending a license, or an order denying or refusing to | 13 | | renew a license shall take effect upon service of the order | 14 | | unless the licensee requests a hearing, in writing, within | 15 | | 10 days after the date of service. In the event a hearing | 16 | | is requested, the order shall be stayed until final | 17 | | administrative order is entered. | 18 | | If the licensee requests a hearing, the Secretary shall | 19 | | schedule a hearing within 30 days after the request for a | 20 | | hearing unless otherwise agreed to by the parties. | 21 | | The hearing shall be held at a time and place | 22 | | designated by the Secretary. The Secretary, and any | 23 | | administrative law judge designated by him or her, shall | 24 | | have the power to administer oaths and affirmations, | 25 | | subpoena witnesses and compel their attendance, take | 26 | | evidence, and require the production of books, papers, |
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| 1 | | correspondence, and other records or information that he or | 2 | | she considers relevant or material to the inquiry. | 3 | | The costs of administrative hearings conducted under | 4 | | this Section shall be paid by the licensee. | 5 | | (g) All moneys received by the Department under this Act | 6 | | shall be deposited in the Financial Institutions Fund. | 7 | | Section 4-15. Bonding.
| 8 | | (a) A person or entity engaged in non-recourse consumer | 9 | | litigation funding under this Act shall post a bond to the | 10 | | Department in the amount of $50,000 per license or irrevocable | 11 | | letter of credit issued and confirmed by a financial | 12 | | institution authorized by law to transact business in the State | 13 | | of Illinois. | 14 | | (b) A bond posted under subsection (a) must continue in | 15 | | effect for the period of licensure and for 3 additional years | 16 | | if the bond is still available. The bond must be available to | 17 | | pay damages and penalties to be a consumer harmed by a | 18 | | violation of this Act. | 19 | | (c) From time to time the Secretary may require a licensee | 20 | | to file a bond in an additional sum if the Secretary determines | 21 | | it to be necessary. In no case shall the bond be more than the | 22 | | outstanding liabilities of the licensee.
| 23 | | Section 4-20. Reporting of violations. The Department | 24 | | shall report to the Attorney General all material violations of |
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| 1 | | this Act of which it becomes aware. | 2 | | Section 4-25. Rulemaking. | 3 | | (a) The Department may make and enforce such reasonable | 4 | | rules, regulations, directions, orders, decisions, and | 5 | | findings as the execution and enforcement of the provisions of | 6 | | this Act require, and as are not inconsistent therewith. All | 7 | | rules, regulations, and directions of a general character shall | 8 | | be made available to all licensees in an electronic format. | 9 | | (b) The Department may adopt rules in connection with the | 10 | | activities of licensees that are necessary and appropriate for | 11 | | the protection of the consumers in this State. These rules | 12 | | shall be consistent with this Act. | 13 | | Section 4-28. Confidentiality. All information collected | 14 | | by the Department under an examination or investigation of a | 15 | | non-recourse consumer litigation funding company, including, | 16 | | but not limited to, information collected to investigate any | 17 | | complaint against a non-recourse consumer litigation funding | 18 | | company filed with the Department, shall be maintained for the | 19 | | confidential use of the Department and shall not be disclosed. | 20 | | The Department may not disclose such information to anyone | 21 | | other than the licensee, law enforcement officials, or other | 22 | | regulatory agencies that have an appropriate regulatory | 23 | | interest as determined by the Secretary, or to a party | 24 | | presenting a lawful subpoena to the Department. Information and |
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| 1 | | documents disclosed to a federal, State, county, or local law | 2 | | enforcement agency shall not be disclosed by the agency for any | 3 | | purpose to any other agency or person. An order issued by the | 4 | | Department against a non-recourse consumer litigation funding | 5 | | company shall be a public record and any documents produced in | 6 | | discovery, filed with the administrative law judge, or | 7 | | introduced at hearing shall be a public record, except as | 8 | | otherwise prohibited by law. | 9 | | Section 4-30. Judicial review. All final administrative | 10 | | decisions of the Department under this Act are subject to | 11 | | judicial review under the provisions of the Administrative | 12 | | Review Law and any rules adopted pursuant thereto.
| 13 | | Section 4-35. Waivers. There shall be no waiver of any | 14 | | provision of this Act. | 15 | | Section 4-45. Severability. The provisions of this Act are | 16 | | severable under Section 1.31 of the Statute of Statutes. | 17 | | Section 4-48. Consumer protection study. The Department | 18 | | shall conduct a study to be reported to the Governor and the | 19 | | leaders of the General Assembly no later than February 1, 2018, | 20 | | addressing the adequacy of the consumer protections contained | 21 | | in this Act. The study shall include, but not be limited to: | 22 | | (1) an analysis of the average percentage of a consumer's |
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| 1 | | settlement that is used to return the funding amount in each | 2 | | transaction; (2) a survey of consumer complaints filed against | 3 | | non-recourse consumer litigation funding companies; (3) a | 4 | | description of the benefits and shortcomings of non-recourse | 5 | | consumer litigation funding to consumers; and (4) any reforms | 6 | | that the Secretary recommends to better regulate non-recourse | 7 | | consumer litigation funding companies.
| 8 | | Article 90. Amendatory Provisions | 9 | | Section 90-1. The Regulatory Sunset Act is amended by | 10 | | changing Section 4.29 as follows: | 11 | | (5 ILCS 80/4.29) | 12 | | Sec. 4.29. Acts repealed in 2019 on January 1, 2019 and | 13 | | December 31, 2019 . | 14 | | (a) The following Act is repealed on January 1, 2019: | 15 | | The Environmental Health Practitioner Licensing Act. | 16 | | (b) The following Act is repealed on May 31, 2019: | 17 | | The Non-Recourse Consumer Litigation Funding Act. | 18 | | (c) (b) The following Act is repealed on December 31, 2019: | 19 | | The Structural Pest Control Act.
| 20 | | (Source: P.A. 95-1020, eff. 12-29-08; 96-473, eff. 8-14-09.) | 21 | | Section 90-10. The Consumer Fraud and Deceptive Business | 22 | | 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 Litigation | 24 | | Funding Act, or the Personal Information Protection Act commits | 25 | | an unlawful practice within the meaning of this Act.
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| 1 | | (Source: P.A. 96-863, eff. 1-19-10; 96-1369, eff. 1-1-11; | 2 | | 96-1376, eff. 7-29-10; 97-333, eff. 8-12-11.) | 3 | | Section 99. Effective date. This Act takes effect 180 days | 4 | | after becoming law.".
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