Full Text of HB4554 102nd General Assembly
HB4554ham001 102ND GENERAL ASSEMBLY | Rep. Maurice A. West, II Filed: 2/7/2022
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| 1 | | AMENDMENT TO HOUSE BILL 4554
| 2 | | AMENDMENT NO. ______. Amend House Bill 4554 by replacing | 3 | | everything after the enacting clause with the following:
| 4 | | "Section 1. Short title. This Act may be cited as the | 5 | | Consumer Income Share Agreement Act. | 6 | | Section 5. Definitions. As used in this Act: | 7 | | "Amount financed" means the amounts advanced by the | 8 | | licensee to the consumer or on behalf of the consumer or, if | 9 | | the licensee is a merchant financing the sale of goods or | 10 | | services to the consumer using an income share agreement, the | 11 | | amount credited by the licensee toward the purchase of such | 12 | | goods and services on behalf of the consumer. | 13 | | "Annual percentage rate" or "APR" means the percentage | 14 | | rate calculated according to the Federal Reserve Board's | 15 | | methodology as set forth under Regulation Z, 12 CFR Part 1026. | 16 | | The "annual percentage rate" of an income share agreement is |
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| 1 | | the measure of the cost of the income share agreement, | 2 | | expressed as a yearly rate, that relates to the amount and | 3 | | timing of value received by the consumer to the amount and | 4 | | timing of payments made. The "annual percentage rate" is | 5 | | determined in accordance with either the actuarial method or | 6 | | the United States rule method. | 7 | | "Consumer" means a natural person who enters into an | 8 | | income share agreement for personal, family, or household use. | 9 | | "Department" means the Department of Financial and | 10 | | Professional Regulation. | 11 | | "Director" means the Director of the Division of Financial | 12 | | Institutions of the Department of Financial and Professional | 13 | | Regulation. | 14 | | "Disposable earnings" means that part of the earnings of | 15 | | an individual remaining after the deduction from total | 16 | | earnings of amounts required by law to be withheld. | 17 | | "Educational ISA" means an income share agreement that: | 18 | | (1) is not made, insured, or guaranteed under Title IV | 19 | | of the Higher Education Act of 1965, 20 U.S.C. 1070 et | 20 | | seq., or another federally subsidized educational finance | 21 | | program; | 22 | | (2) is extended to a consumer expressly, in whole or | 23 | | in part, for postsecondary educational expenses, tuition, | 24 | | or other obligations of, or pays amounts to, or on behalf | 25 | | of, such individual for costs associated with a | 26 | | postsecondary training program or any other program |
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| 1 | | designed to increase the individual's human capital, | 2 | | employability, or earning potential, and is not limited to | 3 | | programs eligible to participate as programs under Title | 4 | | IV of the Higher Education Act of 1965, 20 U.S.C. 1070 et | 5 | | seq., as well as any personal expenses, such as books, | 6 | | supplies, transportation, and living costs, incurred by | 7 | | the individual while enrolled in such a program and any | 8 | | other costs or expenses included in the definition of a | 9 | | "qualified higher education expense" as specified in 26 | 10 | | U.S.C. 529(e)(3)(A), including refinancing of loans or | 11 | | income share agreements used for the purposes described in | 12 | | this paragraph, and regardless of whether the income share | 13 | | agreement is provided by the educational institution that | 14 | | the consumer attends; and | 15 | | (3) does not include loans, open-end credit, or any | 16 | | loan or income share agreement that is secured by real | 17 | | property or a dwelling. | 18 | | "Federal poverty guidelines" means the poverty guidelines | 19 | | updated periodically in the Federal Register by the U.S. | 20 | | Department of Health and Human Services under the authority of | 21 | | 42 U.S.C. 9902(2). | 22 | | "Garnishment" means any legal or equitable procedure | 23 | | through which earnings of an individual are required to be | 24 | | withheld for payment of the income share agreement. | 25 | | "Income" means the salary, wages, income, tips, capital | 26 | | gains, earnings, and other sources of income of a consumer as |
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| 1 | | set forth in an income share agreement. | 2 | | "Income share agreement" or "ISA" means an agreement | 3 | | between a consumer and an ISA provider under which: | 4 | | (1) the ISA provider advances a sum of money to the | 5 | | consumer or to a third party on the consumer's behalf or, | 6 | | if the ISA provider is a seller of goods or services to the | 7 | | consumer, the ISA provider credits toward the purchase of | 8 | | such goods or services; | 9 | | (2) the consumer is obligated to make periodic | 10 | | payments, if any become due, to the ISA provider | 11 | | calculated, based upon, or determined by the consumer's | 12 | | income; | 13 | | (3) the consumer's obligation to make payments, if any | 14 | | become due, to the ISA provider is conditional on the | 15 | | consumer's income exceeding the income threshold set forth | 16 | | in the income share agreement; | 17 | | (4) there is an ISA duration; and | 18 | | (5) each of these elements is available at the time of | 19 | | contracting of the income share agreement. | 20 | | "Income threshold" means a fixed dollar amount that, if a | 21 | | consumer earns less than such amount during the relevant | 22 | | period, the consumer is not required to make a payment for such | 23 | | payment period. | 24 | | "Index" means the Consumer Price Index for Urban Wage | 25 | | Earners and Clerical Workers: U.S. City Average, All Items, | 26 | | 1967=100, compiled by the Bureau of Labor Statistics, United |
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| 1 | | States Department of Labor. | 2 | | "ISA duration" means the maximum length of time during | 3 | | which income may be subject to an ISA payment, absent periods | 4 | | of payment relief pause at the request of the consumer. "ISA | 5 | | duration" does not include periods of payment relief pause. | 6 | | "ISA maximum number of payments" means the maximum number | 7 | | of ISA payments during ISA payment periods in which the | 8 | | consumer's income is equal to or greater than the income | 9 | | threshold that a consumer could be required to make. "ISA | 10 | | maximum number of payments" does not include periods of | 11 | | payment relief pause. | 12 | | "ISA payment" means the amount of a consumer's periodic | 13 | | payment obligation, if any, based on the terms of the income | 14 | | share agreement. The "ISA payment" is equal to the product of | 15 | | the ISA percentage multiplied by the consumer's income, except | 16 | | in cases of an ISA where the ISA payment amount is determined | 17 | | by a schedule of fixed amounts based on a consumer's income in | 18 | | a given payment period. An "ISA payment" is required only for | 19 | | income earned during an ISA payment period in which the | 20 | | consumer's income was equal to or greater than the income | 21 | | threshold. | 22 | | "ISA payment cap" means the maximum amount of money a | 23 | | consumer must pay to satisfy the terms of an income share | 24 | | agreement. | 25 | | "ISA percentage" or "percentage" means the percentage of | 26 | | income or schedule of percentages of income or fixed amounts |
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| 1 | | based on the consumer's income in a given ISA payment period | 2 | | used to calculate a consumer's ISA payment pursuant to an | 3 | | income share agreement. | 4 | | "ISA provider" means a person who provides funding to a | 5 | | consumer pursuant to an income share agreement or, if the ISA | 6 | | provider is a seller of goods and services, the seller. | 7 | | "Licensee" means a person who is licensed under this Act. | 8 | | "Net worth" means total assets minus total liabilities. | 9 | | "Payment relief pause" means a period of time that is | 10 | | requested by the consumer during which the consumer is not | 11 | | required to make payments despite the consumer's income | 12 | | exceeding the income threshold. | 13 | | Section 10. License required to engage in business. | 14 | | Without a license provided under this Act, no person, | 15 | | partnership, association, limited liability company, or | 16 | | corporation may engage in the business of: | 17 | | (1) making income share agreements; or | 18 | | (2) taking assignments of and undertaking direct | 19 | | collection of payments from or enforcement of rights | 20 | | against consumers arising from income share agreements, | 21 | | except for collection of payments and enforcement of | 22 | | rights for 3 months without a license if the person or | 23 | | entity promptly applies for a license and the application | 24 | | has not been denied. |
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| 1 | | Section 15. Application for income share agreement | 2 | | license; fees; surety bond. | 3 | | (a) Application for a license shall be in writing and in a | 4 | | form prescribed by the Director. The applicant at the time of | 5 | | making an application shall pay the Director the sum of $300 as | 6 | | an application fee and the additional sum of $450 as an annual | 7 | | license fee for a period terminating on the last day of the | 8 | | current calendar year; however, if the application is filed | 9 | | after June 30 in any year, the license fee shall be half of the | 10 | | annual license fee for the year. | 11 | | (b) Before the license is granted, every applicant shall | 12 | | provide in a form satisfactory to the Director that the | 13 | | applicant has or will maintain a positive net worth in a | 14 | | minimum of $30,000. Every applicant and licensee shall | 15 | | maintain a surety bond in the principal sum of $25,000 issued | 16 | | by a bonding company authorized to do business in this State | 17 | | and that shall be approved by the Director. The bond shall run | 18 | | to the Director and shall be for the benefit of any consumer | 19 | | who incurs damages as a result of a violation of this Act or | 20 | | rules adopted pursuant to this Act by a licensee. If the | 21 | | Director at any time finds that a bond is of insufficient size, | 22 | | is insecure, is exhausted, or is otherwise doubtful, an | 23 | | additional bond in such amount as determined by the Director | 24 | | shall be filed by the licensee within 30 days after written | 25 | | demand therefor by the Director. |
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| 1 | | Section 20. Appointment of attorney-in-fact for service of | 2 | | process. Every licensee shall appoint, in writing, the | 3 | | Director and his or her successors in office or any official | 4 | | who shall be charged with the administration of this Act, as | 5 | | attorney-in-fact upon whom all lawful process against the | 6 | | licensee may be served within the same legal force and | 7 | | validity as if served on the licensee. A copy of such written | 8 | | appointment, duly certified, shall be filed in the office of | 9 | | the Director, and a copy thereof certified by him or her shall | 10 | | be sufficient evidence. This appointment shall remain in | 11 | | effect while any liability remains outstanding in this State | 12 | | against the licensee. When summons is served upon the Director | 13 | | as attorney-in-fact for such licensee, the Director shall | 14 | | immediately notify the licensee by registered mail, enclosing | 15 | | the summons and specifying the hour and day of service. | 16 | | Section 25. Investigation; license issuance. | 17 | | (a) Upon the filing of an application and the payment of | 18 | | the fees, the Director shall investigate to determine: | 19 | | (1) that the reputation of the applicant, including | 20 | | the managers of a limited liability company, and the | 21 | | partners, owners, officers, or directors thereof warrants | 22 | | belief that the business will be operated honestly and | 23 | | fairly within the purposes of this Act; and | 24 | | (2) that the applicant meets the positive net worth | 25 | | requirements of this Act. |
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| 1 | | Unless the Director makes findings enumerated in this | 2 | | subsection, he or she shall not issue a license and shall | 3 | | notify the applicant of the denial and return to the applicant | 4 | | the sum paid by the applicant as a license fee, but shall | 5 | | retain the $300 application fee. The Director shall approve or | 6 | | deny every application for license within 60 days after the | 7 | | filing of an application with payment of a fee. | 8 | | (b) Upon written request, the applicant is entitled to a | 9 | | hearing on the question of his or her qualifications for a | 10 | | license if: | 11 | | (1) the Director notifies the applicant in writing | 12 | | that his or her application has been denied; or | 13 | | (2) the Director does not issue a license within 60 | 14 | | days after the application for the license was filed. | 15 | | A request for a hearing may not be made more than 15 days | 16 | | after the Director mails a writing to the applicant notifying | 17 | | him or her that the application has been denied and stating in | 18 | | substance the Director's findings supporting denial. | 19 | | Section 30. License. The license shall state the address, | 20 | | including the city and state, at which the business is to be | 21 | | conducted and shall state fully the name of the licensee. The | 22 | | license shall be conspicuously posted in the place of business | 23 | | of the licensee and shall not be transferable or assignable. | 24 | | Section 35. License; place of business. |
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| 1 | | (a) Not more than one place of business shall be | 2 | | maintained under the same license, but the Director may issue | 3 | | more than one license to the same licensee upon compliance | 4 | | with all the provisions of this Act governing the original | 5 | | issuance of a license. A webpage operated by the licensee | 6 | | shall constitute a location. | 7 | | (b) Whenever a licensee changes his or her place of | 8 | | business to a location other than that set forth in the | 9 | | license, he or she shall give written notice to the Director at | 10 | | least 10 days before the relocation. However, if the new | 11 | | location is in excess of 15 miles from the previous location, | 12 | | the licensee shall obtain written approval from the Director | 13 | | before relocation. | 14 | | Section 40. Annual license fee; expenses. | 15 | | (a) Before December 1 of each year, a licensee shall pay to | 16 | | the Director, and the Department must receive, the annual | 17 | | license fee required by this Act for the next succeeding | 18 | | calendar year. The license shall expire on January 1 of the | 19 | | following year unless the licensee fee has been paid before | 20 | | then. | 21 | | (b) In addition to the license fee, the reasonable expense | 22 | | of any examination, investigation, or custody by the Director | 23 | | under any provisions of this Act shall be borne by the | 24 | | licensee. | 25 | | (c) If a licensee fails to renew his or her license by |
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| 1 | | December 31, it shall automatically expire and the licensee is | 2 | | not entitled to a hearing; however, the Director, in his or her | 3 | | discretion, may reinstate an expired license upon payment of | 4 | | the annual renewal fee and proof of good cause for failure to | 5 | | renew. | 6 | | Section 45. Suspension or revocation of license. | 7 | | (a) The Director may issue to a licensee an order to show | 8 | | cause why his or her license should not be suspended for a | 9 | | period not in excess of 6 months or be revoked. The order shall | 10 | | set a place for a hearing and a time therefor that is no less | 11 | | than 10 days after the date of the order. After the hearing, | 12 | | the Director shall revoke or suspend the license, or, if there | 13 | | are mitigating circumstances, may accept an assurance of | 14 | | discontinuance and allow retention of the license, if the | 15 | | Director finds that: | 16 | | (1) the licensee has repeatedly and intentionally | 17 | | violated this Act or any rule or order lawfully made | 18 | | pursuant to this Act, or has violated an assurance of | 19 | | discontinuance; or | 20 | | (2) facts or conditions exist that clearly would have | 21 | | justified the Director in refusing to grant a license for | 22 | | that place or those places of business were the facts or | 23 | | conditions known to exist at the time the application for | 24 | | the license was made. | 25 | | (b) A revocation or suspension of a license is not lawful |
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| 1 | | unless the Director, before instituting proceedings, gives | 2 | | notice to the licensee of the facts or conduct that warrant the | 3 | | intended action and the licensee is afforded an opportunity to | 4 | | show compliance with all lawful requirements for retention of | 5 | | the license. | 6 | | (c) If the Director finds that probable cause for | 7 | | revocation of a license exists and that enforcement of this | 8 | | Act requires immediate suspension of the license pending | 9 | | investigation, the Director, after a hearing upon 10 days' | 10 | | written notice, may enter an order suspending the license for | 11 | | not more than 30 days. | 12 | | (d) Whenever the Director revokes or suspends a license, | 13 | | he or she shall enter an order to that effect and forthwith | 14 | | notify the licensee of the revocation or suspension. Within 10 | 15 | | days after entry of the order he or she shall deliver to the | 16 | | licensee a copy of the order and the findings supporting the | 17 | | order. | 18 | | (e) A person holding a license to make income share | 19 | | agreements may relinquish the license by notifying the | 20 | | Director in writing of its relinquishment, but the | 21 | | relinquishment does not affect his or her liability for acts | 22 | | previously committed. | 23 | | (f) Revocation, suspension, or relinquishment of a license | 24 | | does not impair or affect the obligation of any preexisting | 25 | | lawful contract between the licensee and any consumer. | 26 | | (g) The Director may reinstate a license, terminate a |
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| 1 | | suspension, or grant a new license to a person whose license | 2 | | has been revoked or suspended if no fact or condition then | 3 | | exists that clearly would have justified the Director in | 4 | | refusing to grant a license. | 5 | | Section 50. Closing of business; surrender of license. | 6 | | (a) At least 10 days before a licensee ceases operations, | 7 | | closes business, or files for bankruptcy, the licensee shall | 8 | | do the following: | 9 | | (1) Notify the Department of its action in writing. | 10 | | (2) With the exception of filing for bankruptcy, | 11 | | surrender its license to the Director for cancellation; | 12 | | the surrender of the license shall not affect the | 13 | | licensee's civil or criminal liability for acts committed | 14 | | before surrender or entitle the licensee to return any | 15 | | part of the annual license fee. | 16 | | (3) Notify the Director of the location where the | 17 | | books, accounts, contracts, and records will be maintained | 18 | | and the procedure to ensure prompt return of contracts, | 19 | | titles, and releases to the customers. | 20 | | (4) Ensure that the accounts, books, records, and | 21 | | contracts shall be maintained and serviced by the licensee | 22 | | or another licensee under this Act or an entity exempt | 23 | | from licensure under this Act. | 24 | | (b) The Department shall have the authority to conduct | 25 | | examinations of the books, records, and loan documents at any |
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| 1 | | time after surrender of the license, filing of bankruptcy, or | 2 | | the cessation of operations. | 3 | | Section 55. Examinations and investigations of conduct of | 4 | | business. | 5 | | (a) The Director shall examine periodically, at intervals | 6 | | he or she deems appropriate but not less than once per year, | 7 | | income share agreements, business, and records of every | 8 | | licensee. In addition, for the purpose of discovering | 9 | | violations of this Act or securing information lawfully | 10 | | required, the Director at any time may investigate the income | 11 | | share agreements, business, and records of any licensee. For | 12 | | these purposes the Director shall have free and reasonable | 13 | | access to the offices, places of business, and records of the | 14 | | licensee. | 15 | | (b) If the licensee's records are located outside this | 16 | | State, the licensee at the Director's request shall make them | 17 | | available to the Director at a convenient location within this | 18 | | State, or pay the reasonable and necessary expenses for the | 19 | | Director or his or her representative to examine them where | 20 | | they are located. The Director may designate representatives, | 21 | | including comparable officials of the state in which the | 22 | | records are located, to inspect them on the Director's behalf. | 23 | | (c) For purposes of this Section, the Director may | 24 | | administer oaths or affirmations, and upon request of a party | 25 | | or his or her own motion may subpoena witnesses, compel their |
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| 1 | | attendance, adduce evidence, and require the production of any | 2 | | matter that is relevant to the investigation, including the | 3 | | existence, description, nature, custody, condition, and | 4 | | location of any books, documents, or other tangible things and | 5 | | the identity and location of persons having knowledge of | 6 | | relevant facts or any other matter reasonably calculated to | 7 | | lead to the discovery of admissible evidence. | 8 | | (d) Upon failure without lawful excuse to obey a subpoena | 9 | | or to give testimony and upon reasonable notice to all persons | 10 | | affected thereby, the Director may apply to the court for an | 11 | | order compelling compliance. | 12 | | Section 60. Books and records. | 13 | | (a) Every licensee shall maintain records in conformity | 14 | | with generally accepted accounting principles and practices in | 15 | | a manner that will enable the Director to determine whether | 16 | | the licensee is complying with this Act. The recordkeeping | 17 | | system of a licensee is sufficient if it makes the required | 18 | | information reasonably available. The records pertaining to | 19 | | any income share agreement need not be preserved for more than | 20 | | 2 years after making the final entry relating to the income | 21 | | share agreement. | 22 | | (b) On or before April 15 of each year, every licensee | 23 | | shall file with the Director a composite annual report in a | 24 | | form prescribed by the Director relating to all income share | 25 | | agreements made by the licensee. Information contained in |
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| 1 | | annual reports shall be confidential and may be published only | 2 | | in composite form. | 3 | | Section 65. No other business allowed. | 4 | | (a) A licensee may not carry on other business for the | 5 | | purpose of evasion or violation of this Act at a location where | 6 | | the licensee makes income share agreements. | 7 | | (b) Upon application by the licensee, the Director may | 8 | | approve the conduct of other businesses not specifically | 9 | | permitted by this Act in the licensee's place of business, | 10 | | unless the Director finds that such conduct will conceal or | 11 | | facilitate evasion or violation of this Act. The Director's | 12 | | approval shall be in writing and shall describe the other | 13 | | businesses which may be conducted in the licensed office. | 14 | | Section 70. Prohibitions. | 15 | | (a) No licensee shall take any power of attorney in | 16 | | connection with an income share agreement. | 17 | | (b) A consumer may not authorize any person to confess | 18 | | judgment on a claim arising out of an income share agreement. | 19 | | An authorization in violation of this Section is void. | 20 | | Section 75. Pledge or sale of income share agreement. | 21 | | (a) No licensee or other person shall pledge, hypothecate, | 22 | | or sell an income share agreement entered into under this Act | 23 | | by a consumer except to another licensee under this Act, a |
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| 1 | | bank, savings bank, savings and loan association, or credit | 2 | | union created under the laws of this State or the United | 3 | | States, or to other persons or entities authorized by the | 4 | | Director in writing. Sales of such notes by licensees under | 5 | | this Act or other persons shall be made by agreement in writing | 6 | | and shall authorize the Director to examine the income share | 7 | | agreement documents so hypothecated, pledged, or sold. | 8 | | (b) A consumer may pay the original ISA provider until he | 9 | | or she receives notification of assignment of rights to | 10 | | payment pursuant to an income share agreement and that payment | 11 | | is to be made to the assignee. A notification that does not | 12 | | reasonably identify the rights assigned is ineffective. If | 13 | | requested by the consumer, the assignee shall seasonably | 14 | | furnish reasonable proof that the assignment has been made and | 15 | | unless the proof is furnished the consumer may pay the | 16 | | original ISA provider. | 17 | | (c) An assignee of the rights of the ISA provider is | 18 | | subject to all claims and defenses of the consumer against the | 19 | | ISA provider arising from the income share agreement. A claim | 20 | | or defense of a consumer may be asserted against the assignee | 21 | | under this Section only if the consumer has made a good faith | 22 | | attempt to obtain satisfaction from the ISA provider with | 23 | | respect to the claim or defense and then only to the extent of | 24 | | the amount owing to the assignee with respect to the ISA | 25 | | provider or defense that arose at the time the assignee has | 26 | | notice of the claim or defense. Notice of the claim or defense |
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| 1 | | may be given before the good faith attempt specified in this | 2 | | subsection. Oral notice is effective unless the assignee | 3 | | requests written confirmation when or promptly after oral | 4 | | notice is given and the consumer fails to give the assignee | 5 | | written confirmation within the period of time, not less than | 6 | | 14 days, stated to the consumer when written confirmation is | 7 | | requested. An agreement may not limit or waive the claims or | 8 | | defenses of a consumer under this Section. | 9 | | Section 80. Monthly payment affordability. | 10 | | (a) Maximum income percentage. Each income share agreement | 11 | | shall specify the ISA percentage applicable to the income | 12 | | share agreement and shall comply with the following: | 13 | | (1) The income share agreement may not include an ISA | 14 | | percentage in excess of 20%, or if an ISA defines a series | 15 | | of fixed amounts based on the consumer's income, such | 16 | | amounts shall not equate to more than 20% of the | 17 | | consumer's income. | 18 | | (2) A licensee may not enter into an educational ISA | 19 | | with a consumer if the consumer would be committing more | 20 | | than 20% of his or her income, inclusive of other | 21 | | educational ISA and education loans known at the time. The | 22 | | licensee must confirm a consumer's educational ISA and | 23 | | education loan liabilities through a verifiable | 24 | | third-party source. At a minimum, the licensee must | 25 | | confirm such liabilities using information maintained by a |
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| 1 | | nationwide consumer reporting agency, as defined by 15 | 2 | | U.S.C. 1681a(f), and doing so is sufficient for meeting | 3 | | the requirement in this paragraph; however, nothing in | 4 | | this paragraph shall prohibit a licensee from using other | 5 | | sources to provide additional verification. For the | 6 | | purposes of calculating the portion of a student's future | 7 | | income that would be consumed by the educational ISA for | 8 | | which the student has applied and other educational ISAs | 9 | | and education loans known at the time, the ISA provider | 10 | | shall calculate the aggregate future burden of all such | 11 | | obligations, including the educational ISA for which the | 12 | | student is applying, at hypothetical future income levels | 13 | | ranging from the income threshold of the ISA for which the | 14 | | student has applied up to $70,000, with such number | 15 | | adjusting for inflation each year, in increments of | 16 | | $10,000. The terms of the educational ISA for which the | 17 | | student has applied cannot cause the student's aggregate | 18 | | future burden to exceed the limit in subsection (b) at any | 19 | | of the income increments stated in this paragraph. For the | 20 | | purpose of calculating the percentage burden of an | 21 | | educational ISA at a given future income level, the ISA | 22 | | provider shall use the income percentage that would be | 23 | | applicable for the ISA at such income level, or the fixed | 24 | | amount divided by the income level, where applicable. For | 25 | | the purpose of calculating the percentage burden of an | 26 | | educational loan at a given future income level, the ISA |
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| 1 | | provider shall divide the annual payment obligation by | 2 | | income level using the most affordable payment option that | 3 | | would be available to the student at such income level | 4 | | under such loan. For students enrolled in a Title IV | 5 | | program, as part of this analysis the ISA provider shall | 6 | | assume a federal loan balance equal to the larger of (1) | 7 | | the student's existing federal loan balance, and (2) the | 8 | | maximum amount the student is eligible to borrow under | 9 | | Federal Direct Stafford Loans for his or her status, | 10 | | dependent or independent. | 11 | | (b) Protections during periods of low earnings. The income | 12 | | share agreement must state that when a consumer has income | 13 | | that is equal to or below the income threshold set forth in the | 14 | | income share agreement that the consumer's payment obligation | 15 | | is zero dollars. The income threshold at the time of | 16 | | origination must be high enough such that the consumer's gross | 17 | | income minus any income share agreement obligation must leave | 18 | | the consumer with gross income equal to at least 200% of the | 19 | | federal poverty guidelines for a single person. | 20 | | (c) Required payment relief pauses. An income share | 21 | | agreement must offer at least 3 months of voluntary payment | 22 | | relief pauses, so long as a consumer's current income at the | 23 | | time of requesting the payment relief pause is equal to or less | 24 | | than 400% of the federal poverty guidelines for a single | 25 | | individual, for every 30 income-determined payments required | 26 | | under the income share agreement. |
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| 1 | | Section 85. Maximum effective annual percentage rate. An | 2 | | income share agreement must specify that the maximum amount | 3 | | that a consumer could be required to pay based on the | 4 | | consumer's income under the income share agreement will not | 5 | | result in a consumer ever being required to pay an effective | 6 | | annual percentage rate that is greater than 36%. If at any time | 7 | | the consumer makes payment of an amount that would cause the | 8 | | limit in this Section to apply, all further obligations under | 9 | | the income share agreement shall cease. | 10 | | Section 90. Limits on duration of income share agreements. | 11 | | (a) An income share agreement shall specify that the | 12 | | maximum number of payments may not exceed 240 monthly | 13 | | payments. | 14 | | (b) An income share agreement shall specify that the ISA | 15 | | duration may not exceed 360 months, except in the case of a | 16 | | payment relief pause requested by the consumer. | 17 | | Section 95. Risk sharing. | 18 | | (a) A licensee may not contract for income share agreement | 19 | | terms that would result in a consumer having income that is | 20 | | less than or equal to 300% of the federal poverty guidelines | 21 | | for a single person for the ISA duration being required to make | 22 | | a stream of ISA payments that would yield an effective APR | 23 | | greater than 8%, or the high yield of the 10-year United States |
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| 1 | | Constant Maturity Treasury Notes auctioned at the final | 2 | | auction held before the current calendar year in which an ISA | 3 | | offering is made plus 7%, whichever is greater. | 4 | | (b) A licensee may not contract for income share agreement | 5 | | terms that would result in a consumer having income that is | 6 | | less than or equal to 400% of the federal poverty guidelines | 7 | | for a single person for the ISA duration being required to make | 8 | | a stream of ISA payments that would yield an effective APR | 9 | | greater than 12%, or the high yield of the 10-year United | 10 | | States Constant Maturity Treasury Notes auctioned at the final | 11 | | auction held before the current calendar year in which an ISA | 12 | | offering is made plus 11%, whichever is greater. | 13 | | (c) A licensee may not contract for income share agreement | 14 | | terms that would result in a consumer having income that is | 15 | | less than or equal to 500% of the federal poverty guidelines | 16 | | for a single person for the ISA duration being required to make | 17 | | a stream of ISA payments that would yield an effective APR | 18 | | greater than 15%, or the high yield of the 10-year United | 19 | | States Constant Maturity Treasury Notes auctioned at the final | 20 | | auction held before the current calendar year in which an ISA | 21 | | offering is made plus 14%, whichever is greater. | 22 | | (d) A licensee may not contract for income share agreement | 23 | | terms that would result in a consumer having income that is | 24 | | less than or equal to 600% of the federal poverty guidelines | 25 | | for a single person for the ISA duration being required to make | 26 | | a stream of ISA payments that would yield an effective APR |
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| 1 | | greater than 18%, or the high yield of the 10-year United | 2 | | States Constant Maturity Treasury Notes auctioned at the final | 3 | | auction held before the current calendar year in which an ISA | 4 | | offering is made plus 17%, whichever is greater. | 5 | | (e) For the purposes of determining the various tiers set | 6 | | forth in this Section, a licensee shall calculate the | 7 | | effective APR by determining the various federal poverty | 8 | | guidelines tiers at the time the consumer's income share | 9 | | agreement is originated and assuming such amounts are fixed | 10 | | through the ISA duration. | 11 | | (f) For the purposes of determining ISA duration in this | 12 | | Section: in the case of an educational ISA, a licensee shall | 13 | | assume the ISA duration started after a period equal to the | 14 | | expected length of the program for which a consumer is | 15 | | enrolling; or in the case of a non-educational ISA, a licensee | 16 | | shall assume the ISA duration started immediately. | 17 | | Section 100. Limits on covered income. An income share | 18 | | agreement must specify the definition of income to be used for | 19 | | the purposes of calculating a consumer's payment obligation | 20 | | under the income share agreement. No income share agreement | 21 | | shall include any of the following in its definition of | 22 | | income: | 23 | | (1) The income of the consumer's children or | 24 | | dependents. | 25 | | (2) Any amount paid by the consumer under Title II or |
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| 1 | | XVI of the Social Security Act, 42 U.S.C. 401 et seq., 42 | 2 | | U.S.C. 1381 et seq.; or under a State program funded by | 3 | | Title IV of the Social Security Act, 42 U.S.C. 601 et seq. | 4 | | (3) Individual retirement account distributions. | 5 | | (4) Pensions and annuities. | 6 | | (5) Social security benefits. | 7 | | (6) Other sources of federal or State aid provided to | 8 | | individuals through any of the following: | 9 | | (A) unemployment programs; | 10 | | (B) disaster relief programs; | 11 | | (C) Medicare or Medicaid benefits; | 12 | | (D) benefits received through the Supplemental | 13 | | Nutrition Assistance Program; | 14 | | (E) economic impact payments; or | 15 | | (F) other income excluded from the definition of | 16 | | taxable income set forth by the Internal Revenue | 17 | | Service. | 18 | | Section 105. Fees permitted. In addition to the ISA | 19 | | percentage permitted by this Act, a licensee may contract for | 20 | | and receive the following additional charges: | 21 | | (1) Official fees and taxes. | 22 | | (2) A fee, which shall not exceed the sum of $25, for | 23 | | failure to provide documentation to the licensee for the | 24 | | confirmation and reconciliation of the consumer's income. | 25 | | (3) A fee for processing any forms to confirm the |
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| 1 | | consumer's income with the United States Internal Revenue | 2 | | Service or a State department of revenue or taxation on a | 3 | | dollar-for-dollar, pass-through basis of the expenses | 4 | | incurred by the licensee. | 5 | | (4) A late payment fee in an amount of $20 or 5% of the | 6 | | late payment, whichever is greater, for any payment that | 7 | | is more than 15 days past due; no late payment fee may be | 8 | | charged more than once per late payment. | 9 | | (5) An amount not exceeding $25, plus any actual | 10 | | expenses incurred in connection with a check or draft that | 11 | | is not honored because of insufficient or uncollected | 12 | | funds or because no such account exists. | 13 | | (6) Charges for other benefits conferred on the | 14 | | consumer, if the benefits are of value to her or him and | 15 | | the charges are reasonable in relation to the benefits, | 16 | | are of a type that is not for credit, and are authorized as | 17 | | permissible additional charges by rule adopted by the | 18 | | Department. | 19 | | (7) Before or after default in payment of a scheduled | 20 | | payment of an income share agreement, the parties to the | 21 | | income share agreement may agree in writing to a deferral | 22 | | of all or part of one or more unpaid payments and the | 23 | | licensee may make, at the time of deferral and receive at | 24 | | that time or at any time thereafter, a deferral charge not | 25 | | exceeding an amount equal to 10% of the missed payment. |
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| 1 | | Section 110. Restriction on security interest. Under no | 2 | | circumstances shall a licensee take a security interest in any | 3 | | collateral in connection with an income share agreement. | 4 | | Section 115. Discharge of obligations. | 5 | | (a) All further obligations under an income share | 6 | | agreement, except those accruing before the date of | 7 | | determination by a relevant governmental agency, shall | 8 | | terminate if the consumer is deemed totally and permanently | 9 | | disabled by the applicable governmental agency. | 10 | | (b) All further obligations under the income share | 11 | | agreement, except those accruing before the consumer's death, | 12 | | shall terminate upon the death of the consumer. | 13 | | Section 120. Prohibition on co-signers. No income share | 14 | | agreement shall include or permit the use of a co-signer in | 15 | | connection with any obligation related to an income share | 16 | | agreement. | 17 | | Section 125. Limitation on acceleration. | 18 | | (a) Licensees may not attempt to accelerate or otherwise | 19 | | liquidate a future payment stream under an income share | 20 | | agreement. | 21 | | (b) Notwithstanding subsection (a), nothing in this | 22 | | Section shall prevent a licensee from collecting or pursuing | 23 | | any other remedy available to the licensee for the collection |
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| 1 | | of amounts that were due from the consumer under an income | 2 | | share agreement but that were not paid or properly remitted to | 3 | | the licensee. These amounts may include projected future | 4 | | payments as provided in the income share agreement if the | 5 | | consumer does not provide contractually obligated | 6 | | documentation of income. | 7 | | (c) Notwithstanding subsection (a), an income share | 8 | | agreement may contain a provision that allows a consumer to | 9 | | terminate his or her income share agreement before the events | 10 | | terminating further obligations under the income share | 11 | | agreement. The early termination mechanisms, such as total | 12 | | caps on payments due to the licensee or other rights to | 13 | | partially or fully terminate further obligations under the | 14 | | income share agreement, must be optional to the consumer and | 15 | | within the consumer's control. In such circumstances, such | 16 | | mechanisms will not be deemed a form of acceleration, early | 17 | | termination penalty, or prepayment penalty. | 18 | | Section 130. No assignment of wages. | 19 | | (a) A licensee may not take an assignment of earnings of | 20 | | the consumer for payment or as security for payment of a debt | 21 | | arising out of an income share agreement. An assignment of | 22 | | earnings in violation of this Section is unenforceable by the | 23 | | assignee of the earnings and revocable by the consumer. This | 24 | | Section does not prohibit a consumer from authorizing | 25 | | deductions from his or her earnings in favor of a licensee if |
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| 1 | | the authorization is revocable, the consumer is given a | 2 | | complete copy of the writing evidencing the authorization at | 3 | | the time the consumer signs it, and the writing contains on its | 4 | | face a conspicuous notice of the consumer's right to revoke | 5 | | the authorization. | 6 | | (b) A sale of unpaid earnings made in consideration of the | 7 | | payment of money to or for the account of the seller of the | 8 | | earnings is deemed to be a loan to the seller secured by an | 9 | | assignment of earnings. | 10 | | Section 135. Limitations on garnishment. | 11 | | (a) Before entry of judgment in an action against a | 12 | | consumer for a payment arising from an income share agreement, | 13 | | a licensee may not attach unpaid earnings of the consumer by | 14 | | garnishment or like proceedings. | 15 | | (b) The maximum part of the aggregate disposable earnings | 16 | | of an individual for any workweek which is subjected to | 17 | | garnishment to enforce payment of a judgment arising from an | 18 | | income share agreement may not exceed the lesser of: | 19 | | (1) 25% of the individual's disposable earnings for | 20 | | that week; or | 21 | | (2) the amount by which the individual's disposable | 22 | | earnings for that week exceed 40 times the federal minimum | 23 | | hourly wage prescribed by Section 6(a)(1) of the Fair | 24 | | Labor Standards Act of 1938, 29 U.S.C. 206(a)(1), in | 25 | | effect at the time the earnings are payable. |
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| 1 | | In case of earnings for a pay period other than a week, the | 2 | | Department shall prescribe by rule a multiple of the federal | 3 | | minimum hourly wage equivalent to the amount set forth in | 4 | | paragraph (2). | 5 | | (c) No court may make, execute, or enforce an order or | 6 | | process in violation of this Section. | 7 | | (d) At any time after entry of a judgment in favor of a | 8 | | licensee in an action against a consumer for a payment arising | 9 | | from an income share agreement, the consumer may file with the | 10 | | court a verified application for an order exempting from | 11 | | garnishment pursuant to that judgment, for an appropriate | 12 | | period of time, a greater portion or all of the consumer's | 13 | | aggregate disposable earnings for a workweek or other | 14 | | applicable pay period than is provided for in subsection (b). | 15 | | The consumer shall in the application designate the portion of | 16 | | earnings not exempt from garnishment under this Section and | 17 | | other law, designate the period of time for which the | 18 | | additional exemption is sought, describe the judgment with | 19 | | respect to which the application is made, and state that the | 20 | | designated portion as well as his or her earnings that are | 21 | | exempt by law are necessary for the maintenance of the | 22 | | consumer or a family supported wholly or partly by the | 23 | | earnings. Upon filing a sufficient application under this | 24 | | subsection, the court may issue any temporary order necessary | 25 | | under the circumstances to stay enforcement of the judgment by | 26 | | garnishment, shall set a hearing on the application not less |
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| 1 | | than 5 nor more than 10 days after the date of filing of the | 2 | | application, and shall cause notice of the application and the | 3 | | hearing date to be served on the judgment creditor or the | 4 | | creditor's attorney of record. At the hearing, if it appears | 5 | | to the court that all or any portion of the earnings sought to | 6 | | be additionally exempt are necessary for the maintenance of | 7 | | the consumer or a family supported wholly or partly by the | 8 | | earnings of the consumer for all or any part of the time | 9 | | requested in the application, the court shall issue an order | 10 | | granting the application to that extent; otherwise it shall | 11 | | deny the application. The order is subject to modification or | 12 | | vacation upon further application of any party to it upon a | 13 | | showing of changed circumstances after a hearing upon notice | 14 | | to all interested parties. | 15 | | (e) An employer may not discharge an employee because a | 16 | | licensee has subjected or attempted to subject unpaid earnings | 17 | | of the employee to garnishment or like proceedings directed to | 18 | | the employer for the purpose of paying a judgment arising from | 19 | | an income share agreement. | 20 | | Section 140. Use of multiple agreements. A licensee may | 21 | | not use multiple agreements with respect to a single income | 22 | | share agreement with intent to violate any limitations of this | 23 | | Act. | 24 | | Section 145. Required disclosures. |
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| 1 | | (a) A licensee shall disclose the following information to | 2 | | each consumer, clearly and conspicuously, in a form that the | 3 | | consumer can keep at the time the transaction is consummated: | 4 | | (1) The date of the contract. | 5 | | (2) The dollar amount of the amount financed. | 6 | | (3) The ISA percentage, expressed as a percentage, and | 7 | | an explanation of whether the ISA percentage is fixed or | 8 | | will vary; and any limitation on the ISA percentage | 9 | | adjustments or lack of limitations if the ISA percentage | 10 | | will change after consummation of the income share | 11 | | agreement. The ISA percentage shall be rounded to the | 12 | | nearest one-hundredth of 1% if the ISA percentage is not a | 13 | | whole number. | 14 | | (4) The maximum number of payments expressed as a | 15 | | whole number. | 16 | | (5) The maximum duration expressed as a whole number | 17 | | of the period of time. | 18 | | (6) The income threshold expressed as a dollar amount | 19 | | and a statement that payments will only be required during | 20 | | periods when the consumer's income is equal to or exceeds | 21 | | the income threshold. | 22 | | (7) An itemization of the amount financed; if the ISA | 23 | | provider is a seller of goods or services, then the amount | 24 | | of any down payment and any additional fees or costs shall | 25 | | be itemized. | 26 | | (8) The definition of income to be used for the |
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| 1 | | purposes of calculating the consumer's obligations under | 2 | | the income share agreement. | 3 | | (9) A description of the terms under which the | 4 | | obligations of the consumer under the income share | 5 | | agreement will be extinguished before the full ISA | 6 | | duration. | 7 | | (10) A payment schedule that shows the date on which | 8 | | the first payment will be due and reflecting each date | 9 | | thereafter during the ISA duration that a payment may be | 10 | | due. | 11 | | (11) An itemization of any permissible fees associated | 12 | | with the ISA. | 13 | | (12) A description of the methods used by the ISA | 14 | | provider to engage in a process of reconciliation and | 15 | | verification to determine if the consumer's payments are | 16 | | more than, equal to, or less than the payments owed by the | 17 | | consumer under his or her income share agreement; this | 18 | | description shall include the following: | 19 | | (i) a description of the frequency or triggers | 20 | | for the commencement of the income verification | 21 | | process; | 22 | | (ii) a description of the requirements and | 23 | | timing of the process in which the consumer must | 24 | | participate in order for the ISA provider to | 25 | | verify the consumer's income; and | 26 | | (iii) a description of any records or forms, |
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| 1 | | including tax records, that the consumer may be | 2 | | required to execute or submit. | 3 | | (13) The name and address of the ISA provider. | 4 | | (14) A table displaying the dollar amounts of each | 5 | | payment, the number of payments, the effective annual | 6 | | percentage rate, and the sum total of all payments that a | 7 | | consumer would be required to pay under the income share | 8 | | agreement at a range of annual income levels based on the | 9 | | ISA duration. The comparison table shall include a | 10 | | statement that "This Comparison Table is for illustrative | 11 | | purposes only and may not reflect the amounts that you are | 12 | | likely to pay under this income share agreement. This | 13 | | table assumes you have the same income over the entire | 14 | | term of your income share agreement. It does not take into | 15 | | account changes in income. Your income will likely change | 16 | | over time. This table does not represent the income or | 17 | | range of incomes that you are likely to earn in the | 18 | | future.". In computing the APR, the ISA provider shall use | 19 | | the amount financed and may assume that the income share | 20 | | agreement will be disbursed in the amount and with the | 21 | | disbursement schedule that it reasonably expects to follow | 22 | | for such income share agreement and that payments would | 23 | | commence on the date set forth in the income share | 24 | | agreement. The income used in this disclosure shall | 25 | | include, at minimum, the obligations at the following | 26 | | incomes: |
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| 1 | | (i) no income; | 2 | | (ii) income equal to the annual equivalent of | 3 | | the income threshold; | 4 | | (iii) various income scenarios with at least | 5 | | calculations at annual incomes of $40,000, | 6 | | $60,000, $80,000, $100,000, $125,000, $150,000, | 7 | | $175,000, and $200,000; and | 8 | | (iv) if known by the ISA provider, the | 9 | | consumer's current income. | 10 | | (15) A statement that the income share agreement is | 11 | | not a fixed payment installment loan and that the amount | 12 | | the consumer will be required to pay under the income | 13 | | share agreement: | 14 | | (i) may be more or less than the amount | 15 | | financed by the ISA provider; and | 16 | | (ii) will vary in proportion with the | 17 | | consumer's income. | 18 | | (b) The disclosures required by this Section shall be | 19 | | grouped together and segregated from all other information. | 20 | | (c) The disclosures required by this Section may be | 21 | | provided to a consumer in electronic form, subject to | 22 | | compliance with the consumer's consent and other applicable | 23 | | provisions of the Electronic Signatures in Global and National | 24 | | Commerce Act, 15 U.S.C. 7001 et seq., and applicable State | 25 | | law. | 26 | | (d) If model documents are established pursuant to any |
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| 1 | | federal law covering income share agreements, compliance with | 2 | | those forms shall be considered compliance with this Act with | 3 | | respect to the disclosure requirements contained in this Act. | 4 | | Section 150. Early completion. An income share agreement | 5 | | shall specify the terms and conditions by which the consumer | 6 | | may extinguish his or her obligations under the income share | 7 | | agreement before the end of the income share agreement's | 8 | | duration. An income share agreement may include any method to | 9 | | determine the early completion payment; however, a consumer | 10 | | may always cancel an income share agreement by making | 11 | | aggregate payments, excluding payments to fees, equal to the | 12 | | ISA payment cap. The consumer is entitled to this early | 13 | | completion regardless of whether the consumer makes this early | 14 | | completion payment by making regularly scheduled payments or | 15 | | by making a single lump sum payment in the amount of the early | 16 | | completion payment. | 17 | | Section 155. Assumption of increase in future income. | 18 | | (a) If a consumer fails to provide income documentation as | 19 | | reasonably required by an income share agreement, a licensee | 20 | | may assign an amount of income to the consumer and compute the | 21 | | consumer's monthly payment amount by any of the following | 22 | | methods, to the extent disclosed in the income share | 23 | | agreement: | 24 | | (1) assigning an income amount obtained from a |
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| 1 | | reasonably reliable third party or a credit reporting | 2 | | agency; | 3 | | (2) if the consumer previously provided income | 4 | | documentation or has had an income assigned in the prior | 5 | | 12-month period that has increased by an amount not to | 6 | | exceed 10%, but such increase may not be applied more than | 7 | | once per 12-month period; | 8 | | (3) contacting the consumer's employer, or any person | 9 | | or entity reasonably believed to represent the consumer's | 10 | | employer, to obtain, verify, or update the consumer's | 11 | | income information; | 12 | | (4) contacting the Department of Revenue or the | 13 | | Internal Revenue Service to obtain the most recent | 14 | | information available about the student's income; or | 15 | | (5) for licensees providing educational income share | 16 | | agreements, assigning a reasonable qualified income based | 17 | | on the incomes of: | 18 | | (A) the nearest reasonably relevant quantile of | 19 | | income for individuals working in the profession for | 20 | | which the consumer's educational program was intended | 21 | | to prepare the participant, as determined by | 22 | | information published by the Bureau of Labor | 23 | | Statistics or other reasonably reliable publicly | 24 | | available data sources; or | 25 | | (B) the nearest reasonably relevant quantile of | 26 | | income of consumers who attended the same or a |
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| 1 | | reasonably comparable covered educational program or | 2 | | course of study, as determined by information | 3 | | published by the Bureau of Labor Statistics or other | 4 | | reasonably reliable publicly available data sources. | 5 | | (b) If a licensee assigns an income to a consumer's income | 6 | | share agreement, it shall: | 7 | | (1) notify the consumer in the monthly billing | 8 | | statement, and in each billing statement thereafter while | 9 | | the assigned income remains applicable to the consumer's | 10 | | income share agreement, that income has been assigned and | 11 | | of the consumer's rights under this Section; | 12 | | (2) if the consumer does provide income information as | 13 | | reasonably required by the income share agreement within | 14 | | one year of the date on which the licensee notified the | 15 | | consumer that assigned income will be applied to the | 16 | | income share agreement, then, within 15 days after the | 17 | | licensee's receipt of such information, the licensee shall | 18 | | update each prior instance in which assigned income was | 19 | | applied using the income information provided by the | 20 | | consumer; and | 21 | | (3) if the consumer provides income information more | 22 | | than one year after the licensee first assigned income to | 23 | | the consumer's income share agreement, then the licensee | 24 | | may, but is not obligated to, update each prior instance | 25 | | in which assigned income was applied using the income | 26 | | information provided by the consumer. |
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| 1 | | (c) A licensee that assigns income to an income share | 2 | | agreement shall retain all applicable records relating to the | 3 | | method and data sources used to make such estimation for 3 | 4 | | years after the end of that income share agreement. | 5 | | Section 160. Receipts; statements of account; evidence of | 6 | | payment. | 7 | | (a) The licensee shall deliver or mail to the consumer, | 8 | | without request, a written receipt for each payment made | 9 | | pursuant to an income share agreement. A periodic statement | 10 | | showing a payment received by mail complies with this | 11 | | subsection. | 12 | | (b) Upon written request of a consumer, the licensee shall | 13 | | provide a written statement of the dates and amounts of | 14 | | payments made within the 12 months preceding the month in | 15 | | which the request is received. The statement shall be provided | 16 | | without charge once during each year of the term of the | 17 | | obligation. If additional statements are requested, the | 18 | | licensee may charge an amount not to exceed $5.00 for each | 19 | | additional statement. | 20 | | (c) After a consumer has fulfilled all obligations with | 21 | | respect to an income share agreement, the licensee, upon | 22 | | request of the consumer, shall deliver or mail to the consumer | 23 | | written evidence acknowledging termination of all obligations | 24 | | with respect to the income share agreement. |
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| 1 | | Section 165. Advertising. A licensee may not advertise, | 2 | | print, display, publish, distribute, broadcast, or cause to be | 3 | | advertised, printed, displayed, published, distributed, or | 4 | | broadcast in any manner any statement or representation that | 5 | | is false, deceptive, or misleading. | 6 | | Section 170. Penalties. | 7 | | (a) A person who engages in business as a licensee without | 8 | | the license required by this Act commits a Class 4 felony. | 9 | | (b) The consumer, before the expiration of 2 years after | 10 | | the date of his or her last scheduled payment, may recover such | 11 | | reasonable attorney's fees and court costs as a court may | 12 | | assess. A bona fide error by a licensee in calculating | 13 | | charges, fees, or rebates is not a violation if the licensee | 14 | | corrects the error within a reasonable time after discovery. | 15 | | (c) No provision of this Section imposing any liability | 16 | | shall apply to any act done or omitted in conformity with any | 17 | | rule or written interpretation of a rule by the Division of | 18 | | Financial Institutions of the Department of Financial and | 19 | | Professional Regulation, notwithstanding that after such act | 20 | | or omission has occurred, such rule or interpretation is | 21 | | amended, rescinded, or determined by judicial or other | 22 | | authority to be invalid for any reason. All interpretations | 23 | | must be written and signed by the Department's chief counsel | 24 | | and approved by the Director. | 25 | | (d) Notwithstanding any other provision of this Section, |
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| 1 | | if any person who does not have a license issued under this Act | 2 | | makes an income share agreement to an Illinois consumer, then | 3 | | the loan shall be null and void and the person who made the | 4 | | income share agreement shall have no right to collect, | 5 | | receive, or retain any amounts related to the income share | 6 | | agreement. | 7 | | Section 175. Cease and desist. | 8 | | (a) The Director may issue a cease and desist order to any | 9 | | licensee or another person doing business without a required | 10 | | license, when in the opinion of the Director, the licensee or | 11 | | the other person is violating or is about to violate any | 12 | | provision of this Act or any rule or requirement imposed in | 13 | | writing by the Department as a condition of granting any | 14 | | authorization permitted by this Act. | 15 | | (b) The Director may issue a cease and desist order before | 16 | | a hearing. | 17 | | (c) The Director shall serve notice of his or her action, | 18 | | designated as a cease and desist order made pursuant to this | 19 | | Section, including a statement of the reasons for the action, | 20 | | either personally or by certified mail, return receipt | 21 | | requested. Service by certified mail shall be deemed completed | 22 | | when the notice is deposited in the U.S. mail. | 23 | | (d) Within 15 days after service of the cease and desist | 24 | | order, the licensee or the other person may request, in | 25 | | writing, a hearing. |
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| 1 | | (e) The Director shall schedule a hearing within 30 days | 2 | | after the request for a hearing unless otherwise agreed to by | 3 | | the parties. | 4 | | (f) The cost for the administrative hearing shall be set | 5 | | by rule. | 6 | | (g) If it is determined that the Director had the | 7 | | authority to issue the cease and desist order, he or she may | 8 | | issue such orders as may be reasonably necessary to correct, | 9 | | eliminate, or remedy such conduct. | 10 | | (h) The powers vested in the Director by this Section are | 11 | | additional to all other powers and remedies vested in the | 12 | | Director by law, and nothing in this Section shall be | 13 | | construed as requiring that the Director employ the power | 14 | | conferred in this Section instead of or as a condition | 15 | | precedent to the exercise of any other power or remedy vested | 16 | | in the Director. | 17 | | (i) The Department shall have the authority to adopt rules | 18 | | for the administration of this Section. | 19 | | Section 180. Civil action. A claim of violation of this | 20 | | Act may be asserted in a civil action. | 21 | | Section 185. Application of Act. | 22 | | (a) This Act does not apply
to any person, partnership, | 23 | | association, limited liability
company, or corporation doing | 24 | | business under and as permitted
by any law of this State or the |
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| 1 | | United States relating to
banks, savings and loan | 2 | | associations, savings banks, or credit
unions. This Act does | 3 | | not apply to any income share agreements
or the like made with | 4 | | business or commercial entities.
| 5 | | (b) During the first 90 days after the effective date of
| 6 | | this Act, any person who has applied for a license under this
| 7 | | Act or filed written notice of intention to apply for a license
| 8 | | with the Director and whose application has not been denied,
| 9 | | shall be subject to all provisions of this Act and may make
| 10 | | income share agreements as if he or she were a licensee under
| 11 | | this Act.
| 12 | | (c) This Act shall not apply to any contractor
transaction | 13 | | made before the effective date of this Act.
| 14 | | Section 190. Rules. The Department may adopt and enforce | 15 | | such reasonable rules, directions, orders, decisions, and | 16 | | findings as the execution and enforcement of the provisions of | 17 | | this Act require and that are not inconsistent with this Act. | 18 | | In addition, the Department may adopt rules in connection with | 19 | | the activities of licensees that are necessary and appropriate | 20 | | for the protection of consumers in this State. All rules and | 21 | | directions of a general character shall be sent electronically | 22 | | to all licensees. | 23 | | Section 195. Judicial review. All final administrative | 24 | | decisions of the Department under this Act shall be subject to |
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| 1 | | judicial review pursuant to the provisions of the | 2 | | Administrative Review Law and any rules adopted pursuant to | 3 | | the Administrative Review Law. | 4 | | Section 200. Injunction; civil penalties; costs. If it | 5 | | appears to the Director that a person or any entity has | 6 | | committed or is about to commit a violation of this Act, a rule | 7 | | adopted under this Act, or an order of the Director, the | 8 | | Director may apply to the circuit court for an order enjoining | 9 | | the person or entity from violating or continuing to violate | 10 | | this Act, the rule, or order and for injunctive or other relief | 11 | | that the nature of the case may require and may, in addition, | 12 | | request the court to assess a civil penalty up to $1,000 along | 13 | | with costs and attorney's fees. | 14 | | Section 205. Adjustment of dollar amounts. | 15 | | (a) From time to time the dollar amounts in this Act | 16 | | designated as subject to change shall change, as provided in | 17 | | this Section, according to and to the extent of changes in the | 18 | | index. | 19 | | (b) The index for December of the year preceding the year | 20 | | in which this Act becomes effective is the reference base | 21 | | index. | 22 | | (c) The designated dollar amounts shall change on July 1 | 23 | | of each even-numbered year if the percentage of change, | 24 | | calculated to the nearest whole percentage point, between the |
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| 1 | | index and the end of the preceding year and the reference base | 2 | | index is 10% or more, but: | 3 | | (1) the portion of the percentage change in the index | 4 | | in excess of a multiple of 10% shall be disregarded and the | 5 | | dollar amounts shall change only in multiples of 10% of | 6 | | the amounts provided in this Act on the date of enactment; | 7 | | and | 8 | | (2) the dollar amounts shall not change if the amounts | 9 | | required by this Section are those currently in effect | 10 | | pursuant to this Act as a result of earlier application of | 11 | | this Section. | 12 | | (d) If the index is revised, the percentage of change | 13 | | pursuant to this Section shall be calculated on the basis of | 14 | | the revised index. If a revision of the index changes the | 15 | | reference base index, a revised reference base index shall be | 16 | | determined by multiplying the reference base index then | 17 | | applicable by the rebasing factor furnished by the Bureau of | 18 | | Labor Statistics. If the index is superseded, the index | 19 | | referred to in this Section is the one represented by the | 20 | | Bureau of Labor Statistics as reflecting most accurately | 21 | | changes in the purchasing power of the dollar for consumers. | 22 | | (e) The Department shall adopt a rule setting forth, on or | 23 | | before April 30 of each year in which dollar amounts are to | 24 | | change, the changes in dollar amounts required by this | 25 | | Section. As soon as practical after the changes occur, the | 26 | | Department shall adopt a rule setting forth the changes in the |
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| 1 | | index required by subsection (d), including, if applicable, | 2 | | the numerical equivalent of the reference base index under a | 3 | | revised reference base index and the designation or title of | 4 | | any index superseding the index. | 5 | | (f) A person does not violate this Act with respect to a | 6 | | transaction otherwise complying with this Act if he or she | 7 | | relies on dollar amounts either determined according to | 8 | | subsection (c) or appearing in the last rule of the Department | 9 | | announcing the then-current dollar amounts. | 10 | | Section 210. Construction against implicit authority. This | 11 | | Act is a general act intended as a unified coverage of its | 12 | | subject matter; no part of this Act shall be construed to be | 13 | | impliedly repealed by subsequent legislation if that | 14 | | construction can reasonably be avoided. | 15 | | Section 215. Application of other Acts. Income share | 16 | | agreements and licensees are subject to the Know Before You | 17 | | Owe Private Education Loan Act and the Predatory Loan | 18 | | Prevention Act and shall comply with their requirements and | 19 | | any rules adopted by the Department of Financial and | 20 | | Professional Regulation pursuant to those Acts. | 21 | | Section 220. Severability. The provisions of this Act are | 22 | | severable under Section 1.31 of the Statute on Statutes.
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| 1 | | Section 999. Effective date. This Act takes effect upon | 2 | | becoming law.".
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