Full Text of SB2866 095th General Assembly
SB2866 95TH GENERAL ASSEMBLY
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95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008 SB2866
Introduced 2/15/2008, by Sen. Donne E. Trotter SYNOPSIS AS INTRODUCED: |
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815 ILCS 122/1-10 |
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815 ILCS 122/2-5 |
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815 ILCS 122/3-5 |
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815 ILCS 122/4-5 |
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Amends the Payday Loan Reform Act. In the definition of "payday loan", deletes an element that the loan have a finance charge exceeding an annual percentage rate of 36%. Provides that a lender may not charge more than $10 (instead of $15.50) per $100 loaned on any payday loan over the term of the loan. In provisions regarding loan terms, provides that, in addition to any administrative fee, a lender may not charge interest on the amount of cash delivered to the consumer in an equivalent greater than 36% per annum and adds other requirements regarding rates. Requires a licensee to have unencumbered assets of at least $50,000 per location. Prohibits placement of a new location within 2,500 feet of any business licensed under the Act. Prohibits a device or agreement that would have the effect of charging or collecting more interest than allowed by the Act, charging interest other than as authorized by the Act, or including any jury trial waiver or mandatory arbitration clause in loan documents. Effective immediately.
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A BILL FOR
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SB2866 |
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| AN ACT concerning business.
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| Be it enacted by the People of the State of Illinois,
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| represented in the General Assembly:
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| Section 5. The Payday Loan Reform Act is amended by | 5 |
| changing Sections 1-10, 2-5, 3-5, and 4-5 as follows: | 6 |
| (815 ILCS 122/1-10)
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| Sec. 1-10. Definitions. As used in this Act: | 8 |
| "Check" means a "negotiable instrument", as defined in | 9 |
| Article 3 of the Uniform Commercial Code, that is drawn on a | 10 |
| financial institution. | 11 |
| "Commercially reasonable method of verification" or | 12 |
| "certified database" means a consumer reporting service | 13 |
| database certified by the Department as effective in verifying | 14 |
| that a proposed loan agreement is permissible under this Act, | 15 |
| or, in the absence of the Department's certification, any | 16 |
| reasonably reliable written verification by the consumer | 17 |
| concerning (i) whether the consumer has any outstanding payday | 18 |
| loans, (ii) the principal amount of those outstanding payday | 19 |
| loans, and (iii) whether any payday loans have been paid in | 20 |
| full by the consumer in the preceding 7 days. | 21 |
| "Consumer" means any natural person who, singly or jointly | 22 |
| with another consumer, enters into a loan. | 23 |
| "Consumer reporting service" means an entity that provides |
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| a database certified by the Department. | 2 |
| "Department" means the Department of Financial and | 3 |
| Professional Regulation. | 4 |
| "Secretary" means the Secretary of Financial and | 5 |
| Professional Regulation. | 6 |
| "Gross monthly income" means monthly income as | 7 |
| demonstrated by official documentation of the income, | 8 |
| including, but not limited to, a pay stub or a receipt | 9 |
| reflecting payment of government benefits, for the period 30 | 10 |
| days prior to the date on which the loan is made. | 11 |
| "Lender" and "licensee" mean any person or entity, | 12 |
| including any affiliate or subsidiary of a lender or licensee, | 13 |
| that offers or makes a payday loan, buys a whole or partial | 14 |
| interest in a payday loan, arranges a payday loan for a third | 15 |
| party, or acts as an agent for a third party in making a payday | 16 |
| loan, regardless of whether approval, acceptance, or | 17 |
| ratification by the third party is necessary to create a legal | 18 |
| obligation for the third party, and includes any other person | 19 |
| or entity if the Department determines that the person or | 20 |
| entity is engaged in a transaction that is in substance a | 21 |
| disguised payday loan or a subterfuge for the purpose of | 22 |
| avoiding this Act. | 23 |
| "Loan agreement" means a written agreement between a lender | 24 |
| and consumer to make a loan to the consumer, regardless of | 25 |
| whether any loan proceeds are actually paid to the consumer on | 26 |
| the date on which the loan agreement is made. |
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| "Member of the military" means a person serving in the | 2 |
| armed forces of the United States, the Illinois National Guard, | 3 |
| or any reserve component of the armed forces of the United | 4 |
| States. "Member of the military" includes those persons engaged | 5 |
| in (i) active duty, (ii) training or education under the | 6 |
| supervision of the United States preliminary to induction into | 7 |
| military service, or (iii) a period of active duty with the | 8 |
| State of Illinois under Title 10 or Title 32 of the United | 9 |
| States Code pursuant to order of the President or the Governor | 10 |
| of the State of Illinois. | 11 |
| "Outstanding balance" means the total amount owed by the | 12 |
| consumer on a loan to a lender, including all principal, | 13 |
| finance charges, fees, and charges of every kind. | 14 |
| "Payday loan" or "loan" means a loan with a finance charge | 15 |
| exceeding an annual percentage rate of 36% and with a term that | 16 |
| does not exceed 120 days, including any transaction conducted | 17 |
| via any medium whatsoever, including, but not limited to, | 18 |
| paper, facsimile, Internet, or telephone, in which: | 19 |
| (1) A lender accepts one or more checks dated on the | 20 |
| date written and agrees to hold them for a period of days | 21 |
| before deposit or presentment, or accepts one or more | 22 |
| checks dated subsequent to the date written and agrees to | 23 |
| hold them for deposit; or | 24 |
| (2) A lender accepts one or more authorizations to | 25 |
| debit a consumer's bank account; or | 26 |
| (3) A lender accepts an interest in a consumer's wages, |
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| including, but not limited to, a wage assignment. | 2 |
| "Principal amount" means the amount received by the | 3 |
| consumer from the lender due and owing on a loan, excluding any | 4 |
| finance charges, interest, fees, or other loan-related | 5 |
| charges. | 6 |
| "Rollover" means to refinance, renew, amend, or extend a | 7 |
| loan beyond its original term.
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| (Source: P.A. 94-13, eff. 12-6-05.) | 9 |
| (815 ILCS 122/2-5)
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| Sec. 2-5. Loan terms. | 11 |
| (a) Without affecting the right of a consumer to prepay at | 12 |
| any time without cost or penalty, no payday loan may have a | 13 |
| minimum term of less than 13 days. | 14 |
| (b) No payday loan may be made to a consumer if the loan | 15 |
| would result in the consumer being indebted to one or more | 16 |
| payday lenders for a period in excess of 45 consecutive days. | 17 |
| Except as provided under Section 2-40, if a consumer has or has | 18 |
| had loans outstanding for a period in excess of 45 consecutive | 19 |
| days, no payday lender may offer or make a loan to the consumer | 20 |
| for at least 7 calendar days after the date on which the | 21 |
| outstanding balance of all payday loans made during the 45 | 22 |
| consecutive day period is paid in full. For purposes of this | 23 |
| subsection, the term "consecutive days" means a series of | 24 |
| continuous calendar days in which the consumer has an | 25 |
| outstanding balance on one or more payday loans; however, if a |
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| payday loan is made to a consumer within 6 days or less after | 2 |
| the outstanding balance of all loans is paid in full, those | 3 |
| days are counted as "consecutive days" for purposes of this | 4 |
| subsection. | 5 |
| (c) No lender may make a payday loan to a consumer if the | 6 |
| total principal amount of the loan, when combined with the | 7 |
| principal amount of all of the consumer's other outstanding | 8 |
| payday loans, exceeds $1,000 or 25% of the consumer's gross | 9 |
| monthly income, whichever is less.
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| (d) No payday loan may be made to a consumer who has an | 11 |
| outstanding balance on 2 payday loans. | 12 |
| (e) No lender may charge more than $10 $15.50 per $100 | 13 |
| loaned on any payday loan over the term of the loan. Except as | 14 |
| provided in Section 2-25, this charge is considered fully | 15 |
| earned as of the date on which the loan is made. | 16 |
| (f) A lender may not take or attempt to take an interest in | 17 |
| any of the consumer's personal property to secure a payday | 18 |
| loan. | 19 |
| (g) A consumer has the right to redeem a check or any other | 20 |
| item described in the definition of payday loan under Section | 21 |
| 1-10 issued in connection with a payday loan from the lender | 22 |
| holding the check or other item at any time before the payday | 23 |
| loan becomes payable by paying the full amount of the check or | 24 |
| other item.
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| (h) In addition to any administrative fee, a lender may not | 26 |
| charge interest on the amount of cash delivered to the consumer |
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| in an equivalent greater than 36% per annum, defined as a | 2 |
| 365-day year. The rate charged on the outstanding balance after | 3 |
| maturity may not be greater than the rate charged during the | 4 |
| loan term. Charges on loans shall be computed and paid only as | 5 |
| a percentage of the unpaid principal balance. "Principal | 6 |
| balance" means the balance due and owing exclusive of any | 7 |
| interest, service, or other loan-related charges. | 8 |
| (Source: P.A. 94-13, eff. 12-6-05.) | 9 |
| (815 ILCS 122/3-5)
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| Sec. 3-5. Licensure. | 11 |
| (a) A license to make a payday loan shall state the | 12 |
| address,
including city and state, at which
the business is to | 13 |
| be conducted and shall state fully the name of the licensee.
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| The license shall be conspicuously posted in the place of | 15 |
| business of the
licensee and shall not be transferable or | 16 |
| assignable.
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| (b) An application for a license shall be in writing and in | 18 |
| a form
prescribed by the Secretary. The Secretary may not issue | 19 |
| a payday loan
license unless and until the following findings | 20 |
| are made:
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| (1) that the financial responsibility, experience, | 22 |
| character, and general
fitness of the applicant are such as | 23 |
| to command the confidence of the public
and to warrant the | 24 |
| belief that the business will be operated lawfully and
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| fairly and within the provisions and purposes of this Act; |
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| and
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| (2) that the applicant has unencumbered assets of at | 3 |
| least $50,000 per location; and | 4 |
| (3) that the applicant has submitted such other | 5 |
| information as the
Secretary may deem necessary.
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| (c) A license shall be issued for no longer than one year, | 7 |
| and no renewal
of a license may be provided if a licensee has | 8 |
| substantially violated this
Act and has not cured the violation | 9 |
| to the satisfaction of the Department.
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| (d) A licensee shall appoint, in writing, the Secretary as | 11 |
| attorney-in-fact
upon whom all lawful process against the | 12 |
| licensee may be served with the
same legal force and validity | 13 |
| as if served on the licensee. A copy of the
written | 14 |
| appointment, duly certified, shall be filed in the office of | 15 |
| the
Secretary, and a copy thereof certified by the Secretary | 16 |
| shall be sufficient
evidence to subject a licensee to | 17 |
| jurisdiction in a court of law. This appointment shall remain | 18 |
| in effect while any liability remains
outstanding in this State | 19 |
| against the licensee. When summons is served upon
the Secretary | 20 |
| as attorney-in-fact for a licensee, the Secretary shall | 21 |
| immediately
notify the licensee by registered mail, enclosing | 22 |
| the summons and specifying
the hour and day of service.
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| (e) A licensee must pay an annual fee of $1,000. In | 24 |
| addition to the
license fee, the reasonable expense of any | 25 |
| examination or hearing
by the Secretary under any provisions of | 26 |
| this Act shall be borne by
the licensee. If a licensee fails to |
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| renew its license by December 31,
its license
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| automatically expire; however, the Secretary, in his or her | 3 |
| discretion,
may reinstate an expired license upon:
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| (1) payment of the annual fee within 30 days of the | 5 |
| date of
expiration; and
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| (2) proof of good cause for failure to renew.
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| (f) Not more than one place of business shall be maintained | 8 |
| under the
same license, but the Secretary may issue more than | 9 |
| one license to the same
licensee upon compliance with all the | 10 |
| provisions of this Act governing
issuance of a single license. | 11 |
| The location, except those locations already in
existence as of | 12 |
| June 1, 2005, may not be within one mile of a
horse race track | 13 |
| subject to the Illinois Horse Racing Act of 1975,
within one | 14 |
| mile of a facility at which gambling is conducted under the
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| Riverboat Gambling Act, within one mile of the location at | 16 |
| which a
riverboat subject to the Riverboat Gambling Act docks, | 17 |
| or within one mile of
any State of Illinois or United States | 18 |
| military base or naval installation. The location, except those | 19 |
| locations already in existence as of June 1, 2008, may not be | 20 |
| within 2,500 feet of the location of any other business | 21 |
| licensed under this Act.
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| (g) No licensee shall conduct the business of making loans | 23 |
| under this
Act within any office, suite, room, or place of | 24 |
| business in which any other
business is solicited or engaged in | 25 |
| unless the other business is licensed by the Department or, in | 26 |
| the opinion of the Secretary, the
other business would not be |
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| contrary to the best interests of consumers and
is authorized | 2 |
| by the Secretary in writing.
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| (h) The Secretary shall maintain a list of licensees that | 4 |
| shall be
available to interested consumers and lenders and the | 5 |
| public. The Secretary
shall maintain a toll-free number whereby | 6 |
| consumers may obtain
information about licensees. The | 7 |
| Secretary shall also establish a complaint
process under which | 8 |
| an aggrieved consumer
may file a complaint against a licensee | 9 |
| or non-licensee who violates any
provision of this Act.
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| (Source: P.A. 94-13, eff. 12-6-05.) | 11 |
| (815 ILCS 122/4-5)
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| Sec. 4-5. Prohibited acts. A licensee or unlicensed person | 13 |
| or entity making payday
loans may not commit, or have committed | 14 |
| on behalf of the
licensee
or unlicensed person or entity, any | 15 |
| of the following acts: | 16 |
| (1) Threatening to use or using the criminal process in | 17 |
| this or any
other state to collect on the loan.
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| (2) Using any device or agreement that would have the | 19 |
| effect of
charging or collecting more fees , interest, or | 20 |
| charges than allowed by this
Act, including, but not | 21 |
| limited to, entering into a different type of
transaction
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| with the consumer.
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| (3) Engaging in unfair, deceptive, or fraudulent | 24 |
| practices in the
making or collecting of a payday loan.
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| (4) Using or attempting to use the check provided by |
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| the consumer in
a payday loan as collateral for a | 2 |
| transaction not related to a payday loan.
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| (5) Knowingly accepting payment in whole or in part of | 4 |
| a payday
loan through the proceeds of another payday loan | 5 |
| provided by any licensee.
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| (6) Knowingly accepting any security, other than that | 7 |
| specified in the
definition of payday loan in Section 1-10, | 8 |
| for a payday loan.
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| (7) Charging any fees , interest, or charges other than | 10 |
| those specifically
authorized by this Act.
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| (8) Threatening to take any action against a consumer | 12 |
| that is
prohibited by this Act or making any misleading or | 13 |
| deceptive statements
regarding the payday loan or any | 14 |
| consequences thereof.
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| (9) Making a misrepresentation of a material fact by an | 16 |
| applicant for licensure in
obtaining or attempting to | 17 |
| obtain a license.
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| (10) Including any of the following provisions in loan | 19 |
| documents
required by subsection (b) of Section 2-20:
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| (A) a confession of judgment clause;
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| (B) a waiver of the right to a jury trial , if | 22 |
| applicable, in any action
brought by or against a | 23 |
| consumer, unless the waiver is included in an | 24 |
| arbitration clause allowed under
subparagraph (C) of | 25 |
| this paragraph (11) ;
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| (C) a mandatory arbitration clause that is |
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| oppressive, unfair,
unconscionable, or substantially | 2 |
| in derogation of the rights of consumers ; or
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| (D) a provision in which the consumer agrees not to | 4 |
| assert any claim
or defense arising out of the | 5 |
| contract.
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| (11) Selling any insurance of any kind whether or not | 7 |
| sold in
connection with the making or collecting of a | 8 |
| payday loan.
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| (12) Taking any power of attorney.
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| (13) Taking any security interest in real estate.
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| (14) Collecting a delinquency or collection charge on | 12 |
| any installment
regardless of the period in which it | 13 |
| remains in default.
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| (15) Collecting treble damages on an amount owing from | 15 |
| a payday loan.
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| (16) Refusing, or intentionally delaying or
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| inhibiting, the consumer's right to enter into a repayment | 18 |
| plan pursuant to this
Act. | 19 |
| (17) Charging for, or attempting to
collect, | 20 |
| attorney's fees, court costs, or arbitration costs | 21 |
| incurred in connection with the
collection of a payday | 22 |
| loan. | 23 |
| (18) Making a loan in violation of this Act. | 24 |
| (19) Garnishing the wages or salaries of a consumer who | 25 |
| is a member of the military. | 26 |
| (20) Failing to suspend or defer collection activity |
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| against a consumer who is a member of the military and who | 2 |
| has been deployed to a combat or combat-support posting. | 3 |
| (21) Contacting the military chain of command of a | 4 |
| consumer who is a member of the military in an effort to | 5 |
| collect on a payday loan.
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| (Source: P.A. 94-13, eff. 12-6-05.)
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| Section 99. Effective date. This Act takes effect upon | 8 |
| becoming law.
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