Full Text of SB3410 98th General Assembly
SB3410 98TH GENERAL ASSEMBLY |
| | 98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014 SB3410 Introduced 2/14/2014, by Sen. Andy Manar SYNOPSIS AS INTRODUCED: |
| 815 ILCS 122/2-5 | | 815 ILCS 122/3-5 | |
|
Amends the Payday Loan Reform Act. Authorizes a municipality to limit the number of licensees located in the municipality beginning January 1, 2015. Provides that the limit established by a municipality may be no less than 5. Provides for the Department of Financial and Professional Regulation to randomly nonrenew licenses if the renewed license would result in a number of licenses in excess of the municipal limit. Reduces maximum permissible finance charges.
|
| |
| | A BILL FOR |
|
| | | SB3410 | | LRB098 19960 JLS 55513 b |
|
| 1 | | AN ACT concerning regulation.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Payday Loan Reform Act is amended by | 5 | | changing Sections 2-5 and 3-5 as follows: | 6 | | (815 ILCS 122/2-5)
| 7 | | Sec. 2-5. Loan terms. | 8 | | (a) Without affecting the right of a consumer to prepay at | 9 | | any time without cost or penalty, no payday loan may have a | 10 | | minimum term of less than 13 days. | 11 | | (b) Except for an installment payday loan as defined in | 12 | | this Section,
no payday loan may be made to a consumer if the | 13 | | loan would result in the consumer being indebted to one or more | 14 | | payday lenders for a period in excess of 45 consecutive days. | 15 | | Except as provided under subsection (c) of this Section and | 16 | | Section 2-40, if a consumer has or has had loans outstanding | 17 | | for a period in excess of 45 consecutive days, no payday lender | 18 | | may offer or make a loan to the consumer for at least 7 | 19 | | calendar days after the date on which the outstanding balance | 20 | | of all payday loans made during the 45 consecutive day period | 21 | | is paid in full. For purposes of this subsection, the term | 22 | | "consecutive days" means a series of continuous calendar days | 23 | | in which the consumer has an outstanding balance on one or more |
| | | SB3410 | - 2 - | LRB098 19960 JLS 55513 b |
|
| 1 | | payday loans; however, if a payday loan is made to a consumer | 2 | | within 6 days or less after the outstanding balance of all | 3 | | loans is paid in full, those days are counted as "consecutive | 4 | | days" for purposes of this subsection. | 5 | | (c) Notwithstanding anything in this Act to the contrary, a | 6 | | payday loan
shall also include any installment loan otherwise | 7 | | meeting the definition of
payday loan contained in Section | 8 | | 1-10, but that has a term agreed by the
parties of not less | 9 | | than 112 days and not exceeding 180 days; hereinafter an
| 10 | | "installment payday loan". The following provisions shall | 11 | | apply:
| 12 | | (i) Any installment payday loan must be fully | 13 | | amortizing, with a finance
charge calculated on the | 14 | | principal balances scheduled to be outstanding and
be | 15 | | repayable in substantially equal and consecutive | 16 | | installments, according
to a payment schedule agreed by the | 17 | | parties with not less than 13 days and
not more than one | 18 | | month between payments; except that the first installment
| 19 | | period may be longer than the remaining installment periods | 20 | | by not more than
15 days, and the first installment payment | 21 | | may be larger than the remaining
installment payments by | 22 | | the amount of finance charges applicable to the
extra days. | 23 | | In calculating finance charges under this subsection, when | 24 | | the first installment period is longer than the remaining | 25 | | installment periods, the amount of the finance charges | 26 | | applicable to the extra days shall not be greater than |
| | | SB3410 | - 3 - | LRB098 19960 JLS 55513 b |
|
| 1 | | $7.75 $15.50 per $100 of the original principal balance | 2 | | divided by the number of days in a regularly scheduled | 3 | | installment period and multiplied by the number of extra | 4 | | days determined by subtracting the number of days in a | 5 | | regularly scheduled installment period from the number of | 6 | | days in the first installment period. | 7 | | (ii) An installment payday loan may be refinanced by a | 8 | | new installment
payday loan one time during the term of the | 9 | | initial loan; provided that the
total duration of | 10 | | indebtedness on the initial installment payday loan | 11 | | combined
with the total term of indebtedness of the new | 12 | | loan refinancing that initial
loan, shall not exceed 180 | 13 | | days. For purposes of this Act, a refinancing
occurs when | 14 | | an existing installment payday loan is paid from the | 15 | | proceeds of
a new installment payday loan. | 16 | | (iii) In the event an installment payday loan is paid | 17 | | in full prior to
the date on which the last scheduled | 18 | | installment payment before maturity is
due, other than | 19 | | through a refinancing, no licensee may offer or make a | 20 | | payday
loan to the consumer for at least 2 calendar days | 21 | | thereafter. | 22 | | (iv) No installment payday loan may be made to a | 23 | | consumer if the loan would
result in the consumer being | 24 | | indebted to one or more payday lenders for a
period in | 25 | | excess of 180 consecutive days. The term "consecutive days" | 26 | | does not include the date on which a consumer makes the |
| | | SB3410 | - 4 - | LRB098 19960 JLS 55513 b |
|
| 1 | | final installment payment. | 2 | | (d) (Blank). | 3 | | (e) No lender may make a payday loan to a consumer if the | 4 | | total of all payday loan payments coming due within the first | 5 | | calendar month of the loan, when combined with the payment | 6 | | amount of all of the consumer's other outstanding payday loans | 7 | | coming due within the same month, exceeds the lesser of: | 8 | | (1) $1,000; or | 9 | | (2) in the case of one or more payday loans, 25% of the | 10 | | consumer's gross monthly income; or | 11 | | (3) in the case of one or more installment payday | 12 | | loans, 22.5% of the consumer's gross monthly income; or | 13 | | (4) in the case of a payday loan and an installment | 14 | | payday loan, 22.5% of the consumer's gross monthly income. | 15 | | No loan shall be made to a consumer who has an outstanding | 16 | | balance on 2 payday loans, except that, for a period of 12 | 17 | | months after the effective date of this amendatory Act of the | 18 | | 96th General Assembly, consumers with an existing CILA loan may | 19 | | be issued an installment loan issued under this Act from the | 20 | | company from which their CILA loan was issued. | 21 | | (e-5) Except as provided in subsection (c)(i), no lender | 22 | | may charge more than $7.75 $15.50 per $100 loaned on any payday | 23 | | loan, or more than $7.75 $15.50 per $100 on the initial | 24 | | principal balance and on the principal balances scheduled to be | 25 | | outstanding during any installment period on any installment | 26 | | payday loan. Except for installment payday loans and except as |
| | | SB3410 | - 5 - | LRB098 19960 JLS 55513 b |
|
| 1 | | provided in Section 2-25, this charge is considered fully | 2 | | earned as of the date on which the loan is made. For purposes | 3 | | of determining the finance charge earned on an installment | 4 | | payday loan, the disclosed annual percentage rate shall be | 5 | | applied to the principal balances outstanding from time to time | 6 | | until the loan is paid in full, or until the maturity date, | 7 | | which ever occurs first. No finance charge may be imposed after | 8 | | the final scheduled maturity date. | 9 | | When any loan contract is paid in full, the licensee shall | 10 | | refund any unearned finance charge. The unearned finance charge | 11 | | that is refunded shall be calculated based on a method that is | 12 | | at least as favorable to the consumer as the actuarial method, | 13 | | as defined by the federal Truth in Lending Act. The sum of the | 14 | | digits or rule of 78ths method of calculating prepaid interest | 15 | | refunds is prohibited. | 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.
| 25 | | (Source: P.A. 96-936, eff. 3-21-11; 97-421, eff. 1-1-12.) |
| | | SB3410 | - 6 - | LRB098 19960 JLS 55513 b |
|
| 1 | | (815 ILCS 122/3-5)
| 2 | | Sec. 3-5. Licensure. | 3 | | (a) A license to make a payday loan shall state the | 4 | | address,
including city and state, at which
the business is to | 5 | | be conducted and shall state fully the name of the licensee.
| 6 | | The license shall be conspicuously posted in the place of | 7 | | business of the
licensee and shall not be transferable or | 8 | | assignable.
| 9 | | (b) An application for a license shall be in writing and in | 10 | | a form
prescribed by the Secretary. The Secretary may not issue | 11 | | a payday loan
license unless and until the following findings | 12 | | are made:
| 13 | | (1) that the financial responsibility, experience, | 14 | | character, and general
fitness of the applicant are such as | 15 | | to command the confidence of the public
and to warrant the | 16 | | belief that the business will be operated lawfully and
| 17 | | fairly and within the provisions and purposes of this Act; | 18 | | and
| 19 | | (2) that the applicant has submitted such other | 20 | | information as the
Secretary may deem necessary ; and . | 21 | | (3) that the issuance of the license would not result | 22 | | in the number of licenses being issued for locations in a | 23 | | municipality exceeding any limit upon the number of | 24 | | licensed locations authorized by the municipality.
| 25 | | (c) A license shall be issued for no longer than one year, | 26 | | and no renewal
of a license may be provided if a licensee has |
| | | SB3410 | - 7 - | LRB098 19960 JLS 55513 b |
|
| 1 | | substantially violated this
Act and has not cured the violation | 2 | | to the satisfaction of the Department or if the renewal of the | 3 | | license would result in a number of licenses in a municipality | 4 | | exceeding the limit upon the number of licensed locations | 5 | | authorized by the municipality. If a municipality establishes a | 6 | | limit on the number of licensed locations that is less than the | 7 | | number of licenses sought to be renewed, the Department shall | 8 | | randomly determine which licenses to refuse to renew .
| 9 | | (d) A licensee shall appoint, in writing, the Secretary as | 10 | | attorney-in-fact
upon whom all lawful process against the | 11 | | licensee may be served with the
same legal force and validity | 12 | | as if served on the licensee. A copy of the
written | 13 | | appointment, duly certified, shall be filed in the office of | 14 | | the
Secretary, and a copy thereof certified by the Secretary | 15 | | shall be sufficient
evidence to subject a licensee to | 16 | | jurisdiction in a court of law. This appointment shall remain | 17 | | in effect while any liability remains
outstanding in this State | 18 | | against the licensee. When summons is served upon
the Secretary | 19 | | as attorney-in-fact for a licensee, the Secretary shall | 20 | | immediately
notify the licensee by registered mail, enclosing | 21 | | the summons and specifying
the hour and day of service.
| 22 | | (e) A licensee must pay an annual fee of $1,000. In | 23 | | addition to the
license fee, the reasonable expense of any | 24 | | examination or hearing
by the Secretary under any provisions of | 25 | | this Act shall be borne by
the licensee. If a licensee fails to | 26 | | renew its license by December 31,
its license
shall |
| | | SB3410 | - 8 - | LRB098 19960 JLS 55513 b |
|
| 1 | | automatically expire; however, the Secretary, in his or her | 2 | | discretion,
may reinstate an expired license upon:
| 3 | | (1) payment of the annual fee within 30 days of the | 4 | | date of
expiration; and
| 5 | | (2) proof of good cause for failure to renew.
| 6 | | (f) Not more than one place of business shall be maintained | 7 | | under the
same license, but the Secretary may issue more than | 8 | | one license to the same
licensee upon compliance with all the | 9 | | provisions of this Act governing
issuance of a single license. | 10 | | The location, except those locations already in
existence as of | 11 | | June 1, 2005, may not be within one mile of a
horse race track | 12 | | subject to the Illinois Horse Racing Act of 1975,
within one | 13 | | mile of a facility at which gambling is conducted under the
| 14 | | Riverboat Gambling Act, within one mile of the location at | 15 | | which a
riverboat subject to the Riverboat Gambling Act docks, | 16 | | or within one mile of
any State of Illinois or United States | 17 | | military base or naval installation.
| 18 | | (g) No licensee shall conduct the business of making loans | 19 | | under this
Act within any office, suite, room, or place of | 20 | | business in which (1) any loans are offered or made under the | 21 | | Consumer Installment Loan Act other than title secured loans as | 22 | | defined in subsection (a) of Section 15 of the Consumer | 23 | | Installment Loan Act and governed by Title 38, Section 110.330 | 24 | | of the Illinois Administrative Code or (2) any other
business | 25 | | is solicited or engaged in unless the other business is | 26 | | licensed by the Department or, in the opinion of the Secretary, |
| | | SB3410 | - 9 - | LRB098 19960 JLS 55513 b |
|
| 1 | | the
other business would not be contrary to the best interests | 2 | | of consumers and
is authorized by the Secretary in writing.
| 3 | | (g-5) Notwithstanding subsection (g) of this Section, a | 4 | | licensee may obtain a license under the Consumer Installment | 5 | | Loan Act (CILA) for the exclusive purpose and use of making | 6 | | title secured loans, as defined in subsection (a) of Section 15 | 7 | | of CILA and governed by Title 38, Section 110.300 of the | 8 | | Illinois Administrative Code. A licensee may continue to | 9 | | service Consumer Installment Loan Act loans that were | 10 | | outstanding as of the effective date of this amendatory Act of | 11 | | the 96th General Assembly. | 12 | | (h) The Secretary shall maintain a list of licensees that | 13 | | shall be
available to interested consumers and lenders and the | 14 | | public. The Secretary
shall maintain a toll-free number whereby | 15 | | consumers may obtain
information about licensees. The | 16 | | Secretary shall also establish a complaint
process under which | 17 | | an aggrieved consumer
may file a complaint against a licensee | 18 | | or non-licensee who violates any
provision of this Act.
| 19 | | (i) A municipality may by ordinance limit the number of | 20 | | licensees under this Act that may be located in the | 21 | | municipality on and after January 1, 2015. The limit | 22 | | established by the municipality may not be fewer than 5 | 23 | | licenses. | 24 | | (Source: P.A. 96-936, eff. 3-21-11 .)
|
|