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Public Act 096-1420 | ||||
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AN ACT concerning debt settlement.
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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 1. Short title. This Act may be cited as the Debt | ||||
Settlement Consumer Protection Act. | ||||
Section 5. Purpose and construction. The purpose of this | ||||
Act is to protect consumers who enter into agreements with debt | ||||
settlement providers and to regulate debt settlement | ||||
providers. This Act shall be construed as a consumer protection | ||||
law for all purposes. This Act shall be liberally construed to | ||||
effectuate its purpose. | ||||
Section 10. Definitions. As used in this Act: | ||||
"Consumer" means any person who purchases or contracts for | ||||
the purchase of debt settlement services. | ||||
"Consumer settlement account" means any account or other | ||||
means or device in which payments, deposits, or other transfers | ||||
from a consumer are arranged, held, or transferred by or to a | ||||
debt settlement provider for the accumulation of the consumer's | ||||
funds in anticipation of proffering an adjustment or settlement | ||||
of a debt or obligation of the consumer to a creditor on behalf | ||||
of the consumer. | ||||
"Debt settlement provider" means any person or entity |
engaging in, or holding itself out as engaging in, the business | ||
of providing debt settlement service in exchange for any fee or | ||
compensation, or any person who solicits for or acts on behalf | ||
of any person or entity engaging in, or holding itself out as | ||
engaging in, the business of providing debt settlement service | ||
in exchange for any fee or compensation. "Debt settlement | ||
provider" does not include: | ||
(1) attorneys licensed, or otherwise authorized, to | ||
practice in Illinois who are engaged in the practice of | ||
law;
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(2) escrow agents, accountants, broker dealers in | ||
securities, or investment advisors in securities, when | ||
acting in the ordinary practice of their professions and | ||
through the entity used in the ordinary practice of their | ||
profession;
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(3) any bank, agent of a bank, operating subsidiary of | ||
a bank, affiliate of a bank, trust company, savings and | ||
loan association, savings bank, credit union, crop credit | ||
association, development credit corporation, industrial | ||
development corporation, title insurance company, title | ||
insurance agent, independent escrowee or insurance company | ||
operating or organized under the laws of a state or the | ||
United States, or any other person authorized to make loans | ||
under State law while acting in the ordinary practice of | ||
that business;
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(4) any person who performs credit services for his or |
her employer while receiving a regular salary or wage when | ||
the employer is not engaged in the business of offering or | ||
providing debt settlement service;
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(5) a collection agency licensed pursuant to the | ||
Collection Agency Act that is collecting a debt on its own | ||
behalf or on behalf of a third party; | ||
(6) an organization that is described in Section | ||
501(c)(3) and subject to Section 501(q) of Title 26 of the | ||
United States Code and exempt from tax under Section 501(a) | ||
of Title 26 of the United States Code and governed by the | ||
Debt Management Service Act;
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(7) public officers while acting in their official | ||
capacities and persons acting under court order;
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(8) any person while performing services incidental to | ||
the dissolution, winding up, or liquidating of a | ||
partnership, corporation, or other business enterprise; or | ||
(9) persons licensed under the Real Estate License Act | ||
of 2000 when acting in the ordinary practice of their | ||
profession and not holding themselves out as debt | ||
settlement providers. | ||
"Debt settlement service" means:
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(1) offering to provide advice or service, or | ||
acting as an intermediary between or on behalf of a | ||
consumer and one or more of a consumer's creditors, | ||
where the primary purpose of the advice, service, or | ||
action is to obtain a settlement, adjustment, or |
satisfaction of the consumer's unsecured debt to a | ||
creditor in an amount less than the full amount of the | ||
principal amount of the debt or in an amount less than | ||
the current outstanding balance of the debt; or
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(2) offering to provide services related to or | ||
providing services advising, encouraging, assisting, | ||
or counseling a consumer to accumulate funds for the | ||
primary purpose of proposing or obtaining or seeking to | ||
obtain a settlement, adjustment, or satisfaction of | ||
the consumer's unsecured debt to a creditor in an | ||
amount less than the full amount of the principal | ||
amount of the debt or in an amount less than the | ||
current outstanding balance of the debt. | ||
"Debt settlement service" does not include (A) the | ||
services of attorneys licensed, or otherwise | ||
authorized, to practice in Illinois who are engaged in | ||
the practice of law or (B) debt management service as | ||
defined in the Debt Management Service Act. | ||
"Enrollment or set up fee" means any fee, obligation, or | ||
compensation paid or to be paid by the consumer to a debt | ||
settlement provider in consideration of or in connection with | ||
establishing a contract or other agreement with a consumer | ||
related to the provision of debt settlement service. | ||
"Maintenance fee" means any fee, obligation, or | ||
compensation paid or to be paid by the consumer on a periodic | ||
basis to a debt settlement provider in consideration of |
maintaining the relationship and services to be provided by a | ||
debt settlement provider in accordance with a contract with a | ||
consumer related to the provision of debt settlement service. | ||
"Principal amount of the debt" means the total amount or | ||
outstanding balance owed by a consumer to one or more creditors | ||
for a debt that is included in a contract for debt settlement | ||
service at the time when the consumer enters into a contract | ||
for debt settlement service. | ||
"Savings" means the difference between the principal | ||
amount of the debt and the amount paid by the debt settlement | ||
provider to the creditor or negotiated by the debt settlement | ||
provider and paid by the consumer to the creditor pursuant to a | ||
settlement negotiated by the debt settlement provider on behalf | ||
of the consumer as full and complete satisfaction of the | ||
creditor's claim with regard to that debt. | ||
"Secretary" means the Secretary of Financial and | ||
Professional Regulation. | ||
"Settlement fee" means any fee, obligation, or | ||
compensation paid or to be paid by the consumer to a debt | ||
settlement provider in consideration of or in connection with a | ||
completed agreement or other arrangement on the part of a | ||
creditor to accept less than the principal amount of the debt | ||
as satisfaction of the creditor's claim against the consumer.
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Section 15. Requirement of license. It shall be unlawful | ||
for any person or entity to act as a debt settlement provider |
except as authorized by this Act and without first having | ||
obtained a license under this Act. | ||
Section 20. Application for license. An application for a | ||
license to operate as a debt settlement provider in this State | ||
shall be made to the Secretary and shall be in writing, under | ||
oath, and in the form prescribed by the Secretary. | ||
Each applicant, at the time of making such application, | ||
shall pay to the Secretary the required fee as set by rule.
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Every applicant shall submit to the Secretary, at the time | ||
of the application for a license, a
bond to be approved by the | ||
Secretary in which the applicant shall be the obligor, in the | ||
sum of $100,000 or an additional amount as required by the | ||
Secretary, and in which an insurance company, which is duly | ||
authorized by the State of Illinois to transact the business of | ||
fidelity and surety insurance, shall be a surety.
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The bond shall run to the Secretary for the use of the | ||
Department or of any person or persons
who may have a cause of | ||
action against the obligor in said bond arising out of any | ||
violation of this Act or rules by a debt settlement provider. | ||
Such bond shall be conditioned that the obligor must faithfully | ||
conform to and abide by the provisions of this Act and of all | ||
rules, regulations, and directions lawfully made by the | ||
Secretary and pay to the Secretary or to any person or persons | ||
any and all money that may become due or owing to the State or | ||
to such person or persons, from the obligor under and by virtue |
of the provisions of this Act.
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Section 25. Qualifications for license. Upon the filing of | ||
the application and the approval of the bond and the payment of | ||
the specified fees, the Secretary may issue a license if he or | ||
she finds all of the following:
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(1) The financial responsibility, experience, | ||
character, and general fitness of the
applicant, the | ||
managers, if the applicant is a limited liability company, | ||
the partners, if the applicant is a partnership, and the | ||
officers and directors, if the applicant is a corporation | ||
or a not for profit corporation, are such as to command the | ||
confidence of the community and to warrant belief that the | ||
business will be operated fairly, honestly, and | ||
efficiently within the purposes of this Act. | ||
(2) The applicant, if an individual, the managers, if | ||
the applicant is a limited
liability company, the partners, | ||
if the applicant is a partnership, and the officers and | ||
directors, if the applicant is a corporation, have not been | ||
convicted of a felony or a misdemeanor or disciplined with | ||
respect to a license or are not currently the subject of a | ||
license disciplinary proceeding concerning allegations | ||
involving dishonesty or untrustworthiness. | ||
(3) The person or persons have not had a record of | ||
having defaulted in the payment
of money collected for | ||
others, including the discharge of those debts through |
bankruptcy proceedings. | ||
(4) The applicant, or any officers, directors, | ||
partners, or managers have not previously
violated any | ||
provision of this Act or any rule lawfully made by the | ||
Secretary. | ||
(5) The applicant has not made any false statement or | ||
representation to the Secretary in
applying for a license | ||
under this Section.
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The Secretary shall deliver a license to the applicant to | ||
operate as a debt settlement
provider in accordance with the | ||
provisions of this Act at the location specified in the | ||
application. The license shall remain in full force and effect | ||
until it is surrendered by the debt settlement provider or | ||
revoked by the Secretary as provided in this Act; provided, | ||
however, that each license shall expire by its terms on January | ||
1 next following its issuance unless it is renewed as provided | ||
in this Act. A license, however, may not be surrendered without | ||
the approval of the Secretary.
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More than one license may be issued to the same person for | ||
separate places of business,
but separate applications shall be | ||
made for each location conducting business with Illinois | ||
residents.
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Section 30. Renewal of license. | ||
(a) Each debt settlement provider under the provisions of | ||
this Act may make application to the Secretary for renewal of |
its license, which application for renewal shall be on the form | ||
prescribed by the Secretary and shall be accompanied by a fee | ||
of $1,000 together with a bond or other surety as required, in | ||
a minimum amount of $100,000 or an amount as required by the | ||
Secretary based on the amount of disbursements made by the | ||
licensee in the previous year. The application must be received | ||
by the Department no later than December 1 of the year | ||
preceding the year for which the application applies. | ||
Section 33. Annual report; debt settlement provider | ||
disclosure of statistical information; Secretary to report | ||
statistical information. | ||
(a) A debt settlement provider must file an annual report | ||
with the Secretary that must include all of the following data: | ||
(1) for each Illinois resident: | ||
(i) the number of accounts enrolled; | ||
(ii) the principal amount of debt at the time each | ||
account was enrolled; | ||
(iii) the status of each account (for example, | ||
active or terminated); | ||
(iv) whether the account has been settled, and if | ||
so, the settlement amount and the corresponding | ||
principal amount of debt enrolled for that account; | ||
(v) the total amount of fees paid to the debt | ||
settlement service provider; | ||
(vi) whether the creditor has filed suit on the |
account debt; | ||
(vii) the date the resident is expected to complete | ||
the debt settlement program; and | ||
(viii) the date the resident canceled, terminated, | ||
or became inactive in the program, if applicable. | ||
(2) for persons completing the program during the | ||
reporting period, the median and mean percentage of savings | ||
and the median and mean fees paid to the debt settlement | ||
service provider; | ||
(3) for persons who cancelled, became inactive, or | ||
terminated the program during the reporting period, the | ||
median and mean percentage of the savings and the median | ||
and mean fees paid to the debt settlement service provider; | ||
(4) the percentage of Illinois residents who canceled, | ||
terminated, became inactive, or completed the program | ||
without the settlement of all of the enrolled debt; and | ||
(5) the total amount of fees collected from Illinois | ||
residents.
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The annual report must contain a declaration executed by an | ||
official authorized by the debt settlement provider under | ||
penalty of perjury that states that the report complies with | ||
this Section. | ||
(b) The Secretary may prepare and make available to the | ||
public an annual consolidated report of all the data debt | ||
settlement providers are required to report pursuant to | ||
subsection (a) of this Section.
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Section 35. License; display and location of license. Each | ||
license issued shall be kept conspicuously posted in the place | ||
of business of the debt settlement provider. The business | ||
location may be changed by any debt settlement provider upon 10 | ||
days prior written notice to the Secretary. A debt settlement | ||
provider must operate under the name as stated in its original | ||
application. | ||
Section 45. Denial of license. Any complete application for | ||
a license shall be approved or denied within 60 days after the | ||
filing of the complete application with the Secretary. | ||
Section 50. Revocation or suspension of license.
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(a) The Secretary may revoke or suspend any license if he | ||
or she finds that:
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(1) any debt settlement provider has failed to pay the | ||
annual
license fee or to maintain in effect the bond | ||
required under the provisions of this Act;
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(2) the debt settlement provider has violated any | ||
provisions of this
Act or any rule lawfully made by the | ||
Secretary under the authority of this Act;
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(3) any fact or condition exists that, if it had | ||
existed at the time of the original application for a | ||
license, would have warranted the Secretary in refusing its | ||
issuance; or
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(4) any applicant has made any false statement or | ||
representation to the Secretary in applying for a license | ||
under this Act.
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(b) In every case in which a license is suspended or | ||
revoked or an application for a license or renewal of a license | ||
is denied, the Secretary shall serve notice of his or her | ||
action, including a statement of the reasons for his or her | ||
actions, either personally or by certified mail, return receipt | ||
requested. Service by mail shall be deemed completed if the | ||
notice is deposited in the U.S. Mail.
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(c) In the case of a denial of an application or renewal of | ||
a license, the applicant or
debt settlement provider may | ||
request, in writing, a hearing within 30 days after the date of | ||
service. In the case of a denial of a renewal of a license, the | ||
license shall be deemed to continue in force until 30 days | ||
after the service of the notice of denial, or if a hearing is | ||
requested during that period, until a final administrative | ||
order is entered.
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(d) An order of revocation or suspension of a license shall | ||
take effect upon service of the
order unless the debt | ||
settlement provider requests, in writing, a hearing within 10 | ||
days after the date of service. In the event a hearing is | ||
requested, the order shall be stayed until a final | ||
administrative order is entered.
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(e) If the debt settlement provider requests a hearing, | ||
then the Secretary shall schedule the hearing within 30
days |
after the request for a hearing unless otherwise agreed to by | ||
the parties.
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(f) The hearing shall be held at the time and place | ||
designated by the Secretary. The
Secretary and any | ||
administrative law judge designated by the Secretary have the | ||
power to administer oaths and affirmations, subpoena witnesses | ||
and compel their attendance, take evidence, and require the | ||
production of books, papers, correspondence, and other records | ||
or information that the Secretary considers relevant or | ||
material to the injury.
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(g) The costs for the administrative hearing shall be set | ||
by rule.
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Section 55. Contracts, books, records, and contract | ||
cancellation. Each debt settlement provider shall furnish to | ||
the Secretary, when requested, a copy of the contract entered | ||
into between the debt settlement provider and the debtor. The | ||
debt settlement provider shall furnish the debtor with a copy | ||
of the written contract at the time of execution, which shall | ||
set forth the charges, if any, agreed upon for the services of | ||
the debt settlement provider.
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Each debt settlement provider shall maintain records and | ||
accounts that will enable any debtor
contracting with the debt | ||
settlement provider, at any reasonable time, to ascertain the | ||
status of all the debtor's accounts with the debt settlement | ||
service provider, including, but not limited to, the amount of |
any fees paid by the debtor, amount held in trust (if | ||
applicable), settlement offers made and received on each of the | ||
debtor's accounts, and legally enforceable settlements reached | ||
with the debtor's creditors. A statement showing the total | ||
amount received and the total disbursements to each creditor | ||
shall be furnished by the debt settlement provider to any | ||
individual within 7 days after a request therefor by the said | ||
debtor. Each debt settlement provider shall issue a receipt for | ||
each payment made by the debtor at a debt settlement provider | ||
office. Each debt settlement provider shall prepare and retain | ||
in the file of each debtor a written analysis of the debtor's | ||
income and expenses to substantiate that the plan of payment is | ||
feasible and practical.
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Section 60. Examination of debt settlement provider; duty | ||
to disclose a post-license event. | ||
(a) The Secretary at any time, either in person or through | ||
an appointed representative, may examine the condition and | ||
affairs of a debt settlement provider. In connection with any | ||
examination, the Secretary may examine on oath any debt | ||
settlement provider and any director, officer, employee, | ||
customer, manager, partner, member, creditor, or stockholder | ||
of a debt settlement provider concerning the affairs and | ||
business of the debt settlement provider. The Secretary shall | ||
ascertain whether the debt settlement provider transacts its | ||
business in the manner prescribed by law and the rules issued |
thereunder. The debt settlement provider shall pay the cost of | ||
the examination as determined by the Secretary by | ||
administrative rule. Failure to pay the examination fee within | ||
30 days after receipt of demand from the Secretary may result | ||
in the suspension of the license until the fee is paid. The | ||
Secretary shall have the right to investigate and examine any | ||
person, whether licensed or not, who is engaged in the debt | ||
settlement service business. The Secretary shall have the power | ||
to subpoena the production of any books and records pertinent | ||
to any investigation. | ||
(b) Each debt settlement provider shall disclose promptly | ||
to the Secretary, but in no event more than 30 days after the | ||
occurrence of the event, any change in any of the criteria | ||
listed in Section 25 of this Act for the issuance of a license. | ||
Section 65. Trust funds; requirements and restrictions.
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(a) All funds received by a debt settlement provider or his | ||
agent from and for the purpose of paying bills,
invoices, or | ||
accounts of a debtor shall constitute trust funds owned by and | ||
belonging to the debtor from whom they were received. All such | ||
funds received by the debt settlement provider shall be | ||
separated from the funds of the debt settlement provider not | ||
later than the end of the business day following receipt by the | ||
debt settlement provider. All such funds shall be kept separate | ||
and apart at all times from funds belonging to the debt | ||
settlement provider or any of its officers, employees, or |
agents and may be used for no purpose other than paying bills, | ||
invoices, or accounts of the debtor. All such trust funds | ||
received at the main or branch offices of a debt settlement | ||
provider shall be deposited in a bank in an account in the name | ||
of the debt settlement provider-designated trust account, or by | ||
some other appropriate name indicating that the funds are not | ||
the funds of the debt settlement provider or its officers, | ||
employees, or agents, on or before the close of the business | ||
day following receipt.
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(b) Such funds are not subject to attachment, lien, levy of | ||
execution, or sequestration by order of court except by a | ||
debtor for whom a debt settlement provider is acting as an | ||
agent in paying bills, invoices, or accounts.
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(c) At least once every month, the debt settlement provider | ||
shall render an accounting to the debtor
that shall itemize the | ||
total amount received from the debtor, the total amount paid | ||
each creditor, the amount of charges deducted, and any amount | ||
held in reserve, if applicable, and the status of each of the | ||
debtors' enrolled accounts. A debt settlement provider shall, | ||
in addition, provide such an accounting to a debtor within 7 | ||
days after written demand, but not more than 3 times per | ||
6-month period.
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(d) Nothing in this Act requires the establishment of a | ||
trust account if no consumer funds other than earned settlement | ||
fees are held or controlled by a debt settlement provider. |
Section 75. Rules. The Secretary shall adopt and enforce | ||
all reasonable rules necessary or appropriate for the | ||
administration of this Act. The rulemaking shall be subject to | ||
the provisions of the Illinois Administrative Procedure Act. | ||
Section 80. Penalties.
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(a) Any person who operates as a debt settlement provider | ||
without a license
shall be guilty of a Class 4 felony.
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(b) Any contract of debt settlement service as defined in | ||
this Act made by an
unlicensed person shall be null and void | ||
and of no legal effect.
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(c) The Secretary may, after 10 days notice by registered | ||
mail to the debt settlement service provider at the address on | ||
the license or unlicensed entity engaging in the debt | ||
settlement service business, stating the contemplated action | ||
and in general the grounds therefore, fine such debt settlement | ||
service provider or unlicensed entity an amount not exceeding | ||
$10,000 per violation, and revoke or suspend any license issued | ||
hereunder if he or she finds that: | ||
(1) The debt settlement service provider has failed to | ||
comply with any provision of this Act or any order, | ||
decision, finding, rule, regulation or direction of the | ||
Secretary lawfully made pursuant to the authority of this | ||
Act; or | ||
(2) Any fact or condition exists which, if it had | ||
existed at the time of the original application for the |
license, clearly would have warranted the Secretary in | ||
refusing to issue the license. | ||
Section 83. Additional liability for unlicensed activity. | ||
Any person who, without the required license, engages in | ||
conduct requiring a license under this Act without the required | ||
license shall be liable to the Department in an amount equal to | ||
the greater of (1) $1,000 or (2) an amount equal to four times | ||
the amount of consumer debt enrolled. The Department shall | ||
cause any funds so recovered to be deposited in the Debt | ||
Settlement Consumer Protection Fund. | ||
Section 85. Injunction. To engage in debt settlement | ||
service, render financial service, or accept debtors' funds, as | ||
defined in this Act, without a valid license to do so, is | ||
hereby declared to be inimical to the public welfare and to | ||
constitute a public nuisance. The Secretary may, in the name of | ||
the people of the State of Illinois, through the Attorney | ||
General of the State of Illinois, file a complaint for an | ||
injunction in the circuit court to enjoin such person from | ||
engaging in that business. An injunction proceeding shall be in | ||
addition to, and not in lieu of, penalties and remedies | ||
otherwise provided in this Act. | ||
Section 90. Review. All final administrative decisions of | ||
the Secretary under this Act shall be subject to judicial |
review pursuant to the provisions of the Administrative Review | ||
Law, including all amendments, modifications, and adopted | ||
rules. | ||
Section 95. Cease and desist orders.
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(a) The Secretary may issue a cease and desist order to any | ||
debt settlement provider or other person doing
business without | ||
the required license when, in the opinion of the Secretary, the | ||
debt settlement provider or other person is violating or is | ||
about to violate any provision of the Act or any rule or | ||
condition imposed in writing by the Department.
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(b) The Secretary may issue a cease and desist order prior | ||
to a hearing.
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(c) The Secretary shall serve notice of his or her action, | ||
including a statement of the reasons for
his or her action | ||
either personally or by certified mail, return receipt | ||
requested. Service by mail shall be deemed completed if the | ||
notice is deposited in the U.S. Mail.
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(d) Within 10 days after service of the cease and desist | ||
order, the licensee or other person
may request, in writing, a | ||
hearing.
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(e) The Secretary shall schedule a hearing within 30 days | ||
after the request for a hearing
unless otherwise agreed to by | ||
the parties.
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(f) If it is determined that the Secretary had the | ||
authority to issue the cease and desist
order, then he or she |
may issue such orders as may be reasonably necessary to | ||
correct, eliminate, or remedy that conduct.
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(g) The powers vested in the Secretary by this Section are | ||
additional to any and all other
powers and remedies vested in | ||
the Secretary by law, and nothing in this Section shall be | ||
construed as requiring that the Secretary shall employ the | ||
power conferred in this Section instead of or as a condition | ||
precedent to the exercise of any other power or remedy vested | ||
in the Secretary.
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(h) The cost for the administrative hearing shall be set by | ||
rule.
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Section 100. Moneys received; Financial Institution Fund. | ||
All moneys received by the Division of Financial Institutions | ||
under this Act, except for moneys received for the Debt | ||
Settlement Consumer Protection Fund, shall be deposited in the | ||
Financial Institution Fund created under Section 6z-26 of the | ||
State Finance Act. | ||
Section 103. Debt Settlement Consumer Protection Fund.
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(a) A special income-earning fund is hereby created in the | ||
State Treasury, known as the Debt Settlement Consumer | ||
Protection Fund. This Fund is not subject to appropriation by | ||
the Illinois General Assembly. | ||
(b) All moneys paid into the Fund together with all | ||
accumulated, undistributed income thereon shall be held as a |
special Fund in the State Treasury. All interest earned on the | ||
Fund is non-distributable and shall be returned to the Fund, | ||
and shall be invested and re-invested in the Fund by the | ||
Treasurer or his or her designee. The Fund shall be used solely | ||
for the purpose of providing restitution to consumers who have | ||
suffered monetary loss arising out of a transaction regulated | ||
by this Act. | ||
(c) The Fund shall be applied only to restitution when | ||
restitution has been ordered by the Secretary. Restitution | ||
shall not exceed the amount actually lost by the consumer. The | ||
Fund shall not be used for the payment of any attorney or other | ||
fees. | ||
(d) The Fund shall be subrogated to the amount of the | ||
restitution, and the Secretary shall request the Attorney | ||
General to engage in all reasonable collection steps to collect | ||
restitution from the party responsible for the loss and | ||
reimburse the Fund. | ||
(e) Notwithstanding any other provisions of this Section, | ||
the payment of restitution from the Fund shall be a matter of | ||
grace and not right, and no consumer shall have any vested | ||
rights in the Fund as a beneficiary or otherwise. Before | ||
seeking restitution from the Fund, the consumer or beneficiary | ||
seeking payment of restitution shall apply for restitution on a | ||
form provided by the Secretary. The form shall include any | ||
information the Secretary may reasonably require in order to | ||
determine that restitution is appropriate. All documentation |
required by the Secretary, including the form, is subject to | ||
audit. Distributions from the Fund shall be made solely at the | ||
discretion of the Secretary, except that no payments or | ||
distributions may be made under any circumstance if the Fund is | ||
depleted. | ||
(f) All deposits to this Fund shall be made pursuant to | ||
Section 83 of this Act. | ||
(g) Notwithstanding any other law to the contrary, the Fund | ||
is not subject to administrative charges or charge-backs that | ||
would in any way transfer moneys from the Fund into any other | ||
fund of the State. | ||
Section 105. Advertising and marketing practices. | ||
(a) A debt settlement provider shall not represent, | ||
expressly or by implication, any results or outcomes of its | ||
debt settlement services in any advertising, marketing, or | ||
other communication to consumers unless the debt settlement | ||
provider possesses substantiation for such representation at | ||
the time such representation is made.
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(b) A debt settlement provider shall not, expressly or by | ||
implication, make any unfair or deceptive representations, or | ||
any omissions of material facts, in any of its advertising or | ||
marketing communications concerning debt settlement services.
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(c) All advertising and marketing communications | ||
concerning debt settlement services shall disclose the | ||
following material information clearly and conspicuously:
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"Debt settlement services are not appropriate for | ||
everyone. Failure to pay your monthly bills in a timely | ||
manner will result in increased balances and will harm your | ||
credit rating. Not all creditors will agree to reduce | ||
principal balance, and they may pursue collection, | ||
including lawsuits." | ||
Section 110. Individualized financial analysis. | ||
(a) Prior to entering into a written contract with a | ||
consumer, a debt settlement provider shall prepare and provide | ||
to the consumer in writing and retain a copy of:
| ||
(1) an individualized financial analysis, including | ||
the individual's income, expenses, and debts;
and | ||
(2) a statement containing a good faith estimate of the | ||
length of time it will take to complete the debt settlement | ||
program, the total amount of debt owed to each creditor | ||
included in the debt settlement program, the total savings | ||
estimated to be necessary to complete the debt settlement | ||
program, and the monthly targeted savings amount estimated | ||
to be necessary to complete the debt settlement program.
| ||
(b) A debt settlement provider shall not enter into a | ||
written contract with a consumer unless it makes written | ||
determinations, supported by the financial analysis, that: | ||
(1) the consumer can reasonably meet the requirements | ||
of the proposed debt settlement program, including the fees | ||
and the periodic savings amounts set forth in the savings |
goals; and | ||
(2) the debt settlement program is suitable for the | ||
consumer at the time the contract is to be signed.
| ||
Section 115. Required pre-sale consumer disclosures and | ||
warnings. | ||
(a) Before the consumer signs a contract, the debt | ||
settlement provider shall provide an oral and written notice to | ||
the consumer that clearly and conspicuously discloses all of | ||
the following:
| ||
(1) Debt settlement services may not be suitable for | ||
all consumers. | ||
(2) Using a debt settlement service likely will harm | ||
the consumer's credit history and credit score.
| ||
(3) Using a debt settlement service does not stop | ||
creditor collection activity, including creditor lawsuits | ||
and garnishments. | ||
(4) Not all creditors will accept a reduction in the | ||
balance, interest rate, or fees a consumer owes.
| ||
(5) The consumer should inquire about other means of | ||
dealing with debt, including, but not limited to, nonprofit | ||
credit counseling and bankruptcy.
| ||
(6) The consumer remains obligated to make periodic or | ||
scheduled payments to creditors while participating in a | ||
debt settlement plan, and that the debt settlement provider | ||
will not make any periodic or scheduled payments to |
creditors on behalf of the consumer.
| ||
(7) The failure to make periodic or scheduled payments | ||
to a creditor is likely to:
| ||
(A) harm the consumer's credit history, credit | ||
rating, or credit score;
| ||
(B) lead the creditor to increase lawful | ||
collection activity, including litigation, garnishment | ||
of the consumer's wages, and judgment liens on the | ||
consumer's property; and
| ||
(C) lead to the imposition by the creditor of | ||
interest charges, late fees, and other penalty fees, | ||
increasing the principal amount of the debt. | ||
(8) The amount of time estimated to be necessary to | ||
achieve the represented results.
| ||
(9) The estimated amount of money or the percentage of | ||
debt the consumer must accumulate before a settlement offer | ||
will be made to each of the consumer's creditors.
| ||
(b) The consumer shall sign and date an acknowledgment form | ||
entitled "Consumer Notice and Rights Form" that states: "I, the | ||
debtor, have received from the debt settlement provider a copy | ||
of the form entitled "Consumer Notice and Rights Form"." The | ||
debt settlement provider or its representative shall also sign | ||
and date the acknowledgment form, which includes the name and | ||
address of the debt settlement services provider. The | ||
acknowledgment form shall be in duplicate and incorporated into | ||
the "Consumer Notice and Rights Form". The original |
acknowledgment form shall be retained by the debt settlement | ||
provider, and the duplicate copy shall be retained within the | ||
form by the consumer.
| ||
If the acknowledgment form is in electronic form, then it | ||
shall contain the consumer disclosures required by Section | ||
101(c) of the federal Electronic Signatures in Global and | ||
National Commerce Act. | ||
(c) The requirements of this Section are satisfied if the | ||
provider provides the following warning verbatim, both orally | ||
and in writing, with the caption "CONSUMER NOTICE AND RIGHTS | ||
FORM" in at least 28-point font and the remaining portion in at | ||
least 14-point font, to a consumer before the consumer signs a | ||
contract for the debt settlement provider's services: | ||
"CONSUMER NOTICE AND RIGHTS FORM | ||
CAUTION | ||
We CANNOT GUARANTEE that you successfully will reduce or | ||
eliminate your debt. | ||
If you stop paying your creditors, there is a strong | ||
likelihood some or all of the following may happen: | ||
- CREDITORS MAY STILL CONTACT YOU AND TRY TO COLLECT. | ||
- CREDITORS MAY STILL SUE YOU FOR THE MONEY YOU OWE.
| ||
- YOUR WAGES OR BANK ACCOUNT MAY STILL BE GARNISHED.
| ||
- YOUR CREDIT RATING AND CREDIT SCORE LIKELY WILL BE | ||
HARMED. |
- NOT ALL CREDITORS WILL AGREE TO ACCEPT A BALANCE | ||
REDUCTION. | ||
- YOU SHOULD CONSIDER ALL YOUR OPTIONS FOR ADDRESSING YOUR | ||
DEBT, SUCH AS CREDIT COUNSELING AND BANKRUPTCY FILING.
| ||
- THE AMOUNT OF MONEY YOU OWE MAY INCREASE DUE TO CREDITOR | ||
IMPOSITION OF INTEREST CHARGES, LATE FEES, AND OTHER PENALTY | ||
FEES.
| ||
- EVEN IF WE DO SETTLE YOUR DEBT, YOU MAY STILL BE REQUIRED | ||
TO PAY TAXES ON THE AMOUNT FORGIVEN. | ||
YOUR RIGHT TO CANCEL | ||
If you sign a contract with a Debt Settlement Provider, you | ||
have the right to cancel at any time and receive a full refund | ||
of all unearned fees you have paid to the provider and all | ||
funds placed in your settlement fund that have not been paid to | ||
any creditors. | ||
IF YOU ARE DISSATISFIED
| ||
OR YOU HAVE QUESTIONS | ||
If you are dissatisfied with a debt settlement provider or | ||
have any questions, please bring it to the attention of the | ||
Illinois Attorney General's Office and the Department of | ||
Financial and Professional Regulation. | ||
Attorney General Toll-Free Numbers:
| ||
Carbondale (800) 243-0607 | ||
Springfield (800) 243-0618
|
Chicago (800) 386-5438 | ||
Website for Department of Financial and Professional | ||
Regulation: www.idfpr.com | ||
I, the debtor, have received from the debt settlement provider | ||
a copy of the form entitled Consumer Notice and Rights Form.". | ||
Section 120. Debt settlement contract. | ||
(a) A debt settlement provider shall not provide debt | ||
settlement service to a consumer without a written contract | ||
signed and dated by both the consumer and the debt settlement | ||
provider.
| ||
(b) Any contract for the provision of debt settlement | ||
service entered into in violation of the provisions of this | ||
Section is void.
| ||
(c) A contract between a debt settlement provider and a | ||
consumer for the provision of debt settlement service shall | ||
disclose all of the following clearly and conspicuously:
| ||
(1) The name and address of the consumer. | ||
(2) The date of execution of the contract.
| ||
(3) The legal name of the debt settlement provider, | ||
including any other business names used by the debt | ||
settlement provider.
| ||
(4) The corporate address and regular business | ||
address, including a street address, of the debt settlement | ||
provider.
| ||
(5) The telephone number at which the consumer may |
speak with a representative of the debt settlement provider | ||
during normal business hours.
| ||
(6) A complete list of the consumer's accounts, debts, | ||
and obligations to be included in the provision of debt | ||
settlement service, including the name of each creditor and | ||
principal amount of each debt.
| ||
(7) A description of the services to be provided by the | ||
debt settlement provider, including the expected time | ||
frame for settlement for each account, debt, or obligation | ||
included in item (6) of this subsection (c). | ||
(8) An itemized list of all fees to be paid by the | ||
consumer to the debt settlement provider, and the date, | ||
approximate date, or circumstances under which each fee | ||
will become due.
| ||
(9) A good faith estimate of the total amount of all | ||
fees and compensation, not to exceed the amounts specified | ||
in Section 125 of this Act, to be collected by the debt | ||
settlement provider from the consumer for the provision of | ||
debt settlement service contemplated by the contract.
| ||
(10) A statement of the proposed savings goals for the | ||
consumer, stating the amount to be saved per month or other | ||
period, time period over which savings goal extends, and | ||
the total amount of the savings expected to be paid by the | ||
consumer pursuant to the terms of the contract.
| ||
(11) The amount of money or the percentage of debt the | ||
consumer must accumulate before a settlement offer will be |
made to each of the consumer's creditors.
| ||
(12) The written individualized financial analysis | ||
required by Section 110 of this Act.
| ||
(13) The contents of the "Consumer Notice and Rights | ||
Form" provided in Section 115.
| ||
(14) A written notice to the consumer that the consumer | ||
may cancel the contract at any time until after the debt | ||
settlement provider has fully performed each service the | ||
debt settlement provider contracted to perform or | ||
represented he or she would perform, and upon that event:
| ||
(A) the consumer shall be entitled to a full refund | ||
of all unearned fees and compensation paid by the | ||
consumer to the debt settlement provider, and a full | ||
refund of all funds provided by the consumer to the | ||
debt settlement provider for a consumer settlement | ||
account, except for funds actually paid to a creditor | ||
on behalf of the consumer, under the terms of the | ||
contract for debt settlement service; and
| ||
(B) all powers of attorney granted to the debt | ||
settlement provider by the consumer shall be | ||
considered revoked and voided.
| ||
(15) A form the consumer may use to cancel the contract | ||
pursuant to the provisions of Section 135 of this Act. The | ||
form shall include the name and mailing address of the debt | ||
settlement provider and shall disclose clearly and | ||
conspicuously how the consumer can cancel the contract, |
including applicable addresses, telephone numbers, | ||
facsimile numbers, and electronic mail addresses the | ||
consumer can use to cancel the contract.
| ||
(d) If a debt settlement provider communicates with a | ||
consumer primarily in a language other than English, then the | ||
debt settlement provider shall furnish to the consumer a | ||
translation of all the disclosures and documents required by | ||
this Act in that other language.
| ||
Section 125. Fees. | ||
(a) A debt settlement provider shall not charge fees of any | ||
type or receive compensation from a consumer in a type, amount, | ||
or timing other than fees or compensation permitted in this | ||
Section.
| ||
(b) A debt settlement provider shall not charge or receive | ||
from a consumer any enrollment fee, set up fee, up front fee of | ||
any kind, or any maintenance fee, except for a one-time | ||
enrollment fee of no more than $50.
| ||
(c) A debt settlement provider may charge a settlement fee, | ||
which shall not exceed an amount greater than 15% of the | ||
savings. If the amount paid by the debt settlement provider to | ||
the creditor or negotiated by the debt settlement provider and | ||
paid by the consumer to the creditor pursuant to a settlement | ||
negotiated by the debt settlement provider on behalf of the | ||
consumer as full and complete satisfaction of the creditor's | ||
claim with regard to that debt is greater than the principal |
amount of the debt, then the debt settlement provider shall not | ||
be entitled to any settlement fee.
| ||
(d) A debt settlement provider shall not collect any | ||
settlement fee from a consumer until a creditor enters into a | ||
legally enforceable agreement to accept funds in a specific | ||
dollar amount as full and complete satisfaction of the | ||
creditor's claim with regard to that debt and those funds are | ||
provided by the debt settlement provider on behalf of the | ||
consumer or are provided directly by the consumer to the | ||
creditor pursuant to a settlement negotiated by the debt | ||
settlement provider
| ||
Section 130. Consumer settlement accounts and monthly | ||
accounting. | ||
(a) A debt settlement provider who receives funds from a | ||
consumer shall hold all funds received for a consumer | ||
settlement account in a properly designated trust account in a | ||
federally insured depository institution. The funds shall | ||
remain the property of the consumer until the debt settlement | ||
provider disburses the funds to a creditor on behalf of the | ||
consumer as full or partial satisfaction of the consumer's debt | ||
to the creditor or the creditor's claim against the consumer.
| ||
Any interest earned on such account shall be credited to the | ||
consumer. | ||
(b) A debt settlement provider shall not be named on a | ||
consumer's bank account, take a power of attorney in a |
consumer's bank account, create a demand draft on a consumer's | ||
bank account, or exercise any control over any bank account | ||
held by or on behalf of the consumer.
| ||
(c) A debt settlement provider shall, no less than monthly, | ||
provide each consumer with which it has a contract for the | ||
provision of debt settlement service a statement of account | ||
balances, fees paid, settlements completed, and remaining | ||
debts.
| ||
Section 135. Cancellation of contract and right to fee and | ||
settlement fund refunds. | ||
(a) A consumer may cancel a contract with a debt settlement | ||
provider at any time before the debt settlement provider has | ||
fully performed each service the debt settlement provider | ||
contracted to perform or represented it would perform.
| ||
(b) If a consumer cancels a contract with a debt settlement | ||
provider, or at any time upon a material violation of this Act | ||
on the part of the debt settlement provider, then the debt | ||
settlement provider shall refund all fees and compensation, | ||
with the exception of the application fee and any earned | ||
settlement fee, as well as all funds paid by the consumer to | ||
the debt settlement provider that have accumulated in a | ||
consumer settlement account and that the debt settlement | ||
provider has not disbursed to creditors. Upon cancellation, all | ||
powers of attorney and direct debit authorizations granted to | ||
the debt settlement provider by the consumer shall be |
considered revoked and voided.
| ||
(c) A debt settlement provider shall make any refund | ||
required under this Section within 5 business days after the | ||
notice of cancellation, and shall include with the refund a | ||
full statement of account showing fees received, fees refunded, | ||
savings held, payments to creditors, settlement fees earned if | ||
any, and savings refunded.
| ||
(d) Upon the cancellation of a contract under this Section, | ||
the debt settlement provider shall provide timely notice of the | ||
cancellation of the contract to each of the creditors with whom | ||
the debt settlement provider has had any prior communication on | ||
behalf of the consumer in connection with the provision of any | ||
debt settlement service.
| ||
Section 140. Obligation of good faith. A debt settlement | ||
provider shall act in good faith in all matters under this Act. | ||
Section 145. Prohibited practices. A debt settlement | ||
provider shall not do any of the following:
| ||
(1) Charge or collect from a consumer any fee not | ||
permitted by, in an amount in excess of the maximum amount | ||
permitted by, or at a time earlier than permitted by | ||
Section 125 of this Act.
| ||
(2) Advise or represent, expressly or by implication, | ||
that consumers should stop making payments to their | ||
creditors.
|
(3) Advise or represent, expressly or by implication, | ||
that consumers should stop communicating with their | ||
creditors. | ||
(4) Change the mailing address on any of a consumer's | ||
creditor's statements.
| ||
(5) Make loans or offer credit or solicit or accept any | ||
note, mortgage, or negotiable instrument other than a check | ||
signed by the consumer and dated no later than the date of | ||
signature.
| ||
(6) Take any confession of judgment or power of | ||
attorney to confess judgment against the consumer or appear | ||
as the consumer or on behalf of the consumer in any | ||
judicial proceedings.
| ||
(7) Take any release or waiver of any obligation to be | ||
performed on the part of the debt settlement provider or | ||
any right of the consumer.
| ||
(8) Advertise, display, distribute, broadcast, or | ||
televise services or permit services to be displayed, | ||
advertised, distributed, broadcasted, or televised, in any | ||
manner whatsoever, that contains any false, misleading, or | ||
deceptive statements or representations with regard to any | ||
matter, including services to be performed, the fees to be | ||
charged by the debt settlement provider, or the effect | ||
those services will have on a consumer's credit rating or | ||
on creditor collection efforts.
| ||
(9) Receive any cash, fee, gift, bonus, premium, |
reward, or other compensation from any person other than | ||
the consumer explicitly for the provision of debt | ||
settlement service to that consumer.
| ||
(10) Offer or provide gifts or bonuses to consumers for | ||
signing a debt settlement service contract or for referring | ||
another potential customer or customer.
| ||
(11) Disclose to anyone the name or any personal | ||
information of a consumer for whom the debt settlement | ||
provider has provided or is providing debt settlement | ||
service other than to a consumer's own creditors or the | ||
debt settlement provider's agents, affiliates, or | ||
contractors for the purpose of providing debt settlement | ||
service without the prior consent of the consumer.
| ||
(12) Enter into a contract with a consumer without | ||
first providing the disclosures and financial analysis and | ||
making the determinations required by this Section.
| ||
(13) Misrepresent any material fact, make a material | ||
omission, or make a false promise directed to one or more | ||
consumers in connection with the solicitation, offering, | ||
contracting, or provision of debt settlement service.
| ||
(14) Violate the provisions of applicable do not call | ||
statutes. | ||
(15) Purchase debts or engage in the practice or | ||
business of debt collection.
| ||
(16) Include in a debt settlement agreement any secured | ||
debt.
|
(17) Employ an unfair, unconscionable, or deceptive | ||
act or practice, including the knowing omission of any | ||
material information.
| ||
(18) Engage in any practice that prohibits or limits | ||
the consumer or any creditor from communication directly | ||
with one another. | ||
(19) Represent or imply to a person participating in or | ||
considering debt settlement that purchase of any ancillary | ||
goods or services is required. | ||
Section 150. Noncompliance with the Act. | ||
(a) Any waiver by any consumer of any protection provided | ||
by or any right of the consumer under this Act:
| ||
(1) shall be treated as void; and
| ||
(2) may not be enforced by any federal or State court | ||
or any other person.
| ||
(b) Any attempt by any person to obtain a waiver from any | ||
consumer of any protection provided by or any right or | ||
protection of the consumer or any obligation or requirement of | ||
the debt settlement provider under this Act shall be a | ||
violation of this Act.
| ||
(c) Any contract for debt settlement service that does not | ||
comply with the applicable provisions of this Act:
| ||
(1) shall be treated as void;
and | ||
(2) may not be enforced by any federal or State court | ||
or any other person; and
|
Upon notice of a void contract, a refund by the debt | ||
settlement provider to the consumer shall be made as if the | ||
contract had been cancelled as provided in Section 135 of this | ||
Act.
| ||
Section 155. Civil remedies. | ||
(a) A violation of Section 105, 110, 115, 120, 125, 130, | ||
135, 140, 145, or 150 of this Act constitutes an unlawful | ||
practice under the Consumer Fraud and Deceptive Business | ||
Practices Act. All remedies, penalties, and authority granted | ||
to the Attorney General or State's Attorney by the Consumer | ||
Fraud and Deceptive Business Practices Act shall be available | ||
to him or her for the enforcement of this Act. | ||
(b) A consumer who suffers loss by reason of a violation of | ||
Section 105, 110, 115, 120, 125, 130, 135, 140, 145, or 150 of | ||
this Act may bring a civil action in accordance with the | ||
Consumer Fraud and Deceptive Business Practices Act to enforce | ||
that provision. All remedies and rights granted to a consumer | ||
by the Consumer Fraud and Deceptive Business Practices Act | ||
shall be available to the consumer bringing such an action. The | ||
remedies and rights provided for in this Act are not exclusive, | ||
but cumulative, and all other applicable claims are | ||
specifically preserved. | ||
Section 900. The State Finance Act is amended by changing | ||
Section 6z-26 and by adding Sections 5.755 and 5.756 as |
follows: | ||
(30 ILCS 105/5.755 new) | ||
Sec. 5.755. The Debt Management Service Consumer | ||
Protection Fund. | ||
(30 ILCS 105/5.756 new) | ||
Sec. 5.756. The Debt Settlement Consumer Protection Fund.
| ||
(30 ILCS 105/6z-26)
| ||
Sec. 6z-26. The Financial Institution Fund. All moneys | ||
received by the
Department of Financial and Professional | ||
Regulation under the Safety Deposit License Act, the
Foreign | ||
Exchange License Act, the Pawners Societies Act, the Sale of | ||
Exchange
Act, the Currency Exchange Act, the Sales Finance | ||
Agency Act, the Debt Management Service Act, the Consumer | ||
Installment Loan Act, the Illinois Development Credit
| ||
Corporation Act, the Title Insurance Act, the Debt Settlement | ||
Consumer Protection Act, the Debt Management Service Consumer | ||
Protection Fund, and any other Act administered by the | ||
Department of Financial and Professional Regulation as the | ||
successor of the
Department of Financial Institutions now or in | ||
the future (unless an Act
specifically provides otherwise) | ||
shall be deposited in the Financial
Institution Fund | ||
(hereinafter "Fund"), a special fund that is hereby created in
| ||
the State Treasury.
|
Moneys in the Fund shall be used by the Department, subject | ||
to appropriation,
for expenses incurred in administering the | ||
above named and referenced Acts.
| ||
The Comptroller and the State Treasurer shall transfer from | ||
the General
Revenue Fund to the Fund any monies received by the | ||
Department after June 30,
1993, under any of the above named | ||
and referenced Acts that have been deposited
in the General | ||
Revenue Fund.
| ||
As soon as possible after the end of each calendar year, | ||
the Comptroller
shall compare the balance in the Fund at the | ||
end of the calendar year with the
amount appropriated from the | ||
Fund for the fiscal year beginning on July 1 of
that calendar | ||
year. If the balance in the Fund exceeds the amount
| ||
appropriated, the Comptroller and the State Treasurer shall | ||
transfer from the
Fund to the General Revenue Fund an amount | ||
equal to the difference between the
balance in the Fund and the | ||
amount appropriated.
| ||
Nothing in this Section shall be construed to prohibit | ||
appropriations from
the General Revenue Fund for expenses | ||
incurred in the administration of the
above named and | ||
referenced Acts.
| ||
Moneys in the Fund may be transferred to the Professions | ||
Indirect Cost Fund, as authorized under Section 2105-300 of the | ||
Department of Professional Regulation Law of the Civil | ||
Administrative Code of Illinois.
| ||
(Source: P.A. 94-91, eff. 7-1-05.)
|
Section 905. The Debt Management Service Act is amended by | ||
changing Sections 2, 4, 5, 6, 7, 8.5, 9, 10, 11, 11.5, 12, | ||
12.1, 13, 14, 15, 16, 17, 18, 20, and 20.5 and by adding | ||
Sections 1.5, 16.5, and 16.6 as follows: | ||
(205 ILCS 665/1.5 new) | ||
Sec. 1.5. Purpose and construction. The purpose of this Act | ||
is to protect consumers who enter into agreements with debt | ||
management service providers and to regulate debt management | ||
service providers. This Act shall be construed as a consumer | ||
protection law for all purposes. This Act shall be liberally | ||
construed to effectuate its purpose.
| ||
(205 ILCS 665/2) (from Ch. 17, par. 5302)
| ||
Sec. 2. Definitions. As used in this Act:
| ||
"Credit counselor" means an individual, corporation, or | ||
other entity that is not a debt management service that | ||
provides (1) guidance, educational programs, or advice for the | ||
purpose of addressing budgeting, personal finance, financial | ||
literacy, saving and spending practices, or the sound use of | ||
consumer credit; or (2) assistance or offers to assist | ||
individuals and families with financial problems by providing | ||
counseling; or (3) a combination of the activities described in | ||
items (1) and (2) of this definition. | ||
"Debt management
service" means
the planning and |
management of the financial affairs of
a debtor for a fee and | ||
the receiving
of money
from the debtor for the purpose
of | ||
distributing it , directly or indirectly, to the debtor's | ||
creditors in payment or partial payment of
the debtor's | ||
obligations or soliciting financial contributions from | ||
creditors.
The business of debt management is conducted in this | ||
State if the debt
management business, its employees, or its | ||
agents are located in this State or
if the
debt management | ||
business solicits or contracts with debtors located in this
| ||
State. "Debt management service" does not include "debt | ||
settlement service" as defined in the Debt Settlement Consumer | ||
Protection Act.
| ||
This term shall not include the following when engaged in
| ||
the regular course of their respective businesses and | ||
professions:
| ||
(a) Attorneys at law licensed, or otherwise authorized | ||
to practice, in Illinois who are engaged in the practice of | ||
law .
| ||
(b) Banks, operating subsidiaries of banks, affiliates | ||
of banks, fiduciaries, credit unions, savings and loan | ||
associations,
and savings banks as duly
authorized and | ||
admitted to transact business in the State of Illinois and
| ||
performing credit and financial adjusting service in the | ||
regular course of
their principal business.
| ||
(c) Title insurers , title agents, independent | ||
escrowees, and abstract companies, while doing an escrow
|
business.
| ||
(d) Judicial officers or others acting pursuant to | ||
court
order.
| ||
(e) Employers for their employees, except that no | ||
employer shall retain the services of an outside debt | ||
management service to perform this service unless the debt | ||
management service is licensed pursuant to this Act. | ||
Employers for their employees .
| ||
(f) Bill payment services, as defined in the | ||
Transmitters of Money Act.
| ||
(g) Credit counselors, only when providing services | ||
described in the definition of credit counselor in this | ||
Section. | ||
"Director" means Director of Financial Institutions.
| ||
"Debtor" means the person or persons for whom the debt
| ||
management service is performed.
| ||
"Person" means an individual, firm, partnership,
| ||
association, limited liability company,
corporation, or | ||
not-for-profit corporation.
| ||
"Licensee" means a person licensed under this Act.
| ||
"Secretary" means the Secretary of Financial and | ||
Professional Regulation. | ||
(Source: P.A. 95-331, eff. 8-21-07.)
| ||
(205 ILCS 665/4) (from Ch. 17, par. 5304)
| ||
Sec. 4. Application for license. Application for a license |
to engage in the debt
management
service
business in this State | ||
shall be made to the Secretary Director and shall
be in | ||
writing, under oath, and in the form prescribed by the | ||
Secretary Director .
| ||
Each applicant, at the time of making such application, | ||
shall pay to the
Secretary Director the sum of $30.00 as a fee | ||
for investigation of the applicant, and
the additional sum of | ||
$100.00 as a license fee.
| ||
Every applicant shall submit to the Secretary Director , at | ||
the time of the
application for a license, a bond to be | ||
approved by the Secretary Director in which
the applicant shall | ||
be the obligor, in the sum of $25,000 or
such additional amount | ||
as required by the Secretary Director based on the amount of
| ||
disbursements made by the
licensee in the
previous year, and in | ||
which an
insurance company, which is duly authorized by the | ||
State of Illinois, to
transact the business of fidelity and | ||
surety insurance shall be a surety.
| ||
The bond shall run to the Secretary Director for the use of
| ||
the Department or
of any person or persons who may have a cause | ||
of action against the obligor
in said bond arising out
of any | ||
violation of this
Act or rules by a license.
Such
bond
shall be | ||
conditioned that the obligor will faithfully conform to
and | ||
abide
by the provisions of this Act and of all rules, | ||
regulations and directions
lawfully made by the Secretary | ||
Director and will pay to the Secretary Director or to
any | ||
person or persons any and all money that may become due or |
owing
to the State or to such person or persons, from said | ||
obligor under and by
virtue of the provisions of this Act.
| ||
(Source: P.A. 92-400, eff. 1-1-02.)
| ||
(205 ILCS 665/5) (from Ch. 17, par. 5305)
| ||
Sec. 5. Qualifications for license. Upon the filing of the | ||
application and
the approval of the bond and the payment of the | ||
specified fees, the Secretary may Director
shall issue a | ||
license if he finds:
| ||
(1) That the financial responsibility, experience, | ||
character and general
fitness of the applicant, the managers | ||
thereof, if the applicant is a limited
liability company, the | ||
partners thereof, if the applicant is a partnership, and
of the | ||
officers and directors thereof, if the applicant is a | ||
corporation or a
not-for-profit corporation, are such as to | ||
command the confidence of the
community and to warrant belief | ||
that the business will be operated fairly,
honestly and | ||
efficiently within the purposes of this Act, and
| ||
(2) That the applicant, if an individual, the managers | ||
thereof, if the
applicant is a limited liability company, the | ||
partners thereof, if the
applicant is a partnership, and the | ||
officers and directors thereof, if the
applicant is a | ||
corporation, have not been convicted of a felony or a
| ||
misdemeanor involving dishonesty or untrustworthiness, and
| ||
(3) That the person or persons have not had a record of | ||
having defaulted in
the payment of money collected for others, |
including the discharge of such
debts through bankruptcy | ||
proceedings, and
| ||
(4) The applicant, or any officers, directors, partners or | ||
managers, have
not previously violated any provision of this | ||
Act or any rule lawfully made
by the Secretary Director , and
| ||
(5) The applicant has not made any false statement or | ||
representation to the
Secretary Director in applying for a | ||
license hereunder.
| ||
The Secretary Director shall deliver a license to the | ||
applicant to engage in the debt
management service business in | ||
accordance with the provisions of this Act at
the location | ||
specified in the said application, which license shall remain | ||
in
full force and effect until it is surrendered by the | ||
licensee or revoked by the
Secretary Director as herein | ||
provided; provided, however, that each license shall expire
by | ||
the terms thereof on January 1 next following the issuance | ||
thereof unless
the same be renewed as hereinafter provided. A | ||
license, however, may not be
surrendered without the approval | ||
of the Secretary Director .
| ||
More than one license may be issued to the same person for | ||
separate
places of business, but separate applications shall be | ||
made for each location conducting business with Illinois | ||
residents place
of business .
| ||
(Source: P.A. 90-545, eff. 1-1-98.)
| ||
(205 ILCS 665/6) (from Ch. 17, par. 5306)
|
Sec. 6. Renewal of license. Each debt management service | ||
provider licensee under the provisions of this Act may
make | ||
application to the
Secretary Director for renewal of its | ||
license, which
application for renewal shall be on the form | ||
prescribed by the Secretary Director and
shall be accompanied | ||
by a fee of $100.00 together with a bond or other
surety as | ||
required, in a minimum amount of $25,000 or such an amount as
| ||
required by the Secretary Director based on the amount of | ||
disbursements made by the
licensee in the previous year. The | ||
application must be received by the
Department no later than | ||
December 1 of the year preceding the year for which
the | ||
application applies.
| ||
(Source: P.A. 92-400, eff. 1-1-02.)
| ||
(205 ILCS 665/7) (from Ch. 17, par. 5307)
| ||
Sec. 7. License, display and location. Each license issued | ||
shall be kept conspicuously posted in the
place of business of | ||
the debt management service provider licensee . The business
| ||
location may be changed by any licensee upon
10 days prior | ||
written notice to the Secretary Director .
A license must | ||
operate under the name as stated in its original
application.
| ||
(Source: P.A. 90-545, eff. 1-1-98.)
| ||
(205 ILCS 665/8.5)
| ||
Sec. 8.5. Temporary location. The Secretary Director may | ||
approve a temporary
additional business location for the |
purpose of allowing a debt management service provider licensee | ||
to conduct
business outside the licensed location.
| ||
(Source: P.A. 90-545, eff. 1-1-98.)
| ||
(205 ILCS 665/9) (from Ch. 17, par. 5309)
| ||
Sec. 9. Denial of license. Any application for a license | ||
shall be approved or denied
within 60 days of the filing of a | ||
completed an application with the Secretary Director .
| ||
(Source: P.A. 90-545, eff. 1-1-98.)
| ||
(205 ILCS 665/10) (from Ch. 17, par. 5310)
| ||
Sec. 10. Revocation , or suspension , or refusal to renew of | ||
license.
| ||
(a) The Secretary Director may revoke or suspend or refuse | ||
to renew any license if he finds that:
| ||
(1) any licensee has failed to pay the annual license | ||
fee, or to maintain
in
effect the bond required under the | ||
provisions of this Act;
| ||
(2) the licensee
has violated any
provisions
of this | ||
Act or any rule, lawfully made by the Secretary Director | ||
within
the authority of this Act;
| ||
(3) any fact or condition exists
which, if it had | ||
existed at the time of the original application for a
| ||
license, would have warranted the Secretary Director in | ||
refusing its issuance; or
| ||
(4) any applicant has made any false
statement or |
representation to the Secretary Director in applying for a | ||
license
hereunder.
| ||
(b) In every case in which a license is suspended or | ||
revoked or an
application for a license or renewal of a license | ||
is denied, the Secretary Director shall
serve notice of his | ||
action, including a statement of the reasons for his
actions, | ||
either personally or by certified mail, return receipt | ||
requested.
Service by mail shall be deemed completed if the | ||
notice is deposited in the
U.S. Mail.
| ||
(c) In the case of a denial of an application or renewal of | ||
a license,
the applicant or licensee may request in writing, | ||
within
30 days after the date of service, a hearing. In the | ||
case of a denial of a
renewal of a license, the license shall | ||
be deemed to continue in force until 30
days after the service | ||
of the notice of denial, or if a hearing is requested
during | ||
that period, until a final administrative order is entered.
| ||
(d) An order of revocation or suspension of a license shall | ||
take effect upon
service of the order unless the licensee | ||
requests, in writing, within 10 days
after the date of service, | ||
a hearing. In the event a hearing is requested, the
order shall | ||
be stayed until a final administrative order is entered.
| ||
(e) If the licensee requests a hearing, the Secretary | ||
Director shall schedule either a status date or a the
hearing | ||
within 30 days after the request for a hearing unless otherwise | ||
agreed
to by the parties.
| ||
(f) The hearing shall be held at the time and place |
designated by the
Secretary Director . The Secretary Director | ||
and any administrative law judge designated by him have
the | ||
power to administer oaths and affirmations, subpoena witnesses | ||
and compel
their attendance, take evidence, and require the | ||
production of books, papers,
correspondence, and other records | ||
or information that he considers relevant or
material to the | ||
injury.
| ||
(g) The costs for the administrative hearing shall be set | ||
by rule and shall be borne by the respondent .
| ||
(h) The Director shall have the authority to prescribe | ||
rules for the
administration of this Section.
| ||
(Source: P.A. 90-545, eff. 1-1-98.)
| ||
(205 ILCS 665/11) (from Ch. 17, par. 5311)
| ||
Sec. 11. Contracts, books, records and contract | ||
cancellation. Each debt management service provider licensee | ||
shall furnish to the Secretary Director , when requested, a copy | ||
of
the contract entered into between the debt management | ||
service provider licensee and the debtor. The
debt management | ||
service provider licensee shall furnish the debtor with a copy | ||
of the written contract, at the
time of execution,
which shall | ||
set forth the charges, if any, agreed upon for the services of
| ||
the debt management service provider licensee .
| ||
Each debt management service provider licensee shall | ||
maintain records and accounts which will
enable any debtor | ||
contracting with the debt management service provider |
licensee , at any
reasonable
time, to ascertain the amounts paid | ||
to creditors of the debtor. A
statement showing the total | ||
amount received and the total disbursements to
each creditor | ||
shall be furnished by the debt management service provider | ||
licensee to any individual within
seven days of a request | ||
therefor by the said debtor. Each
debt management service | ||
provider licensee shall issue a receipt for each payment made | ||
by the
debtor at a debt management service provider's | ||
licensee's office. Each debt management service provider | ||
licensee
shall prepare and
retain in the
file of each debtor a | ||
written analysis of debtor's income and expenses to
| ||
substantiate that the plan of payment is feasible and | ||
practical.
| ||
(Source: P.A. 90-545, eff. 1-1-98.)
| ||
(205 ILCS 665/11.5)
| ||
Sec. 11.5. Examination of debt management service provider | ||
licensee . The Secretary Director at any time, either in
person | ||
or through an appointed representative, may examine the | ||
condition and
affairs of a
debt management service provider | ||
licensee . In connection with any
examination, the Secretary | ||
Director may examine on oath any debt management service | ||
provider licensee and
any
director,
officer, employee, | ||
customer, manager, partner, member, creditor or stockholder
of | ||
a licensee concerning the affairs and business of the debt | ||
management service provider licensee . The
Secretary Director |
shall ascertain whether the debt management service provider | ||
licensee transacts its business in the
manner prescribed by law | ||
and the rules issued thereunder. The
debt management service | ||
provider licensee shall pay the cost of the examination as | ||
determined by the Secretary Director by
administrative rule. | ||
Failure to pay the examination fee within 30 days after
receipt | ||
of demand from the Secretary Director may result in the | ||
suspension of the license
until the fee is paid. The Secretary | ||
Director shall have the right to investigate and
examine any | ||
person, whether licensed or not, who is engaged in the debt
| ||
management service business. The Secretary Director shall have | ||
the power to subpoena the
production of any books and records | ||
pertinent to any investigation.
| ||
(Source: P.A. 90-545, eff. 1-1-98.)
| ||
(205 ILCS 665/12) (from Ch. 17, par. 5312)
| ||
Sec. 12.
Fees and charges of debt management service | ||
providers licensees . A debt management service provider | ||
licensee may not charge a debtor any
fees or penalties except | ||
the following:
| ||
(1) an initial counseling fee not to exceed $50 per
debtor | ||
counseled , provided the average initial counseling fee does not
| ||
exceed $30 per debtor for all debtors counseled ; and
| ||
(2) additional fees at the completion of the initial | ||
counseling services
which shall not exceed $50 per month , | ||
provided the average monthly fee does not
exceed $30 per debtor |
for all debtors counseled .
| ||
(Source: P.A. 90-545, eff. 1-1-98.)
| ||
(205 ILCS 665/12.1)
| ||
Sec. 12.1.
All moneys received by the Department of | ||
Financial Institutions
under this Act , except moneys received | ||
for the Debt Management Service Consumer Protection Fund, shall | ||
be deposited in the Financial Institutions Fund created
under | ||
Section 6z-26 of the State Finance Act.
| ||
(Source: P.A. 88-13.)
| ||
(205 ILCS 665/13) (from Ch. 17, par. 5313)
| ||
Sec. 13. Prohibitions.
| ||
(1) No licensee shall advertise, in any manner whatsoever, | ||
any statement
or
representation with regard to the rates, terms | ||
or conditions of debt management
service which is false, | ||
misleading, or deceptive.
| ||
(2) No licensee shall require as a part of the agreement | ||
between the
licensee and any debtor, the purchase of any stock, | ||
insurance, commodity,
service or other property or any interest | ||
therein.
| ||
(3) No licensee shall, directly or indirectly, accept | ||
payment or any other
consideration, whether in cash or in kind, | ||
from any entity for referring
applicants to that entity. The | ||
licensee shall not, directly or indirectly,
make payments in | ||
any form, whether in cash or in kind, to any person,
|
corporation, or other entity for referring applicants or | ||
clients to the
licensee.
| ||
(4) No licensee shall make any loans.
| ||
(5) No licensee shall issue credit cards or act as an agent | ||
in procuring
customers for a credit card company or any | ||
financial institution.
| ||
(6) No licensee shall act as a loan broker.
| ||
(7) No licensee shall operate any other business at the | ||
licensed location .
without another business authorization from | ||
the Director, pursuant to Section
13.5.
| ||
(Source: P.A. 90-545, eff. 1-1-98.)
| ||
(205 ILCS 665/14) (from Ch. 17, par. 5314)
| ||
Sec. 14. Trust funds; requirements and restrictions.
| ||
(a) All funds received by a debt management service | ||
provider licensee or his agent from and for the purpose
of | ||
paying bills, invoices, or accounts of a debtor shall | ||
constitute trust funds
owned by and belonging to the debtor | ||
from whom they were received. All such
funds received by a debt | ||
management service provider licensee shall be separated from | ||
the funds of the debt management service provider licensee
not | ||
later than the end of the business day following receipt by the
| ||
debt management service provider licensee . All such funds shall | ||
be kept separate and apart at all times from
funds belonging to | ||
the debt management service provider licensee or any of its | ||
officers, employees or agents and
may be used for no purpose |
other than paying bills, invoices, or accounts of
the debtor. | ||
All such trust funds received at the main or branch offices of | ||
a
debt management service provider licensee shall be deposited | ||
in a bank in an account in the name of the debt management | ||
service provider licensee
designated "trust account", or by | ||
some other appropriate name indicating that
the funds are not | ||
the funds of the debt management service provider licensee or | ||
its officers, employees, or
agents, on or before the close of | ||
the business day following receipt.
| ||
(b) If a consumer's funds are kept in an interest earning | ||
trust account, then any interest earned on the consumer funds | ||
shall belong to the consumer. If multiple consumers funds are | ||
kept in a single interest earning trust account, then the | ||
interest earned shall belong to the consumers and shall be | ||
deposited pro rata among the consumers whose funds are in the | ||
account. Prior to separation and deposit by the licensee, such | ||
funds may be
used by the licensee only for the making of change | ||
or the cashing of checks
in the normal course of its business. | ||
Such funds are not subject to
attachment, lien, levy of | ||
execution, or sequestration by order of court except
by a | ||
debtor for whom a licensee is acting as an agent in paying | ||
bills,
invoices, or accounts.
| ||
(c) Each debt management service provider licensee shall | ||
make remittances within 30 days after
initial receipt of funds, | ||
and thereafter remittances shall be made within
15 days of | ||
receipt, less fees and costs, unless the reasonable
payment of |
one or more of the debtor's obligations requires that the funds
| ||
be held for a longer period so as to accumulate a sum certain.
| ||
(d) At least once every quarter, the debt management | ||
service provider licensee shall render an accounting to
the | ||
debtor which shall itemize the total amount received from the | ||
debtor, the
total amount paid each creditor, the amount of | ||
charges deducted, and any amount
held in reserve. A debt | ||
management service provider licensee shall, in addition | ||
thereto, provide such an
accounting to a debtor within 7 days | ||
after written demand, but not more
than 3 times per 6 month | ||
period.
| ||
(Source: P.A. 90-545, eff. 1-1-98.)
| ||
(205 ILCS 665/15) (from Ch. 17, par. 5315)
| ||
Sec. 15.
Rules.)
The Secretary Director shall make and | ||
enforce all
reasonable rules as shall be necessary for the
| ||
administration of this Act. Such rulemaking shall be subject to | ||
the provisions
of the Illinois Administrative Procedure Act.
| ||
(Source: P.A. 81-1403.)
| ||
(205 ILCS 665/16) (from Ch. 17, par. 5319)
| ||
Sec. 16. Penalties.
| ||
(a) Any person who engages in the business of debt | ||
management service
without a license shall be guilty of a Class | ||
4 felony.
| ||
(b) Any contract of debt management service as defined in |
this Act, made by
an unlicensed
person, shall be null and void | ||
and of no legal effect.
| ||
(c) The Secretary Director may , after 10 days notice by | ||
registered mail to the debt management service provider at the | ||
address on the license or unlicensed entity engaging in the | ||
debt management service business, stating the contemplated | ||
action and in general the grounds therefore, fine that debt | ||
management service provider or unlicensed entity an amount not | ||
exceeding $10,000 per violation, and revoke or suspend any | ||
license issued if he or she finds that either: | ||
(1) the debt management service provider or unlicensed | ||
entity has failed to comply with any provision of this Act | ||
or any order, decision, finding, rule, regulation, or | ||
direction of the Secretary lawfully made pursuant to the | ||
authority of this Act; or | ||
(2) any fact or condition exists which, if it had | ||
existed at the time of the original application for the | ||
license, clearly would have warranted the Secretary in | ||
refusing to issue the license. set by rule monetary | ||
penalties for violation of this
Act.
| ||
(Source: P.A. 90-545, eff. 1-1-98.)
| ||
(205 ILCS 665/16.5 new) | ||
Sec. 16.5. Additional liability for unlicensed activity. | ||
Any person who, without the required license, engages in | ||
conduct requiring a license under this Act, shall be liable to |
the Department in an amount equal to the greater of (1) $1,000 | ||
or (2) an amount equal to 4 times the amount of consumer debt | ||
enrolled. The Department shall cause any funds so recovered to | ||
be deposited in the Debt Management Service Consumer Protection | ||
Fund. | ||
(205 ILCS 665/16.6 new) | ||
Sec. 16.6. Debt Management Service Consumer Protection | ||
Fund. | ||
(a) A special non-appropriated income-earning fund is | ||
hereby created in the State Treasury, known as the Debt | ||
Management Service Consumer Protection Fund. This Fund is not | ||
subject to appropriation by the Illinois General Assembly. | ||
(b) All moneys paid into the Fund together with all | ||
accumulated, undistributed interest thereon shall be held as a | ||
special Fund in the State Treasury. All interest earned on the | ||
Fund is non-distributable and shall be returned to the Fund, | ||
and shall be invested and re-invested in the Fund by the | ||
Treasurer or his or her designee. The Fund shall be used solely | ||
for the purpose of providing restitution to consumers who have | ||
suffered monetary loss arising out of a transaction regulated | ||
by this Act. | ||
(c) The Fund shall be applied only to restitution when | ||
restitution has been ordered by the Secretary. Restitution | ||
shall not exceed the amount actually lost by the consumer. The | ||
Fund shall not be used for the payment of any attorney or other |
fees. | ||
(d) The Fund shall be subrogated to the amount of the | ||
restitution, and the Secretary shall request the Attorney | ||
General to engage in all reasonable collection steps to collect | ||
restitution from the party responsible for the loss and | ||
reimburse the Fund. | ||
(e) Notwithstanding any other provision of this Section, | ||
the payment of restitution from the Fund shall be a matter of | ||
grace and not of right, and no consumer shall have any vested | ||
rights in the Fund as a beneficiary or otherwise. Before | ||
seeking restitution from the Fund, the consumer or beneficiary | ||
seeking payment of restitution shall apply for restitution on a | ||
form provided by the Secretary. The form shall include any | ||
information the Secretary may reasonably require in order to | ||
determine that restitution is appropriate. All documentation | ||
required by the Secretary, including the form, is subject to | ||
audit. Distributions from the Fund shall be made solely at the | ||
discretion of the Secretary, except that no payments or | ||
distributions may be made under any circumstance if the Fund is | ||
depleted. | ||
(f) All deposits to this Fund shall be made pursuant to | ||
Section 16.5 of this Act. | ||
(g) Notwithstanding any other law to the contrary, the Fund | ||
is not subject to administrative charges or charge-backs that | ||
would in any way transfer moneys from the Fund into any other | ||
fund of the State.
|
(205 ILCS 665/17) (from Ch. 17, par. 5320)
| ||
Sec. 17. Injunction. To engage in debt management service, | ||
render financial service, or accept debtors'
funds, as defined
| ||
in this Act, without a valid license so to do, is hereby | ||
declared
to be
inimical to the public welfare and to constitute | ||
a public nuisance. The
Secretary Director may, in the name of | ||
the people of the State of Illinois, through
the Attorney | ||
General of the State of Illinois, file a complaint for
an | ||
injunction in the circuit court to enjoin such person,
from
| ||
engaging in said business. Such injunction proceeding shall
be | ||
in addition to, and not in lieu of, penalties and remedies | ||
otherwise in this
Act provided.
| ||
(Source: P.A. 90-545, eff. 1-1-98.)
| ||
(205 ILCS 665/18) (from Ch. 17, par. 5321)
| ||
Sec. 18. Review. All final administrative decisions of the | ||
Secretary Director hereunder shall be
subject to judicial | ||
review pursuant to the provisions of the Administrative
Review | ||
Law, and all amendments and
modifications thereof and the rules | ||
adopted pursuant thereto.
| ||
(Source: P.A. 90-545, eff. 1-1-98.)
| ||
(205 ILCS 665/20) (from Ch. 17, par. 5323)
| ||
Sec. 20. Cease and desist orders.
| ||
(a) The Secretary Director may issue a cease and desist |
order to any
licensee, or other person doing business without | ||
the required license, when in
the opinion of the Secretary | ||
Director , the licensee, or other person, is violating or is
| ||
about to violate any provision of the Act or any rule or | ||
condition imposed in
writing by the Department.
| ||
(b) The Secretary Director may issue a cease and desist | ||
order prior to a hearing.
| ||
(c) The Secretary Director shall serve notice of his | ||
action, including a statement of
the reasons for his action | ||
either personally or by certified mail, return
receipt | ||
requested. Service by mail shall be deemed completed if the | ||
notice is
deposited in the U.S. Mail.
| ||
(d) Within 10 days
after
service of the cease and desist | ||
order, the licensee or
other person may request, in writing, a | ||
hearing.
| ||
(e) The Secretary Director shall schedule either a status | ||
date or a hearing within 30 days after the request
for a | ||
hearing unless otherwise agreed to by the parties.
| ||
(f) The Director shall have the authority to prescribe | ||
rules for the
administration of this Section.
| ||
(g) If it is determined that the Secretary Director had the | ||
authority to issue the
cease and desist order, he may issue | ||
such orders as may be reasonably necessary
to correct, | ||
eliminate, or remedy such conduct.
| ||
(h) The powers vested in the Secretary Director by this | ||
Section are additional
to any and all other powers and remedies |
vested in the Secretary Director by law, and
nothing in this | ||
Section shall be construed as requiring that the Secretary | ||
Director shall
employ the power conferred in this Section | ||
instead of
or
as a condition precedent
to the exercise of any | ||
other power or remedy vested in the Secretary Director .
| ||
(i) The cost for the administrative hearing shall be set by | ||
rule and shall be borne by the respondent .
| ||
(Source: P.A. 90-545, eff. 1-1-98.)
| ||
(205 ILCS 665/20.5)
| ||
Sec. 20.5. Receivership.
| ||
(a) If the Secretary Director determines that a licensee is | ||
insolvent or is violating
this Act,
he or she may appoint a | ||
receiver. Under the direction of the Secretary Director , the
| ||
receiver shall,
for the purpose of receivership, take | ||
possession of and title to the books,
records, and
assets of | ||
the licensee. The Secretary Director may require the receiver | ||
to provide
security in an
amount the Secretary Director deems | ||
proper. Upon appointment of the receiver, the
Secretary | ||
Director shall
have published, once each week for 4 consecutive | ||
weeks in a newspaper having a
general
circulation in the | ||
community, a notice informing all persons who have claims
| ||
against the
licensee to present them to the receiver. Within 10 | ||
days after the receiver
takes
possession, the licensee may | ||
apply to the Circuit Court of Sangamon County to
enjoin
further | ||
proceedings. The receiver may operate the business until the |
Secretary Director
determines
that possession should be | ||
restored to the licensee or that the business should
be
| ||
liquidated.
| ||
(b) If the Secretary Director determines that a business in | ||
receivership should be
liquidated,
he or she shall direct the | ||
Attorney General to file a complaint in the Circuit
Court of | ||
the
county in which the business is located, in the name of the | ||
People of the State
of Illinois,
for the orderly liquidation | ||
and dissolution of the business and for an
injunction | ||
restraining
the licensee and its officers and directors from | ||
continuing the operation
of the business.
Within 30 days after | ||
the day the Secretary Director determines that the business
| ||
should be
liquidated, the receiver shall file
with the | ||
Secretary Director and with the clerk of the court that has | ||
charge
of the liquidation
a correct list of all
creditors, as | ||
shown by
the licensee's books and records,
who
have not | ||
presented their claims.
The list shall state the amount of the | ||
claim after allowing all
just credits, deductions, and
set-offs | ||
as shown by the licensee's books. These claims
shall be deemed | ||
proven unless
some interested party files an objection within | ||
the time fixed by the Secretary Director
or court that
has | ||
charge of the liquidation.
| ||
(c) The General Assembly finds and declares that debt | ||
management services
provide an important service and vital | ||
services to Illinois citizens. It is therefore
declared to be | ||
the
policy of this State that customers who receive these |
services must be
protected from
interruptions of services. To | ||
carry out this policy and to insure that
customers of a
| ||
licensee are protected if it is determined that a business in | ||
receivership
should be
liquidated, the Secretary Director | ||
shall make a distribution of moneys collected by the
receiver | ||
in
the following order of priority:
| ||
(1) Allowed claims for the actual necessary expenses of | ||
the receivership
of
the business being liquidated, | ||
including:
| ||
(A) reasonable receiver's fees and receiver's | ||
attorney's fees
approved by the Secretary Director ;
| ||
(B) all expenses of any preliminary or other | ||
examinations into
the condition of the receivership;
| ||
(C) all expenses incurred by the Secretary | ||
Director that are incident to
possession and control of | ||
any property or records of the licensee's
business; and
| ||
(D) reasonable expenses incurred by the Secretary | ||
Director as the result of
business agreements or | ||
contractual arrangements necessary to insure
that the | ||
services of the licensee are delivered to the community | ||
without
interruption.
These business agreements or | ||
contractual arrangements may include, but
are not | ||
limited to, agreements made by the Secretary Director , | ||
or by the receiver with
the
approval of the Secretary | ||
Director , with banks, bonding companies, and other | ||
types of
financial institutions.
|
(1.5) Secured claims.
| ||
(2) Allowed unsecured claims for wages or salaries, | ||
excluding vacation,
severance, and sick leave pay earned by | ||
employees within 90 days before
the appointment of a | ||
receiver.
| ||
(3) Allowed unsecured claims of any tax, and interest | ||
and penalty on
the
tax.
| ||
(4) Allowed unsecured claims, other than a kind | ||
specified in items (1),
(2),
and (3) of this subsection, | ||
filed with the Secretary Director within the time the
| ||
Secretary Director
fixes
for filing claims.
| ||
(5) Allowed unsecured claims, other than a kind | ||
specified in items (1),
(2),
and (3) of this subsection, | ||
filed with the Secretary Director after the time fixed for
| ||
filing
claims by the Secretary Director .
| ||
(6) Allowed creditor claims asserted by an owner, | ||
member, or stockholder
of the business in liquidation.
| ||
(7) After one year from the final dissolution of the | ||
licensee's business,
all
assets not
used to satisfy allowed | ||
claims shall be distributed pro rata to the owner,
owners,
| ||
members, or stockholders of the business.
| ||
The Secretary Director shall pay all claims of equal | ||
priority according to the schedule
established in this | ||
subsection and shall not pay claims of lower priority until
all | ||
higher
priority claims are satisfied. If insufficient assets | ||
are available to meet all
claims of equal
priority, those |
assets shall be distributed pro rata among those claims. All
| ||
unclaimed
assets of a licensee and the licensee's business | ||
shall be deposited with the
Secretary Director to be
paid out | ||
when proper claims are presented to the Secretary Director .
| ||
(d) Upon the order of the circuit court of the county in | ||
which the business
being
liquidated is located, the receiver | ||
may sell or compound any bad or doubtful
debt, and on
like | ||
order may sell the personal property of the business on such | ||
terms as the
court
approves. The receiver shall succeed to | ||
whatever rights or remedies the
unsecured
creditors of the | ||
business may have against the owner or owners, operators,
| ||
stockholders,
directors, members, managers, or officers, | ||
arising out of their claims
against the
licensee's business, | ||
but nothing contained in this Section shall prevent those
| ||
creditors
from filing their claims in the liquidation | ||
proceeding. The receiver may
enforce those
rights or remedies | ||
in any court of competent jurisdiction.
| ||
(e) At the close of a receivership, the receiver shall turn | ||
over to the
Secretary Director all
books of account and ledgers | ||
of the business for preservation. The Secretary Director
shall | ||
hold all
records of receiverships received at any time for a | ||
period of 2 years after the
close of the
receivership. The | ||
records may be destroyed at the termination of the 2-year
| ||
period. All
expenses of the receivership including, but not | ||
limited to, reasonable
receiver's and
attorney's fees approved | ||
by the Secretary Director , all expenses of any preliminary or
|
other
examinations into the condition of the licensee's | ||
business or the
receivership, and all
expenses incident to the | ||
possession and control of any property or records of
the | ||
business
incurred by the Secretary Director shall be paid out | ||
of the assets of the licensee's
business. These
expenses shall | ||
be paid before all other claims.
| ||
(f) Upon the filing of a complaint by the Attorney General | ||
for the orderly
liquidation and dissolution of a debt | ||
management service provider's licensee's business, as provided | ||
in this Act,
all pending
suits and actions upon unsecured | ||
claims against the business shall abate.
Nothing
contained in | ||
this Act, however, prevents these claimants from filing their
| ||
claims in the
liquidation proceeding. If a suit or an action is | ||
instituted or maintained by
the receiver on
any bond or policy | ||
of insurance issued pursuant to the requirements of this
Act, | ||
the
bonding or insurance company sued shall not have the right | ||
to interpose or
maintain any
counterclaim based upon | ||
subrogation, upon any express or implied agreement of,
or right
| ||
to, indemnity or exoneration, or upon any other express or | ||
implied agreement
with, or
right against, the debt management | ||
service provider's licensee's business. Nothing contained in | ||
this Act prevents
the bonding
or insurance company from filing | ||
this type of claim in the liquidation
proceeding.
| ||
(g) A debt management service provider licensee may not | ||
terminate its affairs and close up its business
unless it has
| ||
first deposited with the Secretary Director an amount of money |
equal to all of its debts,
liabilities,
and lawful demands | ||
against it including the costs and expenses of a proceeding
| ||
under this
Section, surrendered to the Secretary Director its | ||
license, and filed with the Secretary Director a
statement of
| ||
termination signed by the debt management service provider | ||
licensee containing a pronouncement of intent to
close up its
| ||
business and liquidate its liabilities and containing a sworn | ||
list itemizing in
full all of its
debts, liabilities, and | ||
lawful demands against it. Corporate licensees must
attach to,
| ||
and make a part of the statement of termination, a copy of a | ||
resolution
providing for the
termination and closing up of the | ||
licensee's affairs, certified by the
secretary of the
licensee | ||
and duly adopted at a shareholders' meeting by the holders of | ||
at least
two-thirds
of the outstanding shares entitled to vote | ||
at the meeting. Upon the filing with
the Secretary Director
of | ||
a statement of termination, the Secretary Director shall cause | ||
notice of that action
to be published
once each week for 3 | ||
consecutive weeks in a public newspaper of general
circulation
| ||
published in the city or village where the business is located, | ||
and if no
newspaper is
published in that place, then in a | ||
public newspaper of general circulation
nearest to that
city or | ||
village. The publication shall give notice that the debts,
| ||
liabilities, and lawful
demands against the business will be | ||
redeemed by the Secretary Director upon demand in
writing
made | ||
by the owner thereof, at any time within 3 years after the date | ||
of first
publication.
After the expiration of the 3-year |
period, the Secretary Director shall return to the
person or | ||
persons
designated in the statement of termination to receive | ||
repayment, and in the
proportion
specified in that statement, | ||
any balance of money remaining in his or her
possession after
| ||
first deducting all unpaid costs and expenses incurred in | ||
connection with
a
proceeding under this Section. The Secretary | ||
Director shall receive for his or her
services, exclusive
of | ||
costs
and expenses, 2% of any amount up to $5,000 and 1% of any | ||
amount in excess of
$5,000 deposited
with him or her under this | ||
Section by any business. Nothing contained
in this
Section | ||
shall affect or impair the liability of any bonding or | ||
insurance
company on
any bond
or insurance policy issued under | ||
this Act relating to the business.
| ||
(Source: P.A. 92-400, eff. 1-1-02.)
| ||
Section 910. The Consumer Fraud and Deceptive Business | ||
Practices Act is amended by adding Section 2III as follows: | ||
(815 ILCS 505/2III new) | ||
Sec. 2III. Violations of the Debt Settlement Consumer | ||
Protection Act. Any person who violates the Debt Settlement | ||
Consumer Protection Act commits an unlawful practice within the | ||
meaning of this Act. | ||
(205 ILCS 665/13.5 rep.) | ||
(205 ILCS 665/15.1 rep.) |
(205 ILCS 665/15.2 rep.) | ||
(205 ILCS 665/15.3 rep.) | ||
Section 915. The Debt Management Service Act is amended by | ||
repealing Sections 13.5, 15.1, 15.2, and 15.3. | ||
Section 970. Severability. The provisions of this Act are | ||
severable under Section 1.31 of the Statute on Statutes.
| ||
Section 999. Effective date. This Act takes effect upon | ||
becoming law. |