97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB4451

 

Introduced 1/30/2012, by Rep. Elizabeth Hernandez

 

SYNOPSIS AS INTRODUCED:
 
205 ILCS 657/5
205 ILCS 657/65
205 ILCS 657/66 new
205 ILCS 657/76 new

    Amends the Transmitters of Money Act. Defines "general-use prepaid card". Provides that all vendors of general-use prepaid cards must be licensees or authorized sellers of licensees. Provides that a vendor of a general-use prepaid card may charge an activation fee not to exceed the greater of $1 or 1% of the value of the card. Provides that, subject to certain exceptions, no person shall impose a reloading fee, balance check fee, overdraft protection fee, dormancy fee, inactivity charge, or service fee with respect to a general-use prepaid card. Provides that the vendor of a general-use prepaid card shall inform the purchaser of a charge or fee before the card is purchased. Sets forth certain prohibited acts that any vendor issuing, selling, or offering for sale general-use prepaid cards may not commit. Provides that no licensee or authorized seller of a licensee may cash checks for a fee unless licensed under the Currency Exchange Act.


LRB097 16789 PJG 61969 b

 

 

A BILL FOR

 

HB4451LRB097 16789 PJG 61969 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Transmitters of Money Act is amended by
5changing Sections 5 and 65 and by adding Sections 66 and 76 as
6follows:
 
7    (205 ILCS 657/5)
8    Sec. 5. Definitions. As used in this Act, unless the
9context otherwise requires, the words and phrases defined in
10this Section have the meanings set forth in this Section.
11    "Authorized seller" means a person not an employee of a
12licensee who engages in the business regulated by this Act on
13behalf of a licensee under a contract between that person and
14the licensee.
15    "Balance check fee" means a fee assessed to a consumer for
16checking the balance on a general-use prepaid card.
17    "Bill payment service" means the business of transmitting
18money on behalf of an Illinois resident for the purpose of
19paying the resident's bills.
20    "Controlling person" means a person owning or holding the
21power to vote 25% or more of the outstanding voting securities
22of a licensee or the power to vote the securities of another
23controlling person of the licensee. For purposes of determining

 

 

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1the percentage of a licensee controlled by a controlling
2person, the person's interest shall be combined with the
3interest of any other person controlled, directly or
4indirectly, by that person or by a spouse, parent, or child of
5that person.
6    "Department" means the Department of Financial and
7Professional Regulation Institutions.
8    "Director" means the Director of the Division of Financial
9Institutions.
10    "Dormancy fee" or "inactivity charge or fee" means a fee,
11charge, or penalty for non-use or inactivity of a general-use
12prepaid card.
13    "General-use prepaid card" or "stored value card" means an
14electronic promise, plastic card, or other payment code or
15device, not marketed or labeled as a gift card, issued by any
16person that is:
17        (1) redeemable or honored, upon presentation, at
18    multiple, unaffiliated merchants or service providers, or
19    automated teller machines;
20        (2) issued in a requested amount, whether or not that
21    amount may, at the option of the issuer, be increased in
22    value or reloaded if requested by the holder;
23        (3) purchased or loaded on a prepaid basis; and
24        (4) can be used to withdraw cash at automated teller
25    machines or by other means, including cash back
26    transactions whereby an amount is added to the total

 

 

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1    purchase price of a transaction and a consumer receives
2    that amount in cash along with the purchase.
3    The term "general-use prepaid card" or "stored value card"
4does not include an electronic promise, plastic card, or
5payment code or device that is:
6        (1) used solely for telephone services;
7        (2) a loyalty, award, or promotional gift card;
8        (3) not marketed to the general public;
9        (4) issued in paper form only (including for tickets
10    and events);
11        (5) not redeemable at automated teller machines or for
12    cash back;
13        (6) redeemable solely for admission to events or venues
14    at a particular location or group of affiliated locations,
15    which may also include services or goods obtainable:
16            (A) at the event or venue after admission; or
17            (B) in conjunction with admission to such events or
18        venues at specific locations affiliated with and in
19        geographic proximity to the event or venue.
20    "Licensee" means a person licensed under this Act.
21    "Location" means a place of business at which activity
22regulated by this Act occurs.
23    "Material litigation" means any litigation that, according
24to generally accepted accounting principles, is deemed
25significant to a licensee's financial health and would be
26required to be referenced in a licensee's annual audited

 

 

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1financial statements, reports to shareholders, or similar
2documents.
3    "Money" means a medium of exchange that is authorized or
4adopted by a domestic or foreign government as a part of its
5currency and that is customarily used and accepted as a medium
6of exchange in the country of issuance.
7    "Money transmitter" means a person who is located in or
8doing business in this State and who directly or through
9authorized sellers does any of the following in this State:
10        (1) Sells or issues payment instruments.
11        (2) Engages in the business of receiving money for
12    transmission or transmitting money.
13        (3) Engages in the business of exchanging, for
14    compensation, money of the United States Government or a
15    foreign government to or from money of another government.
16    "Outstanding payment instrument" means, unless otherwise
17treated by or accounted for under generally accepted accounting
18principles on the books of the licensee, a payment instrument
19issued by the licensee that has been sold in the United States
20directly by the licensee or has been sold in the United States
21by an authorized seller of the licensee and reported to the
22licensee as having been sold, but has not been paid by or for
23the licensee.
24    "Overdraft protection" means a credit arrangement under
25which an issuer of general use prepaid cards automatically
26extends a loan to cover an amount that exceeds the general use

 

 

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1prepaid card account balance.
2    "Overdraft protection fee" means a fee charged by a
3licensee for overdraft protection.
4    "Payment instrument" means a check, draft, money order,
5traveler's check, general-use prepaid stored value card, or
6other instrument or memorandum, written order or written
7receipt for the transmission or payment of money sold or issued
8to one or more persons whether or not that instrument or order
9is negotiable. Payment instrument does not include an
10instrument that is redeemable by the issuer in merchandise or
11service, a credit card voucher, or a letter of credit. A
12written order for the transmission or payment of money that
13results in the issuance of a check, draft, money order,
14traveler's check, or other instrument or memorandum is not a
15payment instrument.
16    "Person" means an individual, partnership, association,
17joint stock association, corporation, or any other form of
18business organization.
19    "Reloading fee" means a fee charged to load cash or value
20to a general-use prepaid card.
21    "Service fee" means a periodic fee, charge, or penalty for
22holding or use of a general-use prepaid card. The term "service
23fee" does not include a one-time initial issuance fee.
24    "Stored value card" means any magnetic stripe card or other
25electronic payment instrument given in exchange for money and
26other similar consideration, including but not limited to

 

 

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1checks, debit payments, money orders, drafts, credit payments,
2and traveler's checks, where the card or other electronic
3payment instrument represents a dollar value that the consumer
4can either use or give to another individual.
5    "Transmitting money" means the transmission of money by any
6means, including transmissions to or from locations within the
7United States or to and from locations outside of the United
8States by payment instrument, facsimile or electronic
9transfer, or otherwise, and includes bill payment services.
10    "Vendor" means a licensee or an authorized seller of a
11licensee that sells or offers to sell general-use prepaid cards
12to consumers.
13(Source: P.A. 92-400, eff. 1-1-02; 93-535, eff. 1-1-04.)
 
14    (205 ILCS 657/65)
15    Sec. 65. Notice of source of instrument; transaction
16records.
17    (a) Every payment instrument other than a general-use
18prepaid stored value card sold through an authorized seller
19shall bear the name of the licensee and a unique consecutive
20number clearly stamped or imprinted on it. When an order for
21the transmission of money results in the issuance of a payment
22instrument, both the order and the payment instrument may bear
23the same unique number.
24    (b) A licensee or authorized seller shall create a record,
25which may be reduced to computer or other electronic medium,

 

 

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1upon receiving any money from a customer.
2    (c) For each payment instrument other than a general-use
3prepaid stored value card sold, the licensee shall require the
4authorized seller to record the face amount of the payment
5instrument and the serial number of the payment instrument.
6    (d) For each transmission of money, the licensee or
7authorized seller shall record the date the money was received,
8the face amount of the payment instrument, the name of the
9customer, the manner of transmission, including the identity
10and location of any bank or other financial institution
11receiving or otherwise involved in accomplishing the
12transmission, the location to which the money is transmitted if
13different from the bank or other financial institution required
14to be recorded, the name of the intended recipient, and the
15date the transmission was accomplished or the money was
16refunded to the customer due to an inability to transmit or
17failure of the intended recipient to receive or obtain the
18money transmitted. The transmission shall be made by the
19licensee or authorized seller within 3 business days after the
20receipt of the money to be transmitted. The licensee or
21authorized seller, in addition to the records required to be
22kept, shall issue a receipt to each person delivering or
23depositing money with the licensee or authorized seller
24indicating the date of the transaction, the face amount of the
25payment instrument, to whom the money is to be transmitted, the
26service charge, and the name and address of the licensee or

 

 

HB4451- 8 -LRB097 16789 PJG 61969 b

1authorized seller. The receipt or a separate disclosure at the
2time of the money transmission shall also include a statement
3of the licensee's refund procedures as well as a toll-free
4telephone number for customer assistance. An inadvertent or
5non-wilful failure to give a consumer the disclosure provided
6for in this Section shall not constitute a violation of this
7Act. The licensee or authorized seller shall keep a copy of
8every receipt in a permanent record book or maintain the data
9embodied in the receipt using photographic, electronic, or
10other means.
11    (e) For each exchange of money of the United States
12government or a foreign government to or from money of another
13government, the licensee or authorized seller shall record the
14date of the transaction, the amount of the transaction, the
15amount of funds stated in currency received by the recipient,
16and the rate of exchange at the time of the transaction. The
17licensee or authorized seller, in addition to the records
18required to be kept, shall issue a receipt to each person
19delivering or depositing money with the licensee or authorized
20seller indicating the date of the transaction, the amount of
21the transaction, the service charge, and the name and address
22of the licensee or authorized seller making the transaction.
23The licensee or authorized seller shall keep a copy of every
24receipt in a permanent record book or maintain data embodied in
25the receipt using photographic, electronic, or other means.
26    (f) Records required to be kept by the licensee or

 

 

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1authorized seller under this Act shall be preserved for at
2least 5 years or as required to comply with any other Act the
3administration of which is vested in the Director. The records
4shall be made available for examination in accordance with
5Sections 55 and 60 of this Act.
6(Source: P.A. 93-535, eff. 1-1-04.)
 
7    (205 ILCS 657/66 new)
8    Sec. 66. General-use prepaid cards.
9    (a) Except as otherwise provided in this Act, this Section
10applies to all persons that issue, sell, or offer for sale
11general-use prepaid cards to consumers. All vendors of
12general-use prepaid cards must be licensees or authorized
13sellers of a licensee under Section 75 of this Act, unless
14otherwise exempt from the requirements of this Act.
15    (b) A vendor may charge an activation fee not to exceed the
16greater of $1 or 1% of the value of the general-use prepaid
17card. Only one activation fee may be charged per general-use
18prepaid card. No vendor shall charge or collect any sum in
19excess of those allowed by this Act.
20    The schedule of fees and charges permitted under this
21Section shall be conspicuously disclosed on the face of the
22general-use prepaid card or on any packaging.
23    (c) Except as provided under subsections (d), (e), and (f),
24no person shall impose a reloading fee, balance check fee,
25overdraft protection fee, dormancy fee, inactivity charge or

 

 

HB4451- 10 -LRB097 16789 PJG 61969 b

1fee, or service fee with respect to a general-use prepaid card.
2    (d) A dormancy fee, inactivity charge or fee, or service
3fee may be charged with respect to a general-use prepaid card,
4if:
5        (1) there has been no activity with respect to the
6    general-use prepaid card in the 18-month period ending on
7    the date on which the charge or fee is imposed;
8        (2) the disclosure requirements of subsection (e) have
9    been met;
10        (3) not more than one dormancy, inactivity charge or
11    fee, or service fee may be charged per month of inactivity,
12    not to exceed $1 or 1% of the value of the card, whichever
13    is less, on the date of assessment; and
14        (4) any additional requirements that the Secretary may
15    deem necessary.
16    (e) The general-use prepaid card shall clearly and
17conspicuously state:
18        (1) that a dormancy fee, inactivity charge or fee, or
19    service fee may be charged;
20        (2) the amount of the fee or charge;
21        (3) how often the fee or charge may be assessed; and
22        (4) that the fee or charge may be assessed for
23    inactivity.
24    The vendor of a general-use prepaid card shall inform the
25purchaser of any charge or fee before the general-use prepaid
26card is purchased, regardless of whether the general-use

 

 

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1prepaid card is purchased in person, over the Internet, or by
2telephone.
3    (f) The prohibition under subsection (c) shall not apply to
4any general-use prepaid card:
5        (1) that is distributed pursuant to an award, loyalty,
6    or promotional program; and
7        (2) with respect to which there is no money or other
8    value exchanged.
9    (g) Any vendor issuing, selling, or offering for sale
10general–use prepaid cards may not commit, or have committed on
11behalf of the vendor, any of the following acts:
12        (1) selling or issuing a general-use prepaid card that
13    is subject to an expiration date;
14        (2) using any device or agreement that would have the
15    effect of charging or collecting more fees or charges than
16    allowed by this Act, including, but not limited to,
17    entering into a different type of transaction with the
18    consumer;
19        (3) engaging in unfair, deceptive, or fraudulent
20    practices in the issuing or selling of a general-use
21    prepaid card;
22        (4) using or causing to be published or disseminated
23    any advertising communication that contains false,
24    misleading, or deceptive statements or representations;
25        (5) making loans of money, discounting notes, bills of
26    exchange, or other evidences of debt, including overdraft

 

 

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1    protection;
2        (6) extending credit; or
3        (7) charging any fees or charges other than those
4    specifically authorized by this Act.
5    (h) In addition to the requirements of this Act, all
6vendors must comply with all State and federal requirements
7applicable to general-use prepaid cards.
 
8    (205 ILCS 657/76 new)
9    Sec. 76. Check cashing. No licensee under this Act or
10authorized seller of a licensee may cash checks for a fee
11unless licensed under the Currency Exchange Act, or unless the
12licensee or authorized seller is an entity exempt from that Act
13under subsection (b) of Section 1 of the Currency Exchange Act
14and operating in compliance with the Check Cashing Act. This
15Section does not apply to any transaction where a customer
16presents a check for the exact amount of any purchase.