103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB4539

 

Introduced 1/31/2024, by Rep. Debbie Meyers-Martin

 

SYNOPSIS AS INTRODUCED:
 
See Index

    Amends the Credit Services Organizations Act. Expands the list of prohibitions imposed on a credit services organization to include: (i) charging or receiving any money or other valuable consideration before providing services listed in the contract (rather than charging or receiving any money or other valuable consideration prior to full and complete performance of the services the credit services organization has agreed to perform); (ii) making a guarantee that a buyer's credit score or credit report will be improved through that buyer contracting with the credit services organization; (iii) adding an authorized user to a credit card account for payment of money or other valuable consideration; (iv) seeking an investigation by a third party of a trade line on a credit report without the authorization of the buyer; (v) failing to allow the buyer to cancel a contract with the credit services organization by phone call, email, text message, or a website; and other prohibitions as specified. In a provision concerning written statements a credit services organization must provide to a buyer before executing a contract or other agreement with the buyer, provides that, if a credit services organization agrees to provide services on a periodic basis, the organization must provide a detailed written description of those services that explains how the buyer will be billed in substantially equal periodic payments at fixed time intervals. In a provision requiring each written contract to include certain statements and information, provides that: (i) a statement alerting the buyer of the cancellation notice form attached to the contract must be written in at least 10-point boldface type; and (ii) the written contract must include a complete and detailed description of the services to be performed by the credit services organization and the total cost to the buyer for such services, including a detailed description on how a buyer will be billed for services provided by the credit services organization on a periodic basis. Requires a credit services organization to obtain a surety bond and adhere to certain procedures. Provides that the surety bond shall be maintained for a period of 5 (rather than 2) years after the date that the credit services organization ceases operations. Makes a change to the definition of "credit services organization".


LRB103 37633 SPS 67760 b

 

 

A BILL FOR

 

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1    AN ACT concerning business.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Credit Services Organizations Act is
5amended by changing Sections 3, 5, 6, 7, and 10 as follows:
 
6    (815 ILCS 605/3)  (from Ch. 121 1/2, par. 2103)
7    Sec. 3. As used in this Act:
8    (a) "Buyer" means an individual who is solicited to
9purchase or who purchases the services of a credit services
10organization.
11    (b) "Consumer reporting agency" has the meaning assigned
12by Section 603(f), Fair Credit Reporting Act (15 U.S.C.
13Section 1681a(f)).
14    (c) "Extension of Credit" means the right to defer payment
15of a debt or to incur a debt and defer its payment offered or
16granted primarily for personal, family, or household purposes.
17    (d) "Credit Services Organization" means a person who,
18with respect to the extension of credit by others and in return
19for the payment of money or other valuable consideration,
20provides, or represents that the person can or will provide,
21any of the following services:
22        (i) improving a buyer's credit record, history, or
23    rating;

 

 

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1        (ii) obtaining an extension of credit for a buyer; or
2        (iii) providing advice or assistance to a buyer with
3    regard to either subsection (i) or (ii).
4    "Credit Services Organization" does not include any of the
5following:
6        (i) a person authorized to make loans or extensions of
7    credit under the laws of this State or the United States
8    who is subject to regulation and supervision by this State
9    or the United States, or a lender approved by the United
10    States Secretary of Housing and Urban Development for
11    participation in a mortgage insurance program under the
12    National Housing Act (12 U.S.C. Section 1701 et seq.);
13        (ii) a bank or savings and loan association whose
14    deposits or accounts are eligible for insurance by the
15    Federal Deposit Insurance Corporation or the Federal
16    Savings and Loan Insurance Corporation, or a subsidiary of
17    such a bank or savings and loan association;
18        (iii) a credit union doing business in this State;
19        (iv) a nonprofit organization exempt from taxation
20    under Section 501(c)(3) of the Internal Revenue Code of
21    1986, provided that such organization does not charge or
22    receive any money or other valuable consideration prior to
23    or upon the execution of a contract or other agreement
24    between the buyer and the nonprofit organization;
25        (v) a person licensed as a real estate broker by this
26    state if the person is acting within the course and scope

 

 

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1    of that license;
2        (vi) a person licensed to practice law in this State
3    if rendering services to buyers as clients acting within
4    the course and scope of the person's practice as an
5    attorney;
6        (vii) a broker-dealer registered with the Securities
7    and Exchange Commission or the Commodity Futures Trading
8    Commission acting within the course and scope of that
9    regulation;
10        (viii) a consumer reporting agency; and
11        (ix) a residential mortgage loan broker or banker who
12    is duly licensed under the Illinois Residential Mortgage
13    License Act of 1987.
14    (e) "Person" means an individual, corporation,
15partnership, joint venture or any business entity.
16(Source: P.A. 88-120.)
 
17    (815 ILCS 605/5)  (from Ch. 121 1/2, par. 2105)
18    Sec. 5. No credit services organization, its salespersons,
19agents or representatives, or any independent contractor who
20sells or attempts to sell the services of a credit services
21organization shall:
22    (1) Charge or receive any money or other valuable
23consideration before providing services listed in the contract
24prior to full and complete performance of the services the
25credit services organization has agreed to perform for or on

 

 

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1behalf of the buyer, unless the credit services organization
2has, in conformity with Section 10 of this Act, obtained a
3surety bond issued by a surety company licensed to do business
4in this State. If a credit services organization is in
5compliance with this subsection the salespersons, agents, and
6representatives who sell the services of such organization
7shall not be required to obtain the surety bond provided for by
8this Act.
9    (2) Charge or receive any money or other valuable
10consideration solely for the referral of a buyer to a retail
11seller who will or may extend credit to the buyer if such
12extension of credit is in substantially the same terms as
13those available to the general public.
14    (3) Make, or advise any buyer to make, any statement that
15is untrue or misleading, or that should be known by the
16exercise of reasonable care to be untrue or misleading, with
17respect to a buyer's credit reporting agency or to any person
18who has extended credit to a buyer or to whom a buyer has made
19application for an extension of credit.
20    (4) Make or use any untrue or misleading representations
21in the offer or sale of the services of a credit services
22organization or engage, directly or indirectly, in any act,
23practice or course of business intended to defraud or deceive
24a buyer in connection with the office or sale of such services;
25including but not limited to: the amount or type of credit a
26consumer can expect to receive as a result of the performance

 

 

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1of the services offered; the qualifications, training or
2experience of its personnel; or the amount of credit
3improvement the consumer can expect to receive as a result of
4the services.
5    (5) Guarantee that a buyer's credit score or credit report
6will be improved through that buyer contracting with the
7credit services organization.
8    (6) For payment of money or other valuable consideration,
9add an authorized user to a credit card account.
10    (7) Seek an investigation by a third party of a trade line
11on a credit report without the authorization of the buyer.
12    (8) Make any statement, or counsel or advise any buyer to
13make any statement, the intended effect of which is to alter
14the buyer's identification to prevent the display of the
15buyer's credit record, history, or rating for the purpose of
16concealing adverse information that is fair, accurate, and not
17obsolete to any consumer reporting agency or to any person who
18has extended credit to the buyer or to whom the buyer has
19applied or is applying for an extension of credit.
20    (9) Engage, directly or indirectly, in any act, practice,
21or course of business that constitutes or results in the
22commission of, or an attempt to commit, a fraud or deception on
23any person in connection with the offer or sale of the services
24of the credit services organization.
25    (10) Fail to obtain a bond in the amount of $100,000, which
26shall be filed pursuant to Section 10 of this Act.

 

 

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1    (11) Fail to allow the buyer to cancel a contract with the
2credit services organization by phone call, email, text
3message, or a website.
4    (12) Fail to permit the buyer to cancel a contract with the
5credit services organization without obligation within 5
6business days after the contract was signed by the buyer.
7    (13) Fail to provide the buyer with a copy of the fully
8completed contract and all other documents the credit services
9organization requires the buyer to sign at the time they are
10signed.
11    (14) Fail to pay a buyer reasonable compensation of no
12less than $250 for trade line data reinserted in a credit
13report that had previously been removed from the credit report
14as a result of work performed by a credit services
15organization, provided that: (A) the buyer notifies the credit
16services organization of the reinserted trade line data on the
17credit report; (B) the buyer authorizes the credit services
18organization to obtain the credit report to confirm the
19reinsertion of the trade line data; and (C) the previously
20removed trade line data appears on the credit report.
21(Source: P.A. 85-1384.)
 
22    (815 ILCS 605/6)  (from Ch. 121 1/2, par. 2106)
23    Sec. 6. Before the execution of a contract or other form of
24agreement between a buyer and a credit services organization
25or before the receipt by any such organization of money or

 

 

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1other valuable consideration, whichever occurs first, such
2organization shall provide the buyer with a statement, in
3writing, containing the following:
4        (1) a complete and accurate statement of the buyer's
5    right to review any file on the buyer maintained by a
6    consumer reporting agency, as provided under the Fair
7    Credit Reporting Act (15 U.S.C. Section 1681 et seq.);
8        (2) a statement that the buyer may review his consumer
9    reporting agency file at no charge if a request therefor
10    is made to such agency within 30 days after receipt by the
11    buyer of notice that credit has been denied and if such
12    request is not made within the allotted time, the
13    approximate charge to the buyer for such review;
14        (3) a complete and accurate statement of the buyer's
15    right to dispute the completeness or accuracy of any item
16    contained in any file on the buyer maintained by a
17    consumer reporting agency;
18        (4) a complete and detailed description of the
19    services to be performed by the credit services
20    organization and the total cost to the buyer for such
21    services, and, if the credit services organization
22    provides services on a periodic basis, the description
23    shall explain how the buyer will be billed in
24    substantially equal periodic payments at fixed time
25    intervals;
26        (5) a statement notifying the buyer that: (i) credit

 

 

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1    reporting agencies have no obligation to remove
2    information from credit reports unless the information is
3    unfair, inaccurate, or unsubstantiated, erroneous, cannot
4    be verified or is more than 7 years old; and (ii) credit
5    reporting agencies have no obligation to remove
6    information concerning bankruptcies unless such
7    information is more than 10 years old;
8        (6) a statement asserting the buyer's right to proceed
9    against the surety bond required under Section 10; and
10        (7) the name and business address of any such surety
11    company together with the name and the number of the
12    account.
13    The credit services organization shall maintain on file,
14for a period of 2 years after the date the statement is
15provided, an exact copy of the statement, signed by the buyer,
16acknowledging receipt of the statement.
17(Source: P.A. 91-357, eff. 7-29-99.)
 
18    (815 ILCS 605/7)  (from Ch. 121 1/2, par. 2107)
19    Sec. 7. (a) Each contract between the buyer and a credit
20services organization for the purchase of the services of the
21credit services organization shall be in writing, dated,
22signed by the buyer, and shall include:
23    (1) a conspicuous statement in size equal to at least
2410-point boldface boldfaced type, in immediate proximity to
25the space reserved for the signature of the buyer, as follows:

 

 

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1    "You, the buyer, may cancel this contract at any time
2before midnight of the third day after the date of the
3transaction. See the attached notice of cancellation form for
4an explanation of this right";
5    (2) a complete and detailed description of the services to
6be performed by the credit services organization and the total
7cost to the buyer for such services, and, if the credit
8services organization provides services on a periodic basis,
9the description shall explain how the buyer will be billed in
10substantially equal periodic payments at fixed time intervals
11the terms and conditions of payment, including the total of
12all payments to be made by the buyer, whether to the credit
13services organization or to another person;
14    (3) (blank); and a full and detailed description of the
15services to be performed by the credit services organization
16for the buyer, including all guarantees and all promises of
17full or partial refunds, and the estimated date by which the
18services are to be performed or the estimated length of time
19for performing the services; and
20    (4) the address of the credit services organization's
21principal place of business and the name and address of its
22agent in the State authorized to receive service of process.
23    (b) The contract must have two easily detachable copies of
24a notice of cancellation. The notice must be in boldface
25boldfaced type and in the following form:
26
"Notice of Cancellation"

 

 

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1    "You may cancel this contract, without any penalty or
2obligation, within three days after the date the contract is
3signed.
4    If you cancel, any payment made by you under this contract
5will be returned within 10 days after the date of receipt by
6the seller of your cancellation notice.
7    To cancel this contract, mail or deliver a signed, dated
8copy of this cancellation notice, or other written notice to:
9    (name of seller) at (address of seller) (place of
10business) not later than midnight (date)
11I hereby cancel this transaction."
12..............................  .............................
13       (date)                      (purchaser's signature)
14    (c) The credit services organization shall give to the
15buyer a copy of the completed contract and all other documents
16the credit services organization requires the buyer to sign at
17the time they are signed.
18(Source: P.A. 85-1384.)
 
19    (815 ILCS 605/10)  (from Ch. 121 1/2, par. 2110)
20    Sec. 10. A If a credit services organization is required
21to obtain a surety bond and must adhere to the following
22procedures pursuant to paragraph (1) of Section 5 of this Act,
23the following procedures shall be applicable:
24    (a) A If a bond is obtained, a copy of the bond it shall be
25filed with the Office of the Secretary of State.

 

 

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1    (b) The required bond shall be in favor of the State of
2Illinois for the benefit of any person who is damaged by any
3violation of this Act. The bond shall also be in favor of any
4person damaged by such practices. Any person claiming against
5the bond for a violation of this Act may maintain an action at
6law against the credit services organization and against the
7surety. The surety shall be liable only for actual damages and
8not the punitive damages permitted under Section 11(b) of this
9Act. The aggregate liability of the surety to all persons
10damaged by a credit services organization's violation of this
11Act shall in no event exceed the amount of the bond.
12    (c) The bond shall be in the amount of $100,000 and shall
13be maintained for a period of 5 2 years after the date that the
14credit services organization ceases operations.
15(Source: P.A. 85-1384.)

 

 

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1 INDEX
2 Statutes amended in order of appearance
3    815 ILCS 605/3from Ch. 121 1/2, par. 2103
4    815 ILCS 605/5from Ch. 121 1/2, par. 2105
5    815 ILCS 605/6from Ch. 121 1/2, par. 2106
6    815 ILCS 605/7from Ch. 121 1/2, par. 2107
7    815 ILCS 605/10from Ch. 121 1/2, par. 2110