|
|||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||
1 | AN ACT concerning loans.
| ||||||||||||||||||||||||||||||||
2 | Be it enacted by the People of the State of Illinois,
| ||||||||||||||||||||||||||||||||
3 | represented in the General Assembly:
| ||||||||||||||||||||||||||||||||
4 | Section 1. Short title. This Act may be cited as the | ||||||||||||||||||||||||||||||||
5 | Illinois Short-Term Loan and Title Loan Regulation Act .
| ||||||||||||||||||||||||||||||||
6 | Section 5. Purpose and construction. The purpose of this | ||||||||||||||||||||||||||||||||
7 | Act is to protect borrowers who enter into any short-term, | ||||||||||||||||||||||||||||||||
8 | high-rate loan or title loan from abuses that occur in the | ||||||||||||||||||||||||||||||||
9 | credit marketplace when lenders of these loans are unregulated. | ||||||||||||||||||||||||||||||||
10 | This Act shall be liberally construed to effectuate its | ||||||||||||||||||||||||||||||||
11 | purpose. This Act shall be construed as a borrower protection | ||||||||||||||||||||||||||||||||
12 | statute for all purposes.
| ||||||||||||||||||||||||||||||||
13 | Section 10. Definitions. As used in this Act: | ||||||||||||||||||||||||||||||||
14 | "Account" means a depositor relationship between a | ||||||||||||||||||||||||||||||||
15 | borrower and a financial institution that is funded by cash or | ||||||||||||||||||||||||||||||||
16 | cash equivalents. | ||||||||||||||||||||||||||||||||
17 | "Borrower" and "obligor" mean any natural person who, | ||||||||||||||||||||||||||||||||
18 | singly or
jointly with another borrower, enters into a | ||||||||||||||||||||||||||||||||
19 | short-term loan or title loan. | ||||||||||||||||||||||||||||||||
20 | "Check" means a negotiable instrument as defined in Article | ||||||||||||||||||||||||||||||||
21 | 3 of the
Uniform Commercial Code that is drawn on a financial | ||||||||||||||||||||||||||||||||
22 | institution and is
to be payable on demand at maturity of the | ||||||||||||||||||||||||||||||||
23 | short-term or title loan.
| ||||||||||||||||||||||||||||||||
24 | "Department" means the Department of Financial | ||||||||||||||||||||||||||||||||
25 | Institutions.
| ||||||||||||||||||||||||||||||||
26 | "Director" means the Director of Financial Institutions.
| ||||||||||||||||||||||||||||||||
27 | "Gross monthly income" means a borrower's gross monthly | ||||||||||||||||||||||||||||||||
28 | income as demonstrated by all of the borrower's pay stubs for | ||||||||||||||||||||||||||||||||
29 | the period 30 days prior to the short-term loan application. | ||||||||||||||||||||||||||||||||
30 | "Lender" and "licensee" mean any person or entity that | ||||||||||||||||||||||||||||||||
31 | offers or
makes a short-term loan or title loan, arranges a |
| |||||||
| |||||||
1 | short-term loan or title loan for a
third party, or acts as an | ||||||
2 | agent for a third party, regardless of whether the
third party | ||||||
3 | is exempt from licensing under this Act or whether approval,
| ||||||
4 | acceptance, or ratification by the third party is necessary to | ||||||
5 | create a legal
obligation for the third party; and any person | ||||||
6 | or entity where the Department
determines that a transaction is | ||||||
7 | in substance a disguised loan or the
application of subterfuge | ||||||
8 | for the purpose of avoiding this Act.
| ||||||
9 | "Local government authorization form" means a form | ||||||
10 | prescribed by
the Director and signed by the clerk or chief | ||||||
11 | executive officer of the county
or municipality in which the | ||||||
12 | licensee is to be located certifying that the
licensed location | ||||||
13 | complies with the zoning and all other applicable county or
| ||||||
14 | municipal ordinances and regulations.
| ||||||
15 | "Principal balance" means the balance due and owed on a | ||||||
16 | short-term loan exclusive of any interest, service charges, or | ||||||
17 | other loan-related charges. | ||||||
18 | "Short-term loan" means a loan transacted via any medium | ||||||
19 | whatsoever, including but not limited to, mail, telephone, | ||||||
20 | internet, or at a location licensed under this Act, in which | ||||||
21 | the lender does any of the following:
| ||||||
22 | (1) accepts a check from the borrower and agrees to | ||||||
23 | hold it for one or more days prior to deposit or | ||||||
24 | presentment, or | ||||||
25 | (2) accepts a post-dated check from the borrower, or | ||||||
26 | (3) accepts authorization to debit a borrower's | ||||||
27 | account, or | ||||||
28 | (4) accepts future wages by wage assignment or by any | ||||||
29 | other method which
would result in the deduction of the | ||||||
30 | borrower's wages. | ||||||
31 | "Short-term loan" includes, but is not limited to, the | ||||||
32 | refinancing, rollover, extension, or renewal of a short-term | ||||||
33 | loan. | ||||||
34 | "Title loan" means a loan wherein, at
commencement, a | ||||||
35 | borrower provides to the lender, as security for the
loan, | ||||||
36 | physical possession of the obligor's title to a motor vehicle, |
| |||||||
| |||||||
1 | a boat, or any other personal property.
| ||||||
2 | "Total payable amount of the loan" means the total amount | ||||||
3 | owed by the borrower, including all associated fees, interest, | ||||||
4 | service charges, and all other loan-related charges, such that | ||||||
5 | payment in full of the total payment amount of the loan would | ||||||
6 | cause the debt occasioned by the short-term loan to be | ||||||
7 | satisfied entirely and forever. | ||||||
8 | Section 15. Applicability.
| ||||||
9 | (a) Except as otherwise provided in this Section, this Act | ||||||
10 | applies to
any lender that offers or makes a short-term or | ||||||
11 | title loan.
| ||||||
12 | (b) The provisions of this Act apply to any person or | ||||||
13 | entity that seeks
to evade its applicability by any device, | ||||||
14 | subterfuge, or pretense whatsoever.
| ||||||
15 | (c) Retail sellers who cash checks incidental to or | ||||||
16 | independent
of a sale and who charge no more than $2 per check | ||||||
17 | for the service are exempt
from the provisions of this Act.
| ||||||
18 | Section 25. Loan terms.
| ||||||
19 | (a) A short-term loan or title loan must have a minimum | ||||||
20 | term of no less than
10 days and a maximum of no more than 1 | ||||||
21 | year.
| ||||||
22 | (b) No short-term or title loan may be executed if the | ||||||
23 | total payable
amount of the loan exceeds 15% of the borrower's | ||||||
24 | monthly gross income. A copy of all pay stubs used to calculate | ||||||
25 | the borrower's monthly gross income must be attached to the | ||||||
26 | loan application.
| ||||||
27 | (c) A borrower shall be permitted to make partial payments | ||||||
28 | (in
amounts equal to no less than $5 increments) on the | ||||||
29 | short-term or title loan at
any time, without charge.
| ||||||
30 | (d) A borrower may rescind a short-term loan or title loan | ||||||
31 | agreement
without cost no later than the end of the business | ||||||
32 | day immediately following
the day on which the loan was made. | ||||||
33 | To rescind the short-term or title loan, the
borrower must | ||||||
34 | inform the lender that the borrower wants to rescind the loan
|
| |||||||
| |||||||
1 | and return cash in an amount equal to the amount loaned under | ||||||
2 | the written
agreement.
| ||||||
3 | (e) After each payment made in full or in part, on any | ||||||
4 | loan, the
licensee shall give to the borrower making the | ||||||
5 | payment a signed, dated
receipt showing the amount paid and the | ||||||
6 | balance due on the loan.
| ||||||
7 | (f) The check written by the borrower in a short-term loan | ||||||
8 | must be made
payable to the licensee.
| ||||||
9 | (g) Upon receipt of the check from the borrower for a | ||||||
10 | short-term loan,
the licensee must immediately stamp the back | ||||||
11 | of the check with an
endorsement that states: "This check is | ||||||
12 | being negotiated as part of a short-term
loan under the | ||||||
13 | Illinois Short-Term Loan and Title Loan Regulation Act, and any | ||||||
14 | holder of this check takes
it subject to all claims and | ||||||
15 | defenses of the maker.".
| ||||||
16 | (h) The licensee must provide the borrower, or each | ||||||
17 | borrower if there
is more than one, with a copy of the loan | ||||||
18 | documents described in Section 45
before the commencement of | ||||||
19 | the short-term or title loan.
| ||||||
20 | (i) The holder or assignee of any check written by a | ||||||
21 | borrower in
connection with a short-term loan takes the | ||||||
22 | instrument subject to all claims and
defenses of the borrower.
| ||||||
23 | Section 30. Permissible charges and fees.
| ||||||
24 | (a) The licensee shall be permitted to charge interest on | ||||||
25 | the amount of cash delivered to the borrower in a short-term | ||||||
26 | loan in an amount not greater than 36% per annum (defined as a | ||||||
27 | 365-day year). The rate charged on the outstanding balance | ||||||
28 | after maturity shall not be greater than the rate charged | ||||||
29 | during the loan term. Charges on short-term or title loans | ||||||
30 | shall be computed and paid only as a percentage of the unpaid | ||||||
31 | principal balance.
| ||||||
32 | (b) No other fees may be charged for any other purpose.
| ||||||
33 | Section 32. Cooling-off periods; renewals.
| ||||||
34 | (a) A short-term or title loan may be refinanced, renewed, |
| |||||||
| |||||||
1 | or extended a maximum number of 2 times, but only when the | ||||||
2 | principal balance has been reduced by at least 20% at the time | ||||||
3 | of each refinancing, renewal, or extension.
| ||||||
4 | (b) Upon termination of a short-term or title loan, no | ||||||
5 | loan, other than the refinancing, renewal, or extension of an | ||||||
6 | existing short-term or title loan may be made to a borrower who | ||||||
7 | has had an outstanding short-term or title loan within the | ||||||
8 | preceding 30 days.
| ||||||
9 | (c) The licensee shall verify the existence of a prior loan | ||||||
10 | as specified in subsection (b) of this Section by using a | ||||||
11 | database created by or approved by the Director for that | ||||||
12 | purpose.
| ||||||
13 | (d) A lender may renew the short-term or title loan only if | ||||||
14 | the lender has
received a statement (not a pre-printed form) | ||||||
15 | from the borrower, initialed at
each
provision, signed, and | ||||||
16 | dated by the borrower, stating:
| ||||||
17 | (1) that the borrower is unable to repay the current | ||||||
18 | loan;
| ||||||
19 | (2) a specific reason that arose after the date of the | ||||||
20 | origination or
renewal of the current loan that makes the | ||||||
21 | borrower unable to repay the
loan; and
| ||||||
22 | (3) that the borrower will be able to repay the loan at | ||||||
23 | the new
maturity date.
| ||||||
24 | Section 35. Licensing.
| ||||||
25 | (a) A license to make a short-term or title loan shall | ||||||
26 | state the address,
including city and state, at which
the | ||||||
27 | business is to be conducted and shall state fully the name of | ||||||
28 | the licensee.
The license shall be conspicuously posted in the | ||||||
29 | place of business of the
licensee and shall not be transferable | ||||||
30 | or assignable.
| ||||||
31 | (b) An application for a license shall be in writing and in | ||||||
32 | a form
prescribed by the Director. No person or entity shall | ||||||
33 | engage in or offer to
engage in the business regulated by this | ||||||
34 | Act unless and until a license has
been issued by the Director. | ||||||
35 | The Director may not issue or renew any such
license unless and |
| |||||||
| |||||||
1 | until the following findings are made:
| ||||||
2 | (1) that authorizing the applicant to engage in the | ||||||
3 | business will
promote the convenience and advantage of the | ||||||
4 | community in which the
applicant proposes to engage in | ||||||
5 | business;
| ||||||
6 | (2) that the financial responsibility, experience, | ||||||
7 | character, and general
fitness of the applicant are such as | ||||||
8 | to command the confidence of the public
and to warrant the | ||||||
9 | belief that the business will be operated lawfully and
| ||||||
10 | fairly, and within the provisions and purposes of this Act;
| ||||||
11 | (3) that the location has conformed to local zoning | ||||||
12 | laws with respect
to location, structural, aesthetic, or | ||||||
13 | other requirements;
| ||||||
14 | (4) that the applicant has submitted a completed local | ||||||
15 | government
authorization form; and
| ||||||
16 | (5) that the applicant has submitted such other | ||||||
17 | information as the
Director may deem necessary.
| ||||||
18 | (c) A license shall be issued for no longer than one year, | ||||||
19 | and no renewal
of a license may be provided if a licensee has | ||||||
20 | violated this Act.
| ||||||
21 | (d) A licensee shall appoint, in writing, the Director as | ||||||
22 | attorney-in-fact
upon whom all lawful process against the | ||||||
23 | licensee may be served with the
same legal force and validity | ||||||
24 | as if served on the licensee. A copy of the
written | ||||||
25 | appointment, duly certified, shall be filed in the office of | ||||||
26 | the
Director, and a copy thereof certified by the Director | ||||||
27 | shall be sufficient
evidence. This appointment shall remain in | ||||||
28 | effect while any liability remains
outstanding in this State | ||||||
29 | against the licensee. When summons is served upon
the Director | ||||||
30 | as attorney-in-fact for a licensee, the Director shall | ||||||
31 | immediately
notify the licensee by registered mail, enclosing | ||||||
32 | the summons and specifying
the hour and day of service.
| ||||||
33 | (e) A public hearing shall be held for each original | ||||||
34 | application and for
renewals if one is requested in writing by | ||||||
35 | the Director.
| ||||||
36 | (f) A licensee must pay an annual fee of $300. In addition |
| |||||||
| |||||||
1 | to the
license fee, the reasonable expense of any examination | ||||||
2 | or hearing
by the Director under any provisions of this Act | ||||||
3 | shall be borne by
the licensee. If a licensee fails to renew | ||||||
4 | his or her license by December 31,
it
shall automatically | ||||||
5 | expire; however, the Director, in his or her discretion,
may | ||||||
6 | reinstate an expired license upon:
| ||||||
7 | (1) payment of the annual renewal fee within 30 days of | ||||||
8 | the date of
expiration; and
| ||||||
9 | (2) proof of good cause for failure to renew.
| ||||||
10 | (g) Not more than one place of business shall be maintained | ||||||
11 | under the
same license, but the Director may issue more than | ||||||
12 | one license to the same
licensee upon compliance with all the | ||||||
13 | provisions of this Act governing
issuance of a single license. | ||||||
14 | The location, except those locations already in
existence as of | ||||||
15 | January 1, 2004, may not be within one mile of a
facility | ||||||
16 | operated by an inter-track wagering location licensee or an
| ||||||
17 | organization licensee subject to the Illinois Horse Racing Act | ||||||
18 | of 1975,
within one mile of a facility at which gambling is | ||||||
19 | conducted under the
Riverboat Gambling Act, within one mile of | ||||||
20 | the location at which a
riverboat subject to the Riverboat | ||||||
21 | Gambling Act docks, or within one mile of
any State of Illinois | ||||||
22 | or United States military base or installation.
| ||||||
23 | (h) No licensee shall conduct the business of making loans | ||||||
24 | under this
Act within any office, suite, room, or place of | ||||||
25 | business in which any other
business is solicited or engaged in | ||||||
26 | unless, in the opinion of the Director, the
other business | ||||||
27 | would not be contrary to the best interests of borrowers and
is | ||||||
28 | authorized by the Director in writing.
| ||||||
29 | (i) If the Director finds, after due notice and hearing, or | ||||||
30 | opportunity
for hearing, that a licensee, or an officer, agent, | ||||||
31 | employee, or representative
of a licensee, has violated any of | ||||||
32 | the provisions of this Act, has failed to
comply with the | ||||||
33 | rules, instructions, or orders promulgated by the Director,
has | ||||||
34 | failed or refused to make its reports to the Director, or has | ||||||
35 | furnished
false information to the Director, the Director may | ||||||
36 | issue an order revoking
or suspending the right of the licensee |
| |||||||
| |||||||
1 | and the officer, agent, employee, or
representative to do | ||||||
2 | business in this State as a licensee. No revocation,
| ||||||
3 | suspension, or surrender of any license shall relieve the | ||||||
4 | licensee from civil
or criminal liability for acts committed | ||||||
5 | before the revocation, suspension, or
surrender.
| ||||||
6 | (j) The Director shall maintain a list of licensees that | ||||||
7 | shall be
available to interested borrowers and lenders and the | ||||||
8 | public. The Director
shall establish a toll-free number whereby | ||||||
9 | borrowers may obtain
information about licensees. The Director | ||||||
10 | shall also establish a complaint
process under which an | ||||||
11 | aggrieved borrower or any member of the public
may file a | ||||||
12 | complaint against a licensee or non-licensee who violates any
| ||||||
13 | provision of this Act. The Director may hold hearings upon the | ||||||
14 | request of a
party to the complaint, make findings of fact, | ||||||
15 | conclusions of law, issue cease
and desist orders, refer the | ||||||
16 | matter to the appropriate law enforcement agency
for | ||||||
17 | prosecution under this Act, and suspend or revoke a license | ||||||
18 | granted
under this Act. All proceedings shall be open to the | ||||||
19 | public.
| ||||||
20 | Section 40. Information and reporting.
| ||||||
21 | (a) A licensee shall keep and use books, accounts, and | ||||||
22 | records that
will enable the Director to determine if the | ||||||
23 | licensee is complying with the
provisions of this Act and | ||||||
24 | maintain any other records as required by the
Director.
| ||||||
25 | (b) A licensee shall collect information annually for a | ||||||
26 | report that shall
disclose in detail and under appropriate | ||||||
27 | headings:
| ||||||
28 | (1) the total number of short-term or title loans, or | ||||||
29 | both, made during the
preceding calendar year;
| ||||||
30 | (2) The total number of renewals of short-term or title | ||||||
31 | loans, or both, made
during the preceding calendar year;
| ||||||
32 | (3) the total number of such loans outstanding as of | ||||||
33 | December 31 of
the preceding calendar year;
| ||||||
34 | (4) the minimum, maximum, and average dollar amount of | ||||||
35 | checks
whose deposits were deferred during the preceding |
| |||||||
| |||||||
1 | calendar year;
| ||||||
2 | (5) the average annual percentage rate and the average | ||||||
3 | number of days
a deposit of a check is deferred during the | ||||||
4 | preceding calendar year;
| ||||||
5 | (6) the total of returned checks, the total of checks | ||||||
6 | recovered, and the
total of checks charged off during the | ||||||
7 | preceding calendar year;
| ||||||
8 | (7) the total number of loans made that were secured by | ||||||
9 | the title to a
motor vehicle or a boat during the preceding | ||||||
10 | calendar year;
| ||||||
11 | (8) the total number of vehicle or boat repossessions | ||||||
12 | as a result of
default on a loan secured by a title to a | ||||||
13 | motor vehicle or a boat during the
preceding calendar year.
| ||||||
14 | The report shall be verified by the oath or affirmation of | ||||||
15 | the owner,
manager, or president of the licensee. The report | ||||||
16 | must be filed with the
Director no later than January 31 of the | ||||||
17 | year following the year for which
the report discloses the | ||||||
18 | information specified in this subsection (b). The
Director may | ||||||
19 | impose upon the licensee a fine of $25 per day for each day
| ||||||
20 | beyond the filing deadline that the report is not filed.
| ||||||
21 | (c) A licensee shall file a copy of the contract and the | ||||||
22 | fee schedule
described in Section 45 with the Director before | ||||||
23 | the date of commencement
of business at each location, at the | ||||||
24 | time any changes are made to the
documents or schedule, and | ||||||
25 | annually thereafter upon renewal of the license.
These | ||||||
26 | documents shall be available to interested parties and to the | ||||||
27 | general
public.
| ||||||
28 | (d) The Department shall compile data in the form of an | ||||||
29 | annual report of the short-term and title lending industry and | ||||||
30 | shall make the report available to the Governor, the General | ||||||
31 | Assembly, and the general public. | ||||||
32 | Section 45. Required disclosures.
| ||||||
33 | (a) Before entering into a short-term loan or title loan, a | ||||||
34 | licensee shall
deliver to the borrower a pamphlet prepared by | ||||||
35 | the Director that:
|
| |||||||
| |||||||
1 | (1) explains, in simple English and Spanish, all of the | ||||||
2 | borrower's
rights and responsibilities in a short-term or | ||||||
3 | title loan transaction;
| ||||||
4 | (2) includes a toll-free number to the Director's | ||||||
5 | office to handle
concerns or provide information about | ||||||
6 | whether a lender is licensed, whether
complaints have been | ||||||
7 | filed with the Director, and the resolution of those
| ||||||
8 | complaints; and
| ||||||
9 | (3) provides information regarding the availability of | ||||||
10 | debt
management services at the time of default.
| ||||||
11 | (b) Licensees shall provide borrowers with a written | ||||||
12 | agreement on a
form specified or approved by the Director that | ||||||
13 | may be kept by the
borrower. The written agreement must include | ||||||
14 | the following information in
English and in the language in | ||||||
15 | which the loan was negotiated:
| ||||||
16 | (1) the name and address of the licensee making the | ||||||
17 | short-term loan or
title loan, and the name and title of | ||||||
18 | the individual employee who signs the
agreement on behalf | ||||||
19 | of the licensee;
| ||||||
20 | (2) an itemization of the fees and interest charges to | ||||||
21 | be paid by the
borrower;
| ||||||
22 | (3) disclosures required by the federal Truth in | ||||||
23 | Lending Act and the
information required by the Federal | ||||||
24 | Consumer Credit Protection Act;
| ||||||
25 | (4) disclosures required under any other State law;
| ||||||
26 | (5) a clear description of the borrower's payment | ||||||
27 | obligations under
the loan;
| ||||||
28 | (6) a notice that the licensee may take possession of a | ||||||
29 | vehicle or a
boat used to secure a loan if the borrower | ||||||
30 | fails to repay the loan and that the
borrower shall be | ||||||
31 | entitled to any proceeds from the sale of the vehicle or | ||||||
32 | the
boat in excess of the amount owed on the loan;
| ||||||
33 | (7) the following statement, in at least 14-point bold | ||||||
34 | type face: "You
cannot be prosecuted in criminal court to | ||||||
35 | collect this loan.". The
information required to be | ||||||
36 | disclosed under this subdivision (7) must be
conspicuously |
| |||||||
| |||||||
1 | disclosed
in the loan document and shall be located | ||||||
2 | immediately preceding
the signature of the borrower; and
| ||||||
3 | (8) the following statement, in at least 14-point bold | ||||||
4 | type face:
| ||||||
5 | "WARNING: A loan is not intended to meet long-term | ||||||
6 | financial needs. A
loan should be used only to meet | ||||||
7 | short-term cash needs. Renewing the loan
rather than paying | ||||||
8 | the debt in full will require additional finance charges.
| ||||||
9 | The cost of your loan may be higher than loans offered by | ||||||
10 | other lending
institutions. Loans are regulated by the | ||||||
11 | Illinois Department of Financial
Institutions."
| ||||||
12 | (c) The following notices in English and Spanish, as well | ||||||
13 | as other
languages in which a significant amount of short-term | ||||||
14 | loan or title loan business
is conducted, must be conspicuously | ||||||
15 | posted by a licensee in each location of
a business providing | ||||||
16 | short-term loans or title loans:
| ||||||
17 | (1) A notice that informs borrowers that the licensee | ||||||
18 | cannot use the
criminal process against a borrower to | ||||||
19 | collect any short-term loan or title loan.
| ||||||
20 | (2) The schedule of all interest and fees to be charged | ||||||
21 | on loans with an
example of the amounts that would be | ||||||
22 | charged on a $100 loan payable in 14
days and a $400 loan | ||||||
23 | payable in 30 days, giving the corresponding annual
| ||||||
24 | percentage rate.
| ||||||
25 | (3) In one-inch bold type, a notice to the public both | ||||||
26 | in the lending
area of each business location containing | ||||||
27 | the following
statement:
| ||||||
28 | "WARNING: A loan is not intended to meet long-term | ||||||
29 | financial needs. A
loan should be used only to meet | ||||||
30 | short-term cash needs. Renewing the loan
rather than paying | ||||||
31 | the debt in full will require additional finance charges.
| ||||||
32 | The cost of your loan may be higher than loans offered by | ||||||
33 | other lending
institutions. Loans are regulated by the | ||||||
34 | Illinois Department of Financial
Institutions."
| ||||||
35 | Section 50. Advertising.
|
| |||||||
| |||||||
1 | (a) Advertising for loans transacted under this Act may not | ||||||
2 | be false,
misleading, or deceptive. That advertising, if it | ||||||
3 | states a rate or amount of
charge for a loan, must state the | ||||||
4 | rate as an annual percentage rate. No
licensee may advertise in | ||||||
5 | any manner so as to indicate or imply that its
interest rates | ||||||
6 | or charges for loans are in any way recommended, approved,
set | ||||||
7 | or established by the State government or by this Act.
| ||||||
8 | (b) If any advertisement to which this Section applies | ||||||
9 | states the
amount of any installment payment, the dollar amount | ||||||
10 | of any finance charge,
or the number of installments or the | ||||||
11 | period of repayment, then the
advertisement shall state all of | ||||||
12 | the following items:
| ||||||
13 | (1) The amount of the loan.
| ||||||
14 | (2) The number, amount, and due dates or period of | ||||||
15 | payments
scheduled to repay the indebtedness if the credit | ||||||
16 | is extended.
| ||||||
17 | (3) The rate of the finance charge expressed as an | ||||||
18 | annual percentage
rate.
| ||||||
19 | Section 55. Permitted charges.
| ||||||
20 | (a) No licensee shall charge or receive, directly or | ||||||
21 | indirectly, any
interest, fees, or charges except where | ||||||
22 | specifically authorized by this
Section and Section 30.
Any | ||||||
23 | agreement, provision, or act by a licensee providing for | ||||||
24 | unauthorized
fees in violation of this Section is | ||||||
25 | unenforceable.
| ||||||
26 | (b) If there are insufficient funds to pay a check on the | ||||||
27 | date of
presentment, a licensee may charge a fee, not to exceed
| ||||||
28 | the fee imposed upon the licensee by the financial institution. | ||||||
29 | Only one such
fee may be collected with respect to a particular | ||||||
30 | check even if it has been
redeposited and returned more than | ||||||
31 | once. A licensee may only present the
check for payment twice. | ||||||
32 | A fee charged under this subsection (b) is a
licensee's | ||||||
33 | exclusive charge for late payment.
| ||||||
34 | (c) When a loan is repaid before its due date, unearned | ||||||
35 | interest
charges must be rebated to the borrower based on a |
| |||||||
| |||||||
1 | method at least as
favorable to the borrower as the actuarial | ||||||
2 | method.
| ||||||
3 | Section 60. Prohibited acts.
A licensee or unlicensed | ||||||
4 | person or entity making short-term
loans or title loans may not | ||||||
5 | commit, or have committed on behalf of the
licensee
or | ||||||
6 | unlicensed person or entity, any of the following acts:
| ||||||
7 | (1) Threatening to use or using the criminal process in | ||||||
8 | this or any
other state to collect on the loan.
| ||||||
9 | (2) Using any device or agreement that would have the | ||||||
10 | effect of
charging or collecting more fees, charges, or | ||||||
11 | interest than allowed by this
Act including, but not | ||||||
12 | limited to, entering into a different type of
transaction
| ||||||
13 | with the borrower.
| ||||||
14 | (3) Engaging in unfair, deceptive, or fraudulent | ||||||
15 | practices in the
making or collecting of a short-term or | ||||||
16 | title loan.
| ||||||
17 | (4) Charging to cash a check representing the proceeds | ||||||
18 | of the short-term
or title loan.
| ||||||
19 | (5) Using or attempting to use the check provided by | ||||||
20 | the borrower in
a short-term loan as collateral for a | ||||||
21 | transaction not related to a short-term loan.
| ||||||
22 | (6) Knowingly accepting payment in whole or in part of | ||||||
23 | the short-term
loan through the proceeds of another | ||||||
24 | short-term loan provided by any licensee.
| ||||||
25 | (7) Knowingly accepting any security, other than that | ||||||
26 | specified in the
definition of short-term loan in Section | ||||||
27 | 10, for a short-term loan.
| ||||||
28 | (8) Charging any interest, fees, or charges other than | ||||||
29 | those specifically
authorized by this Act.
| ||||||
30 | (9) Threatening to take any action against a borrower | ||||||
31 | that is
prohibited by this Act, or making any misleading or | ||||||
32 | deceptive statements
regarding the short-term or title | ||||||
33 | loan or any consequences thereof.
| ||||||
34 | (10) Making a misrepresentation of a material fact by | ||||||
35 | an applicant in
obtaining or attempting to obtain a |
| |||||||
| |||||||
1 | license.
| ||||||
2 | (11) Including any of the following provisions in loan | ||||||
3 | documents
required by subsection (b) of Section 45:
| ||||||
4 | (A) a confession of judgment clause;
| ||||||
5 | (B) a waiver of the right to a jury trial, if | ||||||
6 | applicable, in any action
brought by or against a | ||||||
7 | borrower;
| ||||||
8 | (C) a mandatory arbitration clause that is | ||||||
9 | oppressive, unfair,
unconscionable, or substantially | ||||||
10 | in derogation of the rights of borrowers;
| ||||||
11 | (D) any assignment of or order for payment of wages | ||||||
12 | or other
compensation for services;
| ||||||
13 | (E) a provision in which the borrower agrees not to | ||||||
14 | assert any claim
or defense arising out of the | ||||||
15 | contract.
| ||||||
16 | (12) Selling any insurance of any kind whether or not | ||||||
17 | sold in
connection with the making or collecting of a | ||||||
18 | short-term or title loan.
| ||||||
19 | (13) Taking any power of attorney.
| ||||||
20 | (14) Taking any security interest in real estate.
| ||||||
21 | (15) Collecting a delinquency or collection charge on | ||||||
22 | any installment
regardless of the period in which it | ||||||
23 | remains in default.
| ||||||
24 | (16) Collecting treble damages on an amount owing from | ||||||
25 | a short-term or
title loan.
| ||||||
26 | Section 63. Vehicle and boat titles.
| ||||||
27 | (a) A licensee making title loans may not take possession | ||||||
28 | of a vehicle
or a boat without first giving written notice by | ||||||
29 | regular and certified mail to
the borrower, affording the | ||||||
30 | borrower the opportunity to make the vehicle or
boat
available | ||||||
31 | to the lender at a place, date, and time reasonably convenient | ||||||
32 | to the
lender and borrower, and permitting the borrower to | ||||||
33 | remove from the
vehicle or boat any personal belongings without | ||||||
34 | charge or additional cost to
the
borrower.
| ||||||
35 | (b) If a licensee repossesses a motor vehicle that was used |
| |||||||
| |||||||
1 | as security
and which is used primarily for the obligor's | ||||||
2 | personal, family, or household
purposes, the licensee shall be | ||||||
3 | subject to the requirements of and shall
transfer the | ||||||
4 | certificate of title in accordance with Section 3-114 of the
| ||||||
5 | Illinois Vehicle Code.
| ||||||
6 | (c) If a licensee repossesses a boat that was used as | ||||||
7 | security and
which is used primarily for the borrower's | ||||||
8 | personal, family, or household, the
licensee shall be subject | ||||||
9 | to the requirements of and shall transfer the
certificate of | ||||||
10 | title in accordance with Section 3A-15 of the Boat Registration
| ||||||
11 | and Safety Act.
| ||||||
12 | (d) A licensee making title loans may not dispose of the | ||||||
13 | vehicle or the
boat without first giving at least 10 days | ||||||
14 | written notice to the borrower
before the sale and the | ||||||
15 | opportunity to cure. The notice shall state the date,
time, and | ||||||
16 | place of the sale and provide the borrower with a written
| ||||||
17 | accounting of the amount owed on the loan. A loan contract | ||||||
18 | shall advise the
borrower that matters involving improprieties | ||||||
19 | in the making of the loan or in
loan collecting practices may | ||||||
20 | be referred to the Department and shall
prominently disclose | ||||||
21 | the Department's address and telephone number.
| ||||||
22 | (e) A licensee making title loans may not take possession | ||||||
23 | of a vehicle
or a boat for a loan default and lease the vehicle | ||||||
24 | or the boat back to the
borrower.
| ||||||
25 | (f) A licensee making title loans may not use any appraisal | ||||||
26 | to secure a
loan other than one in a nationally recognized | ||||||
27 | guide such as the Kelley Blue
Book Used Car Guide.
| ||||||
28 | Section 64. Recording or releasing a lien.
| ||||||
29 | (a) Upon making a loan secured by a title to a motor | ||||||
30 | vehicle, the
licensee must immediately take into possession | ||||||
31 | evidence of the borrower's
ownership in the motor vehicle that | ||||||
32 | has been registered with the Office of
the Illinois Secretary | ||||||
33 | of State and shall note on the face of the loan contract
the | ||||||
34 | vehicle's make, model, year of manufacture, and vehicle | ||||||
35 | identification
number.
|
| |||||||
| |||||||
1 | (b) Upon making a loan secured by a title to a boat, the | ||||||
2 | licensee must
immediately take into possession evidence of the | ||||||
3 | borrower's ownership in the
boat that has been registered with | ||||||
4 | the Illinois Department of Natural
Resources and shall note on | ||||||
5 | the face of the loan contract the boat's make,
model, year of | ||||||
6 | manufacture, and identification number.
| ||||||
7 | (c) Within 24 hours after payment in full, the licensee | ||||||
8 | must release
any filed liens, provide evidence of the release | ||||||
9 | to the borrower, and return
the
title to the borrower or cause | ||||||
10 | the title to be returned to the borrower.
| ||||||
11 | (d) A licensee may not charge, directly or indirectly, fees | ||||||
12 | associated
with the repossession of a motor vehicle or a boat.
| ||||||
13 | Section 65. Enforcement and remedies.
| ||||||
14 | (a) The remedies provided in this Act are cumulative and | ||||||
15 | apply to persons
or entities subject to this Act.
| ||||||
16 | (b) Any violation of this Act constitutes a violation of | ||||||
17 | the Consumer Fraud
and Deceptive Business Practices Act.
| ||||||
18 | (c) If any provision of the written agreement described in | ||||||
19 | subsection (a) of
Section 45
violates this Act, then that | ||||||
20 | provision is unenforceable against the borrower.
| ||||||
21 | (d) Any loan executed in violation of this Act shall render | ||||||
22 | the loan null and void as a matter of law. | ||||||
23 | Section 66. Voluntary Payment. A borrower may pay a debt | ||||||
24 | owed a
lender and the lender shall accept as satisfaction of | ||||||
25 | the debt an amount equal
to the sum of the amount owed, | ||||||
26 | incurred court costs, and attorney's fees.
| ||||||
27 | Section 70. Closing of business; surrender of license. At | ||||||
28 | least 10 days
before a licensee ceases operations, closes the | ||||||
29 | business, or files for
bankruptcy, the licensee shall:
| ||||||
30 | (1) Notify the Department of its action in writing.
| ||||||
31 | (2) With the exception of filing for bankruptcy, | ||||||
32 | surrender its license to
the Director for cancellation. The | ||||||
33 | surrender of the license shall not affect
the
licensee's |
| |||||||
| |||||||
1 | civil or criminal liability for acts committed before the | ||||||
2 | surrender
or entitle the licensee to a return of any part | ||||||
3 | of the annual license fee.
| ||||||
4 | (3) Notify the Department of the location where the | ||||||
5 | books, accounts,
contracts, and records will be maintained | ||||||
6 | and the procedure to ensure
prompt return of contracts, | ||||||
7 | titles, and releases to the obligors.
| ||||||
8 | The accounts, books, records, and contracts shall be | ||||||
9 | maintained and
serviced by the licensee, another licensee under | ||||||
10 | this Act, or an entity exempt
from licensing under this Act.
| ||||||
11 | The Department shall have the authority to conduct | ||||||
12 | examinations of
the books, records, and loan documents at any | ||||||
13 | time after surrender of the
license, filing of bankruptcy, or | ||||||
14 | the cessation of operations.
| ||||||
15 | Section 75. Bonding.
| ||||||
16 | (a) A person or entity engaged in making short-term or | ||||||
17 | title loans under
this Act shall post a bond to the Department | ||||||
18 | in the amount of $50,000 for
each location where loans will be | ||||||
19 | made, up to a maximum bond amount of
$500,000.
| ||||||
20 | (b) A bond posted under subsection (a) must continue in | ||||||
21 | effect for 3
years after the lender ceases operation in | ||||||
22 | Illinois. The bond must be
available to pay damages and | ||||||
23 | penalties to a borrower harmed by a violation
of this Act.
| ||||||
24 | Section 85. Those who may not make a short-term or title | ||||||
25 | loan. No
Illinois State bank, mortgage banking
company, or | ||||||
26 | savings and loan association covered by any financial | ||||||
27 | regulation
laws of Illinois may make a short-term loan or title | ||||||
28 | loan, as those terms are
defined in
this Act, in Illinois.
| ||||||
29 | Section 90. Lenders associated with national banks. If a | ||||||
30 | lender who
makes short-term or title loans as defined in and | ||||||
31 | allowed by this Act and who is
otherwise required to be | ||||||
32 | licensed by this Act associates with a national bank,
the | ||||||
33 | lender must be licensed with the Department as specified in |
| |||||||
| |||||||
1 | this Act to
make a short-term or title loan through its | ||||||
2 | association with the national bank
just as it would be if it | ||||||
3 | were making the short-term or title loan without that
| ||||||
4 | association.
| ||||||
5 | Section 95. Preemption of administrative rules. Any
| ||||||
6 | administrative rule or regulation
promulgated prior to the | ||||||
7 | effective
date of this Act by the Department regarding | ||||||
8 | short-term loans or title loans is
preempted.
| ||||||
9 | Section 97. Reporting of violations. The Department shall | ||||||
10 | report to the
Attorney General all violations of this Act of | ||||||
11 | which it becomes aware.
| ||||||
12 | Section 100. Rulemaking. The Department may adopt | ||||||
13 | reasonable
rules to implement and administer this Act.
| ||||||
14 | Section 105. Judicial review. All final administrative | ||||||
15 | decisions of the
Department under this Act are subject to | ||||||
16 | judicial review pursuant to the
provisions of the | ||||||
17 | Administrative Review Law and any rules adopted pursuant
| ||||||
18 | thereto.
| ||||||
19 | Section 110. No waivers. There shall be no waiver of any | ||||||
20 | provision of
this Act.
| ||||||
21 | Section 115. Superiority of Act. To the extent this Act | ||||||
22 | conflicts with
any other Illinois State financial regulation | ||||||
23 | laws, this Act is superior and
supersedes those laws for the
| ||||||
24 | purposes of regulating short-term and title loans in Illinois.
| ||||||
25 | Section 120. Severability.
The provisions of this Act are | ||||||
26 | severable under Section 1.31 of the Statute
on Statutes.
| ||||||
27 | Section 900. The Financial Institutions Code is amended by | ||||||
28 | changing Section 6 as follows:
|
| |||||||
| |||||||
1 | (20 ILCS 1205/6)
(from Ch. 17, par. 106)
| ||||||
2 | Sec. 6. In addition to the duties imposed elsewhere in this | ||||||
3 | Act, the
Department has the following powers:
| ||||||
4 | (1) To exercise the rights, powers and duties vested by law | ||||||
5 | in the
Auditor of Public Accounts under "An Act to provide for | ||||||
6 | the incorporation,
management and regulation of pawners' | ||||||
7 | societies and limiting the rate of
compensation to be paid for | ||||||
8 | advances, storage and insurance on pawns and
pledges and to | ||||||
9 | allow the loaning of money upon personal property", approved
| ||||||
10 | March 29, 1899, as amended.
| ||||||
11 | (2) To exercise the rights, powers and duties vested by law | ||||||
12 | in the
Auditor of Public Accounts under "An Act in relation to | ||||||
13 | the definition,
licensing and regulation of community currency | ||||||
14 | exchanges and ambulatory
currency exchanges, and the operators | ||||||
15 | and employees thereof, and to make an
appropriation therefor, | ||||||
16 | and to provide penalties and remedies for the
violation | ||||||
17 | thereof", approved June 30, 1943, as amended.
| ||||||
18 | (3) To exercise the rights, powers, and duties vested by | ||||||
19 | law in the
Auditor of Public Accounts under "An Act in relation | ||||||
20 | to the buying and
selling of foreign exchange and the | ||||||
21 | transmission or transfer of money to
foreign countries", | ||||||
22 | approved June 28, 1923, as amended.
| ||||||
23 | (4) To exercise the rights, powers, and duties vested by | ||||||
24 | law in the
Auditor of Public Accounts under "An Act to provide | ||||||
25 | for and regulate the
business of guaranteeing titles to real | ||||||
26 | estate by corporations", approved
May 13, 1901, as amended.
| ||||||
27 | (5) To exercise the rights, powers and duties vested by law | ||||||
28 | in the
Department of Insurance under "An Act to define, | ||||||
29 | license, and regulate the
business of making loans of eight | ||||||
30 | hundred dollars or less, permitting an
interest charge thereon | ||||||
31 | greater than otherwise allowed by law, authorizing
and | ||||||
32 | regulating the assignment of wages or salary when taken as | ||||||
33 | security for
any such loan or as consideration for a payment of | ||||||
34 | eight hundred dollars or
less, providing penalties, and to | ||||||
35 | repeal Acts therein named", approved July
11, 1935, as amended.
|
| |||||||
| |||||||
1 | (6) To administer and enforce "An Act to license and | ||||||
2 | regulate the
keeping and letting of safety deposit boxes, | ||||||
3 | safes, and vaults, and the
opening thereof, and to repeal a | ||||||
4 | certain Act therein named", approved June
13, 1945, as amended.
| ||||||
5 | (7) Whenever the Department is authorized or required by | ||||||
6 | law to consider
some aspect of criminal history record | ||||||
7 | information for the purpose of
carrying out its statutory | ||||||
8 | powers and responsibilities, then, upon request
and payment of | ||||||
9 | fees in conformance with the requirements of Section 2605-400 | ||||||
10 | of
the Department of State Police Law
(20 ILCS 2605/2605-400), | ||||||
11 | the
Department of State Police is authorized to furnish, | ||||||
12 | pursuant to positive
identification, such information | ||||||
13 | contained in State files as is necessary
to fulfill the | ||||||
14 | request.
| ||||||
15 | (8) To administer the Illinois Short-Term Loan and Title | ||||||
16 | Loan Regulation Act.
| ||||||
17 | (Source: P.A. 91-239, eff. 1-1-00.)
| ||||||
18 | Section 905. The Consumer Installment Loan Act is amended | ||||||
19 | by changing
Section 21 as follows:
| ||||||
20 | (205 ILCS 670/21)
(from Ch. 17, par. 5427)
| ||||||
21 | Sec. 21. Application of act. This Act does not apply to any | ||||||
22 | person, partnership,
association, limited liability company, | ||||||
23 | or
corporation doing business under and as permitted by any law | ||||||
24 | of this State
or of the United States relating to banks, | ||||||
25 | savings and
loan
associations, savings banks, credit unions, or
| ||||||
26 | licensees under the Residential Mortgage License Act for | ||||||
27 | residential mortgage
loans made pursuant to that Act. This Act | ||||||
28 | does
not apply to
business loans. This Act does not apply to | ||||||
29 | short-term or title loans. For the purposes of this Section, | ||||||
30 | "short-term loan" and "title loan" have the meanings ascribed | ||||||
31 | to those terms in the Illinois Short-Term Loan and Title Loan | ||||||
32 | Regulation Act.
| ||||||
33 | (Source: P.A. 90-437, eff. 1-1-98.)
|
| |||||||
| |||||||
1 | Section 910. The Consumer Fraud and Deceptive Business | ||||||
2 | Practices Act is
amended by changing Section 2Z as follows:
| ||||||
3 | (815 ILCS 505/2Z) (from Ch. 121 1/2, par. 262Z)
| ||||||
4 | Sec. 2Z. Violations of other Acts. Any person who knowingly | ||||||
5 | violates
the Automotive Repair Act,
the Home Repair and | ||||||
6 | Remodeling Act,
the Dance Studio Act,
the Physical Fitness | ||||||
7 | Services Act,
the Hearing Instrument Consumer Protection Act,
| ||||||
8 | the Illinois Union Label Act,
the Job Referral and Job Listing | ||||||
9 | Services Consumer Protection Act,
the Travel Promotion | ||||||
10 | Consumer Protection Act,
the Credit Services Organizations | ||||||
11 | Act,
the Automatic Telephone Dialers Act,
the Pay-Per-Call | ||||||
12 | Services Consumer Protection Act,
the Telephone Solicitations | ||||||
13 | Act,
the Illinois Funeral or Burial Funds Act,
the Cemetery | ||||||
14 | Care Act,
the Safe and Hygienic Bed Act,
the Pre-Need Cemetery | ||||||
15 | Sales Act,
the High Risk Home Loan Act, the Illinois Short-Term | ||||||
16 | Loan and Title Loan Regulation Act, subsection (a) or (b) of | ||||||
17 | Section 3-10 of the
Cigarette Tax Act, subsection
(a) or (b) of | ||||||
18 | Section 3-10 of the Cigarette Use Tax Act, the Electronic
Mail | ||||||
19 | Act, or paragraph (6)
of
subsection (k) of Section 6-305 of the | ||||||
20 | Illinois Vehicle Code
commits an unlawful practice within the | ||||||
21 | meaning of this Act.
| ||||||
22 | (Source: P.A. 92-426, eff. 1-1-02; 93-561, eff. 1-1-04.)
| ||||||
23 | Section 999. Effective date. This Act takes effect January | ||||||
24 | 1, 2005.
|