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1 | AN ACT concerning business.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Payday Loan Reform Act is amended by | |||||||||||||||||||||||||
5 | changing Sections 1-10, 2-5, 3-5, and 4-5 as follows: | |||||||||||||||||||||||||
6 | (815 ILCS 122/1-10)
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7 | Sec. 1-10. Definitions. As used in this Act: | |||||||||||||||||||||||||
8 | "Check" means a "negotiable instrument", as defined in | |||||||||||||||||||||||||
9 | Article 3 of the Uniform Commercial Code, that is drawn on a | |||||||||||||||||||||||||
10 | financial institution. | |||||||||||||||||||||||||
11 | "Commercially reasonable method of verification" or | |||||||||||||||||||||||||
12 | "certified database" means a consumer reporting service | |||||||||||||||||||||||||
13 | database certified by the Department as effective in verifying | |||||||||||||||||||||||||
14 | that a proposed loan agreement is permissible under this Act, | |||||||||||||||||||||||||
15 | or, in the absence of the Department's certification, any | |||||||||||||||||||||||||
16 | reasonably reliable written verification by the consumer | |||||||||||||||||||||||||
17 | concerning (i) whether the consumer has any outstanding payday | |||||||||||||||||||||||||
18 | loans, (ii) the principal amount of those outstanding payday | |||||||||||||||||||||||||
19 | loans, and (iii) whether any payday loans have been paid in | |||||||||||||||||||||||||
20 | full by the consumer in the preceding 7 days. | |||||||||||||||||||||||||
21 | "Consumer" means any natural person who, singly or jointly | |||||||||||||||||||||||||
22 | with another consumer, enters into a loan. | |||||||||||||||||||||||||
23 | "Consumer reporting service" means an entity that provides |
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1 | a database certified by the Department. | ||||||
2 | "Department" means the Department of Financial and | ||||||
3 | Professional Regulation. | ||||||
4 | "Secretary" means the Secretary of Financial and | ||||||
5 | Professional Regulation. | ||||||
6 | "Gross monthly income" means monthly income as | ||||||
7 | demonstrated by official documentation of the income, | ||||||
8 | including, but not limited to, a pay stub or a receipt | ||||||
9 | reflecting payment of government benefits, for the period 30 | ||||||
10 | days prior to the date on which the loan is made. | ||||||
11 | "Lender" and "licensee" mean any person or entity, | ||||||
12 | including any affiliate or subsidiary of a lender or licensee, | ||||||
13 | that offers or makes a payday loan, buys a whole or partial | ||||||
14 | interest in a payday loan, arranges a payday loan for a third | ||||||
15 | party, or acts as an agent for a third party in making a payday | ||||||
16 | loan, regardless of whether approval, acceptance, or | ||||||
17 | ratification by the third party is necessary to create a legal | ||||||
18 | obligation for the third party, and includes any other person | ||||||
19 | or entity if the Department determines that the person or | ||||||
20 | entity is engaged in a transaction that is in substance a | ||||||
21 | disguised payday loan or a subterfuge for the purpose of | ||||||
22 | avoiding this Act. | ||||||
23 | "Loan agreement" means a written agreement between a lender | ||||||
24 | and consumer to make a loan to the consumer, regardless of | ||||||
25 | whether any loan proceeds are actually paid to the consumer on | ||||||
26 | the date on which the loan agreement is made. |
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1 | "Member of the military" means a person serving in the | ||||||
2 | armed forces of the United States, the Illinois National Guard, | ||||||
3 | or any reserve component of the armed forces of the United | ||||||
4 | States. "Member of the military" includes those persons engaged | ||||||
5 | in (i) active duty, (ii) training or education under the | ||||||
6 | supervision of the United States preliminary to induction into | ||||||
7 | military service, or (iii) a period of active duty with the | ||||||
8 | State of Illinois under Title 10 or Title 32 of the United | ||||||
9 | States Code pursuant to order of the President or the Governor | ||||||
10 | of the State of Illinois. | ||||||
11 | "Outstanding balance" means the total amount owed by the | ||||||
12 | consumer on a loan to a lender, including all principal, | ||||||
13 | finance charges, fees, and charges of every kind. | ||||||
14 | "Payday loan" or "loan" means a loan with a finance charge | ||||||
15 | exceeding an annual percentage rate of 36% and with a term that | ||||||
16 | does not exceed 120 days, including any transaction conducted | ||||||
17 | via any medium whatsoever, including, but not limited to, | ||||||
18 | paper, facsimile, Internet, or telephone, in which: | ||||||
19 | (1) A lender accepts one or more checks dated on the | ||||||
20 | date written and agrees to hold them for a period of days | ||||||
21 | before deposit or presentment, or accepts one or more | ||||||
22 | checks dated subsequent to the date written and agrees to | ||||||
23 | hold them for deposit; or | ||||||
24 | (2) A lender accepts one or more authorizations to | ||||||
25 | debit a consumer's bank account; or | ||||||
26 | (3) A lender accepts an interest in a consumer's wages, |
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1 | including, but not limited to, a wage assignment. | ||||||
2 | "Principal amount" means the amount received by the | ||||||
3 | consumer from the lender due and owing on a loan, excluding any | ||||||
4 | finance charges, interest, fees, or other loan-related | ||||||
5 | charges. | ||||||
6 | "Rollover" means to refinance, renew, amend, or extend a | ||||||
7 | loan beyond its original term.
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8 | (Source: P.A. 94-13, eff. 12-6-05.) | ||||||
9 | (815 ILCS 122/2-5)
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10 | Sec. 2-5. Loan terms. | ||||||
11 | (a) Without affecting the right of a consumer to prepay at | ||||||
12 | any time without cost or penalty, no payday loan may have a | ||||||
13 | minimum term of less than 13 days. | ||||||
14 | (b) No payday loan may be made to a consumer if the loan | ||||||
15 | would result in the consumer being indebted to one or more | ||||||
16 | payday lenders for a period in excess of 45 consecutive days. | ||||||
17 | Except as provided under Section 2-40, if a consumer has or has | ||||||
18 | had loans outstanding for a period in excess of 45 consecutive | ||||||
19 | days, no payday lender may offer or make a loan to the consumer | ||||||
20 | for at least 7 calendar days after the date on which the | ||||||
21 | outstanding balance of all payday loans made during the 45 | ||||||
22 | consecutive day period is paid in full. For purposes of this | ||||||
23 | subsection, the term "consecutive days" means a series of | ||||||
24 | continuous calendar days in which the consumer has an | ||||||
25 | outstanding balance on one or more payday loans; however, if a |
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1 | payday loan is made to a consumer within 6 days or less after | ||||||
2 | the outstanding balance of all loans is paid in full, those | ||||||
3 | days are counted as "consecutive days" for purposes of this | ||||||
4 | subsection. | ||||||
5 | (c) No lender may make a payday loan to a consumer if the | ||||||
6 | total principal amount of the loan, when combined with the | ||||||
7 | principal amount of all of the consumer's other outstanding | ||||||
8 | payday loans, exceeds $1,000 or 25% of the consumer's gross | ||||||
9 | monthly income, whichever is less.
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10 | (d) No payday loan may be made to a consumer who has an | ||||||
11 | outstanding balance on 2 payday loans. | ||||||
12 | (e) No lender may charge more than $10 $15.50 per $100 | ||||||
13 | loaned on any payday loan over the term of the loan. Except as | ||||||
14 | provided in Section 2-25, this charge is considered fully | ||||||
15 | earned as of the date on which the loan is made. | ||||||
16 | (f) A lender may not take or attempt to take an interest in | ||||||
17 | any of the consumer's personal property to secure a payday | ||||||
18 | loan. | ||||||
19 | (g) A consumer has the right to redeem a check or any other | ||||||
20 | item described in the definition of payday loan under Section | ||||||
21 | 1-10 issued in connection with a payday loan from the lender | ||||||
22 | holding the check or other item at any time before the payday | ||||||
23 | loan becomes payable by paying the full amount of the check or | ||||||
24 | other item.
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25 | (h) In addition to any administrative fee, a lender may not | ||||||
26 | charge interest on the amount of cash delivered to the consumer |
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1 | in an equivalent greater than 36% per annum, defined as a | ||||||
2 | 365-day year. The rate charged on the outstanding balance after | ||||||
3 | maturity may not be greater than the rate charged during the | ||||||
4 | loan term. Charges on loans shall be computed and paid only as | ||||||
5 | a percentage of the unpaid principal balance. "Principal | ||||||
6 | balance" means the balance due and owing exclusive of any | ||||||
7 | interest, service, or other loan-related charges. | ||||||
8 | (Source: P.A. 94-13, eff. 12-6-05.) | ||||||
9 | (815 ILCS 122/3-5)
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10 | Sec. 3-5. Licensure. | ||||||
11 | (a) A license to make a payday loan shall state the | ||||||
12 | address,
including city and state, at which
the business is to | ||||||
13 | be conducted and shall state fully the name of the licensee.
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14 | The license shall be conspicuously posted in the place of | ||||||
15 | business of the
licensee and shall not be transferable or | ||||||
16 | assignable.
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17 | (b) An application for a license shall be in writing and in | ||||||
18 | a form
prescribed by the Secretary. The Secretary may not issue | ||||||
19 | a payday loan
license unless and until the following findings | ||||||
20 | are made:
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21 | (1) that the financial responsibility, experience, | ||||||
22 | character, and general
fitness of the applicant are such as | ||||||
23 | to command the confidence of the public
and to warrant the | ||||||
24 | belief that the business will be operated lawfully and
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25 | fairly and within the provisions and purposes of this Act; |
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1 | and
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2 | (2) that the applicant has unencumbered assets of at | ||||||
3 | least $50,000 per location; and | ||||||
4 | (3) that the applicant has submitted such other | ||||||
5 | information as the
Secretary may deem necessary.
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6 | (c) A license shall be issued for no longer than one year, | ||||||
7 | and no renewal
of a license may be provided if a licensee has | ||||||
8 | substantially violated this
Act and has not cured the violation | ||||||
9 | to the satisfaction of the Department.
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10 | (d) A licensee shall appoint, in writing, the Secretary as | ||||||
11 | attorney-in-fact
upon whom all lawful process against the | ||||||
12 | licensee may be served with the
same legal force and validity | ||||||
13 | as if served on the licensee. A copy of the
written | ||||||
14 | appointment, duly certified, shall be filed in the office of | ||||||
15 | the
Secretary, and a copy thereof certified by the Secretary | ||||||
16 | shall be sufficient
evidence to subject a licensee to | ||||||
17 | jurisdiction in a court of law. This appointment shall remain | ||||||
18 | in effect while any liability remains
outstanding in this State | ||||||
19 | against the licensee. When summons is served upon
the Secretary | ||||||
20 | as attorney-in-fact for a licensee, the Secretary shall | ||||||
21 | immediately
notify the licensee by registered mail, enclosing | ||||||
22 | the summons and specifying
the hour and day of service.
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23 | (e) A licensee must pay an annual fee of $1,000. In | ||||||
24 | addition to the
license fee, the reasonable expense of any | ||||||
25 | examination or hearing
by the Secretary under any provisions of | ||||||
26 | this Act shall be borne by
the licensee. If a licensee fails to |
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1 | renew its license by December 31,
its license
shall | ||||||
2 | automatically expire; however, the Secretary, in his or her | ||||||
3 | discretion,
may reinstate an expired license upon:
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4 | (1) payment of the annual fee within 30 days of the | ||||||
5 | date of
expiration; and
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6 | (2) proof of good cause for failure to renew.
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7 | (f) Not more than one place of business shall be maintained | ||||||
8 | under the
same license, but the Secretary may issue more than | ||||||
9 | one license to the same
licensee upon compliance with all the | ||||||
10 | provisions of this Act governing
issuance of a single license. | ||||||
11 | The location, except those locations already in
existence as of | ||||||
12 | June 1, 2005, may not be within one mile of a
horse race track | ||||||
13 | subject to the Illinois Horse Racing Act of 1975,
within one | ||||||
14 | mile of a facility at which gambling is conducted under the
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15 | Riverboat Gambling Act, within one mile of the location at | ||||||
16 | which a
riverboat subject to the Riverboat Gambling Act docks, | ||||||
17 | or within one mile of
any State of Illinois or United States | ||||||
18 | military base or naval installation. The location, except those | ||||||
19 | locations already in existence as of June 1, 2008, may not be | ||||||
20 | within 2,500 feet of the location of any other business | ||||||
21 | licensed under this Act.
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22 | (g) No licensee shall conduct the business of making loans | ||||||
23 | under this
Act within any office, suite, room, or place of | ||||||
24 | business in which any other
business is solicited or engaged in | ||||||
25 | unless the other business is licensed by the Department or, in | ||||||
26 | the opinion of the Secretary, the
other business would not be |
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1 | contrary to the best interests of consumers and
is authorized | ||||||
2 | by the Secretary in writing.
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3 | (h) The Secretary shall maintain a list of licensees that | ||||||
4 | shall be
available to interested consumers and lenders and the | ||||||
5 | public. The Secretary
shall maintain a toll-free number whereby | ||||||
6 | consumers may obtain
information about licensees. The | ||||||
7 | Secretary shall also establish a complaint
process under which | ||||||
8 | an aggrieved consumer
may file a complaint against a licensee | ||||||
9 | or non-licensee who violates any
provision of this Act.
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10 | (Source: P.A. 94-13, eff. 12-6-05.) | ||||||
11 | (815 ILCS 122/4-5)
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12 | Sec. 4-5. Prohibited acts. A licensee or unlicensed person | ||||||
13 | or entity making payday
loans may not commit, or have committed | ||||||
14 | on behalf of the
licensee
or unlicensed person or entity, any | ||||||
15 | of the following acts: | ||||||
16 | (1) Threatening to use or using the criminal process in | ||||||
17 | this or any
other state to collect on the loan.
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18 | (2) Using any device or agreement that would have the | ||||||
19 | effect of
charging or collecting more fees , interest, or | ||||||
20 | charges than allowed by this
Act, including, but not | ||||||
21 | limited to, entering into a different type of
transaction
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22 | with the consumer.
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23 | (3) Engaging in unfair, deceptive, or fraudulent | ||||||
24 | practices in the
making or collecting of a payday loan.
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25 | (4) Using or attempting to use the check provided by |
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1 | the consumer in
a payday loan as collateral for a | ||||||
2 | transaction not related to a payday loan.
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3 | (5) Knowingly accepting payment in whole or in part of | ||||||
4 | a payday
loan through the proceeds of another payday loan | ||||||
5 | provided by any licensee.
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6 | (6) Knowingly accepting any security, other than that | ||||||
7 | specified in the
definition of payday loan in Section 1-10, | ||||||
8 | for a payday loan.
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9 | (7) Charging any fees , interest, or charges other than | ||||||
10 | those specifically
authorized by this Act.
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11 | (8) Threatening to take any action against a consumer | ||||||
12 | that is
prohibited by this Act or making any misleading or | ||||||
13 | deceptive statements
regarding the payday loan or any | ||||||
14 | consequences thereof.
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15 | (9) Making a misrepresentation of a material fact by an | ||||||
16 | applicant for licensure in
obtaining or attempting to | ||||||
17 | obtain a license.
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18 | (10) Including any of the following provisions in loan | ||||||
19 | documents
required by subsection (b) of Section 2-20:
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20 | (A) a confession of judgment clause;
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21 | (B) a waiver of the right to a jury trial , if | ||||||
22 | applicable, in any action
brought by or against a | ||||||
23 | consumer, unless the waiver is included in an | ||||||
24 | arbitration clause allowed under
subparagraph (C) of | ||||||
25 | this paragraph (11) ;
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26 | (C) a mandatory arbitration clause that is |
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1 | oppressive, unfair,
unconscionable, or substantially | ||||||
2 | in derogation of the rights of consumers ; or
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3 | (D) a provision in which the consumer agrees not to | ||||||
4 | assert any claim
or defense arising out of the | ||||||
5 | contract.
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6 | (11) Selling any insurance of any kind whether or not | ||||||
7 | sold in
connection with the making or collecting of a | ||||||
8 | payday loan.
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9 | (12) Taking any power of attorney.
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10 | (13) Taking any security interest in real estate.
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11 | (14) Collecting a delinquency or collection charge on | ||||||
12 | any installment
regardless of the period in which it | ||||||
13 | remains in default.
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14 | (15) Collecting treble damages on an amount owing from | ||||||
15 | a payday loan.
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16 | (16) Refusing, or intentionally delaying or
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17 | inhibiting, the consumer's right to enter into a repayment | ||||||
18 | plan pursuant to this
Act. | ||||||
19 | (17) Charging for, or attempting to
collect, | ||||||
20 | attorney's fees, court costs, or arbitration costs | ||||||
21 | incurred in connection with the
collection of a payday | ||||||
22 | loan. | ||||||
23 | (18) Making a loan in violation of this Act. | ||||||
24 | (19) Garnishing the wages or salaries of a consumer who | ||||||
25 | is a member of the military. | ||||||
26 | (20) Failing to suspend or defer collection activity |
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1 | against a consumer who is a member of the military and who | ||||||
2 | has been deployed to a combat or combat-support posting. | ||||||
3 | (21) Contacting the military chain of command of a | ||||||
4 | consumer who is a member of the military in an effort to | ||||||
5 | collect on a payday loan.
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6 | (Source: P.A. 94-13, eff. 12-6-05.)
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7 | Section 99. Effective date. This Act takes effect upon | ||||||
8 | becoming law.
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