HB1219 97TH GENERAL ASSEMBLY

LRB097 06683 CEL 46769 b

97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB1219

Introduced 02/08/11, by Rep. Michael J. Zalewski

SYNOPSIS AS INTRODUCED:

See Index

Amends the Collection Agency Act. Provides that in any action initiated by a debt buyer or debt collector to enforce the collection of a debt shall include (i) a copy of the contract or other writing evidencing the original debt, which must contain a signature of the defendant and (ii) a copy of the assignment or other writing establishing that the plaintiff is the owner of the debt. Provides that in any action brought by a debt buyer or debt collector to enforce the collection of a debt, the plaintiff shall affirmatively state in his or her complaint that the claim is within the statutory period of limitation for the cause of action. Permits that any aggrieved person may bring a civil action to enforce this Act for actual damages sustained by a person as a result of the defendant's failure to adhere to the provisions of this Act and an injunction prohibiting further violations. Provides that in an action brought by an individual, additional damages, as the court may allow, shall not exceed $5,000 per violation. Provides that in an action brought by class action, the court may allow the amount for each named plaintiff as could be recovered if the action was brought as an individual, and the amount as for all other class members, without regard to a minimum individual recovery, shall not exceed $1,000,000. Permits the recovery of attorney's fees and costs if the court finds an action was brought in bad faith and for the purposes of harassment. Provides guidelines for the court to consider in determining damages for a violation of this Act. Provides that a debt collector may not be held liable in any action if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error. Makes other changes.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning regulation.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Collection Agency Act is amended by changing Sections 2 and 9 and by adding Sections 8b-1, 8b-2, and 14c as follows:

(225 ILCS 425/2) (from Ch. 111, par. 2002)

(Section scheduled to be repealed on January 1, 2016)

Sec. 2. Definitions. In this Act:

"Consumer credit transaction" means a transaction between a natural person and another person in which property, service, or money is acquired on credit by that natural person from such other person primarily for personal, family, or household purposes.

"Consumer debt" or "consumer credit" means money, property, or their equivalent, due or owing or alleged to be due or owing from a natural person by reason of a consumer credit transaction.

"Creditor" means a person who extends consumer credit to a debtor.

"Debt" means money, property, or their equivalent which is due or owing or alleged to be due or owing from a natural person to another person.

"Debt collection" means any act or practice in connection with the collection of consumer debts.

"Debt collector", "collection agency", or "agency" means any person who, in the ordinary course of business, regularly, on behalf of himself or herself or others, engages in debt collection.

"Debtor" means a natural person from whom a debt collector seeks to collect a consumer debt that is due and owing or alleged to be due and owing from such person.

"Department" means Division of Professional Regulation within the Department of Financial and Professional Regulation.

"Director" means the Director of the Division of Professional Regulation within the Department of Financial and Professional Regulation.

"Person" means a natural person, partnership, corporation, limited liability company, trust, estate, cooperative, association, or other similar entity.

(Source: P.A. 95-437, eff. 1-1-08.)

(225 ILCS 425/8b-1 new)

Sec. 8b-1. Required attachments. In any action initiated by a debt buyer or debt collector to enforce the collection of a debt, the following materials shall be attached to the complaint:

(1) A copy of the contract or other writing evidencing the original debt, which must contain a signature of the defendant. If a claim is based on credit card debt and no signed writing is evident that the original debt ever existed, then copies of documents generated when the credit card was actually used to incur the debt must be attached.

(2) A copy of the assignment or other writing establishing that the plaintiff is the owner of the debt. If the debt has been assigned more than once, then each assignment or other writing evidencing transfer of ownership must be attached to establish an unbroken chain of ownership. Each assignment or other writing evidencing transfer of ownership must contain the original account number of the debt purchased and must clearly show the debtor's name associated with that account number.

(225 ILCS 425/8b-2 new)

Sec. 8b-2. Pleading timeliness. In any action brought by a debt buyer or debt collector to enforce the collection of a debt, the plaintiff shall affirmatively state in his or her complaint that the claim is within the statutory period of limitation for the cause of action.

(225 ILCS 425/9) (from Ch. 111, par. 2012)

(Section scheduled to be repealed on January 1, 2016)

Sec. 9. (a) The Department may refuse to issue or renew, or may revoke, suspend, place on probation, reprimand or take other disciplinary action as the Department may deem proper, including fines not to exceed $5,000 for a first violation and not to exceed $10,000 for a second or subsequent violation, for any one or any combination of the following causes:

(1) Violations of this Act or of the rules promulgated hereunder.

(2) Conviction of the collection agency or the principals of the agency of any crime under the laws of any U.S. jurisdiction which is a felony, a misdemeanor an essential element of which is dishonesty, or of any crime which directly relates to the practice of the profession.

(3) Making any misrepresentation for the purpose of obtaining a license or certificate.

(4) Habitual or excessive use or addiction to alcohol, narcotics, stimulants or any other chemical agent or drug which results in the inability to practice with reasonable judgment, skill, or safety by any of the principals of a collection agency.

(5) Discipline by another U.S. jurisdiction or foreign nation, if at least one of the grounds for the discipline is the same or substantially equivalent to those set forth in this Act.

(6) A finding by the Department that the licensee, after having his license placed on probationary status, has violated the terms of probation.

(7) Practicing or attempting to practice under a name other than the name as shown on his or her license or any other legally authorized name.

(8) A finding by the Federal Trade Commission that a licensee violated the Federal Fair Debt and Collection Act or its rules.

(9) Failure to file a return, or to pay the tax, penalty or interest shown in a filed return, or to pay any final assessment of tax, penalty or interest, as required by any tax Act administered by the Illinois Department of Revenue until such time as the requirements of any such tax Act are satisfied.

(10) Using or threatening to use force or violence to cause physical harm to a debtor, his family or his property.

(11) Threatening to instigate an arrest or criminal prosecution where no basis for a criminal complaint lawfully exists.

(12) Threatening the seizure, attachment or sale of a debtor's property where such action can only be taken pursuant to court order without disclosing that prior court proceedings are required.

(13) Disclosing or threatening to disclose information adversely affecting a debtor's reputation for credit worthiness with knowledge the information is false.

(14) Initiating or threatening to initiate communication with a debtor's employer unless there has been a default of the payment of the obligation for at least 30 days and at least 5 days prior written notice, to the last known address of the debtor, of the intention to communicate with the employer has been given to the employee, except as expressly permitted by law or court order.

(15) Communicating with the debtor or any member of the debtor's family at such a time of day or night and with such frequency as to constitute harassment of the debtor or any member of the debtor's family. For purposes of this Section the following conduct shall constitute harassment:

(A) Communicating with the debtor or any member of his or her family in connection with the collection of any debt without the prior consent of the debtor given directly to the debt collector, or the express permission of a court of competent jurisdiction, at any unusual time or place or a time or place known or which should be known to be inconvenient to the debtor. In the absence of knowledge of circumstances to the contrary, a debt collector shall assume that the convenient time for communicating with a consumer is after 8 o'clock a.m. and before 9 o'clock p.m. local time at the debtor's location.

(B) The threat of publication or publication of a list of consumers who allegedly refuse to pay debts, except to a consumer reporting agency.

(C) The threat of advertisement or advertisement for sale of any debt to coerce payment of the debt.

(D) Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.

(16) Using profane, obscene or abusive language in communicating with a debtor, his or her family or others.

(17) Disclosing or threatening to disclose information relating to a debtor's indebtedness to any other person except where such other person has a legitimate business need for the information or except where such disclosure is regulated by law.

(18) Disclosing or threatening to disclose information concerning the existence of a debt which the debt collector knows to be reasonably disputed by the debtor without disclosing the fact that the debtor disputes the debt.

(19) Engaging in any conduct which the Director finds was intended to cause and did cause mental or physical illness to the debtor or his or her family.

(20) Attempting or threatening to enforce a right or remedy with knowledge or reason to know that the right or remedy does not exist.

(21) Failing to disclose to the debtor or his or her family the corporate, partnership or proprietary name, or other trade or business name, under which the debt collector is engaging in debt collections and which he or she is legally authorized to use.

(22) Using any form of communication which simulates legal or judicial process or which gives the appearance of being authorized, issued or approved by a governmental agency or official or by an attorney at law when it is not.

(23) Using any badge, uniform, or other indicia of any governmental agency or official except as authorized by law.

(24) Conducting business under any name or in any manner which suggests or implies that a debt collector is bonded if such collector is or is a branch of or is affiliated with any governmental agency or court if such collector is not.

(25) Failing to disclose, at the time of making any demand for payment, the name of the person to whom the claim is owed and at the request of the debtor, the address where payment is to be made and the address of the person to whom the claim is owed.

(26) Misrepresenting the amount of the claim or debt alleged to be owed.

(27) Representing that an existing debt may be increased by the addition of attorney's fees, investigation fees or any other fees or charges when such fees or charges may not legally be added to the existing debt.

(28) Representing that the debt collector is an attorney at law or an agent for an attorney if he is not.

(29) Collecting or attempting to collect any interest or other charge or fee in excess of the actual debt or claim unless such interest or other charge or fee is expressly authorized by the agreement creating the debt or claim unless expressly authorized by law or unless in a commercial transaction such interest or other charge or fee is expressly authorized in a subsequent agreement. If a contingency or hourly fee arrangement (i) is established under an agreement between a collection agency and a creditor to collect a debt and (ii) is paid by a debtor pursuant to a contract between the debtor and the creditor, then that fee arrangement does not violate this Section unless the fee is unreasonable. The Department shall determine what constitutes a reasonable collection fee.

(30) Communicating or threatening to communicate with a debtor when the debt collector is informed in writing by an attorney that the attorney represents the debtor concerning the claim, unless authorized by the attorney. If the attorney fails to respond within a reasonable period of time, the collector may communicate with the debtor. The collector may communicate with the debtor when the attorney gives his consent.

(31) Engaging in dishonorable, unethical, or unprofessional conduct of a character likely to deceive, defraud, or harm the public.

(32) Filing a false affidavit, including, but not limited to, a false affidavit of service.

(b) The Department shall deny any license or renewal authorized by this Act to any person who has defaulted on an educational loan guaranteed by the Illinois State Scholarship Commission; however, the Department may issue a license or renewal if the person in default has established a satisfactory repayment record as determined by the Illinois State Scholarship Commission.

No debt collector while collecting or attempting to collect a debt shall engage in any of the Acts specified in this Section, each of which shall be unlawful practice.

(Source: P.A. 94-414, eff. 12-31-05.)

(225 ILCS 425/14c new)

Sec. 14c. Violations; civil liability.

(a) Except as otherwise provided by this Section, any aggrieved person may bring a civil action to enforce this Act for:

(1) any actual damages sustained by a person as a result of the defendant's failure to adhere to the provisions of this Act; and

(2) an injunction prohibiting further violations.

In the case of any action by an individual, the court may allow additional damages, which may not exceed $5,000 per violation.

In the case of a class action, the court may allow the amount for each named plaintiff as could be recovered if the action was brought as an individual, and the amount as for all other class members, without regard to a minimum individual recovery, shall not exceed $1,000,000.

In the case of any successful action to enforce this Act, the defendant or defendants may recover the costs of the action, together with reasonable attorney's fees as determined by the court. On a finding by the court that an action under this subsection (a) was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney's fees reasonable in relation to the work expended and costs.

(b) In determining damages for a violation of this Act, the court shall consider the following:

(1) in any individual action under subsection (a), the frequency and persistence of noncompliance by the debt buyer or collector, the nature of the noncompliance, and the extent that the noncompliance was intentional; or

(2) in any class action under subsection (a), the frequency and persistence of noncompliance by the debt collector, the nature of the noncompliance, the resources of the debt collector, the number of persons adversely affected, and the extent that the debt collector's noncompliance was intentional.

(c) A debt collector may not be held liable in any action brought under this Section if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.