HB5284 98TH GENERAL ASSEMBLY

LRB098 17723 JLS 52840 b

98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB5284

Introduced , by Rep. C.D. Davidsmeyer

SYNOPSIS AS INTRODUCED:

815 ILCS 122/2-20

Amends the Payday Loan Reform Act. Provides that the Department of Financial and Professional Regulation shall develop a short video depicting the manner in which compound interest works and setting forth statutorily required disclosures. Requires the video to be available in Spanish and English and to be presented to payday loan customers at the time of a transaction.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning business.

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

Section 5. The Payday Loan Reform Act is amended by changing Section 2-20 as follows:

(815 ILCS 122/2-20)

Sec. 2-20. Required disclosures.

(a) Before a payday loan is made, a lender shall deliver to the consumer a pamphlet prepared by the Secretary that:

(1) explains, in simple English and Spanish, all of the consumer's rights and responsibilities in a payday loan transaction;

(2) includes a toll-free number to the Secretary's office to handle concerns or provide information about whether a lender is licensed, whether complaints have been filed with the Secretary, and the resolution of those complaints; and

(3) provides information regarding the availability of debt management services.

(b) Lenders shall provide consumers with a written agreement that may be kept by the consumer. The written agreement must include the following information in English and in the language in which the loan was negotiated:

(1) the name and address of the lender making the payday loan, and the name and title of the individual employee who signs the agreement on behalf of the lender;

(2) disclosures required by the federal Truth in Lending Act;

(3) a clear description of the consumer's payment obligations under the loan;

(4) the following statement, in at least 14-point bold type face: "You cannot be prosecuted in criminal court to collect this loan." The information required to be disclosed under this subdivision (4) must be conspicuously disclosed in the loan document and shall be located immediately preceding the signature of the consumer; and

(5) the following statement, in at least 14-point bold type face:

"WARNING: This loan is not intended to meet long-term financial needs. This loan should be used only to meet short-term cash needs. The cost of your loan may be higher than loans offered by other lending institutions. This loan is regulated by the Department of Financial and Professional Regulation."

(c) The following notices in English and Spanish must be conspicuously posted by a lender in each location of a business providing payday loans:

(1) A notice that informs consumers that the lender cannot use the criminal process against a consumer to collect any payday loan.

(2) The schedule of all finance charges to be charged on loans with an example of the amounts that would be charged on a $100 loan payable in 13 days, a $400 loan payable in 30 days, and an installment payday loan of $400 payable on a monthly basis over 180 days, giving the corresponding annual percentage rate.

(3) In one-inch bold type, a notice to the public in the lending area of each business location containing the following statement:

"WARNING: This loan is not intended to meet long-term financial needs. This loan should be used only to meet short-term cash needs. The cost of your loan may be higher than loans offered by other lending institutions. This loan is regulated by the Department of Financial and Professional Regulation."

(4) In one-inch bold type, a notice to the public in the lending area of each business location containing the following statement:

"INTEREST-FREE REPAYMENT PLAN: If you still owe on one or more payday loans, other than an installment payday loan, after 35 days, you are entitled to enter into a repayment plan. The repayment plan will give you at least 55 days to repay your loan in installments with no additional finance charges, interest, fees, or other charges of any kind."

(d) The Department shall develop, in cooperation with one or more trade associations that represent lenders, a video making the disclosures required under this Section. The video shall contain an explanation of the manner in which compound interest works.

The video shall be no longer than 15 minutes in length. The video shall be made available in both Spanish and English.

A lender shall display to the consumer at the time of the transaction the video created under this Section. The display shall be made on screen having a diagonal measurement of not less than 19 inches. The consumer shall select the language in which the video is presented.

The Department, in cooperation with one or more trade associations that represent lenders, may revise and update the video at any time.

The Department may adopt rules necessary to implement this subsection.

The cost of any video developed under this subsection shall be paid only from moneys available from the collection of license fees under this Act.

(Source: P.A. 96-936, eff. 3-21-11.)