Rep. André M. Thapedi

Filed: 4/12/2013

 

 


 

 


 
09800HB0531ham001LRB098 03805 MGM 44561 a

1
AMENDMENT TO HOUSE BILL 531

2    AMENDMENT NO. ______. Amend House Bill 531 by replacing
3everything after the enacting clause with the following:
 
4    "Section 1-1. Short title. This Act may be cited as the
5Non-Recourse Consumer Lawsuit Funding Act.
 
6    Section 1-5. Definitions. In this Act:
7    "Non-recourse consumer lawsuit funding company" means a
8person or entity that enters into a non-recourse consumer
9lawsuit funding transaction with a consumer. "Non-recourse
10consumer lawsuit funding company" includes any affiliate or
11subsidiary of a non-recourse consumer lawsuit funding company;
12an entity or person who buys a whole or partial interest in a
13non-recourse consumer lawsuit funding, acts as an agent to
14provide non-recourse consumer lawsuit funding from a third
15party for a fee, or acts as an agent for a third party in
16providing non-recourse consumer lawsuit funding for a fee,

 

 

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1regardless of whether approval or acceptance by the third party
2is necessary to create a legal obligation for the third party;
3and any other person or entity if the Department determines
4that the person or entity is engaged in a transaction that is
5in substance a disguised non-recourse consumer lawsuit funding
6or a subterfuge for the purpose of avoiding this Act.
7Notwithstanding anything to the contrary contained in this Act,
8a bank, lender, financing entity, or any other special purpose
9entity that provides financing to a non-recourse consumer
10lawsuit funding company or to which a non-recourse consumer
11lawsuit funding company grants a security interest or transfers
12any rights or interest in non-recourse consumer lawsuit funding
13shall not cause the bank, lender, financing entity, or special
14purpose entity to be deemed a non-recourse consumer lawsuit
15funding company. Notwithstanding anything to the contrary
16contained in this Act, an attorney or accountant who provides
17services to a consumer shall not be deemed a non-recourse
18consumer lawsuit funding company.
19    "Consumer" means a natural person residing or domiciled in
20Illinois or who elects to enter into a transaction under this
21Act in Illinois, whether it be in-person, over the internet, by
22facsimile, or any other electronic means, and who has a pending
23legal claim and is represented by an attorney at the time he or
24she enters into a contract for non-recourse consumer lawsuit
25funding.
26    "Contract" means a written agreement between a consumer and

 

 

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1a non-recourse consumer lawsuit funding company that the
2non-recourse consumer lawsuit funding company agrees to
3provide non-recourse consumer lawsuit funding to the consumer
4in compliance with Article 2.
5    "Department" means the Illinois Department of Financial
6and Professional Regulation.
7    "Funding amount" means the dollar amount of funds provided
8to the consumer by the non-recourse consumer lawsuit funding
9company subsequent to the execution of the contract as
10consideration for the assignment of or purchase of a contingent
11right to receive a portion of the proceeds of the legal claim.
12    "Funding date" means the date on which the funding amount
13is paid to the consumer by the non-recourse consumer lawsuit
14funding company.
15    "Legal claim" means a civil or statutory claim or action.
16    "Licensee" means any non-recourse consumer lawsuit funding
17company licensed in accordance with Article 3.
18    "Non-recourse consumer lawsuit funding" means a
19transaction of any amount in which a non-recourse consumer
20lawsuit funding company purchases and a consumer assigns to the
21non-recourse consumer lawsuit funding company the contingent
22right to receive a portion of the potential proceeds of a
23settlement, judgment, award, or verdict obtained in the
24consumer's legal claim.
25    "Proceeds" means those funds available for payment to the
26non-recourse consumer lawsuit funding company that are

 

 

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1remaining from any settlement, verdict, final judgment,
2insurance payment, or award obtained in the consumer's legal
3claim after reductions are made under Section 2-15 of this Act.
4    "Resolution date" means the date the funding amount plus
5the agreed upon fees from the legal claim are received by the
6non-recourse consumer lawsuit funding company.
7    "Secretary" means the Illinois Secretary of Financial and
8Professional Regulation.
 
9
Article 2. Non-Recourse Consumer Lawsuit Funding

 
10    Section 2-5. Contract provisions. All contracts for
11non-recourse consumer lawsuit funding shall be in writing and
12comply with all of the following requirements:
13    (1) The contract shall contain on the front page,
14appropriately headed and in at least 12-point, bold face type,
15a chart that clearly contains the following disclosures:
16        (A) the total funding amount paid to the consumer;
17        (B) an itemization of one-time fees;
18        (C) the total dollar amount owed by the consumer to the
19    non-recourse consumer lawsuit funding company, set forth
20    up to 1,080 days beginning at the 11th business day after
21    the funding date, then at 30 days after the funding date
22    and at every 30 days thereafter; the total dollar amount
23    shall be calculated using the identical methodology used by
24    the non-recourse consumer lawsuit funding company to

 

 

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1    calculate the contracted fee amount under Section 2-10.
2    The Secretary shall prescribe by rule the format of the
3chart that clearly discloses to the consumer all the
4information in this subsection. Until the Secretary makes such
5a rule, each non-recourse consumer lawsuit funding company must
6have a chart format approved for distribution by the Secretary.
7    No contract for non-recourse consumer lawsuit funding
8shall be enforceable against the consumer unless it complies
9entirely with this subsection.
10    (2) The contract shall provide that the consumer may cancel
11the contract within 10 business days following the consumer's
12receipt of the funding amount, without penalty or further
13obligation. The contract shall contain the following notice
14written in at least 12-point, bold face type:
15    "Consumer's right to cancellation: You may cancel this
16    contract without penalty or further obligation within 10
17    business days after the funding date.".
18    The contract must also specify that in order for the
19cancellation to be effective, the consumer must either return
20to the non-recourse consumer lawsuit funding company the total
21amount of the funding amount by (a) delivering the non-recourse
22consumer lawsuit funding company's uncashed check to the
23non-recourse consumer lawsuit company's offices in person
24within 10 business days after receipt of the funding amount,
25(b) sending a notice of cancellation via registered or
26certified mail and include in the mailing a return of the total

 

 

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1amount of funding amount in the form of the non-recourse
2consumer lawsuit funding company's uncashed check within 10
3business days after receipt of the funding amount, or (c)
4sending a registered, certified or cashier's check or money
5order, by insured, registered, or certified United States mail,
6postmarked within 10 business days after receipt of the funding
7amount, to the address specified in the contract for
8cancellation.
9    (3) The contract shall contain all of the following
10statements in at least 12-point, bold face type:
11        "(A) [Insert name of the non-recourse consumer lawsuit
12    funding company] agrees that it shall have no right to and
13    will not make any decisions with respect to the conduct of
14    the legal claim or any settlement or resolution thereof and
15    that the right to make those decisions remains solely with
16    you and your attorney in the legal claim. [Insert name of
17    the non-recourse consumer lawsuit funding company] further
18    agrees that it shall have no right to pursue the legal
19    claim on your behalf.
20        (B) [Insert name of the non-recourse consumer lawsuit
21    funding company] agrees that it shall only accept: (i) an
22    assignment of a contingent right to receive a portion of
23    the potential proceeds; (ii) the contracted return of the
24    funding amount; and (iii) any agreed upon fees. Any agreed
25    upon fees to [insert name of the non-recourse consumer
26    lawsuit funding company] shall not be determined as a

 

 

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1    percentage of your recovery from the legal claim but shall
2    be set as a contractually determined amount based upon
3    intervals of time from the funding date through the
4    resolution date. [Insert name of the non-recourse consumer
5    lawsuit funding company] is not accepting an assignment of
6    your legal claim.
7        (C) [Insert name of the non-recourse consumer lawsuit
8    funding company] agrees that you may make payments on a
9    funding at any time without additional cost or penalty.
10        (D) [Insert name of the non-recourse consumer lawsuit
11    funding company] is not a law firm and is prohibited from
12    rendering legal advice. Advice about the conduct of the
13    legal claim or any settlement or resolution shall be
14    directed to a properly licensed attorney.".
15    (4) All contracts with the consumer must contain the
16following statement, in plain language in a box with 15-point,
17bold face type, in all capitalized letters, stating the
18following:
19    "THE FUNDING AMOUNT AND AGREED UPON FEES SHALL ONLY BE PAID
20    FROM THE PROCEEDS OF YOUR LEGAL CLAIM AND SHALL ONLY BE
21    PAID TO THE EXTENT THAT THERE ARE AVAILABLE PROCEEDS FROM
22    YOUR LEGAL CLAIM. YOU WILL NOT OWE [INSERT NAME OF THE
23    NON-RECOURSE CONSUMER LAWSUIT FUNDING COMPANY] ANYTHING IF
24    THERE ARE NO PROCEEDS FROM YOUR LEGAL CLAIM.".
25    (5) The contract shall contain the following statement in
26at least 12-point, bold face type located immediately above the

 

 

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1space where the consumer's signature is required:
2    "Do not sign this Agreement before you read it completely
3    or if it contains any blank spaces. You are entitled to a
4    completely filled-in copy of this Agreement. Before you
5    sign this Agreement you should obtain the advice of an
6    attorney. Depending on the circumstances, you may want to
7    consult a tax, public, or private benefit planning or
8    financial professional. You acknowledge that your attorney
9    in the legal claim has provided no tax, public, or private
10    benefit planning regarding this transaction. You further
11    understand and agree that the funds you receive from
12    [insert name of the non-recourse consumer lawsuit funding
13    company] shall not be used to pay for or applied to the
14    payment of attorney's fees or litigation costs related to
15    your legal claim.".
16    (6) The executed contract shall contain a written
17acknowledgment by the consumer that he or she has reviewed the
18contract in its entirety.
19    (7) The non-recourse consumer lawsuit funding company
20shall provide the consumer's attorney with a written
21notification of the non-recourse consumer lawsuit funding
22provided to the consumer 3 business days before the funding
23date by way of postal mail, courier service, facsimile, e-mail
24return receipt acknowledged, or other means of proof of
25delivery method unless there is a written acknowledgment by the
26attorney representing the consumer in the legal claim as to the

 

 

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1terms of the contract. Notwithstanding notice of the
2non-recourse consumer lawsuit funding, the consumer's attorney
3is not responsible for paying or ensuring payment of the
4consumer's obligation.
5    (8) The contracted return of the funding amount, plus any
6agreed upon fees assigned to the non-recourse consumer lawsuit
7funding company on the resolution date shall not be determined
8as a percentage of the recovery from the legal claim but shall
9be set as a contractually determined amount based upon
10intervals of time from the funding date through the resolution
11date.
 
12    Section 2-10. Contracted fee amount.
13    (a) The non-recourse consumer lawsuit funding company
14shall offer the consumer the option of either entering into a
15conventional loan under the Consumer Installment Loan Act or
16entering into non-recourse consumer lawsuit funding.
17    If the consumer elects to enter into a conventional loan
18agreement under the Consumer Installment Loan Act, the interest
19charged shall not exceed an annual percentage rate of 36%.
20    If the consumer elects to enter into non-recourse consumer
21lawsuit funding, the company shall not charge a fee in excess
22of 36% annual percentage rate plus a deferment fee not to
23exceed 1.5% for each month the funding is outstanding with
24compounding to occur no more often than bi-monthly.
25    (b) No additional fees shall be applied for any period of

 

 

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1time beyond 1080 days from the funding date.
2    (c) Except for the fees set forth in this Section and
3Section 20, the non-recourse consumer lawsuit funding company
4shall not impose on a consumer any additional finance charges,
5interest, fees, or charges of any sort for any purpose.
6    (d) Under no circumstances shall the total amount of
7finance charges, interest, fees, or any other charges, when
8taken together, exceed the award to the consumer.
 
9    Section 2-12. Charges permitted.
10    (a) A licensee may charge an acquisition charge not to
11exceed 8% of the amount funded or $100, whichever is less.
12    (b) A licensee may charge an expedited funds delivery
13option charge not to exceed the actual cost of delivery or $20,
14whichever is less. Expedited funds delivery options,
15including, but not limited to, overnight delivery, electronic
16fund transfers, and Automated Clearing House (ACH)
17transactions may be offered to the consumer as a choice of the
18method of the delivery of funds. The fund delivery charge is
19fully earned at the time that each funding transaction is made
20and shall not be subject to refund. Details and receipts of
21delivery shall be provided in an invoice to the consumer no
22more than 10 business days after the funding date. A no-charge
23delivery option must be offered to the consumer as a choice.
 
24    Section 2-15. Claim priorities. Any lien arising out of the

 

 

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1underlying consumer's legal claim for subrogation claims,
2attorney fees, attorney liens, and litigation costs, health
3care providers, employers in worker's compensation
4proceedings, health insurers, employers with self-funded
5health care plans, Medicare, and Public Aid shall be satisfied
6before and take priority over any claim of the non-recourse
7consumer lawsuit funding company. All other holders of liens,
8security interests, or subrogation claims shall take priority
9over the non-recourse consumer lawsuit funding company to the
10extent allowed by law.
 
11    Section 2-20. Standards and practices. Each non-recourse
12consumer lawsuit funding company shall adhere to the following:
13    (1) The non-recourse consumer lawsuit funding company
14shall not pay or offer to pay any compensation to any attorney,
15law firm, medical provider, chiropractor, physical therapist,
16or any of their employees for referring a consumer to the
17non-recourse consumer lawsuit funding company. The
18non-recourse consumer lawsuit funding company agrees not to
19accept any compensation from any attorney, law firm, medical
20provider, chiropractor, physical therapist, or any of their
21employees, other than the funding amount and any agreed upon
22fees the consumer assigned to the non-recourse consumer lawsuit
23funding company out of the potential proceeds of the legal
24claim. If a lawyer or law firm represents one or more consumers
25with outstanding non-recourse consumer lawsuit fundings from

 

 

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1the same non-recourse consumer lawsuit funding company, that
2non-recourse consumer lawsuit funding company may not provide
3any type of funding to the lawyer or law firm.
4    (2) The non-recourse consumer lawsuit funding company
5shall not advertise false or intentionally misleading
6information regarding its product or services.
7    (3) The non-recourse consumer lawsuit funding company
8shall not knowingly provide funding to a consumer who has
9previously sold and assigned an amount of the potential
10proceeds of his or her legal claim to another non-recourse
11consumer lawsuit funding company without first purchasing that
12non-recourse consumer lawsuit funding company's entire accrued
13balance unless otherwise agreed to in writing by the consumer
14and all non-recourse consumer lawsuit funding companies that
15provided non-recourse consumer lawsuit funding to the
16consumer.
17    (4) The non-recourse consumer lawsuit funding company
18shall not offer single premium credit life, disability, or
19unemployment insurance that will be financed through a
20non-recourse consumer lawsuit funding transaction.
21    (5) For non-English speaking consumers, the principal
22terms of the contract must be translated in writing into the
23consumer's primary language. The consumer must sign the
24translated document containing the principal terms and initial
25each page and the translator must sign an affirmation
26confirming that the principal terms have been presented to the

 

 

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1consumer in the consumer's primary language and acknowledged by
2the consumer. Principal terms shall include all items that must
3be disclosed by Section 2-5.
4    (6) The non-recourse consumer lawsuit funding company
5shall not knowingly enter into a non-recourse consumer lawsuit
6funding contract with a consumer where the consumer's legal
7claim is a pending class action lawsuit at the time of the
8funding. The non-recourse consumer lawsuit funding company may
9not discuss a consumer's choice to join a class action lawsuit
10other than to confirm that a consumer has or has not chosen to
11join a class action lawsuit. Should any legal claim in which a
12plaintiff has received non-recourse consumer lawsuit funding
13become a class action matter, no further funding shall be
14permitted. The non-recourse consumer lawsuit funding company
15is prohibited from advancing, loaning, assigning, or otherwise
16providing funds, directly or indirectly, to any attorney, law
17firm, or related entity for the purposes of researching,
18investigating, developing, prosecuting, or otherwise
19representing parties in class action mass tort litigation.
20    (7) No communication between a consumer's attorney and a
21non-recourse consumer lawsuit funding company pertaining to a
22consumer's non-recourse consumer lawsuit funding transaction
23shall limit, waive, or abrogate any statutory or common-law
24privilege, including the attorney-client privilege or the
25work-product doctrine.
26    (8) The return of the funding amount to the non-recourse

 

 

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1consumer lawsuit funding company, plus any agreed upon fees,
2shall be rendered only out of the funds, if any, of the
3realized settlement, judgment, award, or verdict the consumer
4may receive from the legal claim. Under no circumstances shall
5the non-recourse consumer lawsuit funding company have
6recourse for the funding amount beyond the consumer's proceeds
7from the legal claim.
8    (9) The non-recourse consumer lawsuit funding company
9shall have no authority to advise the consumer on any legal
10matters or to make any decisions with respect to the conduct of
11the litigation of the legal claim or any settlement or
12resolution thereof. The right to make those decisions remains
13solely with the consumer and the consumer's attorney
14representing the consumer in the legal claim. The non-recourse
15consumer lawsuit funding company shall have no right to pursue
16the legal claim on the consumer's behalf.
17    (10) The non-recourse consumer lawsuit funding company
18shall only accept an assignment of a contingent right to
19receive a portion of the potential proceeds, rather than an
20assignment of the legal claim. The contracted return of the
21funding amount, plus any agreed upon fees assigned to the
22non-recourse consumer lawsuit funding company, shall not be
23determined as a percentage of the total recovery from the legal
24claim, but shall be set as a contractually determined amount
25based upon intervals of time from the funding date through the
26resolution date.

 

 

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1    (11) Notwithstanding subsection (9) of this Section, the
2non-recourse consumer lawsuit funding company shall allow the
3consumer to make payments on a funding at any time without
4additional cost or penalty.
5    (12) Contact between the non-recourse consumer lawsuit
6funding company and the consumer shall be subject to the
7following limitations:
8        (A) Neither a non-recourse consumer lawsuit funding
9    company, nor any person acting on behalf of a non-recourse
10    consumer lawsuit funding company, shall contact a consumer
11    prior to the consumer obtaining legal representation and
12    initiating a legal claim.
13        (B) Neither a non-recourse consumer lawsuit funding
14    company, nor any person acting on behalf of a non-recourse
15    consumer lawsuit funding company, shall contact the
16    consumer after the funding date in order to influence any
17    decisions with respect to the conduct of the legal claim or
18    any settlement or resolution thereof. Notwithstanding the
19    foregoing, the non-recourse consumer lawsuit funding
20    company may contact the consumer to obtain the status of
21    the legal claim and updated attorney contact information.
22        (C) After the resolution date, neither a non-recourse
23    consumer lawsuit funding company, nor any person acting on
24    behalf of a non-recourse consumer lawsuit funding company,
25    shall seek to collect additional funds or threaten civil
26    action for any deficiency.
 

 

 

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1    Section 2-25. Information; reporting and examination.
2    (a) A licensee shall keep and use books, accounts, and
3records that will enable the Secretary to determine if the
4licensee is complying with the provisions of this Act and
5maintain any other records as required by the Secretary.
6    (b) A licensee shall collect and maintain information
7annually for a report that shall disclose in detail and under
8appropriate headings:
9        (1) the total number of non-recourse consumer lawsuit
10    fundings made during the previous calendar year;
11        (2) the total number of non-recourse consumer lawsuit
12    fundings outstanding as of December 31st of the preceding
13    calendar year;
14        (3) the minimum, maximum, and average amount of
15    non-recourse consumer lawsuit fundings made during the
16    preceding calendar year;
17        (4) the average annual fee rate of the non-recourse
18    consumer lawsuit fundings made during the preceding year;
19    and
20        (5) the total number of non-recourse consumer lawsuit
21    funding transactions in which the non-recourse consumer
22    lawsuit funding company received the return of the funding
23    amount, plus any agreed upon fees; the total number of
24    non-recourse consumer lawsuit funding transactions for
25    which the non-recourse consumer lawsuit funding company

 

 

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1    received no return of the funding amount or any fees; and
2    the total number of non-recourse consumer lawsuit funding
3    transactions in which the non-recourse consumer lawsuit
4    funding company received an amount less than the contracted
5    amount.
6    The report shall be verified by the oath or affirmation of
7the Chief Executive Officer, Chief Financial Officer, or other
8duly authorized representative of the licensee. The report must
9be filed with the Secretary no later than March 1 of the year
10following the year for which the report discloses the
11information specified in this subsection (b). The Secretary may
12impose a fine of $50 per day upon the licensee for each day
13beyond the filing deadline that the report is not filed.
14    (c) The Department shall have the authority to conduct
15examinations at any time of the books, records, and
16non-recourse consumer lawsuit funding documents of a licensee
17or other company or person doing business without the required
18license. Any licensee being examined must provide to the
19Department convenient and free access at all reasonable hours
20at its office or location to all books, records, non-recourse
21consumer lawsuit funding documents. The officers, directors,
22and agents of the non-recourse consumer lawsuit funding company
23must facilitate the examination and aid in the examination so
24far as it is in their power to do so.
 
25    Section 2-30. Applicability. The contingent right to

 

 

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1receive a portion of the potential proceeds of a legal claim is
2assignable and valid for the purposes of obtaining funding from
3a licensee under this Section.
 
4
Article 3. Licensure.

 
5    Section 3-1. Licensure requirement.
6    (a) Except as provided in subsection (b), on and after the
7effective date of this Act, a non-recourse consumer lawsuit
8funding company as defined by Section 1-5 must be licensed by
9the Department as provided in this Article.
10    (b) A non-recourse consumer lawsuit funding company
11licensed on the effective date of this Act under the Consumer
12Installment Loan Act need not comply with subsection (a) until
13the Department takes action on the non-recourse consumer
14lawsuit funding company's application for a non-recourse
15consumer lawsuit funding license. The application must be
16submitted to the Department within 3 months after the effective
17date of this Act. If the application is not submitted within 3
18months after the effective date of this Act, the non-recourse
19consumer lawsuit funding company is subject to subsection (a).
 
20    Section 3-5. Licensure.
21    (a) An application for a license shall be in writing and in
22a form prescribed by the Secretary. Applicants must also submit
23a non-refundable application fee of $2,500, due at the time of

 

 

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1the application. The Secretary may not issue a non-recourse
2consumer lawsuit funding license unless and until the following
3findings are made:
4        (1) that the financial responsibility, experience,
5    character, and general fitness of the applicant are such as
6    to command the confidence of the public and to warrant the
7    belief that the business will be operated lawfully and
8    fairly and within the provisions and purpose of this Act;
9        (2) that the applicant has submitted such other
10    information as the Secretary may deem necessary; and
11        (3) that the applicant is a current licensee under the
12    Consumer Installment Loan Act.
13    (b) A license shall be issued for no longer than one year
14and no renewal of a license may be provided if a licensee has
15substantially violated this Act and has not cured the violation
16to the satisfaction of the Department.
17    (c) A licensee shall appoint, in writing, the Secretary as
18attorney-in-fact upon whom all lawful process against the
19licensee may be served with the same legal force and validity
20as if served on the licensee. A copy of the written
21appointment, duly certified, shall be filed in the office of
22the Secretary, and a copy thereof certified by the Secretary
23shall be sufficient evidence to subject a licensee to
24jurisdiction in a court of law. This appointment shall remain
25in effect while any liability remains outstanding in this State
26against the licensee. When summons is served upon the Secretary

 

 

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1as attorney-in-fact for a licensee, the Secretary shall
2immediately notify the licensee by registered mail, enclosing
3the summons and specifying the day of service.
4    (d) A licensee must pay an annual fee of $1,000. In
5addition to the annual license fee, the reasonable expense of
6any examination or hearing by the Secretary under any
7provisions of this Act shall be borne by the licensee. If a
8licensee fails to submit an application for renewal by December
931st of the then current year, its license shall automatically
10expire; however, the Secretary, in his or her discretion, may
11reinstate an expired license upon:
12        (1) payment of the annual fee within 30 days of the
13    date of expiration; and
14        (2) proof of good cause for failure to renew.
15        (3) that the applicant is a current licensee under the
16    Consumer Installment Loan Act.
17    (e) No licensee shall conduct the business of providing
18non-recourse consumer lawsuit funding under this Act within any
19office, suite, room, or place of business in which any other
20business is solicited or engaged unless the other business is
21licensed by the Department and, in the opinion of the
22Secretary, the other business would not be contrary to the best
23interests of consumers and is authorized by the Secretary in
24writing.
25    (f) The Secretary shall maintain a list of licensees that
26shall be available to interested consumers and lenders and the

 

 

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1public. The Secretary shall maintain a toll-free number whereby
2consumers may obtain information about licensees. The
3Secretary shall also establish a complaint process under which
4an aggrieved consumer may file a complaint against a licensee
5or non-licensee who violates any provision of this Act.
 
6    Section 3-10. Closing of business; surrender of license. At
7least 10 days before a licensee ceases operations, closes the
8business, or files for bankruptcy, the licensee shall:
9    (1) Notify the Department of its intended action in
10writing.
11    (2) With the exception of filing for bankruptcy, surrender
12its license to the Secretary for cancellation. The surrender of
13the license shall not affect the licensee's civil or criminal
14liability for acts committed before or after the surrender or
15entitle the licensee to a return of any part of the annual
16license fee.
17    (3) Notify the Department of the location where the books,
18accounts, contracts, and records will be maintained.
19    The accounts, books, records, and contracts shall be
20maintained and serviced by the licensee, by another licensee
21under this Act, or by the Department.
 
22
Article 4. Administrative Provisions

 
23    Section 4-5. Prohibited acts. A licensee or unlicensed

 

 

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1person or entity entering into non-recourse consumer lawsuit
2funding may not commit, or have committed, on behalf of the
3licensee or unlicensed person or entity, any of the following
4acts:
5    (1) Threatening to use or using the criminal process in
6this or any other state to collect the assignment.
7    (2) Using any device or agreement that would have the
8effect of charging or collecting more fees or charges than
9allowed in this Act, including, but not limited to, entering
10into a different type of transaction with the consumer.
11    (3) Engaging in unfair, deceptive, or fraudulent practices
12related to the non-recourse consumer lawsuit funding.
13    (4) Threatening to take any action against a consumer that
14is prohibited by this Act or making any misleading or deceptive
15statements regarding the non-recourse consumer lawsuit
16funding.
17    (5) Making a misrepresentation of a material fact by an
18applicant for licensure in obtaining or attempting to obtain a
19license.
20    (6) Including any of the following provisions in
21non-recourse consumer lawsuit funding contracts:
22        (A) a confession of judgment clause;
23        (B) a mandatory arbitration clause that is oppressive,
24    unfair, unconscionable, or substantially in derogation of
25    the rights of consumers; or
26        (C) a provision that the consumer agrees not to assert

 

 

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1    any claim or defense arising out of the contract.
2    (7) Taking any power of attorney.
 
3    Section 4-10. Enforcement and remedies.
4    (a) The remedies provided in this Act are cumulative and
5apply to persons or entities subject to this Act.
6    (b) Any material violation of this Act, including the
7commission of an act prohibited under Section 4-5, constitutes
8a violation of the Consumer Fraud and Deceptive Business
9Practices Act.
10    (c) If any provision of the written agreement described in
11Section 2-5 violates this Act, then that provision is
12unenforceable against the consumer.
13    (d) Subject to the Illinois Administrative Procedures Act,
14the Secretary may hold hearings, make findings of fact,
15conclusions of law, issue cease and desist orders, have the
16power to issue fines of up to $10,000 per violation, refer the
17matter to the appropriate law enforcement agency for
18prosecution under this Act, and suspend or revoke a license
19granted under this Act. All proceedings shall be open to the
20public.
21    (e) The Secretary may issue a cease and desist order to any
22licensee or other person doing business without the required
23license, when in the opinion of the Secretary the licensee or
24other person is violating or is about to violate any provisions
25of this Act or any rule or requirement imposed in writing by

 

 

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1the Department as a condition of granting any authorization
2permitted by this Act. In addition to any other action
3authorized by this Act, if the Secretary determines that a
4non-recourse consumer lawsuit funding company is engaged in or
5is believed to be engaged in activities that may constitute a
6violation of this Act and the Secretary is able to show that an
7emergency exists, the Secretary may suspend the non-recourse
8consumer lawsuit funding company's license for a period not
9exceeding 180 calendar days. The cease and desist order and
10emergency suspension permitted by this subsection (e) may be
11issued prior to a hearing.
12    The Secretary shall serve notice of his or her action,
13including, but not limited to, a statement of the reasons for
14the action, either personally or by certified mail, return
15receipt requested. Service by certified mail shall be deemed
16completed when the notice is deposited in the U.S. Mail.
17    Within 10 business days after service of the cease and
18desist order, the licensee or other person may request a
19hearing in writing. The Secretary shall schedule a hearing
20within 30 days after the request for a hearing unless otherwise
21agreed to by the parties. The Secretary shall have the
22authority to adopt rules for the administration of this
23Section.
24    If it is determined that the Secretary had the authority to
25issue the cease and desist order, he or she may issue such
26orders as may be reasonably necessary to correct, eliminate, or

 

 

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1remedy the conduct.
2    The powers vested in the Secretary by the subsection (e)
3are additional to any and all other powers and remedies vested
4in the Secretary by law, and nothing in this subsection (e)
5shall be construed as requiring that the Secretary shall employ
6the power conferred in this subsection instead of or as a
7condition precedent to the exercise of any other power or
8remedy vested in the Secretary.
9    (f) The Secretary may, after 10 business days notice by
10registered mail to the licensee at the address set forth in the
11license stating the contemplated action an in general the
12grounds therefore, fine the licensee an amount not exceeding
13$10,000 per violation, or revoke or suspend any license issued
14by the Department if found that:
15        (1) the licensee has failed to comply with any
16    provision of this Act or any order, decision, finding,
17    rule, regulation, or direction of the Secretary lawfully
18    made under the authority of this Act; or
19        (2) any fact or condition exists that, if it had
20    existed at the time of the original application for the
21    license, clearly would have warranted the Secretary in
22    refusing to issue the license.
23        No revocation, suspension, or surrender of any license
24    shall impair or affect the obligation of any pre-existing
25    lawful contract between the non-recourse consumer lawsuit
26    funding company and a consumer.

 

 

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1        The Secretary may issue a new license to a licensee
2    whose license has been revoked when facts or conditions
3    that clearly would have warranted the Secretary in refusing
4    originally to issue the license no longer exist.
5        In every case in which a license or renewal of a
6    license is denied, the Secretary shall serve the licensee
7    with notice of his or her action, including a statement of
8    the reasons for his or her actions, either personally, or
9    by certified mail, return receipt requested. Service by
10    certified mail shall be deemed completed when the notice is
11    deposited in the U.S. Mail.
12        An order assessing a fine, an order revoking or
13    suspending a license, or an order denying or refusing to
14    renew a license shall take effect upon service of the order
15    unless the licensee requests a hearing, in writing, within
16    10 days after the date of service. In the event a hearing
17    is requested, the order shall be stayed until final
18    administrative order is entered.
19        If the licensee requests a hearing, the Secretary shall
20    schedule a hearing within 30 days after the request for a
21    hearing unless otherwise agreed to by the parties.
22        The hearing shall be held at a time and place
23    designated by the Secretary. The Secretary, and any
24    administrative law judge designated by him or her, shall
25    have the power to administer oaths and affirmations,
26    subpoena witnesses and compel their attendance, take

 

 

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1    evidence, and require the production of books, papers,
2    correspondence, and other records or information that he or
3    she considers relevant or material to the inquiry.
4        The costs of administrative hearings conducted under
5    this Section shall be paid by the licensee.
6    (g) All moneys received by the Department under this Act
7shall be deposited in the Financial Institutions Fund.
 
8    Section 4-15. Bonding.
9    (a) A person or entity engaged in non-recourse consumer
10lawsuit funding under this Act shall post a bond to the
11Department in the amount of $50,000 per license or irrevocable
12letter of credit issued and confirmed by a financial
13institution authorized by law to transact business in the State
14of Illinois.
15    (b) A bond posted under subsection (a) must continue in
16effect for the period of licensure and for 3 additional years
17if the bond is still available. The bond must be available to
18pay damages and penalties to be a consumer harmed by a
19violation of this Act.
20    (c) From time to time the Secretary may require a licensee
21to file a bond in an additional sum if the Secretary determines
22it to be necessary. In no case shall the bond be more than the
23outstanding liabilities of the licensee.
 
24    Section 4-20. Reporting of violations. The Department

 

 

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1shall report to the Attorney General all material violations of
2this Act of which it becomes aware.
 
3    Section 4-25. Rulemaking.
4    (a) The Department may make and enforce such reasonable
5rules, regulations, directions, orders, decisions, and
6findings as the execution and enforcement of the provisions of
7this Act require, and as are not inconsistent therewith. All
8rules, regulations, and directions of a general character shall
9be made available to all licensees in an electronic format.
10    (b) The Department may adopt rules in connection with the
11activities of licensees that are necessary and appropriate for
12the protection of the consumers in this State. These rules
13shall be consistent with this Act.
 
14    Section 4-28. Confidentiality. All information collected
15by the Department under an examination or investigation of a
16non-recourse consumer lawsuit funding company, including, but
17not limited to, information collected to investigate any
18complaint against a non-recourse consumer lawsuit funding
19company filed with the Department, shall be maintained for the
20confidential use of the Department and shall not be disclosed.
21The Department may not disclose such information to anyone
22other than the licensee, law enforcement officials, or other
23regulatory agencies that have an appropriate regulatory
24interest as determined by the Secretary, or to a party

 

 

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1presenting a lawful subpoena to the Department. Information and
2documents disclosed to a federal, State, county, or local law
3enforcement agency shall not be disclosed by the agency for any
4purpose to any other agency or person. An order issued by the
5Department against a non-recourse consumer lawsuit funding
6company shall be a public record and any documents produced in
7discovery, filed with the administrative law judge, or
8introduced at hearing shall be a public record, except as
9otherwise prohibited by law.
 
10    Section 4-30. Judicial review. All final administrative
11decisions of the Department under this Act are subject to
12judicial review under the provisions of the Administrative
13Review Law and any rules adopted pursuant thereto.
 
14    Section 4-35. Waivers. There shall be no waiver of any
15provision of this Act.
 
16    Section 4-45. Severability. The provisions of this Act are
17severable under Section 1.31 of the Statute of Statutes.
 
18    Section 4-48. Consumer protection study. The Department
19shall conduct a study to be reported to the Governor and the
20leaders of the General Assembly no later than February 1, 2015,
21addressing the adequacy of the consumer protections contained
22in this Act. The study shall include, but not be limited to:

 

 

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1(1) an analysis of the average percentage of a consumer's
2settlement that is used to return the funding amount in each
3transaction; (2) a survey of consumer complaints filed against
4non-recourse consumer lawsuit funding companies; (3) a
5description of the benefits and shortcomings of non-recourse
6consumer lawsuit funding to consumers; and (4) any reforms that
7the Secretary recommends to better regulate non-recourse
8consumer lawsuit funding companies.
 
9
Article 90. Amendatory Provisions

 
10    Section 90-1. The Regulatory Sunset Act is amended by
11changing Section 4.25 as follows:
 
12    (5 ILCS 80/4.25)
13    Sec. 4.25. Acts Act repealed on January 1, 2015 and May 31,
142015.
15    (a) The following Act is repealed on January 1, 2015:
16    The Genetic Counselor Licensing Act.
17    (b) The following Act is repealed on May 31, 2015:
18    The Non-Recourse Consumer Lawsuit Funding Act.
19(Source: P.A. 93-1041, eff. 9-29-04.)
 
20    Section 90-10. The Consumer Fraud and Deceptive Business
21Practices Act is amended by changing Section 2Z as follows:
 

 

 

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1    (815 ILCS 505/2Z)  (from Ch. 121 1/2, par. 262Z)
2    Sec. 2Z. Violations of other Acts. Any person who knowingly
3violates the Automotive Repair Act, the Automotive Collision
4Repair Act, the Home Repair and Remodeling Act, the Dance
5Studio Act, the Physical Fitness Services Act, the Hearing
6Instrument Consumer Protection Act, the Illinois Union Label
7Act, the Job Referral and Job Listing Services Consumer
8Protection Act, the Travel Promotion Consumer Protection Act,
9the Credit Services Organizations Act, the Automatic Telephone
10Dialers Act, the Pay-Per-Call Services Consumer Protection
11Act, the Telephone Solicitations Act, the Illinois Funeral or
12Burial Funds Act, the Cemetery Oversight Act, the Cemetery Care
13Act, the Safe and Hygienic Bed Act, the Pre-Need Cemetery Sales
14Act, the High Risk Home Loan Act, the Payday Loan Reform Act,
15the Mortgage Rescue Fraud Act, subsection (a) or (b) of Section
163-10 of the Cigarette Tax Act, subsection (a) or (b) of Section
173-10 of the Cigarette Use Tax Act, the Electronic Mail Act, the
18Internet Caller Identification Act, paragraph (6) of
19subsection (k) of Section 6-305 of the Illinois Vehicle Code,
20Section 11-1431, 18d-115, 18d-120, 18d-125, 18d-135, 18d-150,
21or 18d-153 of the Illinois Vehicle Code, Article 3 of the
22Residential Real Property Disclosure Act, the Automatic
23Contract Renewal Act, the Non-Recourse Consumer Lawsuit
24Funding Act, or the Personal Information Protection Act commits
25an unlawful practice within the meaning of this Act.
26(Source: P.A. 96-863, eff. 1-19-10; 96-1369, eff. 1-1-11;

 

 

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196-1376, eff. 7-29-10; 97-333, eff. 8-12-11.)
 
2    Section 99. Effective date. This Act takes effect 180 days
3after becoming law.".