Rep. André M. Thapedi

Filed: 4/17/2013

 

 


 

 


 
09800HB0531ham002LRB098 03805 CEL 44817 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 Litigation Funding Act.
 
6    Section 1-5. Definitions. In this Act:
7    "Non-recourse consumer litigation funding company" means a
8person or entity that enters into a non-recourse consumer
9litigation funding transaction with a consumer. "Non-recourse
10consumer litigation funding company" includes any affiliate or
11subsidiary of a non-recourse consumer litigation funding
12company; an entity or person who buys a whole or partial
13interest in a non-recourse consumer litigation funding, acts as
14an agent to provide non-recourse consumer litigation funding
15from a third party for a fee, or acts as an agent for a third
16party in providing non-recourse consumer litigation funding

 

 

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

 

 

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1    "Contract" means a written agreement between a consumer and
2a non-recourse consumer litigation funding company that the
3non-recourse consumer litigation funding company agrees to
4provide non-recourse consumer litigation funding to the
5consumer in compliance with Article 2.
6    "Department" means the Illinois Department of Financial
7and Professional Regulation.
8    "Funding amount" means the dollar amount of funds provided
9to the consumer by the non-recourse consumer litigation funding
10company subsequent to the execution of the contract as
11consideration for the assignment of or purchase of a contingent
12right to receive a portion of the proceeds of the legal claim.
13    "Funding date" means the date on which the funding amount
14is paid to the consumer by the non-recourse consumer litigation
15funding company.
16    "Legal claim" means a civil or statutory claim or action.
17    "Licensee" means any non-recourse consumer litigation
18funding company licensed in accordance with Article 3.
19    "Non-recourse consumer litigation funding" means a
20transaction of any amount in which a non-recourse consumer
21litigation funding company purchases and a consumer assigns to
22the non-recourse consumer litigation funding company the
23contingent right to receive a portion of the potential proceeds
24of a settlement, judgment, award, or verdict obtained in the
25consumer's legal claim. "Non-recourse consumer litigation
26funding" does not include entities that engage in a commercial

 

 

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1to commercial business transaction.
2    "Proceeds" means those funds available for payment to the
3non-recourse consumer litigation funding company that are
4remaining from any settlement, verdict, final judgment,
5insurance payment, or award obtained in the consumer's legal
6claim after reductions are made under Section 2-15 of this Act.
7    "Resolution date" means the date the funding amount plus
8the agreed upon fees from the legal claim are received by the
9non-recourse consumer litigation funding company.
10    "Secretary" means the Illinois Secretary of Financial and
11Professional Regulation.
 
12
Article 2. Non-Recourse Consumer Litigation Funding

 
13    Section 2-5. Contract provisions. All contracts for
14non-recourse consumer litigation funding shall be in writing
15and comply with all of the following requirements:
16    (1) The contract shall contain on the front page,
17appropriately headed and in at least 12-point, bold face type,
18a chart that clearly contains the following disclosures:
19        (A) the total funding amount paid to the consumer;
20        (B) an itemization of one-time fees;
21        (C) the total dollar amount owed by the consumer to the
22    non-recourse consumer litigation funding company, set
23    forth up to 1,080 days beginning at the 11th business day
24    after the funding date, then at 180 days after the funding

 

 

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1    date and at every 180 days thereafter; the total dollar
2    amount shall be calculated using the identical methodology
3    used by the non-recourse consumer litigation funding
4    company to calculate the contracted fee amount under
5    Section 2-10.
6    The Secretary shall prescribe by rule the format of the
7chart that clearly discloses to the consumer all the
8information in this subsection. Until the Secretary makes such
9a rule, each non-recourse consumer litigation funding company
10must have a chart format approved for distribution by the
11Secretary.
12    No contract for non-recourse consumer litigation funding
13shall be enforceable against the consumer unless it complies
14entirely with this subsection.
15    (2) The contract shall provide that the consumer may cancel
16the contract within 7 business days following the consumer's
17receipt of the funding amount, without penalty or further
18obligation. The contract shall contain the following notice
19written in at least 12-point, bold face type:
20    "Consumer's right to cancellation: You may cancel this
21    contract without penalty or further obligation within 10
22    business days after the funding date.".
23    The contract must also specify that in order for the
24cancellation to be effective, the consumer must either return
25to the non-recourse consumer litigation funding company the
26total amount of the funding amount by (a) delivering the

 

 

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1non-recourse consumer litigation funding company's uncashed
2check to the non-recourse consumer litigation company's
3offices in person within 10 business days after receipt of the
4funding amount, (b) sending a notice of cancellation via
5registered or certified mail and include in the mailing a
6return of the total amount of funding amount in the form of the
7non-recourse consumer litigation funding company's uncashed
8check within 10 business days after receipt of the funding
9amount, or (c) sending a registered, certified or cashier's
10check or money order, by insured, registered, or certified
11United States mail, postmarked within 10 business days after
12receipt of the funding amount, to the address specified in the
13contract for cancellation.
14    (3) The contract shall contain all of the following
15statements in at least 12-point, bold face type:
16        "(A) [Insert name of the non-recourse consumer
17    litigation funding company] agrees that it shall have no
18    right to and will not make any decisions with respect to
19    the conduct of the legal claim or any settlement or
20    resolution thereof and that the right to make those
21    decisions remains solely with you and your attorney in the
22    legal claim. [Insert name of the non-recourse consumer
23    litigation funding company] further agrees that it shall
24    have no right to pursue the legal claim on your behalf.
25        (B) [Insert name of the non-recourse consumer
26    litigation funding company] agrees that it shall only

 

 

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1    accept: (i) an assignment of a contingent right to receive
2    a portion of the potential proceeds; (ii) the contracted
3    return of the funding amount; and (iii) any agreed upon
4    fees. Any agreed upon fees to [insert name of the
5    non-recourse consumer litigation funding company] shall
6    not be determined as a percentage of your recovery from the
7    legal claim but shall be set as a contractually determined
8    amount based upon intervals of time from the funding date
9    through the resolution date. [Insert name of the
10    non-recourse consumer litigation funding company] is not
11    accepting an assignment of your legal claim.
12        (C) [Insert name of the non-recourse consumer
13    litigation funding company] agrees that you may make
14    payments on a funding at any time without additional cost
15    or penalty.
16        (D) [Insert name of the non-recourse consumer
17    litigation funding company] is not a law firm and is
18    prohibited from rendering legal advice. Advice about the
19    conduct of the legal claim or any settlement or resolution
20    shall be directed to a properly licensed attorney.".
21    (4) All contracts with the consumer must contain the
22following statement, in plain language in a box with 15-point,
23bold face type, in all capitalized letters, stating the
24following:
25    "THE FUNDING AMOUNT AND AGREED UPON FEES SHALL ONLY BE PAID
26    FROM THE PROCEEDS OF YOUR LEGAL CLAIM AND SHALL ONLY BE

 

 

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1    PAID TO THE EXTENT THAT THERE ARE AVAILABLE PROCEEDS FROM
2    YOUR LEGAL CLAIM. YOU WILL NOT OWE [INSERT NAME OF THE
3    NON-RECOURSE CONSUMER LITIGATION FUNDING COMPANY] ANYTHING
4    IF THERE ARE NO PROCEEDS FROM YOUR LEGAL CLAIM.".
5    (5) The contract shall contain the following statement in
6at least 12-point, bold face type located immediately above the
7space where the consumer's signature is required:
8    "Do not sign this Agreement before you read it completely
9    or if it contains any blank spaces. You are entitled to a
10    completely filled-in copy of this Agreement. Before you
11    sign this Agreement you should obtain the advice of an
12    attorney. Depending on the circumstances, you may want to
13    consult a tax, public, or private benefit planning or
14    financial professional. You acknowledge that your attorney
15    in the legal claim has provided no tax, public, or private
16    benefit planning regarding this transaction. You further
17    understand and agree that the funds you receive from
18    [insert name of the non-recourse consumer litigation
19    funding company] shall not be used to pay for or applied to
20    the payment of attorney's fees or litigation costs related
21    to your legal claim.".
22    (6) The executed contract shall contain a written
23acknowledgment by the consumer that he or she has reviewed the
24contract in its entirety.
25    (7) The non-recourse consumer litigation funding company
26shall provide the consumer's attorney with a written

 

 

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1notification of the non-recourse consumer litigation funding
2provided to the consumer 3 business days before the funding
3date by way of postal mail, courier service, facsimile, e-mail
4return receipt acknowledged, or other means of proof of
5delivery method unless there is a written acknowledgment by the
6attorney representing the consumer in the legal claim as to the
7terms of the contract.
8    (8) The contracted return of the funding amount, plus any
9agreed upon fees assigned to the non-recourse consumer
10litigation funding company on the resolution date shall not be
11determined as a percentage of the recovery from the legal claim
12but shall be set as a contractually determined amount based
13upon intervals of time from the funding date through the
14resolution date.
 
15    Section 2-10. Contracted fee amount.
16    (a) The non-recourse consumer litigation funding company
17shall offer the consumer the option of either entering into a
18conventional loan under the Consumer Installment Loan Act or
19entering into non-recourse consumer litigation funding.
20    If the consumer elects to enter into a conventional loan
21agreement under the Consumer Installment Loan Act, the interest
22charged shall not exceed an annual percentage rate of 36%.
23    If the consumer elects to enter into non-recourse consumer
24litigation funding, the company shall not charge a fee in
25excess of 36% annual percentage rate plus a deferment fee not

 

 

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1to exceed 3% for each month the funding is outstanding with
2compounding to occur no more often than quarterly.
3    (b) No additional fees shall be applied for any period of
4time beyond 1,080 days from the funding date.
5    (c) Except for the fees set forth in this Section and
6Section 20, the non-recourse consumer litigation funding
7company shall not impose on a consumer any additional finance
8charges, interest, fees, or charges of any sort for any
9purpose.
10    (d) Under no circumstances shall the total amount of
11finance charges, interest, fees, or any other charges, when
12taken together, exceed the award to the consumer.
 
13    Section 2-12. Charges permitted.
14    (a) A licensee may charge an acquisition charge not to
15exceed 8% of the amount funded or $100, whichever is less.
16    (b) A licensee may charge an expedited funds delivery
17option charge not to exceed the actual cost of delivery or $20,
18whichever is less. Expedited funds delivery options,
19including, but not limited to, overnight delivery, electronic
20fund transfers, and Automated Clearing House (ACH)
21transactions may be offered to the consumer as a choice of the
22method of the delivery of funds. The fund delivery charge is
23fully earned at the time that each funding transaction is made
24and shall not be subject to refund. Details and receipts of
25delivery shall be provided in an invoice to the consumer no

 

 

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1more than 10 business days after the funding date. A no-charge
2delivery option must be offered to the consumer as a choice.
 
3    Section 2-15. Claim priorities. Any lien arising out of the
4underlying consumer's legal claim for subrogation claims,
5attorney fees, attorney liens, and litigation costs, health
6care providers, employers in worker's compensation
7proceedings, health insurers, employers with self-funded
8health care plans, Medicare, and Public Aid shall be satisfied
9before and take priority over any claim of the non-recourse
10consumer litigation funding company. All other holders of
11liens, security interests, or subrogation claims shall take
12priority over the non-recourse consumer litigation funding
13company to the extent allowed by law.
 
14    Section 2-20. Standards and practices. Each non-recourse
15consumer litigation funding company shall adhere to the
16following:
17    (1) The non-recourse consumer litigation funding company
18shall not pay or offer to pay any compensation to any attorney,
19law firm, medical provider, chiropractor, physical therapist,
20or any of their employees for referring a consumer to the
21non-recourse consumer litigation funding company. The
22non-recourse consumer litigation funding company agrees not to
23accept any compensation from any attorney, law firm, medical
24provider, chiropractor, physical therapist, or any of their

 

 

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1employees, other than the funding amount and any agreed upon
2fees the consumer assigned to the non-recourse consumer
3litigation funding company out of the potential proceeds of the
4legal claim. If a lawyer or law firm represents one or more
5consumers with outstanding non-recourse consumer litigation
6fundings from the same non-recourse consumer litigation
7funding company, that non-recourse consumer litigation funding
8company may not provide any type of funding to the lawyer or
9law firm.
10    (2) The non-recourse consumer litigation funding company
11shall not advertise false or intentionally misleading
12information regarding its product or services.
13    (3) The non-recourse consumer litigation funding company
14shall not knowingly provide funding to a consumer who has
15previously sold and assigned an amount of the potential
16proceeds of his or her legal claim to another non-recourse
17consumer litigation funding company without first purchasing
18that non-recourse consumer litigation funding company's entire
19accrued balance unless otherwise agreed to in writing by the
20consumer and all non-recourse consumer litigation funding
21companies that provided non-recourse consumer litigation
22funding to the consumer.
23    (4) The non-recourse consumer litigation funding company
24shall not offer single premium credit life, disability, or
25unemployment insurance that will be financed through a
26non-recourse consumer litigation funding transaction.

 

 

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1    (5) For non-English speaking consumers, the principal
2terms of the contract must be translated in writing into the
3consumer's primary language. The consumer must sign the
4translated document containing the principal terms and initial
5each page and the translator must sign an affirmation
6confirming that the principal terms have been presented to the
7consumer in the consumer's primary language and acknowledged by
8the consumer. Principal terms shall include all items that must
9be disclosed by Section 2-5.
10    (6) No communication between a consumer's attorney and a
11non-recourse consumer litigation funding company pertaining to
12a consumer's non-recourse consumer litigation funding
13transaction shall limit, waive, or abrogate any statutory or
14common-law privilege, including the attorney-client privilege
15or the work-product doctrine.
16    (7) The return of the funding amount to the non-recourse
17consumer litigation funding company, plus any agreed upon fees,
18shall be rendered only out of the funds, if any, of the
19realized settlement, judgment, award, or verdict the consumer
20may receive from the legal claim. Under no circumstances shall
21the non-recourse consumer litigation funding company have
22recourse for the funding amount beyond the consumer's proceeds
23from the legal claim.
24    (8) The non-recourse consumer litigation funding company
25shall have no authority to advise the consumer on any legal
26matters or to make any decisions with respect to the conduct of

 

 

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1the litigation of the legal claim or any settlement or
2resolution thereof. The right to make those decisions remains
3solely with the consumer and the consumer's attorney
4representing the consumer in the legal claim. The non-recourse
5consumer litigation funding company shall have no right to
6pursue the legal claim on the consumer's behalf.
7    (9) The non-recourse consumer litigation funding company
8shall only accept an assignment of a contingent right to
9receive a portion of the potential proceeds, rather than an
10assignment of the legal claim. The contracted return of the
11funding amount, plus any agreed upon fees assigned to the
12non-recourse consumer litigation funding company, shall not be
13determined as a percentage of the total recovery from the legal
14claim, but shall be set as a contractually determined amount
15based upon intervals of time from the funding date through the
16resolution date.
17    (10) Notwithstanding subsection (8) of this Section, the
18non-recourse consumer litigation funding company shall allow
19the consumer to make payments on a funding at any time without
20additional cost or penalty.
21    (11) Contact between the non-recourse consumer litigation
22funding company and the consumer shall be subject to the
23following limitations:
24        (A) Neither a non-recourse consumer litigation funding
25    company, nor any person acting on behalf of a non-recourse
26    consumer litigation funding company, shall contact a

 

 

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1    consumer prior to the consumer obtaining legal
2    representation and initiating a legal claim.
3        (B) Neither a non-recourse consumer litigation funding
4    company, nor any person acting on behalf of a non-recourse
5    consumer litigation funding company, shall contact the
6    consumer after the funding date in order to influence any
7    decisions with respect to the conduct of the legal claim or
8    any settlement or resolution thereof. Notwithstanding the
9    foregoing, the non-recourse consumer litigation funding
10    company may contact the consumer to obtain the status of
11    the legal claim and updated attorney contact information.
12        (C) After the resolution date, neither a non-recourse
13    consumer litigation funding company, nor any person acting
14    on behalf of a non-recourse consumer litigation funding
15    company, shall seek to collect additional funds or threaten
16    civil action for any deficiency.
 
17    Section 2-25. Information; reporting and examination.
18    (a) A licensee shall keep and use books, accounts, and
19records that will enable the Secretary to determine if the
20licensee is complying with the provisions of this Act and
21maintain any other records as required by the Secretary.
22    (b) A licensee shall collect and maintain information
23annually for a report that shall disclose in detail and under
24appropriate headings:
25        (1) the total number of non-recourse consumer

 

 

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1    litigation fundings made during the previous calendar
2    year;
3        (2) the total number of non-recourse consumer
4    litigation fundings outstanding as of December 31st of the
5    preceding calendar year;
6        (3) the minimum, maximum, and average amount of
7    non-recourse consumer litigation fundings made during the
8    preceding calendar year;
9        (4) the average annual fee rate of the non-recourse
10    consumer litigation fundings made during the preceding
11    year; and
12        (5) the total number of non-recourse consumer
13    litigation funding transactions in which the non-recourse
14    consumer litigation funding company received the return of
15    the funding amount, plus any agreed upon fees; the total
16    number of non-recourse consumer litigation funding
17    transactions for which the non-recourse consumer
18    litigation funding company received no return of the
19    funding amount or any fees; and the total number of
20    non-recourse consumer litigation funding transactions in
21    which the non-recourse consumer litigation funding company
22    received an amount less than the contracted amount.
23    The report shall be verified by the oath or affirmation of
24the Chief Executive Officer, Chief Financial Officer, or other
25duly authorized representative of the licensee. The report must
26be filed with the Secretary no later than March 1 of the year

 

 

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1following the year for which the report discloses the
2information specified in this subsection (b). The Secretary may
3impose a fine of $50 per day upon the licensee for each day
4beyond the filing deadline that the report is not filed.
5    (c) The Department shall have the authority to conduct
6examinations at any time of the books, records, and
7non-recourse consumer litigation funding documents of a
8licensee or other company or person doing business without the
9required license. Any licensee being examined must provide to
10the Department convenient and free access at all reasonable
11hours at its office or location to all books, records,
12non-recourse consumer litigation funding documents. The
13officers, directors, and agents of the non-recourse consumer
14litigation funding company must facilitate the examination and
15aid in the examination so far as it is in their power to do so.
 
16    Section 2-30. Applicability.
17    (a) The contingent right to receive a portion of the
18potential proceeds of a legal claim is assignable and valid for
19the purposes of obtaining funding from a licensee under this
20Section.
21    (b) Nothing in this Act shall cause any non-recourse civil
22litigation funding transaction conforming to this Act to be
23deemed to be a loan or investment contract or subject to the
24restrictions or provisions governing loans or investment
25contracts set forth in the Interest Act, the Consumer

 

 

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1Installment Loan Act, or any other provisions of State law.
 
2
Article 3. Licensure.

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

 

 

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

 

 

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1immediately notify the licensee by registered mail, enclosing
2the summons and specifying the day of service.
3    (d) A licensee must pay an annual fee of $1,000. In
4addition to the annual license fee, the reasonable expense of
5any examination or hearing by the Secretary under any
6provisions of this Act shall be borne by the licensee. If a
7licensee fails to submit an application for renewal by December
831st of the then current year, its license shall automatically
9expire; however, the Secretary, in his or her discretion, may
10reinstate an expired license upon:
11        (1) payment of the annual fee within 30 days of the
12    date of expiration; and
13        (2) proof of good cause for failure to renew.
14        (3) that the applicant is a current licensee under the
15    Consumer Installment Loan Act.
16    (e) No licensee shall conduct the business of providing
17non-recourse consumer litigation funding under this Act within
18any office, suite, room, or place of business in which any
19other business is solicited or engaged unless the other
20business is licensed by the Department and, in the opinion of
21the Secretary, the other business would not be contrary to the
22best interests of consumers and is authorized by the Secretary
23in writing.
24    (f) The Secretary shall maintain a list of licensees that
25shall be available to interested consumers and lenders and the
26public. The Secretary shall maintain a toll-free number whereby

 

 

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

 
22    Section 4-5. Prohibited acts. A licensee or unlicensed
23person or entity entering into non-recourse consumer

 

 

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

 

 

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

 

 

09800HB0531ham002- 24 -LRB098 03805 CEL 44817 a

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

 

 

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

 

 

09800HB0531ham002- 26 -LRB098 03805 CEL 44817 a

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

 

 

09800HB0531ham002- 27 -LRB098 03805 CEL 44817 a

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

 

 

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

 

 

09800HB0531ham002- 29 -LRB098 03805 CEL 44817 a

1documents disclosed to a federal, State, county, or local law
2enforcement agency shall not be disclosed by the agency for any
3purpose to any other agency or person. An order issued by the
4Department against a non-recourse consumer litigation funding
5company shall be a public record and any documents produced in
6discovery, filed with the administrative law judge, or
7introduced at hearing shall be a public record, except as
8otherwise prohibited by law.
 
9    Section 4-30. Judicial review. All final administrative
10decisions of the Department under this Act are subject to
11judicial review under the provisions of the Administrative
12Review Law and any rules adopted pursuant thereto.
 
13    Section 4-35. Waivers. There shall be no waiver of any
14provision of this Act.
 
15    Section 4-45. Severability. The provisions of this Act are
16severable under Section 1.31 of the Statute of Statutes.
 
17    Section 4-48. Consumer protection study. The Department
18shall conduct a study to be reported to the Governor and the
19leaders of the General Assembly no later than February 1, 2018,
20addressing the adequacy of the consumer protections contained
21in this Act. The study shall include, but not be limited to:
22(1) an analysis of the average percentage of a consumer's

 

 

09800HB0531ham002- 30 -LRB098 03805 CEL 44817 a

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

 
9    Section 90-1. The Regulatory Sunset Act is amended by
10changing Section 4.29 as follows:
 
11    (5 ILCS 80/4.29)
12    Sec. 4.29. Acts repealed in 2019 on January 1, 2019 and
13December 31, 2019.
14    (a) The following Act is repealed on January 1, 2019:
15        The Environmental Health Practitioner Licensing Act.
16    (b) The following Act is repealed on May 31, 2019:
17        The Non-Recourse Consumer Litigation Funding Act.
18    (c) (b) The following Act is repealed on December 31, 2019:
19        The Structural Pest Control Act.
20(Source: P.A. 95-1020, eff. 12-29-08; 96-473, eff. 8-14-09.)
 
21    Section 90-10. The Consumer Fraud and Deceptive Business
22Practices 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 Litigation
24Funding Act, or the Personal Information Protection Act commits
25an unlawful practice within the meaning of this Act.

 

 

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1(Source: P.A. 96-863, eff. 1-19-10; 96-1369, eff. 1-1-11;
296-1376, eff. 7-29-10; 97-333, eff. 8-12-11.)
 
3    Section 99. Effective date. This Act takes effect 180 days
4after becoming law.".