Illinois General Assembly - Full Text of SB2054
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Full Text of SB2054  102nd General Assembly

SB2054 102ND GENERAL ASSEMBLY

  
  

 


 
102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
SB2054

 

Introduced 2/26/2021, by Sen. Omar Aquino

 

SYNOPSIS AS INTRODUCED:
 
225 ILCS 429/10
225 ILCS 429/105
225 ILCS 429/115
225 ILCS 429/125

    Amends the Debt Settlement Consumer Protection Act. Adds student loan borrowers to the definition of "consumer". Adds to the definition of "debt settlement provider" any person or entity engaging in, or holding itself out as engaging in, or any person who solicits for or acts on behalf of such person or entity engaging in or holding itself out as engaging in, the business of student loan debt relief services in exchange for any fee or compensation assessed against or charged to a consumer. Excludes institutions of higher education from the definition of "debt settlement provider". Defines other terms. Requires a specified notice and disclosure to student loan borrowers to be included in advertising and marketing communications concerning student loan debt relief services. Requires providers of student loan debt relief services to provide a specified notice and disclosure before a student loan borrower signs a contract. Provides that any fees charged to a student loan borrower in exchange for student loan debt relief shall comply with a provision concerning fees. Makes other changes. Effective immediately.


LRB102 17176 SPS 22628 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB2054LRB102 17176 SPS 22628 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Debt Settlement Consumer Protection Act is
5amended by changing Sections 10, 105, 115, and 125 as follows:
 
6    (225 ILCS 429/10)
7    Sec. 10. Definitions. As used in this Act:
8    "Consumer" means any person who purchases or contracts for
9the purchase of debt settlement services or a student loan
10borrower.
11    "Consumer settlement account" means any account or other
12means or device in which payments, deposits, or other
13transfers from a consumer are arranged, held, or transferred
14by or to a debt settlement provider for the accumulation of the
15consumer's funds in anticipation of proffering an adjustment
16or settlement of a debt or obligation of the consumer to a
17creditor on behalf of the consumer.
18    "Debt settlement provider" means: (1) any person or entity
19engaging in, or holding itself out as engaging in, the
20business of providing debt settlement service in exchange for
21any fee or compensation; (2) , or any person who solicits for or
22acts on behalf of any person or entity engaging in, or holding
23itself out as engaging in, the business of providing debt

 

 

SB2054- 2 -LRB102 17176 SPS 22628 b

1settlement service in exchange for any fee or compensation;
2(3) any person or entity engaging in, or holding itself out as
3engaging in the business of student loan debt relief services
4in exchange for any fee or compensation assessed against or
5charged to a consumer; or (4) any person who solicits for or
6acts on behalf of such person or entity engaging in or holding
7itself out as engaging in, the business of student loan debt
8relief services in exchange for any fee or compensation
9assessed against or charged to a consumer. "Debt settlement
10provider" does not include:
11        (1) attorneys licensed, or otherwise authorized, to
12    practice in Illinois who are engaged in the practice of
13    law;
14        (2) escrow agents, accountants, broker dealers in
15    securities, or investment advisors in securities, when
16    acting in the ordinary practice of their professions and
17    through the entity used in the ordinary practice of their
18    profession;
19        (3) any bank, agent of a bank, operating subsidiary of
20    a bank, affiliate of a bank, trust company, savings and
21    loan association, savings bank, credit union, crop credit
22    association, development credit corporation, industrial
23    development corporation, title insurance company, title
24    insurance agent, independent escrowee or insurance company
25    operating or organized under the laws of a state or the
26    United States, or any other person authorized to make

 

 

SB2054- 3 -LRB102 17176 SPS 22628 b

1    loans under State law while acting in the ordinary
2    practice of that business;
3        (4) any person who performs credit services for his or
4    her employer while receiving a regular salary or wage when
5    the employer is not engaged in the business of offering or
6    providing debt settlement service;
7        (5) a collection agency licensed pursuant to the
8    Collection Agency Act that is collecting a debt on its own
9    behalf or on behalf of a third party;
10        (6) an organization that is described in Section
11    501(c)(3) and subject to Section 501(q) of Title 26 of the
12    United States Code and exempt from tax under Section
13    501(a) of Title 26 of the United States Code and governed
14    by the Debt Management Service Act;
15        (7) public officers while acting in their official
16    capacities and persons acting under court order;
17        (8) any person while performing services incidental to
18    the dissolution, winding up, or liquidating of a
19    partnership, corporation, or other business enterprise; or
20        (9) persons licensed under the Real Estate License Act
21    of 2000 when acting in the ordinary practice of their
22    profession and not holding themselves out as debt
23    settlement providers; or .
24        (10) any institution of higher education as defined in
25    the Higher Education Act of 1965, 20 U.S.C. 1001.
26    "Debt settlement service" means:

 

 

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1        (1) offering to provide advice or service, or acting
2    as an intermediary between or on behalf of a consumer and
3    one or more of a consumer's creditors, where the primary
4    purpose of the advice, service, or action is to obtain a
5    settlement, adjustment, or satisfaction of the consumer's
6    unsecured debt to a creditor in an amount less than the
7    full amount of the principal amount of the debt or in an
8    amount less than the current outstanding balance of the
9    debt; or
10        (2) offering to provide services related to or
11    providing services advising, encouraging, assisting, or
12    counseling a consumer to accumulate funds for the primary
13    purpose of proposing or obtaining or seeking to obtain a
14    settlement, adjustment, or satisfaction of the consumer's
15    unsecured debt to a creditor in an amount less than the
16    full amount of the principal amount of the debt or in an
17    amount less than the current outstanding balance of the
18    debt; or .
19        (3) student loan debt relief.
20    "Debt settlement service" does not include (A) the
21services of attorneys licensed, or otherwise authorized, to
22practice in Illinois who are engaged in the practice of law, or
23(B) debt management service as defined in the Debt Management
24Service Act, (C) the services of a student loan servicer, as
25defined in the Student Loan Servicing Rights Act, or (D) the
26services of any other originator, guarantor, or servicer of

 

 

SB2054- 5 -LRB102 17176 SPS 22628 b

1federal education loans.
2    "Enrollment or set up fee" means any fee, obligation, or
3compensation paid or to be paid by the consumer to a debt
4settlement provider in consideration of or in connection with
5establishing a contract or other agreement with a consumer
6related to the provision of debt settlement service.
7    "Federal education loan" means any loan made, guaranteed,
8or insured under Title IV of the federal Higher Education Act
9of 1965.
10    "Maintenance fee" means any fee, obligation, or
11compensation paid or to be paid by the consumer on a periodic
12basis to a debt settlement provider in consideration of
13maintaining the relationship and services to be provided by a
14debt settlement provider in accordance with a contract with a
15consumer related to the provision of debt settlement service.
16    "Principal amount of the debt" means the total amount or
17outstanding balance owed by a consumer to one or more
18creditors for a debt that is included in a contract for debt
19settlement service at the time when the consumer enters into a
20contract for debt settlement service.
21    "Savings" means the difference between the principal
22amount of the debt and the amount paid by the debt settlement
23provider to the creditor or negotiated by the debt settlement
24provider and paid by the consumer to the creditor pursuant to a
25settlement negotiated by the debt settlement provider on
26behalf of the consumer as full and complete satisfaction of

 

 

SB2054- 6 -LRB102 17176 SPS 22628 b

1the creditor's claim with regard to that debt.
2    "Secretary" means the Secretary of Financial and
3Professional Regulation.
4    "Settlement fee" means any fee, obligation, or
5compensation paid or to be paid by the consumer to a debt
6settlement provider in consideration of or in connection with
7a completed agreement or other arrangement on the part of a
8creditor to accept less than the principal amount of the debt
9as satisfaction of the creditor's claim against the consumer.
10    "Student loan borrower" means a person who has received or
11agreed to pay a student loan for his or her own educational
12expenses.
13    "Student loan debt relief" means, in exchange for any fee
14or compensation assessed against or charged to a student loan
15borrower, offering to provide advice or service, or acting as
16an intermediary between or on behalf of a consumer and the
17United States Department of Education or any other originator
18or guarantor of federal education loans or one or more of the
19servicers of a student loan borrowers' federal education loan,
20where the primary purpose of the advice, service, or action is
21to (1) negotiate, arrange, or obtain a settlement, adjustment,
22discharge, or satisfaction of the student loan borrower's
23federal education loan debt in an amount less than the full
24amount of the principal amount of the debt, a reduction or
25alteration to the interest rate, a reduction or alteration in
26the amount of monthly payment or fees owed, or in an amount

 

 

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1less than the current outstanding balance of the debt, (2)
2enroll the student loan borrower in a repayment plan,
3forbearance, or deferment of his or her federal education loan
4debt, (3) apply for consolidation or consolidate the student
5loan borrower's federal education loans, or (4) offer to
6provide any other services related to altering the terms of a
7student loan borrower's federal education loan debt,
8including, but not limited to, a reduction in the amount of
9interest, the principal balance, or the amount of monthly
10payment or fees owed.
11(Source: P.A. 96-1420, eff. 8-3-10.)
 
12    (225 ILCS 429/105)
13    Sec. 105. Advertising and marketing practices.
14    (a) A debt settlement provider shall not represent,
15expressly or by implication, any results or outcomes of its
16debt settlement services in any advertising, marketing, or
17other communication to consumers unless the debt settlement
18provider possesses substantiation for such representation at
19the time such representation is made.
20    (b) A debt settlement provider shall not, expressly or by
21implication, make any unfair or deceptive representations, or
22any omissions of material facts, in any of its advertising or
23marketing communications concerning debt settlement services.
24    (c) All advertising and marketing communications
25concerning debt settlement services shall disclose the

 

 

SB2054- 8 -LRB102 17176 SPS 22628 b

1following material information clearly and conspicuously:
2        "Debt settlement services are not appropriate for
3    everyone. Failure to pay your monthly bills in a timely
4    manner will result in increased balances and will harm
5    your credit rating. Not all creditors will agree to reduce
6    principal balance, and they may pursue collection,
7    including lawsuits."
8    (d) All advertising and marketing communications
9concerning student loan debt relief services shall disclose
10the following material information clearly and conspicuously,
11along with the legally registered name of the company:
12        "[Name of company] is a private company, and is not
13    affiliated with the Department of Education or any other
14    academic entity or governmental agency. [Name of company]
15    is not a lender, guarantor, or servicer of federal student
16    loans. You can apply for consolidation and other repayment
17    plans without paid assistance through the United States
18    Department of Education. More information is available
19    through the Department's website or your federal student
20    loan servicer. You can find out who your servicer is
21    through the Department of Education.".
22(Source: P.A. 96-1420, eff. 8-3-10.)
 
23    (225 ILCS 429/115)
24    Sec. 115. Required pre-sale consumer disclosures and
25warnings.

 

 

SB2054- 9 -LRB102 17176 SPS 22628 b

1    (a) Before the consumer signs a contract, the debt
2settlement provider shall provide an oral and written notice
3to the consumer that clearly and conspicuously discloses all
4of the following:
5        (1) Debt settlement services may not be suitable for
6    all consumers.
7        (2) Using a debt settlement service likely will harm
8    the consumer's credit history and credit score.
9        (3) Using a debt settlement service does not stop
10    creditor collection activity, including creditor lawsuits
11    and garnishments.
12        (4) Not all creditors will accept a reduction in the
13    balance, interest rate, or fees a consumer owes.
14        (5) The consumer should inquire about other means of
15    dealing with debt, including, but not limited to,
16    nonprofit credit counseling and bankruptcy.
17        (6) The consumer remains obligated to make periodic or
18    scheduled payments to creditors while participating in a
19    debt settlement plan, and that the debt settlement
20    provider will not make any periodic or scheduled payments
21    to creditors on behalf of the consumer.
22        (7) The failure to make periodic or scheduled payments
23    to a creditor is likely to:
24            (A) harm the consumer's credit history, credit
25        rating, or credit score;
26            (B) lead the creditor to increase lawful

 

 

SB2054- 10 -LRB102 17176 SPS 22628 b

1        collection activity, including litigation, garnishment
2        of the consumer's wages, and judgment liens on the
3        consumer's property; and
4            (C) lead to the imposition by the creditor of
5        interest charges, late fees, and other penalty fees,
6        increasing the principal amount of the debt.
7        (8) The amount of time estimated to be necessary to
8    achieve the represented results.
9        (9) The estimated amount of money or the percentage of
10    debt the consumer must accumulate before a settlement
11    offer will be made to each of the consumer's creditors.
12        (10) For student loan debt relief services, before the
13    student loan borrower signs a contract, the provider shall
14    provide an oral and written notice to the student loan
15    borrower that clearly and conspicuously discloses the
16    following:
17            "[Name of company] is a private company, and is
18        not affiliated with the Department of Education or any
19        other academic entity or governmental agency. [Name of
20        company] is not a lender, guarantor, or servicer of
21        federal student loans. You can apply for consolidation
22        and other repayment plans without paid assistance
23        through the United States Department of Education.
24        More information is available through the Department's
25        website or your federal student loan servicer. You can
26        find out who your servicer is through the Department

 

 

SB2054- 11 -LRB102 17176 SPS 22628 b

1        of Education.".
2    (b) The consumer shall sign and date an acknowledgment
3form entitled "Consumer Notice and Rights Form" that states:
4"I, the debtor, have received from the debt settlement
5provider a copy of the form entitled "Consumer Notice and
6Rights Form"." The debt settlement provider or its
7representative shall also sign and date the acknowledgment
8form, which includes the name and address of the debt
9settlement services provider. The acknowledgment form shall be
10in duplicate and incorporated into the "Consumer Notice and
11Rights Form". The original acknowledgment form shall be
12retained by the debt settlement provider, and the duplicate
13copy shall be retained within the form by the consumer.
14    If the acknowledgment form is in electronic form, then it
15shall contain the consumer disclosures required by Section
16101(c) of the federal Electronic Signatures in Global and
17National Commerce Act.
18    (c) Except as provided in subsection (d), the The
19requirements of this Section are satisfied if the provider
20provides the following warning verbatim, both orally and in
21writing, with the caption "CONSUMER NOTICE AND RIGHTS FORM" in
22at least 28-point font and the remaining portion in at least
2314-point font, to a consumer before the consumer signs a
24contract for the debt settlement provider's services:
 
25
"CONSUMER NOTICE AND RIGHTS FORM

 

 

 

SB2054- 12 -LRB102 17176 SPS 22628 b

1
CAUTION
2    We CANNOT GUARANTEE that you successfully will reduce or
3eliminate your debt.
4    If you stop paying your creditors, there is a strong
5likelihood some or all of the following may happen:
6    - CREDITORS MAY STILL CONTACT YOU AND TRY TO COLLECT.
7    - CREDITORS MAY STILL SUE YOU FOR THE MONEY YOU OWE.
8    - YOUR WAGES OR BANK ACCOUNT MAY STILL BE GARNISHED.
9    - YOUR CREDIT RATING AND CREDIT SCORE LIKELY WILL BE
10HARMED.
11    - NOT ALL CREDITORS WILL AGREE TO ACCEPT A BALANCE
12REDUCTION.
13    - YOU SHOULD CONSIDER ALL YOUR OPTIONS FOR ADDRESSING YOUR
14DEBT, SUCH AS CREDIT COUNSELING AND BANKRUPTCY FILING.
15    - THE AMOUNT OF MONEY YOU OWE MAY INCREASE DUE TO CREDITOR
16IMPOSITION OF INTEREST CHARGES, LATE FEES, AND OTHER PENALTY
17FEES.
18    - EVEN IF WE DO SETTLE YOUR DEBT, YOU MAY STILL BE REQUIRED
19TO PAY TAXES ON THE AMOUNT FORGIVEN.
 
20
YOUR RIGHT TO CANCEL
21    If you sign a contract with a Debt Settlement Provider,
22you have the right to cancel at any time and receive a full
23refund of all unearned fees you have paid to the provider and
24all funds placed in your settlement fund that have not been

 

 

SB2054- 13 -LRB102 17176 SPS 22628 b

1paid to any creditors.
 
2
IF YOU ARE DISSATISFIED
3
OR YOU HAVE QUESTIONS
4    If you are dissatisfied with a debt settlement provider or
5have any questions, please bring it to the attention of the
6Illinois Attorney General's Office and the Department of
7Financial and Professional Regulation.
8Attorney General Toll-Free Numbers:
9    Carbondale (800) 243-0607
10    Springfield (800) 243-0618
11    Chicago (800) 386-5438
12    Website for Department of Financial and Professional
13Regulation: www.idfpr.com
14I, the debtor, have received from the debt settlement provider
15a copy of the form entitled Consumer Notice and Rights Form.".
16    (d) All providers of student loan debt relief services
17shall include the following disclosure:
18        "[NAME OF COMPANY] IS A PRIVATE COMPANY, AND IS NOT
19    AFFILIATED WITH THE DEPARTMENT OF EDUCATION OR ANY OTHER
20    ACADEMIC ENTITY OR GOVERNMENTAL AGENCY. [NAME OF COMPANY]
21    IS NOT A LENDER, GUARANTOR, OR SERVICER OF FEDERAL STUDENT
22    LOANS. YOU CAN APPLY FOR CONSOLIDATION AND OTHER REPAYMENT
23    PLANS WITHOUT PAID ASSISTANCE THROUGH THE UNITED STATES
24    DEPARTMENT OF EDUCATION. MORE INFORMATION IS AVAILABLE
25    THROUGH THE DEPARTMENT'S WEBSITE OR YOUR FEDERAL STUDENT

 

 

SB2054- 14 -LRB102 17176 SPS 22628 b

1    LOAN SERVICER. YOU CAN FIND OUT WHO YOUR SERVICER IS
2    THROUGH THE DEPARTMENT OF EDUCATION.".
3(Source: P.A. 96-1420, eff. 8-3-10.)
 
4    (225 ILCS 429/125)
5    Sec. 125. Fees.
6    (a) A debt settlement provider shall not charge fees of
7any type or receive compensation from a consumer in a type,
8amount, or timing other than fees or compensation permitted in
9this Section.
10    (b) A debt settlement provider shall not charge or receive
11from a consumer any enrollment fee, set up fee, up front fee of
12any kind, or any maintenance fee, except for a one-time
13enrollment fee of no more than $50.
14    (c) A debt settlement provider may charge a settlement
15fee, which shall not exceed an amount greater than 15% of the
16savings. If the amount paid by the debt settlement provider to
17the creditor or negotiated by the debt settlement provider and
18paid by the consumer to the creditor pursuant to a settlement
19negotiated by the debt settlement provider on behalf of the
20consumer as full and complete satisfaction of the creditor's
21claim with regard to that debt is greater than the principal
22amount of the debt, then the debt settlement provider shall
23not be entitled to any settlement fee.
24    (d) A debt settlement provider shall not collect any
25settlement fee from a consumer until a creditor enters into a

 

 

SB2054- 15 -LRB102 17176 SPS 22628 b

1legally enforceable agreement to accept funds in a specific
2dollar amount as full and complete satisfaction of the
3creditor's claim with regard to that debt and those funds are
4provided by the debt settlement provider on behalf of the
5consumer or are provided directly by the consumer to the
6creditor pursuant to a settlement negotiated by the debt
7settlement provider.
8    (e) Any fees charged to a student loan borrower in
9exchange for student loan debt relief shall comply with this
10Section.
11(Source: P.A. 96-1420, eff. 8-3-10; 97-333, eff. 8-12-11.)
 
12    Section 99. Effective date. This Act takes effect upon
13becoming law.