HB3461eng 103RD GENERAL ASSEMBLY

HB3461 Engrossed LRB103 25804 SPS 52155 b

AN ACT concerning business.

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

Section 5. The Consumer Fraud and Deceptive Business Practices Act is amended by changing Section 2Z as follows:

(815 ILCS 505/2Z) (from Ch. 121 1/2, par. 262Z)

Sec. 2Z. Violations of other Acts. Any person who knowingly violates the Automotive Repair Act, the Automotive Collision Repair Act, the Home Repair and Remodeling Act, the Dance Studio Act, the Physical Fitness Services Act, the Hearing Instrument Consumer Protection Act, the Illinois Union Label Act, the Installment Sales Contract Act, the Job Referral and Job Listing Services Consumer Protection Act, the Travel Promotion Consumer Protection Act, the Credit Repair Services Organizations Act, the Automatic Telephone Dialers Act, the Pay-Per-Call Services Consumer Protection Act, the Telephone Solicitations Act, the Illinois Funeral or Burial Funds Act, the Cemetery Oversight Act, the Cemetery Care Act, the Safe and Hygienic Bed Act, the Illinois Pre-Need Cemetery Sales Act, the High Risk Home Loan Act, the Payday Loan Reform Act, the Predatory Loan Prevention Act, the Mortgage Rescue Fraud Act, subsection (a) or (b) of Section 3-10 of the Cigarette Tax Act, subsection (a) or (b) of Section 3-10 of the Cigarette Use Tax Act, the Electronic Mail Act, the Internet Caller Identification Act, paragraph (6) of subsection (k) of Section 6-305 of the Illinois Vehicle Code, Section 11-1431, 18d-115, 18d-120, 18d-125, 18d-135, 18d-150, or 18d-153 of the Illinois Vehicle Code, Article 3 of the Residential Real Property Disclosure Act, the Automatic Contract Renewal Act, the Reverse Mortgage Act, Section 25 of the Youth Mental Health Protection Act, the Personal Information Protection Act, or the Student Online Personal Protection Act commits an unlawful practice within the meaning of this Act.

(Source: P.A. 100-315, eff. 8-24-17; 100-416, eff. 1-1-18; 100-863, eff. 8-14-18; 101-658, eff. 3-23-21.)

Section 10. The Credit Services Organizations Act is amended by changing Sections 1, 3, 5, 6, 7, 8, 9, 11, 14, and 15, and by adding Sections 5.5 and 17 as follows:

(815 ILCS 605/1) (from Ch. 121 1/2, par. 2101)

Sec. 1. This Act shall be known and may be cited as the "Credit Repair Services Organizations Act".

(Source: P.A. 85-1384.)

(815 ILCS 605/3) (from Ch. 121 1/2, par. 2103)

Sec. 3. As used in this Act:

(a) "Buyer" means an individual who is solicited to purchase or who purchases the services of a credit repair services organization.

(b) "Consumer reporting agency" has the meaning assigned by Section 603(f), Fair Credit Reporting Act (15 U.S.C. Section 1681a(f)).

(c) "Extension of Credit" means the right to defer payment of a debt or to incur a debt and defer its payment offered or granted primarily for personal, family, or household purposes.

(d) "Credit Repair Services Organization" means a person who, with respect to the extension of credit by others and in return for the payment of money or other valuable consideration, provides, or represents that the person can or will provide, any of the following services:

(i) improving a buyer's credit record, history, or rating;

(ii) obtaining an extension of credit for a buyer; or

(iii) providing advice or assistance to a buyer with regard to either subsection (i) or (ii).

"Credit Repair Services Organization" does not include any of the following:

(i) a person authorized to make loans or extensions of credit under the laws of this State or the United States who is subject to regulation and supervision by this State or the United States, or a lender approved by the United States Secretary of Housing and Urban Development for participation in a mortgage insurance program under the National Housing Act (12 U.S.C. Section 1701 et seq.);

(ii) a bank or savings and loan association whose deposits or accounts are eligible for insurance by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation, or a subsidiary of such a bank or savings and loan association;

(iii) a credit union doing business in this State;

(iv) a nonprofit organization exempt from taxation under Section 501(c)(3) of the Internal Revenue Code of 1986, provided that such organization does not charge or receive any money or other valuable consideration prior to or upon the execution of a contract or other agreement between the buyer and the nonprofit organization;

(v) a person licensed as a real estate broker by this state if the person is acting within the course and scope of that license;

(vi) an attorney licensed or otherwise authorized to practice in this State if: a person licensed to practice law in this State acting within the course and scope of the person's practice as an attorney;

(1) the attorney's practice does not principally involve services regulated by this Act, other than litigation;

(2) the attorney does not have any relationship with a credit repair organization that provides services regulated by this Act; or

(3) any services provided by the attorney that are regulated by this Act and are incidental to the primary purpose of the representation;

(vii) a broker-dealer registered with the Securities and Exchange Commission or the Commodity Futures Trading Commission acting within the course and scope of that regulation;

(viii) a consumer reporting agency; and

(ix) a residential mortgage loan broker or banker who is duly licensed under the Illinois Residential Mortgage License Act of 1987.

(e) "Person" means an individual, corporation, partnership, joint venture or any business entity.

(f) "Consumer report" has the meaning assigned by Section 1681a(d) of the Fair Credit Reporting Act (15 U.S.C. Section 1681a(d)).

(g) "Contract start date" means the date the consumer entered into a contract with a credit repair organization.

(h) "Director" means the Director of Financial and Professional Regulation.

(i) "Permanent change" means any removal of negative items from a consumer's credit report or any change that turns a negative item on a consumer's credit report into a neutral or positive item change to the consumer's credit report that remains in place for at least 6 months.

(Source: P.A. 88-120.)

(815 ILCS 605/5) (from Ch. 121 1/2, par. 2105)

Sec. 5. No credit repair services organization, its salespersons, agents or representatives, or any independent contractor who sells or attempts to sell the services of a credit repair services organization shall:

(1) Charge or receive any money or other valuable consideration prior to:

(A) the full and complete achievement of a permanent change; and

(B) demonstrating achievement of the permanent change by providing the buyer with:

(i) a copy of the buyer's credit report pulled on or before the contract start date;

(ii) a second copy of the buyer's credit report, pulled after the contract start date, that shows the change for which the buyer is to be charged if the change persists for 6 months; and

(iii) a third copy of the buyer's credit report, pulled 6 months after the issuance of the copy described in item (ii), that shows the persistence of the change described in item (ii) performance of the services the credit services organization has agreed to perform for or on behalf of the buyer, unless the credit services organization has, in conformity with Section 10 of this Act, obtained a surety bond issued by a surety company licensed to do business in this State. If a credit services organization is in compliance with this subsection the salespersons, agents, and representatives who sell the services of such organization shall not be required to obtain the surety bond provided for by this Act.

(1.5) Deny a buyer's request for a copy of all communications contemporaneously sent to a credit reporting agency related to the achievement of a specified permanent change.

(2) Charge or receive any money or other valuable consideration solely for the referral of a buyer to a retail seller who will or may extend credit to the buyer if such extension of credit is in substantially the same terms as those available to the general public.

(2.5) Pay, offer, or receive any money or other variable consideration for the referral of a buyer to or from the credit repair organization.

(2.6) Represent temporary changes to a buyer's credit report, as described in paragraph (4) of subsection (b) of Section 5.5 as successful results in advertisements.

(3) Make, or advise any buyer to make, any statement that is untrue or misleading, or that should be known by the exercise of reasonable care to be untrue or misleading, with respect to a buyer's credit reporting agency or to any person who has extended credit to a buyer or to whom a buyer has made application for an extension of credit.

(4) Make or use any untrue or misleading representations in the offer or sale of the services of a credit repair services organization or engage, directly or indirectly, in any act, practice or course of business intended to defraud or deceive a buyer in connection with the office or sale of such services; including but not limited to: the amount or type of credit a consumer can expect to receive as a result of the performance of the services offered; the qualifications, training or experience of its personnel; or the amount of credit improvement the consumer can expect to receive as a result of the services.

(Source: P.A. 85-1384.)

(815 ILCS 605/5.5 new)

Sec. 5.5. Duties of the Director.

(a) The Director shall oversee the activities of credit repair organizations and compliance with this Act.

(b) A credit repair organization shall submit a report every 6 months to the Director, in a form and manner as the Director may prescribe, containing the following information:

(1) the number of buyers under contract with the credit repair organization during the reporting term;

(2) the number of credit report items questioned for each buyer under contract through a dispute, a complaint, or some other documented action by the credit repair organization since the contract start date;

(3) the number of items successfully removed from each buyer's credit report;

(4) the number of items reinserted in a buyer's credit reports within 6 months;

(5) the number of items that stayed off a buyer's credit reports for 6 or more months; and

(6) any additional information as determined by the Director.

(c) A credit repair organization shall file with the Director, every 6 months, the statistical proof that confirms the information used to demonstrate successful results in advertisements, including, but not limited to, advertisements sent by mail, posted on the Internet, printed in newspapers or other publications, and sent electronically by text or e-mail.

(d) The Director shall routinely audit the accuracy of the advertisements sent by credit services organizations.

(e) The Director shall issue an annual report to the General Assembly, including a compilation of the statistical proof received from credit repair organizations as described in subsection (c) and an assessment of the quality of services provided by credit repair organizations to consumers.

(815 ILCS 605/6) (from Ch. 121 1/2, par. 2106)

Sec. 6. Before the execution of a contract or other form of agreement between a buyer and a credit repair services organization or before the receipt by any such organization of money or other valuable consideration, whichever occurs first, such organization shall provide the buyer with a statement, in writing, containing the following:

(1) a complete and accurate statement of the buyer's right to review any file on the buyer maintained by a consumer reporting agency, as provided under the Fair Credit Reporting Act (15 U.S.C. Section 1681 et seq.);

(2) a statement that the buyer may review his consumer reporting agency file at no charge if a request therefor is made to such agency within 30 days after receipt by the buyer of notice that credit has been denied and if such request is not made within the allotted time, the approximate charge to the buyer for such review;

(3) a complete and accurate statement of the buyer's right to dispute the completeness or accuracy of any item contained in any file on the buyer maintained by a consumer reporting agency;

(4) (blank); a complete and detailed description of the services to be performed by the credit services organization and the total cost to the buyer for such services;

(5) a statement notifying the buyer that: (i) credit reporting agencies have no obligation to remove information from credit reports unless the information is erroneous, cannot be verified or is more than 7 years old; and (ii) credit reporting agencies have no obligation to remove information concerning bankruptcies unless such information is more than 10 years old;

(6) (blank); and a statement asserting the buyer's right to proceed against the surety bond required under Section 10; and

(7) (blank). the name and business address of any such surety company together with the name and the number of the account.

The credit repair services organization shall maintain on file, for a period of 2 years after the date the statement is provided, an exact copy of the statement, signed by the buyer, acknowledging receipt of the statement.

(Source: P.A. 91-357, eff. 7-29-99.)

(815 ILCS 605/7) (from Ch. 121 1/2, par. 2107)

Sec. 7. (a) Each contract between the buyer and a credit repair services organization for the purchase of the services of the credit repair services organization shall be in writing, dated, signed by the buyer, and shall include all of the following:

(1) A complete and detailed description of the terms and conditions of payment described in Section 5, whether to the credit repair organization or to another person. a conspicuous statement in boldfaced type, in immediate proximity to the space reserved for the signature of the buyer, as follows:

"You, the buyer, may cancel this contract at any time before midnight of the third day after the date of the transaction. See the attached notice of cancellation form for an explanation of this right";

(2) A complete and detailed description of the cancellation policy of the credit repair organization, that shall include the following provisions: the terms and conditions of payment, including the total of all payments to be made by the buyer, whether to the credit services organization or to another person;

(A) If a buyer seeks to stop using the services of a credit repair organization, the buyer shall submit a request to the credit repair organization to cancel the contract. A credit repair organization shall allow submission of a cancellation request electronically.

(B) A credit repair organization that has received a request to cancel services for a buyer shall process the cancellation within 15 days after the postmark of any written request or of receipt of an electronic request, and cease to conduct any additional work on behalf of the buyer.

(C) Consumers whose cancellation requests are processed and completed, remain obligated to pay for any permanent change resulting from actions taken by the credit repair organization during the contract term from the contract start date through the date the cancellation is processed.

(3) A a full and detailed description of the services to be performed by the credit repair services organization for the buyer, including all guarantees and all promises of full or partial refunds, and the estimated date by which the services are to be performed or the estimated length of time for performing the services. ; and

(4) The the address of the credit repair services organization's principal place of business and the name and address of its agent in the State authorized to receive service of process.

(b) (Blank). The contract must have two easily detachable copies of a notice of cancellation. The notice must be in boldfaced type and in the following form:

"Notice of Cancellation"

"You may cancel this contract, without any penalty or obligation, within three days after the date the contract is signed.

If you cancel, any payment made by you under this contract will be returned within 10 days after the date of receipt by the seller of your cancellation notice.

To cancel this contract, mail or deliver a signed, dated copy of this cancellation notice, or other written notice to:

(name of seller) at (address of seller) (place of business) not later than midnight (date) I hereby cancel this transaction." .............................. ............................. (date) (purchaser's signature)

(c) The credit repair services organization shall give to the buyer a copy of the completed contract and all other documents the credit repair services organization requires the buyer to sign at the time they are signed.

(Source: P.A. 85-1384.)

(815 ILCS 605/8) (from Ch. 121 1/2, par. 2108)

Sec. 8. (a) Any contract for services which does not comply with applicable provisions of this article shall be void and unenforceable as contrary to public policy. Any waiver by a buyer of the provisions of this Act shall be deemed void and unenforceable by a credit services organization as contrary to public policy. Any attempt by a credit repair services organization to have a buyer waive rights granted by this Act shall constitute a violation of this Act.

(b) The provisions of this Act shall apply to any person who seeks to evade its application by any device, subterfuge, or pretense, including, without limitation:

(1) instructing or suggesting that a buyer make payments into an account controlled by a third party;

(2) using any agents, affiliates, or subsidiaries in an attempt to avoid the application of the provisions of this Act; or

(3) having any affiliation or other business arrangement with an entity that is exempt from the provisions of this Act for the purpose of evading the provisions of this Act.

(c) A violation of this Section shall constitute a violation of this Act.

(Source: P.A. 85-1384.)

(815 ILCS 605/9) (from Ch. 121 1/2, par. 2109)

Sec. 9. (a) A credit repair services organization shall file a registration statement with the Secretary of State before conducting business in this State. The registration statement shall contain:

(1) the name and address of the credit repair services organization;

(2) the name and address of the registered agent authorized to accept service of process on behalf of the credit repair services organization;

(3) the name and address of any person who directly or indirectly owns or controls 10 percent or more of the outstanding shares of stock in the credit repair services organization; and

(4) the name, numbers, and location of the surety company issuing a surety bond maintained as required by Section 10 of this Act.

(b) The registration statement must also contain either:

(1) a full and complete disclosure of any litigation or unresolved complaint filed with a governmental authority of this State, any other state or the United States relating to the operation of the credit repair services organization; or

(2) a notarized statement that states that there has been no litigation or unresolved complaint filed with a governmental authority of this State, any other state or the United States relating to the operation of the credit repair services organization.

(c) The credit repair services organization shall update such statement not later than the 90th day after the date on which a change in the information required in the statement occurs.

(d) Each credit repair services organization registering under this Section shall maintain a copy of the registration statement in their files. The credit repair services organization shall allow a buyer to inspect the registration statement on request.

(e) The Secretary of State may charge each credit repair services organization that files a registration statement a reasonable fee not to exceed $100 to cover the cost of filing.

(Source: P.A. 85-1384.)

(815 ILCS 605/11) (from Ch. 121 1/2, par. 2111)

Sec. 11. (a) Any person injured by a violation of this Act or by the credit repair services organization's breach of a contract entered into pursuant to Section 7 of this Act, may bring any action for recovery of actual damages. Such person may also be awarded punitive damages, reasonable attorney's fees and court costs.

(b) A violation of this Act shall be subject to a civil penalty of $5,000 for a first offense and $10,000 for a second and any subsequent offense.

(Source: P.A. 85-1384.)

(815 ILCS 605/14) (from Ch. 121 1/2, par. 2114)

Sec. 14. (a) In an action under this Act the burden of proving an exemption under paragraph (d) of Section 3 is on the person claiming the exemption.

(b) Proof of reliance shall not be required to pursue a claim based on misrepresentation, false statements, or the omission of any material fact.

(Source: P.A. 85-1384.)

(815 ILCS 605/15) (from Ch. 121 1/2, par. 2115)

Sec. 15. The remedies provided by this Act are in addition to other remedies provided by law. A violation of this Act shall also constitute a violation of the Consumer Fraud and Deceptive Business Practices Act. A violation of the Telemarketing and Consumer Fraud and Abuse Prevention Act (15 U.S.C. Section 6101 et seq.), and its implementing regulations, 16 CFR 310.1 et seq., or of the Credit Repair Organizations Act (15 U.S.C. Section 1679 et seq.) shall also be a violation of this Act.

(Source: P.A. 85-1384.)

(815 ILCS 605/17 new)

Sec. 17. Rulemaking. The Director may adopt rules necessary to administer this Act.

(815 ILCS 605/10 rep.)

Section 15. The Credit Services Organizations Act is amended by repealing Section 10.

Section 99. Effective date. This Act takes effect January 1, 2024.