97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB3227

 

Introduced 2/24/2011, by Rep. Dan Brady

 

SYNOPSIS AS INTRODUCED:
 
225 ILCS 45/1a-1
225 ILCS 45/1a-5 new
225 ILCS 45/3  from Ch. 111 1/2, par. 73.103
815 ILCS 390/13.5 new
815 ILCS 390/14  from Ch. 21, par. 214

    Amends the Illinois Funeral or Burial Funds Act. Sets forth (i) additional disclosures and requirements for pre-need contracts, (ii) certain specified requirements for the solicitation of pre-need funeral consumers under the Act, and (iii) additional requirements concerning recordkeeping by the licensee. Makes other changes. Amends the Illinois Pre-Need Cemetery Sales Act. Sets forth (i) certain specified requirements for the solicitation of pre-need consumers under the Act and (ii) additional disclosures and requirements for pre-need contracts.


LRB097 10789 CEL 51225 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB3227LRB097 10789 CEL 51225 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 Illinois Funeral or Burial Funds Act is
5amended by changing Sections 1a-1 and 3 and by adding Section
61a-5 as follows:
 
7    (225 ILCS 45/1a-1)
8    Sec. 1a-1. Pre-need contracts.
9    (a) It shall be unlawful for any seller doing business
10within this State to accept sales proceeds from a purchaser,
11either directly or indirectly by any means, unless the seller
12enters into a pre-need contract with the purchaser which meets
13the following requirements:
14        (1) It states the name and address of the principal
15    office of the seller and the parent company of the seller,
16    if any.
17        (1.5) If funded by a trust, it clearly identifies the
18    trustee's name and address and the primary state or federal
19    regulator of the trustee as a corporate fiduciary.
20        (1.7) If funded by life insurance, it clearly
21    identifies the life insurance provider and the primary
22    regulator of the life insurance provider.
23        (2) It clearly identifies the provider's name and

 

 

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1    address, the purchaser, and the beneficiary, if other than
2    the purchaser.
3        (2.5) If the provider has branch locations, the
4    contract gives the purchaser the opportunity to identify
5    the branch at which the funeral will be provided.
6        (3) In an attached Statement of Funeral Goods and
7    Services Selected, it It contains a complete description of
8    the funeral merchandise and services to be provided and the
9    price of the merchandise and services, and it clearly
10    discloses whether the price of the merchandise and services
11    is guaranteed or not guaranteed as to price.
12            (A) Each guaranteed price contract shall contain
13        the following statement in 12 point bold type:
14            THIS CONTRACT GUARANTEES THE BENEFICIARY THE
15        SPECIFIC GOODS AND SERVICES CONTRACTED FOR. NO
16        ADDITIONAL CHARGES MAY BE REQUIRED. FOR DESIGNATED
17        GOODS AND SERVICES, ADDITIONAL CHARGES MAY BE INCURRED
18        FOR UNEXPECTED EXPENSES INCLUDING, BUT NOT LIMITED TO,
19        CASH ADVANCES, SHIPPING OF REMAINS FROM A DISTANT
20        PLACE, OR DESIGNATED HONORARIA ORDERED OR DIRECTED BY
21        SURVIVORS.
22            (B) Except as provided in subparagraph (C) of this
23        paragraph (3), each non-guaranteed price contract
24        shall contain the following statement in 12 point bold
25        type:
26            THIS CONTRACT DOES NOT GUARANTEE THE PRICE THE

 

 

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1        BENEFICIARY WILL PAY FOR ANY SPECIFIC GOODS OR
2        SERVICES. ANY FUNDS PAID UNDER THIS CONTRACT ARE ONLY A
3        DEPOSIT TO BE APPLIED TOWARD THE FINAL PRICE OF THE
4        GOODS OR SERVICES CONTRACTED FOR. ADDITIONAL CHARGES
5        MAY BE REQUIRED. THE FINAL PRICE SHALL BE DETERMINED AT
6        THE TIME OF DEATH.
7            (C) If a non-guaranteed price contract may
8        subsequently become guaranteed, the contract shall
9        clearly disclose the nature of the guarantee and the
10        time, occurrence, or event upon which the contract
11        shall become a guaranteed price contract.
12        (3.5) Each non-guaranteed price contract that is
13    funded by a trust must disclose that (i) the estate of the
14    decedent or responsible party will be legally obligated to
15    pay any shortfall in the trust account and (ii) that the
16    estate would be entitled to receive any excess funds in the
17    trust account after payment of the at-need prices.
18        (4) It provides that if the particular supplies and
19    services specified in the pre-need contract are
20    unavailable at the time of delivery, the provider shall be
21    required to furnish supplies and services similar in style
22    and at least equal in quality of material and workmanship.
23        (5) It discloses any penalties or restrictions,
24    including but not limited to geographic restrictions or the
25    inability of the provider to perform, on the delivery of
26    merchandise, services, or pre-need contract guarantees.

 

 

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1        (6) Regardless of the method of funding the pre-need
2    contract, the following must be disclosed:
3            (A) Whether the pre-need contract is to be funded
4        by a trust, life insurance, or an annuity;
5            (B) The nature of the relationship among the person
6        funding the pre-need contract, the provider, and the
7        seller, including any commission or other remuneration
8        paid to the seller or seller's agent; and
9            (C) The impact on the pre-need contract of (i) any
10        changes in the funding arrangement including but not
11        limited to changes in the assignment, beneficiary
12        designation, or use of the funds; (ii) any specific
13        penalties to be incurred by the contract purchaser as a
14        result of failure to make payments; (iii) penalties to
15        be incurred or moneys or refunds to be received as a
16        result of cancellations; and (iv) all relevant
17        information concerning what occurs and whether any
18        entitlements or obligations arise if there is a
19        difference between the proceeds of the particular
20        funding arrangement and the amount actually needed to
21        pay for the funeral at-need.
22            (D) The method of changing the provider.
23    (b) All pre-need contracts are subject to the Federal Trade
24Commission Rule concerning the Cooling-Off Period for
25Door-to-Door Sales (16 CFR Part 429).
26    (c) No pre-need contract shall be sold in this State unless

 

 

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1there is a provider for the services and personal property
2being sold. If the seller is not a provider, then the seller
3must have a binding agreement with a provider, and the identity
4of the provider and the nature of the agreement between the
5seller and the provider shall be disclosed in the pre-need
6contract at the time of the sale and before the receipt of any
7sales proceeds. If the pre-need contract requires the
8performance of funeral services and the seller is not the
9provider of the funeral services, then the pre-need contract
10must also be signed by the provider of the funeral services in
11order to be valid. The failure to disclose the identity of the
12provider, the nature of the agreement between the seller and
13the provider, or any changes thereto to the purchaser and
14beneficiary, or the failure to make the disclosures required in
15subdivision (a)(1), constitutes an intentional violation of
16this Act.
17    (d) All pre-need contracts must be in writing in at least
1811 point type, numbered, and executed in duplicate. All
19pre-need contracts must specify the date and location of
20execution of the contract. A signed copy of the pre-need
21contract must be provided to the purchaser at the time of entry
22into the pre-need contract. The Comptroller may by rule develop
23a model pre-need contract form that meets the requirements of
24this Act.
25    (e) The State Comptroller shall by rule develop a booklet
26for consumers in plain English describing the scope,

 

 

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1application, and consumer protections of this Act. After the
2adoption of these rules, no pre-need contract shall be sold in
3this State unless (i) the seller distributes to the purchaser
4prior to the sale a booklet promulgated or approved for use by
5the State Comptroller; (ii) the seller explains to the
6purchaser the terms of the pre-need contract prior to the
7purchaser signing; and (iii) the purchaser initials a statement
8in the contract confirming that the seller has explained the
9terms of the contract prior to the purchaser signing.
10    (f) All sales proceeds received in connection with a
11pre-need contract shall be deposited into a trust account as
12provided in Section 1b and Section 2 of this Act, or shall be
13used to purchase a life insurance policy or tax-deferred
14annuity as provided in Section 2a of this Act.
15    (g) No pre-need contract shall be sold in this State unless
16it is accompanied by a funding mechanism permitted under this
17Act, and unless the seller is licensed by the Comptroller as
18provided in Section 3 of this Act. Nothing in this Act is
19intended to relieve sellers of pre-need contracts from being
20licensed under any other Act required for their profession or
21business, and being subject to the rules promulgated to
22regulate their profession or business, including rules on
23solicitation and advertisement.
24(Source: P.A. 96-879, eff. 2-2-10.)
 
25    (225 ILCS 45/1a-5 new)

 

 

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1    Sec. 1a-5. Requirements for pre-need solicitation.
2    (a) All sellers of pre-need funeral goods and services,
3their employees, agents, and anyone soliciting on their behalf,
4shall comply with the following requirements when engaged in
5the solicitation of pre-need funeral consumers:
6        (1) Upon initiating a solicitation by telephone, or
7    upon entering the residence of a solicitation prospect, the
8    solicitor must identify himself or herself, the pre-need
9    seller on whose behalf the solicitation is being made, and
10    a general description of the pre-need goods and services to
11    be offered for sale.
12        (2) When making a pre-need sale solicitation, the
13    solicitor must present to the consumer a copy of the
14    General Price List of the pre-need seller and any other
15    pre-need consumer disclosure information required by law.
16        (3) Pre-need sellers who solicit consumers by
17    telephone are required to maintain a "do-not-call" list and
18    to place on the list the household telephone number of any
19    consumer who requests to be put on the list.
20    (b) All sellers of pre-need funeral goods and services,
21their employees, agents, and anyone soliciting on their behalf,
22are prohibited from undertaking any of the following practices
23when engaging in the solicitation of pre-need funeral
24consumers:
25        (1) The making of any untrue statement of material fact
26    or omission of any material fact when engaged in pre-need

 

 

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1    solicitation.
2        (2) The use of any advertisement or offer of pre-need
3    funeral goods or services that is false, misleading,
4    deceptive, unfair, coercive, or intimidating.
5        (3) The solicitation of potential pre-need consumers
6    by telephone any time between the hours of 9:00 p.m. and
7    8:00 a.m.
8        (4) The use of the term "trust" or "trust-funded" in
9    any pre-need advertisement or solicitation in any
10    misleading way.
11        (5) The direct or indirect solicitation of persons in
12    hospitals, rest homes, nursing homes, or similar health
13    care facilities by telephone or in person without having
14    been expressly requested to do so by that person or the
15    person's representative.
 
16    (225 ILCS 45/3)  (from Ch. 111 1/2, par. 73.103)
17    Sec. 3. Licensing.
18    (a) No person, firm, partnership, association or
19corporation may act as seller without first securing from the
20State Comptroller a license to so act. Application for such
21license shall be in writing, signed by the applicant and duly
22verified on forms furnished by the Comptroller. Each
23application shall contain at least the following:
24        (1) The full name and address (both residence and place
25    of business) of the applicant, and every member, officer

 

 

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1    and director thereof if the applicant is a firm,
2    partnership, association, or corporation, and of every
3    shareholder holding more than 10% of the corporate stock if
4    the applicant is a corporation;
5        (2) A statement of the applicant's assets and
6    liabilities;
7        (3) The name and address of the applicant's principal
8    place of business at which the books, accounts, and records
9    shall be available for examination by the Comptroller as
10    required by this Act;
11        (4) The names and addresses of the applicant's branch
12    locations at which pre-need sales shall be conducted and
13    which shall operate under the same license number as the
14    applicant's principal place of business;
15        (5) For each individual listed under item (1) above, a
16    detailed statement of the individual's business experience
17    for the 10 years immediately preceding the application; any
18    present or prior connection between the individual and any
19    other person engaged in pre-need sales; any felony or
20    misdemeanor convictions for which fraud was an essential
21    element; any charges or complaints lodged against the
22    individual for which fraud was an essential element and
23    which resulted in civil or criminal litigation; any failure
24    of the individual to satisfy an enforceable judgment
25    entered against him based upon fraud; and any other
26    information requested by the Comptroller relating to past

 

 

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1    business practices of the individual. Since the
2    information required by this item (5) may be confidential
3    or contain proprietary information, this information shall
4    not be available to other licensees or the general public
5    and shall be used only for the lawful purposes of the
6    Comptroller in enforcing this Act;
7        (6) The name of the trustee and, if applicable, the
8    names of the advisors to the trustee, including a copy of
9    the proposed trust agreement under which the trust funds
10    are to be held as required by this Act; and
11        (7) Such other information as the Comptroller may
12    reasonably require in order to determine the qualification
13    of the applicant to be licensed under this Act.
14    (b) Applications for license shall be accompanied by a
15fidelity bond executed by the applicant and a surety company
16authorized to do business in this State or an irrevocable,
17unconditional letter of credit issued by a bank, credit union,
18or trust company authorized to do business in the State of
19Illinois, as approved by the State Comptroller, in such amount
20not exceeding $10,000 as the Comptroller may require. If, after
21notice and an opportunity to be heard, it has been determined
22that a licensee has violated this Act within the past 5
23calendar years, the Comptroller may require an additional bond
24or letter of credit from the licensee from time to time in
25amounts equal to one-tenth of such trust funds, which bond or
26letter of credit shall run to the Comptroller for the use and

 

 

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1benefit of the beneficiaries of such trust funds.
2    The licensee shall keep accurate accounts, books and
3records in this State, at the principal place of business
4identified in the licensee's license application or as
5otherwise approved by the Comptroller in writing, of all
6transactions, copies of all pre-need contracts, trust
7agreements, and other agreements, dates and amounts of payments
8made and accepted thereon, the names and addresses of the
9contracting parties, the persons for whose benefit such funds
10are accepted, and the names of the depositaries of such funds.
11The licensee shall also keep a record of the value and balance
12of each pre-need funeral trust fund and the value of each
13insurance policy, as of the most recent transaction, including
14all annual reports received from trustees and insurance
15companies. Each licensee shall maintain the documentation for a
16period of 3 years after the licensee has fulfilled his
17obligations under the pre-need contract. Additionally, for a
18period not to exceed 6 months after the performance of all
19terms in a pre-need sales contract, the licensee shall maintain
20copies of the contract at the licensee branch location where
21the contract was entered or at some other location agreed to by
22the Comptroller in writing. If an insurance policy or
23tax-deferred annuity is used to fund the pre-need contract, the
24licensee under this Act shall keep and maintain accurate
25accounts, books, and records in this State, at the principal
26place of business identified in the licensee's application or

 

 

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1as otherwise approved by the Comptroller in writing, of all
2insurance policies and tax-deferred annuities used to fund the
3pre-need contract, the name and address of insured, annuitant,
4and initial beneficiary, and the name and address of the
5insurance company issuing the policy or annuity. If a life
6insurance policy or tax-deferred annuity is used to fund a
7pre-need contract, the licensee shall notify the insurance
8company of the name of each pre-need contract purchaser and the
9amount of each payment when the pre-need contract, insurance
10policy or annuity is purchased.
11    The licensee shall make reports to the Comptroller annually
12or at such other time as the Comptroller may require, on forms
13furnished by the Comptroller. The licensee shall file the
14annual report with the Comptroller within 75 days after the end
15of the licensee's fiscal year. The Comptroller shall for good
16cause shown grant an extension for the filing of the annual
17report upon the written request of the licensee. Such extension
18shall not exceed 60 days. If a licensee fails to submit an
19annual report to the Comptroller within the time specified in
20this Section, the Comptroller shall impose upon the licensee a
21penalty of $5 for each and every day the licensee remains
22delinquent in submitting the annual report. The Comptroller may
23abate all or part of the $5 daily penalty for good cause shown.
24Every application shall be accompanied by a check or money
25order in the amount of $25 and every report shall be
26accompanied by a check or money order in the amount of $10

 

 

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1payable to: Comptroller, State of Illinois.
2    The licensee shall make all required books and records
3pertaining to trust funds, insurance policies, or tax-deferred
4annuities available to the Comptroller for examination. The
5Comptroller, or a person designated by the Comptroller who is
6trained to perform such examinations, may at any time
7investigate the books, records and accounts of the licensee
8with respect to trust funds, insurance policies, or
9tax-deferred annuities and for that purpose may require the
10attendance of and examine under oath all persons whose
11testimony he may require. The licensee shall pay a fee for such
12examination in accordance with a schedule established by the
13Comptroller. The fee shall not exceed the cost of such
14examination. For pre-need contracts funded by trust
15arrangements, the cost of an initial examination shall be borne
16by the licensee if it has $10,000 or more in trust funds,
17otherwise, by the Comptroller. The charge made by the
18Comptroller for an examination shall be based upon the total
19amount of trust funds held by the licensee at the end of the
20calendar or fiscal year for which the report is required by
21this Act and shall be in accordance with the following
22schedule:
23Less than $10,000.................................no charge;
24$10,000 or more but less than $50,000...................$10;
25$50,000 or more but less than $100,000..................$40;
26$100,000 or more but less than $250,000.................$80;

 

 

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1$250,000 or more........................................$100.
2    The Comptroller may order additional audits or
3examinations as he or she may deem necessary or advisable to
4ensure the safety and stability of the trust funds and to
5ensure compliance with this Act. These additional audits or
6examinations shall only be made after good cause is established
7by the Comptroller in the written order. The grounds for
8ordering these additional audits or examinations may include,
9but shall not be limited to:
10        (1) material and unverified changes or fluctuations in
11    trust balances or insurance or annuity policy amounts;
12        (2) the licensee changing trustees more than twice in
13    any 12-month period;
14        (3) any withdrawals or attempted withdrawals from the
15    trusts, insurance policies, or annuity contracts in
16    violation of this Act; or
17        (4) failure to maintain or produce documentation
18    required by this Act for deposits into trust accounts,
19    trust investment activities, or life insurance or annuity
20    policies.
21    The licensee shall bear the full cost of that examination
22or audit, up to a maximum of $20,000. The Comptroller may elect
23to pay for the examination or audit and receive reimbursement
24from the licensee. Payment of the costs of the examination or
25audit by a licensee shall be a condition of receiving,
26maintaining, or renewing a license under this Act. All moneys

 

 

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1received by the Comptroller for examination or audit fees shall
2be maintained in a separate account to be known as the
3Comptroller's Administrative Fund. This Fund, subject to
4appropriation by the General Assembly, may be utilized by the
5Comptroller for enforcing this Act and other purposes that may
6be authorized by law.
7    For pre-need contracts funded by life insurance or a
8tax-deferred annuity, the cost of an examination shall be borne
9by the licensee. The fee schedule for such examination shall be
10established in rules promulgated by the Comptroller. In the
11event such investigation or other information received by the
12Comptroller discloses a substantial violation of the
13requirements of this Act, the Comptroller shall revoke the
14license of such person upon a hearing as provided in this Act.
15Such licensee may terminate all further responsibility for
16compliance with the requirements of this Act by voluntarily
17surrendering the license to the Comptroller, or in the event of
18its loss, furnishing the Comptroller with a sworn statement to
19that effect, which states the licensee's intention to
20discontinue acceptance of funds received under pre-need
21contracts. Such license or statement must be accompanied by an
22affidavit that said licensee has lawfully expended or refunded
23all funds received under pre-need contracts, and that the
24licensee will accept no additional sales proceeds. The
25Comptroller shall immediately cancel or revoke said license.
26(Source: P.A. 96-879, eff. 2-2-10.)
 

 

 

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1    Section 10. The Illinois Pre-Need Cemetery Sales Act is
2amended by changing Section 14 and by adding Section 13.5 as
3follows:
 
4    (815 ILCS 390/13.5 new)
5    Sec. 13.5. Requirements for pre-need solicitation.
6        (a) All sellers of pre-need goods and services, their
7employees, agents, and anyone soliciting on their behalf, shall
8comply with the following requirements when engaged in the
9solicitation of pre-need consumers:
10        (1) Upon initiating a solicitation by telephone, or
11    upon entering the residence of a solicitation prospect, the
12    solicitor must identify himself or herself, the pre-need
13    seller on whose behalf the solicitation is being made, and
14    a general description of the pre-need goods and services to
15    be offered for sale.
16        (2) When making a pre-need sale solicitation, the
17    solicitor must present to the consumer a copy of the
18    General Price List of the pre-need seller and any other
19    pre-need consumer disclosure information required by law.
20        (3) Pre-need sellers who solicit consumers by
21    telephone are required to maintain a "do-not-call" list and
22    to place on the list the household telephone number of any
23    consumer who requests to be put on the list.
24    (b) All sellers of pre-need goods and services, their

 

 

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1employees, agents, and anyone soliciting on their behalf, are
2prohibited from undertaking any of the following practices when
3engaging in the solicitation of pre-need consumers:
4        (1) The making of any untrue statement of material fact
5    or omission of any material fact when engaged in pre-need
6    solicitation.
7        (2) The use of any advertisement or offer of pre-need
8    goods or services that is false, misleading, deceptive,
9    unfair, coercive, or intimidating.
10        (3) The solicitation of potential pre-need consumers
11    by telephone any time between the hours of 9:00 p.m. and
12    8:00 a.m.
13        (4) The use of the term "trust" or "trust-funded" in
14    any pre-need advertisement or solicitation in any
15    misleading way.
16        (5) The direct or indirect solicitation of persons in
17    hospitals, rest homes, nursing homes, or similar health
18    care facilities by telephone or in-person without having
19    been expressly requested to do so by that person or the
20    person's representative.
 
21    (815 ILCS 390/14)  (from Ch. 21, par. 214)
22    Sec. 14. Contract required.
23    (a) It is unlawful for any person doing business within
24this State to accept sales proceeds, either directly or
25indirectly, by any means unless the seller enters into a

 

 

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1pre-need sales contract with the purchaser which meets the
2following requirements:
3        (1) A written sales contract shall be executed in at
4    least 11 point type in duplicate for each pre-need sale
5    made by a licensee, and a signed copy given to the
6    purchaser. Each completed contract shall be numbered and
7    shall contain: (i) the name and address of the purchaser,
8    the principal office of the licensee, and the parent
9    company of the licensee; (ii) the name of the person, if
10    known, who is to receive the cemetery merchandise, cemetery
11    services or the completed interment, entombment or
12    inurnment spaces under the contract; and (iii) in an
13    attached Statement of Funeral Goods and Services Selected,
14    specific identification of such merchandise, services or
15    spaces to be provided, if a specific space or spaces are
16    contracted for, and the price of the merchandise, services,
17    or space or spaces.
18        (2) In addition, such contracts must contain a
19    provision in distinguishing typeface as follows:
20        "Notwithstanding anything in this contract to the
21    contrary, you are afforded certain specific rights of
22    cancellation and refund under the Illinois Pre-Need
23    Cemetery Sales Act, enacted by the 84th General Assembly of
24    the State of Illinois".
25        (3) All pre-need sales contracts shall be sold on a
26    guaranteed price basis. At the time of performance of the

 

 

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1    service or delivery of the merchandise, the seller shall be
2    prohibited from assessing the purchaser or his heirs or
3    assigns or duly authorized representative any additional
4    charges for the specific merchandise and services listed on
5    the pre-need sales contract.
6        (4) Each contract shall clearly disclose that the price
7    of the merchandise or services is guaranteed and shall
8    contain the following statement in 12 point bold type:
9        "THIS CONTRACT GUARANTEES THE BENEFICIARY THE SPECIFIC
10    GOODS, SERVICES, INTERMENT SPACES, ENTOMBMENT SPACES, AND
11    INURNMENT SPACES CONTRACTED FOR. NO ADDITIONAL CHARGES MAY
12    BE REQUIRED FOR DESIGNATED GOODS, SERVICES, AND SPACES.
13    ADDITIONAL CHARGES MAY BE INCURRED FOR UNEXPECTED
14    EXPENSES."
15        (5) The pre-need sales contract shall provide that if
16    the particular cemetery services, cemetery merchandise, or
17    spaces specified in the pre-need contract are unavailable
18    at the time of delivery, the seller shall be required to
19    furnish services, merchandise, and spaces similar in style
20    and at least equal in quality of material and workmanship.
21        (6) The pre-need contract shall also disclose any
22    specific penalties to be incurred by the purchaser as a
23    result of failure to make payments; and penalties to be
24    incurred or moneys or refunds to be received as a result of
25    cancellation of the contract.
26        (7) The pre-need contract shall disclose the nature of

 

 

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1    the relationship between the provider and the seller.
2        (8) Each pre-need contract that authorizes the
3    delivery of cemetery merchandise to a licensed and bonded
4    warehouse shall provide that prior to or upon delivery of
5    the merchandise to the warehouse the title to the
6    merchandise and a warehouse receipt shall be delivered to
7    the purchaser or beneficiary. The pre-need contract shall
8    contain the following statement in 12 point bold type:
9    "THIS CONTRACT AUTHORIZES THE DELIVERY OF MERCHANDISE TO A
10    LICENSED AND BONDED WAREHOUSE FOR STORAGE OF THE
11    MERCHANDISE UNTIL THE MERCHANDISE IS NEEDED BY THE
12    BENEFICIARY. DELIVERY OF THE MERCHANDISE IN THIS MANNER MAY
13    PRECLUDE REFUND OF SALE PROCEEDS THAT ARE ATTRIBUTABLE TO
14    THE DELIVERED MERCHANDISE."
15        The purchaser shall initial the statement at the time
16    of entry into the pre-need contract.
17        (9) Each pre-need contract that authorizes the
18    placement of cemetery merchandise at the site of its
19    ultimate use prior to the time that the merchandise is
20    needed by the beneficiary shall contain the following
21    statement in 12 point bold type:
22    "THIS CONTRACT AUTHORIZES THE PLACEMENT OF MERCHANDISE AT
23    THE SITE OF ITS ULTIMATE USE PRIOR TO THE TIME THAT THE
24    MERCHANDISE IS NEEDED BY THE BENEFICIARY. DELIVERY OF THE
25    MERCHANDISE IN THIS MANNER MAY PRECLUDE REFUND OF SALE
26    PROCEEDS THAT ARE ATTRIBUTABLE TO THE DELIVERED

 

 

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1    MERCHANDISE."
2        The purchaser shall initial the statement at the time
3    of entry into the pre-need contract.
4        (10) Each pre-need contract that is funded by a trust
5    shall clearly identify the trustee's name and address and
6    the primary state or federal regulator of the trustee as a
7    corporate fiduciary.
8    (b) Every pre-need sales contract must be in writing and
9must specify the date and location of execution of the
10contract. A copy of the signed pre-need contract must be
11provided to the purchaser at the time of entry into the
12pre-need contract. The Comptroller may by rule develop a model
13pre-need sales contract form that meets the requirements of
14this Act.
15    (c) To the extent the Rule is applicable, every pre-need
16sales contract is subject to the Federal Trade Commission Rule
17concerning the Cooling-Off Period for Door-to-Door Sales (16
18CFR Part 429).
19    (d) No pre-need sales contract may be entered into in this
20State unless there is a provider for the cemetery merchandise,
21cemetery services, and undeveloped interment, inurnment, and
22entombment spaces being sold. If the seller is not the
23provider, then the seller must have a binding agreement with a
24provider, and the identity of the provider and the nature of
25the agreement between the seller and the provider must be
26disclosed in the pre-need sales contract at the time of sale

 

 

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1and before the receipt of any sale proceeds. If the pre-need
2contract requires the performance of funeral services and the
3seller is not the provider of the funeral services, then the
4pre-need contract must also be signed by the provider of the
5funeral services in order to be valid. The failure to disclose
6the identity of the provider, the nature of the agreement
7between the seller and the provider, or any changes thereto to
8the purchaser and beneficiary, or the failure to make the
9disclosures required by this Section constitutes an
10intentional violation of this Act.
11    (e) No pre-need contract may be entered into in this State
12unless it is accompanied by a funding mechanism permitted under
13this Act and unless the seller is licensed by the Comptroller
14as provided in this Act. Nothing in this Act is intended to
15relieve providers or sellers of pre-need contracts from being
16licensed under any other Act required for their profession or
17business or from being subject to the rules promulgated to
18regulate their profession or business, including rules on
19solicitation and advertisement.
20    (f) No pre-need contract may be entered into in this State
21unless the seller explains to the purchaser the terms of the
22pre-need contract prior to the purchaser signing and the
23purchaser initials a statement in the contract confirming that
24the seller has explained the terms of the contract prior to the
25purchaser signing.
26    (g) The State Comptroller shall develop a booklet for

 

 

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1consumers in plain English describing the scope, application,
2and consumer protections of this Act. After the booklet is
3developed, no pre-need contract may be sold in this State
4unless the seller distributes to the purchaser prior to the
5sale a booklet developed or approved for use by the State
6Comptroller.
7(Source: P.A. 96-879, eff. 2-2-10.)