97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB2939

 

Introduced 2/1/2012, by Sen. Emil Jones, III

 

SYNOPSIS AS INTRODUCED:
 
205 ILCS 657/5
205 ILCS 657/65
205 ILCS 657/66 new
205 ILCS 657/76 new

    Amends the Transmitters of Money Act. Creates a provision concerning general-use prepaid cards. Provides that all vendors of general-use prepaid cards must be licensees or authorized sellers of a licensee under the Act. Provides that the permitted fees a vendor may charge includes an activation fee not to exceed the greater of $1 or 1% of the value of the general-use prepaid card. Provides that a prohibition on the imposition of certain fees or charges shall provide that it is unlawful for any person to impose a reloading fee, balance check fee, overdraft protection fee, dormancy fee, inactivity charge or fee, or service fee with respect to a general-use prepaid card. Provides that there are exceptions to the prohibition on imposition of certain fees or charges and the prohibitions shall not apply to any general-use prepaid card (i) that is distributed pursuant to an award, loyalty, or promotional program and (ii) with respect to which, there is no money or other value exchanged. Creates a provision concerning check-cashing. Provides that any vendor issuing, selling, or offering for sale general-use prepaid cards may not commit, or have committed on behalf of the vendor, certain specified acts. Provides that all vendors must comply with all State and federal requirements applicable to general-use prepaid cards to be in compliance. Provides that no licensee under the Act or an authorized seller of a licensee may cash checks for a fee unless licensed under the Currency Exchange Act or unless the licensee or authorized seller is an entity exempt under the Currency Exchange Act and operating in compliance with the Check Cashing Act. Makes changes to the provisions concerning definitions and notice of source of instrument and transaction records.


LRB097 14481 CEL 59335 b

 

 

A BILL FOR

 

SB2939LRB097 14481 CEL 59335 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 Transmitters of Money Act is amended by
5changing Sections 5 and 65 and by adding Sections 66 and 76 as
6follows:
 
7    (205 ILCS 657/5)
8    Sec. 5. Definitions. As used in this Act, unless the
9context otherwise requires, the words and phrases defined in
10this Section have the meanings set forth in this Section.
11    "Authorized seller" means a person not an employee of a
12licensee who engages in the business regulated by this Act on
13behalf of a licensee under a contract between that person and
14the licensee.
15    "Balance check fee" means a fee assessed to a consumer for
16checking the balance on a general-use prepaid card.
17    "Bill payment service" means the business of transmitting
18money on behalf of an Illinois resident for the purpose of
19paying the resident's bills.
20    "Controlling person" means a person owning or holding the
21power to vote 25% or more of the outstanding voting securities
22of a licensee or the power to vote the securities of another
23controlling person of the licensee. For purposes of determining

 

 

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1the percentage of a licensee controlled by a controlling
2person, the person's interest shall be combined with the
3interest of any other person controlled, directly or
4indirectly, by that person or by a spouse, parent, or child of
5that person.
6    "Department" means the Department of Financial and
7Professional Regulation Institutions.
8    "Director" means the Director of the Division of Financial
9Institutions.
10    "Dormancy fee" or "inactivity charge or fee" means a fee,
11charge, or penalty for non-use or inactivity of a general-use
12prepaid card.
13    "General-use prepaid card" or "stored value card" means an
14electronic promise, plastic card, or other payment code or
15device, not marketed or labeled as a gift card, issued by any
16person that is:
17        (1) redeemable or honored, upon presentation, at
18    multiple, unaffiliated merchants or service providers or
19    automated teller machines;
20        (2) issued in a requested amount, whether or not that
21    amount may, at the option of the issuer, be increased in
22    value or reloaded if requested by the holder;
23        (3) purchased or loaded on a prepaid basis; and
24        (4) used to withdraw cash at automated teller machines
25    or by other means, including cash back transactions whereby
26    an amount is added to the total purchase price of a

 

 

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1    transaction and a consumer receives that amount in cash
2    along with the purchase.
3        The term "general-use prepaid card" does not include an
4    electronic promise, plastic card, or payment code or device
5    that is:
6            (1) used solely for telephone services;
7            (2) a loyalty, award, or promotional gift card;
8            (3) not marketed to the general public;
9            (4) issued in paper form only, including for
10        tickets and events;
11            (5) not redeemable at automated teller machines or
12        for cash back; or
13            (6) redeemable solely for admission to events or
14        venues at a particular location or group of affiliated
15        locations, which may also include services or goods
16        obtainable:
17                (i) at the event or venue after admission; or
18                (ii) in conjunction with admission to such
19            events or venues at specific locations affiliated
20            with and in geographic proximity to the event or
21            venue.
22    "Licensee" means a person licensed under this Act.
23    "Location" means a place of business at which activity
24regulated by this Act occurs.
25    "Material litigation" means any litigation that, according
26to generally accepted accounting principles, is deemed

 

 

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1significant to a licensee's financial health and would be
2required to be referenced in a licensee's annual audited
3financial statements, reports to shareholders, or similar
4documents.
5    "Money" means a medium of exchange that is authorized or
6adopted by a domestic or foreign government as a part of its
7currency and that is customarily used and accepted as a medium
8of exchange in the country of issuance.
9    "Money transmitter" means a person who is located in or
10doing business in this State and who directly or through
11authorized sellers does any of the following in this State:
12        (1) Sells or issues payment instruments.
13        (2) Engages in the business of receiving money for
14    transmission or transmitting money.
15        (3) Engages in the business of exchanging, for
16    compensation, money of the United States Government or a
17    foreign government to or from money of another government.
18    "Outstanding payment instrument" means, unless otherwise
19treated by or accounted for under generally accepted accounting
20principles on the books of the licensee, a payment instrument
21issued by the licensee that has been sold in the United States
22directly by the licensee or has been sold in the United States
23by an authorized seller of the licensee and reported to the
24licensee as having been sold, but has not been paid by or for
25the licensee.
26    "Overdraft protection" means a credit arrangement under

 

 

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1which an issuer of general use prepaid cards automatically
2extends a loan to cover an amount that exceeds the general-use
3prepaid card account balance.
4    "Overdraft protection fee" means a fee charged by a
5licensee for overdraft protection.
6    "Payment instrument" means a check, draft, money order,
7traveler's check, general-use prepaid stored value card, or
8other instrument or memorandum, written order or written
9receipt for the transmission or payment of money sold or issued
10to one or more persons whether or not that instrument or order
11is negotiable. Payment instrument does not include an
12instrument that is redeemable by the issuer in merchandise or
13service, a credit card voucher, or a letter of credit. A
14written order for the transmission or payment of money that
15results in the issuance of a check, draft, money order,
16traveler's check, or other instrument or memorandum is not a
17payment instrument.
18    "Person" means an individual, partnership, association,
19joint stock association, corporation, or any other form of
20business organization.
21    "Reloading fee" means a fee charged to load cash or value
22to a general-use prepaid card.
23    "Service fee" means a periodic fee, charge, or penalty for
24holding or use of a general-use prepaid card. The term "service
25fee" does not include a one-time initial issuance fee.
26    "Stored value card" means any magnetic stripe card or other

 

 

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1electronic payment instrument given in exchange for money and
2other similar consideration, including but not limited to
3checks, debit payments, money orders, drafts, credit payments,
4and traveler's checks, where the card or other electronic
5payment instrument represents a dollar value that the consumer
6can either use or give to another individual.
7    "Transmitting money" means the transmission of money by any
8means, including transmissions to or from locations within the
9United States or to and from locations outside of the United
10States by payment instrument, facsimile or electronic
11transfer, or otherwise, and includes bill payment services.
12    "Vendor" means a licensee or an authorized seller of a
13licensee that sells or offers to sell general-use prepaid cards
14to consumers.
15(Source: P.A. 92-400, eff. 1-1-02; 93-535, eff. 1-1-04.)
 
16    (205 ILCS 657/65)
17    Sec. 65. Notice of source of instrument; transaction
18records.
19    (a) Every payment instrument other than a general-use
20prepaid stored value card sold through an authorized seller
21shall bear the name of the licensee and a unique consecutive
22number clearly stamped or imprinted on it. When an order for
23the transmission of money results in the issuance of a payment
24instrument, both the order and the payment instrument may bear
25the same unique number.

 

 

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1    (b) A licensee or authorized seller shall create a record,
2which may be reduced to computer or other electronic medium,
3upon receiving any money from a customer.
4    (c) For each payment instrument other than a general-use
5prepaid stored value card sold, the licensee shall require the
6authorized seller to record the face amount of the payment
7instrument and the serial number of the payment instrument.
8    (d) For each transmission of money, the licensee or
9authorized seller shall record the date the money was received,
10the face amount of the payment instrument, the name of the
11customer, the manner of transmission, including the identity
12and location of any bank or other financial institution
13receiving or otherwise involved in accomplishing the
14transmission, the location to which the money is transmitted if
15different from the bank or other financial institution required
16to be recorded, the name of the intended recipient, and the
17date the transmission was accomplished or the money was
18refunded to the customer due to an inability to transmit or
19failure of the intended recipient to receive or obtain the
20money transmitted. The transmission shall be made by the
21licensee or authorized seller within 3 business days after the
22receipt of the money to be transmitted. The licensee or
23authorized seller, in addition to the records required to be
24kept, shall issue a receipt to each person delivering or
25depositing money with the licensee or authorized seller
26indicating the date of the transaction, the face amount of the

 

 

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1payment instrument, to whom the money is to be transmitted, the
2service charge, and the name and address of the licensee or
3authorized seller. The receipt or a separate disclosure at the
4time of the money transmission shall also include a statement
5of the licensee's refund procedures as well as a toll-free
6telephone number for customer assistance. An inadvertent or
7non-wilful failure to give a consumer the disclosure provided
8for in this Section shall not constitute a violation of this
9Act. The licensee or authorized seller shall keep a copy of
10every receipt in a permanent record book or maintain the data
11embodied in the receipt using photographic, electronic, or
12other means.
13    (e) For each exchange of money of the United States
14government or a foreign government to or from money of another
15government, the licensee or authorized seller shall record the
16date of the transaction, the amount of the transaction, the
17amount of funds stated in currency received by the recipient,
18and the rate of exchange at the time of the transaction. The
19licensee or authorized seller, in addition to the records
20required to be kept, shall issue a receipt to each person
21delivering or depositing money with the licensee or authorized
22seller indicating the date of the transaction, the amount of
23the transaction, the service charge, and the name and address
24of the licensee or authorized seller making the transaction.
25The licensee or authorized seller shall keep a copy of every
26receipt in a permanent record book or maintain data embodied in

 

 

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1the receipt using photographic, electronic, or other means.
2    (f) Records required to be kept by the licensee or
3authorized seller under this Act shall be preserved for at
4least 5 years or as required to comply with any other Act the
5administration of which is vested in the Director. The records
6shall be made available for examination in accordance with
7Sections 55 and 60 of this Act.
8(Source: P.A. 93-535, eff. 1-1-04.)
 
9    (205 ILCS 657/66 new)
10    Sec. 66. General-use prepaid cards.
11    (a) Except as otherwise provided in this Act, this Section
12applies to all persons that issue, sell, or offer for sale
13general-use prepaid cards as defined by this Act to consumers.
14All vendors of general-use prepaid cards must be licensees or
15authorized sellers of a licensee pursuant to Section 75 of this
16Act, unless otherwise exempt from the requirements of this Act.
17    (b) The permitted fees a vendor may charge includes an
18activation fee not to exceed the greater of $1 or 1% of the
19value of the general-use prepaid card. Only one activation fee
20may be charged per general-use prepaid card. No vendor shall
21charge or collect any sum in excess of those allowed by this
22Act.
23    The schedule of fees and charges permitted under this
24Section shall be conspicuously disclosed on the face of the
25general-use prepaid card or on any packaging.

 

 

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1    (c) Except as provided under subsections (d) and (e) of
2this Section, it is unlawful for any person to impose a
3reloading fee, balance check fee, overdraft protection fee,
4dormancy fee, inactivity charge or fee, or service fee with
5respect to a general-use prepaid card.
6    (d) A dormancy fee, inactivity charge or fee, or service
7fee may be charged with respect to a general-use prepaid card,
8if:
9        (1) there has been no activity with respect to the
10    general-use prepaid card in the 18-month period ending on
11    the date that the charge or fee is imposed;
12        (2) the following disclosure requirements are met:
13            (A) the general-use prepaid card clearly and
14        conspicuously states:
15                (i) that a dormancy fee, inactivity charge or
16            fee, or service fee may be charged;
17                (ii) the amount of such fee or charge;
18                (iii) how often such fee or charge may be
19            assessed; and
20                (iv) that such fee or charge may be assessed
21            for inactivity; and
22            (B) the vendor of such general-use prepaid card
23        informs the purchaser of such charge or fee before such
24        general-use prepaid card is purchased, regardless of
25        whether the general-use prepaid card is purchased in
26        person, over the internet, or by telephone;

 

 

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1        (3) not more than one dormancy, inactivity charge or
2    fee, or service fee may be charged per month of inactivity,
3    not to exceed $1 or 1% of the value of the card, whichever
4    is less, on the date of assessment; and
5        (4) any additional requirements that the Secretary may
6    deem necessary.
7    (e) The prohibition under subsection (b) shall not apply to
8any general-use prepaid card:
9        (1) that is distributed pursuant to an award, loyalty,
10    or promotional program; and
11        (2) with respect to which, there is no money or other
12    value exchanged.
13    (f) Any vendor issuing, selling, or offering for sale
14general–use prepaid cards may not commit, or have committed on
15behalf of the vendor, any of the following acts:
16        (1) sell or issue a general-use prepaid card that is
17    subject to an expiration date;
18        (2) use any device or agreement that may have the
19    effect of charging or collecting more fees or charges than
20    allowed by this Act, including, but not limited to,
21    entering into a different type of transaction with the
22    consumer;
23        (3) engage in unfair, deceptive, or fraudulent
24    practices in the issuing or selling of a general-use
25    prepaid card;
26        (4) use or cause to be published or disseminated any

 

 

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1    advertising communication that contains false, misleading,
2    or deceptive statements or representations;
3        (5) make loans of money, discounting notes, bills of
4    exchange, or other evidences of debt, including overdraft
5    protection;
6        (6) extend credit; or
7        (7) charge any fees or charges other than those
8    specifically authorized by this Act.
9    (g) In addition to the requirements of this Act, all
10vendors must comply with all State and federal requirements
11applicable to general-use prepaid cards to be in compliance
12with this Section.
 
13    (205 ILCS 657/76 new)
14    Sec. 76. Check cashing. No licensee under this Act or
15authorized seller of a licensee may cash checks for a fee
16unless licensed pursuant to the Currency Exchange Act or unless
17the licensee or authorized seller is an entity exempt under
18subsection (b) of Section 1 of the Currency Exchange Act and
19operating in compliance with the Check Cashing Act. This
20Section does not apply to any transaction where a customer
21presents a check for the exact amount of any purchase.