[ Search ] [ Legislation ]
[ Home ] [ Back ] [ Bottom ]
91_HB2900
LRB9108880JSpc
1 AN ACT to create the Short-term Loan Act.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 1. Short title. This Act may be cited as the
5 Short-term Loan Act.
6 Section 5. Definitions.
7 "Director" means the Director of Financial Institutions.
8 "Motor vehicle title loan firm" means any business that
9 loans money to a borrower in a transaction in which the
10 borrower turns over custody of a title to a motor vehicle as
11 security for the loan.
12 "Net worth" means total assets minus total liabilities.
13 "Payday loan firm" means any business that loans money to
14 a borrower in a transaction in which the loan is due and
15 payable upon the next payday of the borrower or any member of
16 the borrower's immediate family.
17 Section 10. License required to engage in business. No
18 person, partnership, association, limited liability company,
19 or corporation shall engage in the business of making loans
20 of money for terms of 92 days or less except as authorized by
21 this Act after first obtaining a license from the Director.
22 Section 15. Application; fees. Application for a
23 license shall be in writing, under oath, and in the form
24 prescribed by the Director. The applicant at the time of
25 making the application shall pay to the Director an
26 application fee and annual license fee to be fixed by the
27 Director by rule. The application fee and the annual license
28 fee shall in no case be less than the amounts determined by
29 the Director to be necessary to cover his or her duties
-2- LRB9108880JSpc
1 prescribed by this Act, including the cost of maintaining and
2 operating a consumer complaint system as hereinafter
3 described.
4 Section 20. Positive net worth; bond. Before a license
5 is granted, the applicant shall prove in form satisfactory to
6 the Director that the applicant has a positive net worth of a
7 minimum of $50,000. An applicant shall maintain a surety bond
8 in the principal sum of $5,000 issued by a bonding company
9 authorized to do business in this State and which shall be
10 approved by the Director. This bond shall run to the Director
11 and shall be for the benefit of any person who incurs damages
12 as a result of the actions of a licensee and who is lawfully
13 awarded these damages pursuant to an appropriate court order.
14 If the Director finds at any time that a bond is of
15 insufficient size or otherwise doubtful, an additional bond
16 in any amount determined by the Director shall be filed by
17 the licensee within 30 days after written demand by the
18 Director.
19 Section 25. Appointment of attorney-in-fact for service
20 of process. A licensee shall appoint, in writing, the
21 Director and his or her successors in office or any official
22 who shall hereafter be charged with the administration of
23 this Act as attorney-in-fact upon whom all lawful process
24 against the licensee may be served with the same legal force
25 and validity as if served on the licensee. A copy of the
26 written appointment, duly certified, shall be filed in the
27 office of the Director, and a copy thereof certified by him
28 or her shall be sufficient evidence. This appointment shall
29 remain in effect while any liability remains outstanding in
30 this State against the licensee. When summons is served upon
31 the Director as attorney-in-fact for such licensee, the
32 Director shall immediately notify the licensee by registered
-3- LRB9108880JSpc
1 mail, enclosing the summons and specifying the hour and day
2 of service.
3 Section 30. Investigation to determine whether license
4 shall be issued. Upon the filing of an application and the
5 payment of the required fees, the Director shall investigate
6 to determine (1) that the reputation of the applicant,
7 including managers, partners, owners, officers or directors
8 of a limited liability company, is such as to warrant belief
9 that the business will be operated honestly and fairly within
10 the purposes of this Act and (2) that the applicant meets the
11 positive net worth requirement set forth in Section 20 of
12 this Act. Unless the Director finds that the application
13 meets both of these criteria, he or she shall not issue a
14 license and shall notify the applicant of the denial and
15 return to the applicant the sum paid by the applicant as an
16 annual license fee, but shall retain the application fee.
17 The Director shall approve or deny every application for
18 licensure under this Act within 60 days from the filing of
19 the application and submission of the required fees.
20 Section 35. License; consumer information to be posted.
21 (a) The license shall state the address, including city
22 and state, at which the business is to be conducted and shall
23 state fully the name of the licensee. The license shall be
24 conspicuously posted in the place of business of the licensee
25 and shall not be transferable or assignable.
26 (b) In addition to posting the license, the licensee
27 shall legibly post in each of his or her offices where
28 business is done with the public, in a format to be
29 determined by the Director by rule, the name, address, and
30 telephone number of a short-term consumer lending customer
31 complaint gathering service or hotline that the Director
32 shall use to gather information about each licensee and take
-4- LRB9108880JSpc
1 appropriate action.
2 Section 40. More than one license to same licensee. Not
3 more than one place of business shall be maintained under the
4 same license, but the Director may issue more than one
5 license to the same licensee upon compliance with all the
6 provisions of this Act governing an original issuance of a
7 license.
8 Section 45. Changing place of business. Whenever a
9 licensee changes his or her place of business to a location
10 other than that set forth in his or her license, he or she
11 shall give written notice of the change to the Director at
12 least 10 days prior to the relocation. However, if the new
13 location is more than 15 miles in distance from the previous
14 location, the licensee shall obtain written approval from the
15 Director prior to the relocation.
16 Section 50. Annual license fee. A licensee shall, on or
17 before December 15 of each year, pay to the Director the
18 annual license fee required by Section 15 of this Act for the
19 next succeeding calendar year. The license shall expire on
20 January 1 unless the license fee has been timely paid to
21 renew the license.
22 Section 55. Expenses. In addition to his or her
23 licensee fee, the licensee shall bear the reasonable expense
24 of any examination, investigation, or custody by the Director
25 under any provisions of this Act.
26 Section 60. License expirations and reinstatements. If
27 a licensee fails to renew his or her license by December 31
28 of any year, the license shall automatically expire and the
29 licensee is not entitled to a hearing; however, the Director,
-5- LRB9108880JSpc
1 in his or her discretion, may reinstate an expired license
2 upon payment of the annual renewal fee and proof of good
3 cause for failure to renew.
4 Section 65. Deposits. All money received by the
5 Director under this Act shall be deposited in the Financial
6 Institution Fund created under Section 6z-26 of the State
7 Finance Act.
8 Section 70. Fines, suspension, or revocation of license.
9 (a) The Director may, after 10 days notice by registered
10 mail to the licensee at the address set forth in the license,
11 stating the contemplated action and the general grounds
12 therefor, fine the licensee an amount not exceeding $10,000
13 per violation, or revoke or suspend any license issued under
14 this Act, if he or she finds that:
15 (1) the licensee has failed to comply with any
16 provision of this Act or any order, decision, finding,
17 rule, or direction of the Director lawfully made pursuant
18 to the authority of this Act; or
19 (2) any fact or condition exists which, if it had
20 existed at the time of the original application for the
21 license, clearly would have warranted the Director in
22 refusing to issue the license.
23 (b) The Director may fine, suspend, or revoke only the
24 particular license with respect to the grounds for which the
25 fine, revocation, or suspension occur or exist, but if the
26 Director shall find that the grounds for the fine,
27 suspension, or revocation are of general application to all
28 offices or to more than one office of the licensee, the
29 Director shall fine, suspend, or revoke every license to
30 which these grounds apply.
31 (c) No revocation, suspension, or surrender of any
32 license shall impair or affect the obligation of any
-6- LRB9108880JSpc
1 pre-existing lawful contract between the licensee and any
2 obligor.
3 (d) The Director may issue a new license to a licensee
4 whose license has been revoked when facts or conditions that
5 clearly would have warranted the Director in refusing
6 originally to issue the license no longer exist.
7 (f) In every case in which a license is suspended or
8 revoked or an application for a license or renewal of a
9 license is denied, the Director shall serve the licensee with
10 notice of his or her action, including a statement of the
11 reasons for his or her actions, either personally, or by
12 certified mail, return receipt requested. Service by
13 certified mail shall be deemed completed when the notice is
14 deposited in the U.S. Mail.
15 (g) An order assessing a fine, an order revoking or
16 suspending a license, and an order denying renewal of a
17 license shall take effect upon service of the order unless
18 the licensee requests, in writing, within 10 days after the
19 date of service, a hearing. If a hearing is requested, the
20 order shall be stayed until a final administrative order is
21 entered.
22 (h) If the licensee requests a hearing, the Director
23 shall schedule a hearing within 30 days after the request for
24 a hearing unless otherwise agreed to by the parties.
25 (i) The hearing shall be held at the time and place
26 designated by the Director. The Director and any
27 administrative law judge designated by him or her shall have
28 the power to administer oaths and affirmations, subpoena
29 witnesses and compel their attendance, take evidence, and
30 require the production of books, papers, correspondence, and
31 other records or information that he or she considers
32 relevant or material to the inquiry.
33 (j) The costs for the administrative hearing shall be set
34 by rule.
-7- LRB9108880JSpc
1 (k) The Director shall have the authority to prescribe
2 rules for the administration of this Section.
3 Section 75. Closing of business; surrender of license.
4 (a) At least 10 days prior to a licensee ceasing
5 operations, closing business, or filing for bankruptcy, the
6 licensee shall notify the Director of its action in writing.
7 With the exception of filing for bankruptcy, the licensee
8 shall surrender its license to the Director for cancellation.
9 The surrender of the license shall not affect the licensee's
10 civil or criminal liability for acts committed prior to
11 surrender or entitle the licensee to a return of any part of
12 the annual license fee.
13 (b) The licensee shall notify the Director of the
14 location where the books, accounts, contracts, and records
15 will be maintained and the procedure to ensure prompt return
16 of contracts, titles, and releases to the customers.
17 (c) The accounts, books, records, and contracts shall be
18 maintained and serviced by the licensee or another licensee
19 under this Act, or an entity exempt from licensure under this
20 Act.
21 (d) The Director shall have the authority to conduct
22 examinations of the books, records, and loan documents at any
23 time after surrender of the license, filing of bankruptcy, or
24 the cessation of operations.
25 Section 80. Investigation of conduct of business. For
26 the purpose of discovering violations of this Act or securing
27 information lawfully required by it, the Director may at any
28 time investigate the loans and business and examine the
29 books, accounts, records, and files used therein of every
30 licensee and of every person, partnership, association,
31 limited liability company, and corporation engaged in the
32 business described in Section 10 of this Act, whether the
-8- LRB9108880JSpc
1 person, partnership, association, limited liability company,
2 or corporation shall act or claim to act as principal or
3 agent or within or without the authority of this Act. For
4 this purpose the Director shall have free access to the
5 offices and places of business, books, accounts, papers,
6 records, files, safes, and vaults of such persons,
7 partnerships, associations, limited liability companies, and
8 corporations. The Director may require the attendance of and
9 examine under oath all persons whose testimony he or she may
10 require relative to such loans or such business, and in such
11 cases the Director shall have power to administer oaths to
12 all persons called as witnesses.
13 The Director shall make an examination of the affairs,
14 business, office, and records of each licensee at least once
15 each year. The Director shall by rule and regulation set the
16 fee to be charged for each examination day, including travel
17 expenses for out-of-state licensed locations. The fee shall
18 reasonably reflect actual costs. The Director shall also
19 have authority to examine the books and records of any
20 business made by a former licensee that is being liquidated,
21 as the Director deems necessary, and may charge the
22 examination fees otherwise required for licensees.
23 Section 85. Books and records. A licensee shall retain
24 and use in his or her business or at another location
25 approved by the Director such records as are required by the
26 Director to enable the Director to determine whether the
27 licensee is complying with the provisions of this Act and the
28 rules promulgated under this Act. A licensee shall preserve
29 the records of any loan for at least 2 years after making the
30 final entry for the loan. Accounting systems maintained in
31 whole or in part by mechanical or electronic data processing
32 methods that provide information equivalent to that otherwise
33 required and follow generally accepted accounting principles
-9- LRB9108880JSpc
1 are acceptable for that purpose, if approved by the Director
2 in writing.
3 Section 90. Reports. A licensee shall annually, on or
4 before the first day of March, file a report with the
5 Director giving such relevant information as the Director may
6 reasonably require concerning the business and operations
7 during the preceding calendar year of each licensed place of
8 business conducted by the licensee. The report shall be made
9 under oath and in a form prescribed by the Director. Whenever
10 a licensee operates 2 or more licensed offices or whenever 2
11 or more affiliated licensees operate licensed offices, a
12 composite report of such group of licensed offices may be
13 filed in lieu of individual reports. The Director may make
14 and publish annually an analysis and recapitulation of the
15 reports. The Director may fine each licensee $25 for each day
16 beyond March 1 such report is filed.
17 Section 95. Other business; rules and regulations. Upon
18 application by the licensee, and approval by the Director,
19 the Director may approve the conduct of other businesses not
20 specifically permitted by this Act in the licensee's place of
21 business, unless the Director finds that such conduct will
22 conceal or facilitate evasion or violation of this Act. Such
23 approval shall be in writing and shall describe the other
24 businesses that may be conducted in the licensed office. The
25 Director shall make and enforce reasonable rules and
26 regulations for the conduct of business under this Act in the
27 same office with other businesses as may be necessary to
28 prevent evasions or violations of this Act. The Director may
29 investigate any business conducted in the licensed office to
30 determine whether any evasion or violation of this Act has
31 occurred.
-10- LRB9108880JSpc
1 Section 100. Prohibition against taking power of
2 attorney. No licensee shall take any power of attorney
3 except to acknowledge the execution of an instrument or to
4 confess judgement.
5 Section 105. Pledge or sale of note. No licensee or
6 other person shall pledge, hypothecate, or sell a note
7 entered into under the provisions of this Act by an obligor
8 except to another licensee under this Act, a licensee under
9 the Sales Finance Agency Act, a bank, a savings bank, a
10 savings and loan association, or a credit union created under
11 the laws of this State or the United States, or to other
12 persons or entities authorized by the Director in writing.
13 Sales of notes by licensees under this Act or other persons
14 shall be made by agreement in writing and shall authorize the
15 Director to examine the loan documents so hypothecated,
16 pledged, or sold.
17 Section 110. Charges permitted.
18 (a) A licensee may lend to any borrower a principal
19 amount not exceeding $1,000 for a period not exceeding 92
20 days and may charge, contract for, and receive thereon
21 interest at a rate agreed upon by the licensee and the
22 obligor but in no case exceeding 24% per year. All
23 transactions between licensees and their contractors on the
24 one hand, and obligors on the other, shall be subject to the
25 provisions of this Act. Nothing in this authorization shall
26 permit the further lending by any licensee of any additional
27 sum of money to any borrower in violation of Section 140 of
28 this Act.
29 (b) For purpose of this Section, the following terms
30 shall have the meanings ascribed herein.
31 "Applicable interest" for a precomputed loan contract
32 means the amount of interest attributable to each monthly
-11- LRB9108880JSpc
1 installment period. It is computed as if each installment
2 period were one month and any interest charged for extending
3 the first installment period beyond one month is ignored.
4 The applicable interest for any monthly installment period is
5 that portion of the precomputed interest that bears the same
6 ratio to the total precomputed interest as the balances
7 scheduled to be outstanding during that month bear to the sum
8 of all scheduled monthly outstanding balances in the original
9 contract.
10 "Interest-bearing loan" means a loan in which the debt is
11 expressed as a principal amount plus interest charged on
12 actual unpaid principal balances for the time actually
13 outstanding.
14 "Precomputed loan" means a loan in which the debt is
15 expressed as the sum of the original principal amount plus
16 interest computed actuarially in advance, assuming all
17 payments will be made when scheduled.
18 (c) Loans may be interest-bearing or precomputed.
19 (d) To compute time for either interest-bearing or
20 precomputed loans for the calculation of interest and other
21 purposes, a month shall be 1/12th of a year. A day shall be
22 1/365th of a year when calculation is made for a fraction of
23 a month. When a period of time includes one or more whole
24 months plus a fraction of a month, the licensee may charge
25 interest for the fraction of the month at the rate of 1/365th
26 of the agreed annual rate for each day actually elapsed.
27 (e) With respect to interest-bearing loans:
28 (1) Interest shall be computed on unpaid principal
29 balances outstanding from time to time, for the time
30 outstanding, until fully paid. Each payment shall be
31 applied first to the accumulated interest and the
32 remainder of the payment applied to the unpaid principal
33 balance; provided however, that if the amount of the
34 payment is insufficient to pay the accumulated interest,
-12- LRB9108880JSpc
1 the unpaid interest continues to accumulate to be paid
2 from the proceeds of subsequent payments and is not added
3 to the principal balance.
4 (2) Interest shall not be payable in advance or
5 compounded.
6 (3) Loans may be payable as agreed between the
7 parties, including payment at irregular times or in
8 unequal amounts and rates that may vary with an index
9 that is independently verifiable and beyond the control
10 of the licensee.
11 (4) The lender or creditor may, if the contract
12 provides, collect a delinquency or collection charge on
13 each installment in default for a period of not less than
14 10 days in an amount not exceeding 5% of the installment
15 on installments in excess of $200, or $10 on installments
16 of $200 or less, but only one delinquency and collection
17 charge may be collected on any installment regardless of
18 the period during which it remains in default.
19 (f) With respect to precomputed loans:
20 (1) Payments shall be applied in the order in which
21 they become due.
22 (2) When any loan contract is paid in full before
23 the due date, a licensee shall refund or credit the
24 obligor with the total of the applicable interest for all
25 fully unexpired days.
26 (3) The lender or creditor may, if the contract
27 provides, collect a delinquency or collection charge on
28 each installment in default for a period of not less than
29 10 days in an amount not exceeding 5% of the installment
30 on installments in excess of $200, or $10 on installments
31 of $200 or less, but only one delinquency or collection
32 charge may be collected on any installment regardless of
33 the period during which it remains in default.
34 (4) Fifteen days after the final installment as
-13- LRB9108880JSpc
1 originally scheduled or deferred, the licensee may, upon
2 giving notice to the obligor, convert a precomputed loan
3 to an interest-bearing loan and compute and charge
4 interest on that loan at any rate of interest previously
5 agreed to by the parties to the loan.
6 Section 115. Credit insurance. Voluntary credit life
7 insurance, credit accident and health insurance, involuntary
8 unemployment insurance, credit property insurance, or other
9 credit insurance policies approved or permitted by the
10 Director of Insurance and any charge therefor which is
11 deducted from the loan or paid by the obligor shall comply
12 with the Illinois Insurance Code and all lawful requirements
13 of the Director of Insurance related thereto. When there are
14 2 or more obligors on the loan contract, only one charge for
15 credit life insurance and credit accident and health
16 insurance may be made and only one of the obligors need be
17 required to be insured, except that joint credit insurance
18 may cover 2 obligors. Insurance obtained from, by or through
19 a licensee shall be in effect when the loan is transacted.
20 The purchase of such insurance through the licensee or from
21 an agent, broker or insurer specified by the licensee shall
22 not be a condition precedent to the granting of the loan.
23 Section 120. Property insurance.
24 (a) A licensee may require the obligor to provide
25 property damage insurance on real and personal property, all
26 or part of which serves as security against reasonable risks
27 of loss, damage, and destruction in connection with loans
28 exceeding an original principal amount of $500. The amount
29 and term of the insurance shall be reasonable in relation to
30 the amount and term of the loan contract and the type and
31 value of the property, and the insurance shall be procured in
32 accordance with the insurance laws of this State. The
-14- LRB9108880JSpc
1 purchase of such insurance through the licensee or from an
2 agent, broker or insurer specified by the licensee shall not
3 be a condition precedent to the granting of the loan. The
4 premium charged shall not exceed that charged by the
5 insurance company.
6 (b) If the obligor fails to furnish evidence that he has
7 procured insurance on the property, the licensee may purchase
8 substitute insurance that may be substantially equivalent to
9 or more limited than coverage the obligor is required to
10 maintain. Such insurance must comply with the Collateral
11 Protection Act.
12 Section 125. Extra charges prohibited. No amount in
13 addition to the charges authorized by this Act shall be
14 directly or indirectly charged, contracted for, or received,
15 except (1) lawful fees paid to any public officer or agency
16 to record, file or release security; (2) (i) costs and
17 disbursements actually incurred in connection with a real
18 estate loan, for any title insurance, title examination,
19 abstract of title, survey, or appraisal, or paid to a trustee
20 in connection with a trust deed, and (ii) in connection with
21 a real estate loan those charges authorized by Section 4.1a
22 of the Interest Act, whether called "points" or otherwise,
23 which charges are imposed as a condition for making the loan
24 and are not refundable in the event of prepayment of the
25 loan; (3) costs and disbursements, including reasonable
26 attorney's fees, incurred in legal proceedings to collect a
27 loan or to realize on a security after default; and (4) an
28 amount not exceeding $25, plus any actual expenses incurred
29 in connection with a check or draft that is not honored
30 because of insufficient or uncollected funds or because no
31 such account exists. This Section does not prohibit the
32 receipt of a commission, dividend, charge, or other benefit
33 by the licensee or by an employee, affiliate, or associate of
-15- LRB9108880JSpc
1 the licensee from the insurance permitted by Sections 115 and
2 120 of this Act or from insurance in lieu of perfecting a
3 security interest provided that the premiums for such
4 insurance do not exceed the fees that otherwise could be
5 contracted for by the licensee under this Section. Obtaining
6 any of the items referred to in clause (i) of item (2) of
7 this Section through the licensee or from any person
8 specified by the licensee shall not be a condition precedent
9 to the granting of the loan.
10 Section 130. Disclosure of terms of contract. In any
11 loan transaction under this Act, the licensee must disclose
12 all of the following items to the obligor of the loan before
13 the transaction is consummated:
14 (1) The amount and date of the loan contract.
15 (2) The original principal amount of the loan.
16 (3) Any deduction from the loan made by the licensee for
17 any purpose prior to the loan being transferred to the
18 obligor.
19 (4) Any payment made by the obligor in connection with
20 obtaining the loan.
21 (5) The date on which the finance charge begins to accrue
22 if different from the date of the transaction.
23 (6) The total amount of the loan charge with a
24 description of each amount included using the term "finance
25 charge".
26 (7) The finance charge expressed as an annual percentage
27 rate using the term "annual percentage rate". "Annual
28 percentage rate" means the nominal annual percentage rate of
29 finance charge determined in accordance with the actuarial
30 method of computation with an accuracy at least to the
31 nearest 1/4 of 1%; or at the option of the licensee by
32 application of the United States rule so that it may be
33 disclosed with an accuracy at least to the nearest 1/4 of 1%.
-16- LRB9108880JSpc
1 (8) For all payday loans, the fact that a post-dated
2 check may be presented to a financial institution for payment
3 in full on the date for which it has been made out.
4 (9) The number, amount and due dates or periods of
5 payments scheduled to repay the loan and the sum of such
6 payments using the term "total of payments".
7 (10) The amount or method of computing the amount of any
8 default, delinquency, or similar charges payable in the event
9 of late payments.
10 (11) The right of the obligor to prepay the loan in full
11 on any installment date and the fact that such prepayment in
12 full will reduce the insurance charge for the loan.
13 (12) A description or identification of the type of any
14 security interest held or to be retained or acquired by the
15 licensee in connection with the loan and a clear
16 identification of the property to which the security interest
17 relates. If after-acquired property will be subject to the
18 security interest, or if other or future indebtedness is or
19 may be secured by any such property, this fact shall be
20 clearly set forth in conjunction with the description or
21 identification of the type of security interest held,
22 retained or acquired.
23 (13) A description of any penalty charge that may be
24 imposed by the licensee for prepayment of the principal of
25 the obligation with an explanation of the method of
26 computation of such penalty and the conditions under which it
27 may be imposed.
28 (14) Identification and description of the method of
29 computing any unearned portion of the finance charge in the
30 event of prepayment of the loan, and if the licensee uses the
31 "Rule of 78ths" method, including a statement explaining such
32 method substantially as follows:
33 Unearned finance charges under the Rule of 78ths are
34 computed by calculating for all fully unexpired monthly
-17- LRB9108880JSpc
1 installment periods, as originally scheduled or deferred,
2 which follow the day of prepayment, the portion of the
3 precomputed interest that bears the same ratio to the
4 total precomputed interest as the balances scheduled to
5 be outstanding during that monthly installment period
6 bear to the sum of all scheduled monthly outstanding
7 balances originally contracted for.
8 The description shall also include an example of its
9 application solely for purposes of illustration in
10 substantially the following form:
11 PREPAYMENT - "RULE OF 78THS"
12 Unearned Original Sum of balances due every month after
13 prepayment
14 = X ___________________________________
15 Charge Charge* Sum of balances due every month of
16 contract
17 *for Finance Charge (excluding any charges added for a first
18 payment period of more than one month) or credit insurance
19 charges.
20 Example: 12 monthly payments of $10 (balance is $120 1st
21 month, $110 2nd month, and so on), $20 Finance Charge. If 5
22 payments are prepaid in full, unearned Finance Charge is:
23 50+40+30+20+10
24 $20 x _________________________________ =$3.85
25 120+110+100+90+80+70+60+50+40+30+20+10
26 The terms "finance charge" and "annual percentage rate"
27 shall be printed more conspicuously than other terminology
28 required by this Section.
29 At the time disclosures are made, the licensee shall
30 deliver to the obligor a duplicate of the instrument or
31 statement by which the required disclosures are made and on
32 which the licensee and obligor are identified and their
33 addresses stated. All of the disclosures shall be made
34 clearly, conspicuously and in meaningful sequence and made
-18- LRB9108880JSpc
1 together on either:
2 (i) the note or other instrument evidencing the
3 obligation. Where a creditor elects to combine
4 disclosures with the contract, security agreement, and
5 evidence of a transaction in a single document, the
6 disclosures required under this Section shall be made on
7 the face of the document, on the reverse side, or on both
8 sides, provided that the amount of the finance charge and
9 the annual percentage rate shall appear on the face of
10 the document, and, if the reverse side is used, the
11 printing on both sides of the document shall be equally
12 clear and conspicuous, both sides shall contain the
13 statement, "NOTICE: See other side for important
14 information", and the place for the obligor's signature
15 shall be provided following the full content of the
16 document; or
17 (ii) One side of a separate statement which
18 identifies the transaction.
19 The amount of the finance charge shall be determined as
20 the sum of all charges, payable directly or indirectly by the
21 obligor and imposed directly or indirectly by the licensee as
22 an incident to or as a condition to the extension of credit,
23 whether paid or payable by the obligor, any other person on
24 behalf of the obligor, to the licensee or to a third party,
25 including any of the following types of charges:
26 (A) Interest, time price differential, and any
27 amount payable under a discount or other system of
28 additional charges.
29 (B) Service, transaction, activity, or
30 carrying charge.
31 (C) Loan fee, points, finder's fee, or similar
32 charge.
33 (D) Fee for an appraisal, investigation, or
34 credit report.
-19- LRB9108880JSpc
1 (E) Charges or premiums for credit life,
2 accident, health, or loss of income insurance,
3 written in connection with any credit transaction
4 unless:
5 (a) the insurance coverage is not
6 required by the licensee and this fact is
7 clearly and conspicuously disclosed in writing
8 to the obligor; and
9 (b) any obligor desiring such insurance
10 coverage gives specific dated and separately
11 signed affirmative written indication of such
12 desire after receiving written disclosure to
13 him or her of the cost of such insurance.
14 (F) Charges or premiums for insurance, written
15 in connection with any credit transaction, against
16 loss of or damage to property or against liability
17 arising out of the ownership or use of property
18 unless a clear, conspicuous, and specific statement
19 in writing is furnished by the licensee to the
20 obligor setting forth the cost of the insurance if
21 obtained from or through the licensee and stating
22 that the obligor may choose the person through which
23 the insurance is to be obtained.
24 (G) Premium or other charge for any other
25 guarantee or insurance protecting the licensee
26 against the obligor's default or other credit loss.
27 (H) Any charge imposed by a licensee upon
28 another licensee for purchasing or accepting an
29 obligation of an obligor if the obligor is required
30 to pay any part of that charge in cash, as an
31 addition to the obligation, or as a deduction from
32 the proceeds of the obligation.
33 (15) A late payment, delinquency, default, reinstatement
34 or other charge is not a finance charge if imposed for actual
-20- LRB9108880JSpc
1 unanticipated late payment, delinquency, default or other
2 occurrence.
3 (16) A licensee who complies with the federal Truth in
4 Lending Act, amendments thereto, and any regulations issued
5 or which may be issued thereunder, shall be deemed to be in
6 compliance with the provisions of this Section, except with
7 respect to the disclosure in item (14), which may be set
8 forth in any manner.
9 Section 135. No real estate security. A licensee shall
10 not take any security interest in real estate, except a lien
11 which results from obtaining a judgement.
12 Section 140. Maximum term and amount. The loan contract
13 shall provide for repayment of the principal and charges
14 within 92 days from the date of the loan contract. No
15 licensee shall furnish, loan, or otherwise provide an
16 additional sum of money to any obligor under any
17 circumstances during, on, or within 24 hours after the
18 expiration of the loan contract, and any contractual
19 agreement entered into by the licensee and the obligor with
20 respect to the transfer of money in violation of this Section
21 shall be null and void. No licensee shall permit an obligor
22 to owe any licensee or any affiliate of a licensee (including
23 a corporation owned or managed by the licensee) or agent of
24 any licensee an aggregate principal amount of more than
25 $1,000 at any time for loans transacted pursuant to this Act.
26 Section 145. Advertising.
27 (a) Advertising for loans transacted under this Act may
28 not be false, misleading, or deceptive. Advertising that
29 states a rate or amount of charge for a loan must state the
30 rate as an annual percentage rate. No licensee may advertise
31 in any manner so as to indicate or imply that his interest
-21- LRB9108880JSpc
1 rates or charges for loans are in any way "recommended",
2 "approved", "set" or "established" by the State government or
3 by this Act.
4 (b) If any advertisement to which this Section applies
5 states the amount of any installment payment, the dollar
6 amount of any finance charge, or the number of installments
7 or the period of repayment, then the advertisement shall
8 state all of the following items:
9 (1) The amount of the loan.
10 (2) The number, amount, and due dates or period of
11 payments scheduled to repay the indebtedness if the
12 credit is extended.
13 (3) The rate of the finance charge expressed as an
14 annual percentage rate.
15 Section 150. Incentives. A licensee may not pay money
16 or any other thing of value to any person as an incentive or
17 inducement to apply for a loan, to borrow money, or to refer
18 potential borrowers to the licensee.
19 Section 155. Redemption of repossessed vehicle; transfer
20 of certificate of title. Where the licensee repossesses a
21 motor vehicle that was used as collateral and which is used
22 primarily for the obligor's personal, family or household
23 purposes, the licensee shall be subject to the requirements
24 of and shall transfer the certificate of title pursuant to
25 Section 3-114 of the Illinois Vehicle Code.
26 Section 160. Collections; disciplinary action. Licensees
27 and their contractors shall be bound by the Collection Agency
28 Act and shall be liable for disciplinary action, including
29 refusal to issue a license, refusal to renew a license,
30 revocation of license, suspension of license, probation,
31 reprimand, or any other disciplinary action the Director may
-22- LRB9108880JSpc
1 deem proper, including fines not to exceed $1,000 per
2 licensee per complaint, for any act that constitutes a
3 violation of Section 9 of the Collection Agency Act.
4 Section 165. Collections; elderly or disabled persons.
5 (a) Any licensee who commits a violation of Section 9 of
6 the Collection Agency Act when the victim of the violation is
7 an elderly person or disabled person shall be guilty of a
8 Class A misdemeanor. With respect to this Section, "elderly
9 person" means a person 60 years of age or older and "disabled
10 person" means a person who suffers from a permanent physical
11 or mental impairment resulting from disease, injury,
12 functional disorder, or congenital condition.
13 (b) The fine for a Class A misdemeanor committed under
14 this Section shall be not more than $10,000.
15 Section 170. Payday lending; threat of criminal
16 prosecution. No licensee or contractor for any licensee
17 shall at any time communicate with any obligor to threaten
18 them with criminal prosecution, criminal conviction, or
19 criminal sentencing when the alleged criminal act upon which
20 the threat is predicated is the act of writing a postdated
21 personal check which is not made good by the obligor at the
22 time and date written on the check.
23 Section 175. Penalties for violation.
24 (a) Any person who engages in business as a short term
25 lender without the license required by this Act shall be
26 guilty of a Class 4 felony.
27 (b) The obligor, prior to the expiration of 2 years after
28 the date of his or her last scheduled payment, may recover
29 such reasonable attorney's fees and court costs as a court
30 may assess against any licensee or lender for a violation of
31 Section 10, 95, 110, 115, 120, 125, 130, 140, 145, 155, 160,
-23- LRB9108880JSpc
1 165, or 170. The balance due under the terms of the loan
2 contract shall be reduced by the amount which the obligor is
3 thus entitled to recover. A bona fide error by a licensee in
4 calculating charges or rebates is not a violation if the
5 licensee corrects the error within a reasonable time after
6 discovery.
7 (c) A license issued under this Act may be revoked if
8 the licensee, or any directors, managers of a limited
9 liability company, partners, or officer thereof is convicted
10 of a felony.
11 (d) No provision of this Section imposing any liability
12 shall apply to any act done or omitted in conformity with any
13 rule or written interpretation thereof by the Director,
14 notwithstanding that after such act or omission has occurred,
15 such rule or interpretation is amended, rescinded, or
16 determined by judicial or other authority to be invalid for
17 any reason. All interpretations must be written and signed
18 by the Chief Counsel of the Department of Financial
19 Institutions and approved by the Director.
20 Section 180. Cease and desist.
21 (a) The Director may issue a cease and desist order to
22 any licensee, or other person doing business without the
23 required license, when in the opinion of the Director, the
24 licensee, or other person, is violating or is about to
25 violate any provision of this Act or any rule or requirement
26 imposed in writing by the Director as a condition of granting
27 any authorization permitted by this Act.
28 (b) The Director may issue a cease and desist order
29 prior to a hearing.
30 (c) The Director shall serve notice of his or her
31 action, designated as a cease and desist order made pursuant
32 to this Section, including a statement of the reasons for the
33 action, either personally or by certified mail, return
-24- LRB9108880JSpc
1 receipt requested. Service by certified mail shall be deemed
2 completed when the notice is deposited in the U.S. mail.
3 (d) Within 15 days of service of the cease and desist
4 order, the licensee or other person may request, in writing,
5 a hearing.
6 (e) The Director shall schedule a hearing within 30 days
7 after the request for a hearing unless otherwise agreed to by
8 the parties.
9 (f) The Director shall have the authority to prescribe
10 rules for the administration of this Section.
11 (g) If it is determined that the Director had the
12 authority to issue the cease and desist order, he or she may
13 issue such orders as may be reasonably necessary to correct,
14 eliminate, or remedy such conduct.
15 (h) The powers vested in the Director by this Section
16 are additional to any and all other powers and remedies
17 vested in the Director by law, and nothing in this Section
18 shall be construed as requiring that the Director shall
19 employ the power conferred in this Section instead of or as a
20 condition precedent to the exercise of any other power or
21 remedy vested in the Director.
22 (i) The cost for the administrative hearing shall be set
23 by rule.
24 Section 185. Civil action. A claim of violation of this
25 Act may be asserted in a civil action.
26 Section 190. Scope of Act. This Act does not apply to
27 licensees under the Consumer Installment Loan Act making
28 loans of more than $1,000 of any duration or loans of any
29 amount with a term of 93 days or longer, any person,
30 partnership, association, limited liability company, or
31 corporation doing business under and as permitted by any law
32 of this State or of the United States relating to banks,
-25- LRB9108880JSpc
1 savings and loan associations, savings banks, or credit
2 unions, or licensees under the Residential Mortgage License
3 Act for residential mortgage loans made pursuant to that Act.
4 This Act does not apply to business loans.
5 Section 195. Rules. The Director may make and enforce
6 such reasonable rules, orders, decisions, and findings as the
7 execution and enforcement of the provisions of this Act
8 require. All rules shall be printed and copies thereof
9 mailed to all licensees.
10 Section 200. Judicial review. All final administrative
11 decisions of the Director hereunder shall be subject to
12 judicial review pursuant to the provisions of the
13 Administrative Review Law, and all amendments and
14 modifications thereof, and any rules adopted pursuant
15 thereto.
16 Section 205. Injunction; civil penalty; costs. If it
17 appears to the Director that a person or any entity has
18 committed or is about to commit a violation of this Act, a
19 rule promulgated under this Act, or an order of the Director,
20 the Director may apply to the circuit court for an order
21 enjoining the person or entity from violating or continuing
22 to violate this Act, the rule, or order and for injunctive or
23 other relief that the nature of the case may require and may,
24 in addition, request the court to assess a civil penalty up
25 to $1,000 along with costs and attorney's fees.
26 Section 210. Severability. The provisions of this Act
27 are severable under Section 1.31 of the Statute on Statutes.
28 Section 215. Applicability. This Act shall not apply to
29 any contract or transaction made before January 1, 2001.
-26- LRB9108880JSpc
1 Section 295. The Financial Institutions Code is amended
2 by changing Section 8 as follows:
3 (20 ILCS 1205/8) (from Ch. 17, par. 109)
4 Sec. 8. The Director shall direct and supervise all
5 Department administrative and technical activities, in
6 addition to the duties imposed upon him elsewhere in this
7 Code, and shall:
8 (1) Apply and carry out this Code and the laws and all
9 rules adopted in pursuance thereof.
10 (2) Appoint, subject to the provisions of the Personnel
11 Code, such employees of the Department and such experts and
12 special assistants as may be necessary to carry out
13 effectively the provisions of this Code.
14 (3) Foster and develop programs with financial
15 institutions, for the best interests of these institutions,
16 their services and the people of the State of Illinois.
17 (4) Attend meetings of the Advisory Boards created by
18 laws relating to financial institutions.
19 (5) Make continuous studies and report his
20 recommendations to the Governor for the improvement of the
21 Department.
22 (6) Make an annual report regarding the work of the
23 Department and such special reports as he may consider
24 desirable to the Governor, or as the Governor may request.
25 (6.5) Operate an electronic consumer complaint reception
26 service by telephone, computer, or any other means that the
27 Director finds appropriate to receive and compile complaints
28 from consumers concerning the operations of licensees under
29 the Short-term Loan Act.
30 (7) Perform any other lawful acts which he may consider
31 necessary or desirable to carry out the purposes and
32 provisions of this Law.
33 (Source: Laws 1957, p. 369.)
-27- LRB9108880JSpc
1 Section 297. The Consumer Fraud and Deceptive Business
2 Practices Act is amended by changing Section 2E as follows:
3 (815 ILCS 505/2E) (from Ch. 121 1/2, par. 262E)
4 Sec. 2E. Any person who is regularly engaged in the
5 business of providing or furnishing merchandise to consumers
6 or in making loans to consumers and who has committed in any
7 calendar year 3 or more violations, as determined in any
8 civil or criminal proceeding, of the "Consumer Finance Act";
9 the "Consumer Installment Loan Act,"; the "Retail Installment
10 Sales Act,"; the "Motor Vehicle Retail Installment Sales Act,
11 the Interest Act, the Illinois Wage Assignment Act, the
12 Short-term Loan Act,"; "An Act to revise the law in relation
13 to the rate of interest and to repeal certain acts therein
14 named", approved May 24, 1879, as amended; "An Act to promote
15 the welfare of wage-earners by regulating the assignment of
16 wages, and prescribing a penalty for the violation thereof",
17 approved July 1, 1935, as amended; or Part 8 of Article XII
18 of the Code of Civil Procedure, as amended, or of any 2 or
19 more of those Acts, is guilty of an unlawful practice within
20 the meaning of this Act. Nothing in this Section prohibits
21 the prosecution of a person under the Acts specified herein
22 as well as under this Act.
23 (Source: P.A. 82-783.)
24 Section 299. Effective date. This Act takes effect
25 January 1, 2001.