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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 relation13 to the rate of interest and to repeal certain acts therein14 named", approved May 24, 1879, as amended; "An Act to promote15 the welfare of wage-earners by regulating the assignment of16 wages, and prescribing a penalty for the violation thereof",17 approved July 1, 1935, as amended; orPart 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.
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