HB0073 EngrossedLRB103 03589 SPS 48595 b

1    AN ACT concerning business.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Consumer Legal Funding Act is amended by
5changing Sections 5 and 55 as follows:
 
6    (815 ILCS 121/5)
7    Sec. 5. Definitions.
8    "Advertise" means publishing or disseminating any written,
9electronic, or printed communication, or any communication by
10means of recorded telephone messages or transmitted on radio,
11television, the Internet, or similar communications media,
12including film strips, motion pictures, and videos, published,
13disseminated, circulated, or placed before the public,
14directly or indirectly, for the purpose of inducing a consumer
15to enter into a consumer legal funding.
16    "Charges" means the fees, as set forth in Section 25, to be
17paid to the consumer legal funding company by or on behalf of
18the consumer above the funded amount provided by or on behalf
19of the company to an Illinois consumer pursuant to this Act.
20    "Consumer" means a natural person who has a pending legal
21claim and who resides or is domiciled in Illinois.
22    "Consumer legal funding" or "funding" means a nonrecourse
23transaction in which a company purchases and a consumer

 

 

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1transfers to the company an unvested, contingent future
2interest in the potential net proceeds of a settlement or
3judgment obtained from the consumer's legal claim; and in
4which, if no proceeds are obtained from the consumer's legal
5claim, the consumer is not required to repay the company the
6consumer legal funding amount or charges.
7    "Consumer legal funding company" or "company" means a
8person or entity that enters into, purchases, or services a
9consumer legal funding transaction with an Illinois consumer.
10"Consumer legal funding company" does not include:
11        (1) an immediate family member of the consumer;
12        (2) a bank, lender, financing entity, or other special
13    purpose entity:
14            (A) that provides financing to a consumer legal
15        funding company; or
16            (B) to which a consumer legal funding company
17        grants a security interest or transfers any rights or
18        interest in a consumer legal funding; or
19        (3) an attorney or accountant who provides services to
20    a consumer.
21    "Department" means the Department of Financial and
22Professional Regulation.
23    "Funded amount" means the amount of moneys provided to, or
24on behalf of, the consumer in the consumer legal funding.
25"Funded amount" does not include charges except for charges
26that are deducted from the funded amount.

 

 

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1    "Funding date" means the date on which the funded amount
2is transferred to the consumer by the consumer legal funding
3company either by personal delivery; via wire, ACH, or other
4electronic means; or mailed by insured, certified, or
5registered United States mail.
6    "Immediate family member" means a parent; sibling; child
7by blood, adoption, or marriage; spouse; grandparent; or
8grandchild.
9    "Legal claim" means a bona fide civil claim or cause of
10action.
11    "Resolution amount" means the funded amount plus the
12agreed-upon charges that are delivered to the consumer legal
13funding company on the resolution date.
14    "Resolution date" means the date the resolution amount is
15delivered to the consumer legal funding company.
16    "Secretary" means the Secretary of Financial and
17Professional Regulation or the Secretary's designee.
18(Source: P.A. 102-987, eff. 5-27-22.)
 
19    (815 ILCS 121/55)
20    Sec. 55. Consumer legal funding license scope.
21    (a) It shall be unlawful for any person or entity to
22operate as a consumer legal funding provider in this State
23except as authorized by this Act and without first having
24obtained a license in accordance with this Act. No person or
25entity may engage in any device, subterfuge, or pretense to

 

 

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1evade the requirements of this Act. However, any company that
2has a license in good standing under the Consumer Installment
3Loan Act on the effective date of this Act shall be entitled to
4make consumer legal fundings under the terms of this Act upon
5the effective date of this Act if that company files an
6application for a consumer legal funding license within 60
7days after the Department issues forms for the filing of that
8application and until the Department approves or denies the
9application for a funding license. Any consumer legal funding
10contract made by any person or entity in violation of this
11subsection shall be null and void and the person or entity who
12entered into the consumer legal funding transaction shall have
13no right to collect, attempt to collect, receive, or retain
14any principal, interest, or charges related to the consumer
15legal funding transaction.
16    (b) The provisions of this Act do not apply to a bank,
17savings bank, savings association, or credit union organized
18under the laws of this State, any other state, or under the
19laws of the United States.
20    (b-1) The provisions of this Act do not apply to consumer
21legal funding if (i) the amount of funding is greater than
22$500,000 and (ii) the consumer does not use or intend to use
23any of the proceeds for personal, family, or household
24expenses.
25    (c) Any consumer legal funding made by a person not
26licensed under this Act, including a person holding an

 

 

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1inactive license, and not exempt under this Act shall be null
2and void, and no person or entity shall have any right to
3collect, attempt to collect, receive, or retain any principal,
4fee, interest, or charges related to the funding.
5(Source: P.A. 102-987, eff. 5-27-22.)