Illinois General Assembly - Full Text of SB0669
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Full Text of SB0669  102nd General Assembly

SB0669enr 102ND GENERAL ASSEMBLY

  
  
  

 


 
SB0669 EnrolledLRB102 15407 SPS 20770 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Debt Settlement Consumer Protection Act is
5amended by changing Sections 10, 105, 115, 125, and 145 as
6follows:
 
7    (225 ILCS 429/10)
8    Sec. 10. Definitions. As used in this Act:
9    "Consumer" means any person who purchases or contracts for
10the purchase of debt settlement services or a student loan
11borrower.
12    "Consumer settlement account" means any account or other
13means or device in which payments, deposits, or other
14transfers from a consumer are arranged, held, or transferred
15by or to a debt settlement provider for the accumulation of the
16consumer's funds in anticipation of proffering an adjustment
17or settlement of a debt or obligation of the consumer to a
18creditor on behalf of the consumer.
19    "Debt settlement provider" means: (1) any person or entity
20engaging in, or holding itself out as engaging in, the
21business of providing debt settlement service in exchange for
22any fee or compensation; (2) , or any person who solicits for or
23acts on behalf of any person or entity engaging in, or holding

 

 

SB0669 Enrolled- 2 -LRB102 15407 SPS 20770 b

1itself out as engaging in, the business of providing debt
2settlement service in exchange for any fee or compensation;
3(3) any person or entity engaging in, or holding itself out as
4engaging in the business of student loan debt relief services
5in exchange for any fee or compensation assessed against or
6charged to a consumer; or (4) any person who solicits for or
7acts on behalf of such person or entity engaging in or holding
8itself out as engaging in, the business of student loan debt
9relief services in exchange for any fee or compensation
10assessed against or charged to a consumer. "Debt settlement
11provider" does not include:
12        (1) attorneys licensed, or otherwise authorized, to
13    practice in Illinois who are engaged in the practice of
14    law;
15        (2) escrow agents, accountants, broker dealers in
16    securities, or investment advisors in securities, when
17    acting in the ordinary practice of their professions and
18    through the entity used in the ordinary practice of their
19    profession;
20        (3) any bank, agent of a bank, operating subsidiary of
21    a bank, affiliate of a bank, trust company, savings and
22    loan association, savings bank, credit union, crop credit
23    association, development credit corporation, industrial
24    development corporation, title insurance company, title
25    insurance agent, independent escrowee or insurance company
26    operating or organized under the laws of a state or the

 

 

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1    United States, or any other person authorized to make
2    loans under State law while acting in the ordinary
3    practice of that business;
4        (4) any person who performs credit services for his or
5    her employer while receiving a regular salary or wage when
6    the employer is not engaged in the business of offering or
7    providing debt settlement service;
8        (5) a collection agency licensed pursuant to the
9    Collection Agency Act that is collecting a debt on its own
10    behalf or on behalf of a third party;
11        (6) an organization that is described in Section
12    501(c)(3) and subject to Section 501(q) of Title 26 of the
13    United States Code and exempt from tax under Section
14    501(a) of Title 26 of the United States Code and governed
15    by the Debt Management Service Act;
16        (7) public officers while acting in their official
17    capacities and persons acting under court order;
18        (8) any person while performing services incidental to
19    the dissolution, winding up, or liquidating of a
20    partnership, corporation, or other business enterprise; or
21        (9) persons licensed under the Real Estate License Act
22    of 2000 when acting in the ordinary practice of their
23    profession and not holding themselves out as debt
24    settlement providers; or .
25        (10) any institution of higher education as defined in
26    the Higher Education Act of 1965, 20 U.S.C. 1001.

 

 

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1    "Debt settlement service" means:
2        (1) offering to provide advice or service, or acting
3    as an intermediary between or on behalf of a consumer and
4    one or more of a consumer's creditors, where the primary
5    purpose of the advice, service, or action is to obtain a
6    settlement, adjustment, or satisfaction of the consumer's
7    unsecured debt to a creditor in an amount less than the
8    full amount of the principal amount of the debt or in an
9    amount less than the current outstanding balance of the
10    debt; or
11        (2) offering to provide services related to or
12    providing services advising, encouraging, assisting, or
13    counseling a consumer to accumulate funds for the primary
14    purpose of proposing or obtaining or seeking to obtain a
15    settlement, adjustment, or satisfaction of the consumer's
16    unsecured debt to a creditor in an amount less than the
17    full amount of the principal amount of the debt or in an
18    amount less than the current outstanding balance of the
19    debt; or .
20        (3) student loan debt relief.
21    "Debt settlement service" does not include (A) the
22services of attorneys licensed, or otherwise authorized, to
23practice in Illinois who are engaged in the practice of law, or
24(B) debt management service as defined in the Debt Management
25Service Act, (C) the services of a student loan servicer, as
26defined in the Student Loan Servicing Rights Act, or (D) the

 

 

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1services of any other originator, guarantor, or servicer of
2federal education loans or private education loans.
3    "Enrollment or set up fee" means any fee, obligation, or
4compensation paid or to be paid by the consumer to a debt
5settlement provider in consideration of or in connection with
6establishing a contract or other agreement with a consumer
7related to the provision of debt settlement service.
8    "Federal education loan" means any loan made, guaranteed,
9or insured under Title IV of the federal Higher Education Act
10of 1965.
11    "Maintenance fee" means any fee, obligation, or
12compensation paid or to be paid by the consumer on a periodic
13basis to a debt settlement provider in consideration of
14maintaining the relationship and services to be provided by a
15debt settlement provider in accordance with a contract with a
16consumer related to the provision of debt settlement service.
17    "Principal amount of the debt" means the total amount or
18outstanding balance owed by a consumer to one or more
19creditors for a debt that is included in a contract for debt
20settlement service at the time when the consumer enters into a
21contract for debt settlement service.
22    "Savings" means the difference between the principal
23amount of the debt and the amount paid by the debt settlement
24provider to the creditor or negotiated by the debt settlement
25provider and paid by the consumer to the creditor pursuant to a
26settlement negotiated by the debt settlement provider on

 

 

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1behalf of the consumer as full and complete satisfaction of
2the creditor's claim with regard to that debt.
3    "Secretary" means the Secretary of Financial and
4Professional Regulation.
5    "Settlement fee" means any fee, obligation, or
6compensation paid or to be paid by the consumer to a debt
7settlement provider in consideration of or in connection with
8a completed agreement or other arrangement on the part of a
9creditor to accept less than the principal amount of the debt
10as satisfaction of the creditor's claim against the consumer.
11    "Student loan borrower" means a person who has received or
12agreed to pay a student loan for his or her own educational
13expenses; a parent, grandparent, or other family member who
14has received or agreed to pay a student loan for a family
15member receiving the education; or any co-signer who has
16agreed to share responsibility for repaying a student loan
17with the person receiving the education.
18    "Student loan debt relief" means, in exchange for any fee
19or compensation assessed against or charged to a student loan
20borrower, offering to provide advice or service, or acting as
21an intermediary between or on behalf of a consumer and the
22United States Department of Education or any other originator
23or guarantor of federal education loans or one or more of the
24servicers of a student loan borrower's federal education loan,
25where the primary purpose of the advice, service, or action is
26to (1) negotiate, arrange, or obtain a settlement, adjustment,

 

 

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1discharge, or satisfaction of the student loan borrower's
2federal education loan debt in an amount less than the full
3amount of the principal amount of the debt, a reduction or
4alteration to the interest rate, a reduction or alteration in
5the amount of monthly payment or fees owed, or in an amount
6less than the current outstanding balance of the debt, (2)
7enroll the student loan borrower in a repayment plan,
8forbearance, or deferment of his or her federal education loan
9debt, (3) apply for consolidation or consolidate the student
10loan borrower's federal education loans, or (4) offer to
11provide any other services related to altering the terms of a
12student loan borrower's federal education loan debt,
13including, but not limited to, a reduction in the amount of
14interest, the principal balance, or the amount of monthly
15payment or fees owed.
16(Source: P.A. 96-1420, eff. 8-3-10.)
 
17    (225 ILCS 429/105)
18    Sec. 105. Advertising and marketing practices.
19    (a) A debt settlement provider shall not represent,
20expressly or by implication, any results or outcomes of its
21debt settlement services in any advertising, marketing, or
22other communication to consumers unless the debt settlement
23provider possesses substantiation for such representation at
24the time such representation is made.
25    (b) A debt settlement provider shall not, expressly or by

 

 

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1implication, make any unfair or deceptive representations, or
2any omissions of material facts, in any of its advertising or
3marketing communications concerning debt settlement services.
4    (c) All advertising and marketing communications
5concerning debt settlement services shall disclose the
6following material information clearly and conspicuously:
7        "Debt settlement services are not appropriate for
8    everyone. Failure to pay your monthly bills in a timely
9    manner will result in increased balances and will harm
10    your credit rating. Not all creditors will agree to reduce
11    principal balance, and they may pursue collection,
12    including lawsuits."
13    (d) All advertising and marketing communications
14concerning student loan debt relief services shall disclose
15the following material information clearly and conspicuously,
16along with the legally registered name of the company:
17        "[Name of company] is a private company, and is not
18    affiliated with the Department of Education or any other
19    academic entity or governmental agency. [Name of company]
20    is not a lender, guarantor, or servicer of federal student
21    loans. You can apply for consolidation and other repayment
22    plans without paid assistance through the United States
23    Department of Education. More information is available
24    through the Department's website or your federal student
25    loan servicer. You can find out who your servicer is
26    through the Department of Education.".

 

 

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1(Source: P.A. 96-1420, eff. 8-3-10.)
 
2    (225 ILCS 429/115)
3    Sec. 115. Required pre-sale consumer disclosures and
4warnings.
5    (a) Before the consumer signs a contract, the debt
6settlement provider shall provide an oral and written notice
7to the consumer that clearly and conspicuously discloses all
8of the following:
9        (1) Debt settlement services may not be suitable for
10    all consumers.
11        (2) Using a debt settlement service likely will harm
12    the consumer's credit history and credit score.
13        (3) Using a debt settlement service does not stop
14    creditor collection activity, including creditor lawsuits
15    and garnishments.
16        (4) Not all creditors will accept a reduction in the
17    balance, interest rate, or fees a consumer owes.
18        (5) The consumer should inquire about other means of
19    dealing with debt, including, but not limited to,
20    nonprofit credit counseling and bankruptcy.
21        (6) The consumer remains obligated to make periodic or
22    scheduled payments to creditors while participating in a
23    debt settlement plan, and that the debt settlement
24    provider will not make any periodic or scheduled payments
25    to creditors on behalf of the consumer.

 

 

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1        (7) The failure to make periodic or scheduled payments
2    to a creditor is likely to:
3            (A) harm the consumer's credit history, credit
4        rating, or credit score;
5            (B) lead the creditor to increase lawful
6        collection activity, including litigation, garnishment
7        of the consumer's wages, and judgment liens on the
8        consumer's property; and
9            (C) lead to the imposition by the creditor of
10        interest charges, late fees, and other penalty fees,
11        increasing the principal amount of the debt.
12        (8) The amount of time estimated to be necessary to
13    achieve the represented results.
14        (9) The estimated amount of money or the percentage of
15    debt the consumer must accumulate before a settlement
16    offer will be made to each of the consumer's creditors.
17        (10) For student loan debt relief services, before the
18    student loan borrower signs a contract, the provider shall
19    provide an oral and written notice to the student loan
20    borrower that clearly and conspicuously discloses the
21    following:
22            "[Name of company] is a private company, and is
23        not affiliated with the Department of Education or any
24        other academic entity or governmental agency. [Name of
25        company] is not a lender, guarantor, or servicer of
26        federal student loans. You can apply for consolidation

 

 

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1        and other repayment plans without paid assistance
2        through the United States Department of Education.
3        More information is available through the Department's
4        website or your federal student loan servicer. You can
5        find out who your servicer is through the Department
6        of Education.".
7    (b) The consumer shall sign and date an acknowledgment
8form entitled "Consumer Notice and Rights Form" that states:
9"I, the debtor, have received from the debt settlement
10provider a copy of the form entitled "Consumer Notice and
11Rights Form"." The debt settlement provider or its
12representative shall also sign and date the acknowledgment
13form, which includes the name and address of the debt
14settlement services provider. The acknowledgment form shall be
15in duplicate and incorporated into the "Consumer Notice and
16Rights Form". The original acknowledgment form shall be
17retained by the debt settlement provider, and the duplicate
18copy shall be retained within the form by the consumer.
19    If the acknowledgment form is in electronic form, then it
20shall contain the consumer disclosures required by Section
21101(c) of the federal Electronic Signatures in Global and
22National Commerce Act.
23    (c) Except as provided in subsection (d), the The
24requirements of this Section are satisfied if the provider
25provides the following warning verbatim, both orally and in
26writing, with the caption "CONSUMER NOTICE AND RIGHTS FORM" in

 

 

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1at least 28-point font and the remaining portion in at least
214-point font, to a consumer before the consumer signs a
3contract for the debt settlement provider's services:
 
4
"CONSUMER NOTICE AND RIGHTS FORM

 
5
CAUTION
6    We CANNOT GUARANTEE that you successfully will reduce or
7eliminate your debt.
8    If you stop paying your creditors, there is a strong
9likelihood some or all of the following may happen:
10    - CREDITORS MAY STILL CONTACT YOU AND TRY TO COLLECT.
11    - CREDITORS MAY STILL SUE YOU FOR THE MONEY YOU OWE.
12    - YOUR WAGES OR BANK ACCOUNT MAY STILL BE GARNISHED.
13    - YOUR CREDIT RATING AND CREDIT SCORE LIKELY WILL BE
14HARMED.
15    - NOT ALL CREDITORS WILL AGREE TO ACCEPT A BALANCE
16REDUCTION.
17    - YOU SHOULD CONSIDER ALL YOUR OPTIONS FOR ADDRESSING YOUR
18DEBT, SUCH AS CREDIT COUNSELING AND BANKRUPTCY FILING.
19    - THE AMOUNT OF MONEY YOU OWE MAY INCREASE DUE TO CREDITOR
20IMPOSITION OF INTEREST CHARGES, LATE FEES, AND OTHER PENALTY
21FEES.
22    - EVEN IF WE DO SETTLE YOUR DEBT, YOU MAY STILL BE REQUIRED
23TO PAY TAXES ON THE AMOUNT FORGIVEN.
 

 

 

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1
YOUR RIGHT TO CANCEL
2    If you sign a contract with a Debt Settlement Provider,
3you have the right to cancel at any time and receive a full
4refund of all unearned fees you have paid to the provider and
5all funds placed in your settlement fund that have not been
6paid to any creditors.
 
7
IF YOU ARE DISSATISFIED
8
OR YOU HAVE QUESTIONS
9    If you are dissatisfied with a debt settlement provider or
10have any questions, please bring it to the attention of the
11Illinois Attorney General's Office and the Department of
12Financial and Professional Regulation.
13Attorney General Toll-Free Numbers:
14    Carbondale (800) 243-0607
15    Springfield (800) 243-0618
16    Chicago (800) 386-5438
17    Website for Department of Financial and Professional
18Regulation: www.idfpr.com
19I, the debtor, have received from the debt settlement provider
20a copy of the form entitled Consumer Notice and Rights Form.".
21    (d) All providers of student loan debt relief services
22shall include the following disclosure:
23        "[NAME OF COMPANY] IS A PRIVATE COMPANY, AND IS NOT
24    AFFILIATED WITH THE DEPARTMENT OF EDUCATION OR ANY OTHER
25    ACADEMIC ENTITY OR GOVERNMENTAL AGENCY. [NAME OF COMPANY]

 

 

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1    IS NOT A LENDER, GUARANTOR, OR SERVICER OF FEDERAL STUDENT
2    LOANS. YOU CAN APPLY FOR CONSOLIDATION AND OTHER REPAYMENT
3    PLANS WITHOUT PAID ASSISTANCE THROUGH THE UNITED STATES
4    DEPARTMENT OF EDUCATION. MORE INFORMATION IS AVAILABLE
5    THROUGH THE DEPARTMENT'S WEBSITE OR YOUR FEDERAL STUDENT
6    LOAN SERVICER. YOU CAN FIND OUT WHO YOUR SERVICER IS
7    THROUGH THE DEPARTMENT OF EDUCATION.".
8(Source: P.A. 96-1420, eff. 8-3-10.)
 
9    (225 ILCS 429/125)
10    Sec. 125. Fees.
11    (a) A debt settlement provider shall not charge fees of
12any type or receive compensation from a consumer in a type,
13amount, or timing other than fees or compensation permitted in
14this Section.
15    (b) A debt settlement provider shall not charge or receive
16from a consumer any enrollment fee, set up fee, up front fee of
17any kind, or any maintenance fee, except for a one-time
18enrollment fee of no more than $50.
19    (c) A debt settlement provider may charge a settlement
20fee, which shall not exceed an amount greater than 15% of the
21savings. If the amount paid by the debt settlement provider to
22the creditor or negotiated by the debt settlement provider and
23paid by the consumer to the creditor pursuant to a settlement
24negotiated by the debt settlement provider on behalf of the
25consumer as full and complete satisfaction of the creditor's

 

 

SB0669 Enrolled- 15 -LRB102 15407 SPS 20770 b

1claim with regard to that debt is greater than the principal
2amount of the debt, then the debt settlement provider shall
3not be entitled to any settlement fee.
4    (d) A debt settlement provider shall not collect any
5settlement fee from a consumer until a creditor enters into a
6legally enforceable agreement to accept funds in a specific
7dollar amount as full and complete satisfaction of the
8creditor's claim with regard to that debt and those funds are
9provided by the debt settlement provider on behalf of the
10consumer or are provided directly by the consumer to the
11creditor pursuant to a settlement negotiated by the debt
12settlement provider.
13    (e) Any fees charged to a student loan borrower in
14exchange for student loan debt relief shall comply with this
15Section.
16(Source: P.A. 96-1420, eff. 8-3-10; 97-333, eff. 8-12-11.)
 
17    (225 ILCS 429/145)
18    Sec. 145. Prohibited practices. A debt settlement provider
19shall not do any of the following:
20        (1) Charge or collect from a consumer any fee not
21    permitted by, in an amount in excess of the maximum amount
22    permitted by, or at a time earlier than permitted by
23    Section 125 of this Act.
24        (2) Advise or represent, expressly or by implication,
25    that consumers should stop making payments to their

 

 

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1    creditors, lenders, loan servicers, or loan guarantors or
2    government entities.
3        (3) Advise or represent, expressly or by implication,
4    that consumers should stop communicating with their
5    creditors, lenders, loan servicers, loan guarantors, or
6    attorneys or government entities.
7        (4) Change the mailing address on any of a consumer's
8    creditor's statements.
9        (5) Make loans or offer credit or solicit or accept
10    any note, mortgage, or negotiable instrument other than a
11    check signed by the consumer and dated no later than the
12    date of signature.
13        (6) Take any confession of judgment or power of
14    attorney to confess judgment against the consumer or
15    appear as the consumer or on behalf of the consumer in any
16    judicial proceedings.
17        (7) Take any release or waiver of any obligation to be
18    performed on the part of the debt settlement provider or
19    any right of the consumer.
20        (8) Advertise, display, distribute, broadcast, or
21    televise services or permit services to be displayed,
22    advertised, distributed, broadcasted, or televised, in any
23    manner whatsoever, that contains any false, misleading, or
24    deceptive statements or representations with regard to any
25    matter, including services to be performed, the fees to be
26    charged by the debt settlement provider, or the effect

 

 

SB0669 Enrolled- 17 -LRB102 15407 SPS 20770 b

1    those services will have on a consumer's credit rating or
2    on creditor collection efforts.
3        (9) Receive any cash, fee, gift, bonus, premium,
4    reward, or other compensation from any person other than
5    the consumer explicitly for the provision of debt
6    settlement service to that consumer.
7        (10) Offer or provide gifts or bonuses to consumers
8    for signing a debt settlement service contract or for
9    referring another potential customer or customer.
10        (11) Disclose to anyone the name or any personal
11    information of a consumer for whom the debt settlement
12    provider has provided or is providing debt settlement
13    service other than to a consumer's own creditors or the
14    debt settlement provider's agents, affiliates, or
15    contractors for the purpose of providing debt settlement
16    service without the prior consent of the consumer.
17        (12) Enter into a contract with a consumer without
18    first providing the disclosures and financial analysis and
19    making the determinations required by this Section.
20        (13) Misrepresent any material fact, make a material
21    omission, or make a false promise directed to one or more
22    consumers in connection with the solicitation, offering,
23    contracting, or provision of debt settlement service.
24        (14) Violate the provisions of applicable do not call
25    statutes.
26        (15) Purchase debts or engage in the practice or

 

 

SB0669 Enrolled- 18 -LRB102 15407 SPS 20770 b

1    business of debt collection.
2        (16) Include in a debt settlement agreement any
3    secured debt.
4        (17) Employ an unfair, unconscionable, or deceptive
5    act or practice, including the knowing omission of any
6    material information.
7        (18) Engage in any practice that prohibits or limits
8    the consumer or any creditor from communication directly
9    with one another.
10        (19) Represent or imply to a person participating in
11    or considering debt settlement that purchase of any
12    ancillary goods or services is required.
13        (20) Access or obtain a consumer's or student loan
14    borrower's federal student aid information in violation of
15    federal law.
16(Source: P.A. 96-1420, eff. 8-3-10.)
 
17    Section 99. Effective date. This Act takes effect upon
18becoming law.