SB0482ham001 94TH GENERAL ASSEMBLY

State Government Administration Committee

Adopted in House Comm. on May 04, 2005

09400SB0482ham001 LRB094 10608 AMC 45678 a

AMENDMENT TO SENATE BILL 482

AMENDMENT NO. ______. Amend Senate Bill 482 by replacing everything after the enacting clause with the following:

"Section 5. The Illinois Funeral or Burial Funds Act is amended by changing Section 1a-1 as follows:

(225 ILCS 45/1a-1)

Sec. 1a-1. Pre-need contracts.

(a) It shall be unlawful for any seller doing business within this State to accept sales proceeds from a purchaser, either directly or indirectly by any means, unless the seller enters into a pre-need contract with the purchaser which meets the following requirements:

(1) It states the name and address of the principal office of the seller and the parent company of the seller, if any.

(2) It clearly identifies the provider's name and address, the purchaser, and the beneficiary, if other than the purchaser.

(2.5) If the provider has branch locations, the contract gives the purchaser the opportunity to identify the branch at which the funeral will be provided.

(3) It contains a complete description of the funeral merchandise and services to be provided and the price of the merchandise and services, and it clearly discloses whether the price of the merchandise and services is guaranteed or not guaranteed as to price.

(A) Each guaranteed price contract shall contain the following statement in 12 point bold type:

THIS CONTRACT GUARANTEES THE BENEFICIARY THE SPECIFIC GOODS AND SERVICES CONTRACTED FOR. NO ADDITIONAL CHARGES MAY BE REQUIRED. FOR DESIGNATED GOODS AND SERVICES, ADDITIONAL CHARGES MAY BE INCURRED FOR UNEXPECTED EXPENSES INCLUDING, BUT NOT LIMITED TO, CASH ADVANCES, SHIPPING OF REMAINS FROM A DISTANT PLACE, OR DESIGNATED HONORARIA ORDERED OR DIRECTED BY SURVIVORS.

(B) Except as provided in subparagraph (C) of this paragraph (3), each non-guaranteed price contract shall contain the following statement in 12 point bold type:

THIS CONTRACT DOES NOT GUARANTEE THE PRICE THE BENEFICIARY WILL PAY FOR ANY SPECIFIC GOODS OR SERVICES. ANY FUNDS PAID UNDER THIS CONTRACT ARE ONLY A DEPOSIT TO BE APPLIED TOWARD THE FINAL PRICE OF THE GOODS OR SERVICES CONTRACTED FOR. ADDITIONAL CHARGES MAY BE REQUIRED.

(C) If a non-guaranteed price contract may subsequently become guaranteed, the contract shall clearly disclose the nature of the guarantee and the time, occurrence, or event upon which the contract shall become a guaranteed price contract.

(4) It provides that if the particular supplies and services specified in the pre-need contract are unavailable at the time of delivery, the provider shall be required to furnish supplies and services similar in style and at least equal in quality of material and workmanship.

(5) It discloses any penalties or restrictions, including but not limited to geographic restrictions or the inability of the provider to perform, on the delivery of merchandise, services, or pre-need contract guarantees.

(6) Regardless of the method of funding the pre-need contract, the following must be disclosed:

(A) Whether the pre-need contract is to be funded by a trust, life insurance, or an annuity;

(B) The nature of the relationship among the person funding the pre-need contract, the provider, and the seller; and

(C) The impact on the pre-need contract of (i) any changes in the funding arrangement including but not limited to changes in the assignment, beneficiary designation, or use of the funds; (ii) any specific penalties to be incurred by the contract purchaser as a result of failure to make payments; (iii) penalties to be incurred or moneys or refunds to be received as a result of cancellations; and (iv) all relevant information concerning what occurs and whether any entitlements or obligations arise if there is a difference between the proceeds of the particular funding arrangement and the amount actually needed to pay for the funeral at-need.

(D) The method of changing the provider.

(b) All pre-need contracts are subject to the Federal Trade Commission Rule concerning the Cooling-Off Period for Door-to-Door Sales (16 CFR Part 429).

(c) No pre-need contract shall be sold in this State unless there is a provider for the services and personal property being sold. If the seller is not a provider, then the seller must have a binding agreement with a provider, and the identity of the provider and the nature of the agreement between the seller and the provider shall be disclosed in the pre-need contract at the time of the sale and before the receipt of any sales proceeds. A separate completed contract, as required by the Illinois Pre-Need Cemetery Sales Act, shall be issued for cemetery merchandise, cemetery services, or undeveloped interment, entombment, or inurnment spaces, as defined in the Illinois Pre-Need Cemetery Sales Act, and not covered by this Act, unless the seller is licensed under both Acts and all disclosures are in compliance with both Acts. The failure to disclose the identity of the provider, the nature of the agreement between the seller and the provider, or any changes thereto to the purchaser and beneficiary, or the failure to make the disclosures required in subdivision (a)(1), constitutes an intentional violation of this Act.

(d) All pre-need contracts must be in writing in at least 11 point type, numbered, and executed in duplicate. A signed copy of the pre-need contract must be provided to the purchaser at the time of entry into the pre-need contract. The Comptroller may by rule develop a model pre-need contract form which meets the requirements of this Act.

(e) The State Comptroller shall by rule develop a booklet for consumers in plain English describing the scope, application, and consumer protections of this Act. After the adoption of these rules, no pre-need contract shall be sold in this State unless (i) the seller distributes to the purchaser prior to the sale a booklet promulgated or approved for use by the State Comptroller; (ii) the seller explains to the purchaser the terms of the pre-need contract prior to the purchaser signing; and (iii) the purchaser initials a statement in the contract confirming that the seller has explained the terms of the contract prior to the purchaser signing.

(f) All sales proceeds received in connection with a pre-need contract shall be deposited into a trust account as provided in Section 1b and Section 2 of this Act, or shall be used to purchase a life insurance policy or tax-deferred annuity as provided in Section 2a of this Act.

(g) No pre-need contract shall be sold in this State unless it is accompanied by a funding mechanism permitted under this Act, and unless the seller is licensed by the Comptroller as provided in Section 3 of this Act. Nothing in this Act is intended to relieve sellers of pre-need contracts from being licensed under any other Act required for their profession or business, and being subject to the rules promulgated to regulate their profession or business, including rules on solicitation and advertisement.

(Source: P.A. 92-419, eff. 1-1-02.)

Section 10. The Cemetery Care Act is amended by changing Section 14 as follows:

(760 ILCS 100/14) (from Ch. 21, par. 64.14)

Sec. 14. The Comptroller may at any time investigate the cemetery business of every licensee with respect to its care funds. The Comptroller shall examine at least annually every licensee who holds $750,000 $250,000 or more in its care funds. For that purpose, the Comptroller shall have free access to the office and places of business and to such records of all licensees and of all trustees of the care funds of all licensees as shall relate to the acceptance, use and investment of care funds. The Comptroller may require the attendance of and examine under oath all persons whose testimony he may require relative to such business and in such cases the Comptroller or any qualified representative of the Comptroller whom the Comptroller may designate, may administer oaths to all such persons called as witnesses, and the Comptroller, or any such qualified representative of the Comptroller, may conduct such examinations. The cost of an initial examination shall be borne by the cemetery authority if it has $10,000 or more in such fund; otherwise, by the Comptroller. The charge made by the Comptroller for such examination shall be based upon the total amount of care funds held by the cemetery authority as of the end of the calendar or fiscal year for which a report is required by Section 12 of this Act and shall be in accordance with the following schedule:

less than $10,000.............................no charge;

$10,000 or more but less than $50,000.............................................$10;

$50,000 or more but less than $100,000............................................$40;

$100,000 or more but less than $250,000............................................$80;

$250,000 or more........................................$100.

Any licensee which is not required to be examined annually shall submit an annual report to the Comptroller containing such information as the Comptroller reasonably may request.

The Comptroller may order additional audits or examinations as he or she may deem necessary or advisable to ensure the safety and stability of the trust funds and to ensure compliance with this Act. These additional audits or examinations shall only be made after good cause is established by the Comptroller in the written order. The grounds for ordering these additional audits or examinations may include, but shall not be limited to:

(1) material and unverified changes or fluctuations in trust balances;

(2) the licensee changing trustees more than twice in any 12-month period;

(3) any withdrawals or attempted withdrawals from the trusts in violation of this Act; or

(4) failure to maintain or produce documentation required by this Act for deposits into trust accounts or trust investment activities.

Prior to ordering an additional audit or examination, the Comptroller shall request the licensee to respond and comment upon the factors identified by the Comptroller as warranting the subsequent examination or audit. The licensee shall have 30 days to provide a response to the Comptroller. If the Comptroller decides to proceed with the additional examination or audit, the licensee shall bear the full cost of that examination or audit, up to a maximum of $7,500. The Comptroller may elect to pay for the examination or audit and receive reimbursement from the licensee. Payment of the costs of the examination or audit by a licensee shall be a condition of receiving or maintaining a license under this Act. All moneys received by the Comptroller for examination or audit fees shall be maintained in a separate account to be known as the Comptroller's Administrative Fund. This Fund, subject to appropriation by the General Assembly, may be utilized by the Comptroller for enforcing this Act and other purposes that may be authorized by law.

(Source: P.A. 89-615, eff. 8-9-96.)

Section 15. The Illinois Pre-Need Cemetery Sales Act is amended by changing Section 14 as follows:

(815 ILCS 390/14) (from Ch. 21, par. 214)

Sec. 14. Contract required.

(a) It is unlawful for any person doing business within this State to accept sales proceeds, either directly or indirectly, by any means unless the seller enters into a pre-need sales contract with the purchaser which meets the following requirements:

(1) A written sales contract shall be executed in at least 11 point type in duplicate for each pre-need sale made by a licensee, and a signed copy given to the purchaser. Each completed contract shall be numbered and shall contain: (i) the name and address of the purchaser, the principal office of the licensee, and the parent company of the licensee; (ii) the name of the person, if known, who is to receive the cemetery merchandise, cemetery services or the completed interment, entombment or inurnment spaces under the contract; and (iii) specific identification of such merchandise, type of services to be held by cemetery or crematory personnel, or spaces to be provided, if a specific space or spaces are contracted for, and the price of the merchandise, services, or space or spaces; (iv) the location of the spaces to be provided, if a specific space is contracted for, indicated on a copy of an overall map of the site or section of the interment, entombment, or inurnment spaces; and (v) a description of the type of care furnished by a provider holding a valid license under the Cemetery Care Act that is being purchased to maintain the interment, entombment, or inurnment space, if a specific space is contracted for. If no care is included in the contract, the contract shall state in 11-point type "This contract does not include maintenance care.", and this statement shall be initialed by the purchaser.

(1.5) Upon request by the purchaser, each contract may include a current copy of the provider's rules and regulations pertaining to the site of the completed interment, entombment, or inurnment spaces, if such spaces are to be provided under the contract.

(2) In addition, such contracts must contain a provision in distinguishing typeface as follows:

"Notwithstanding anything in this contract to the contrary, you are afforded certain specific rights of cancellation and refund under the Illinois Pre-Need Cemetery Sales Act, enacted by the 84th General Assembly of the State of Illinois".

(3) All pre-need sales contracts shall be sold on a guaranteed price basis. At the time of performance of the service or delivery of the merchandise, the seller shall be prohibited from assessing the purchaser or his heirs or assigns or duly authorized representative any additional charges for the specific merchandise and services listed on the pre-need sales contract.

(4) Each contract shall clearly disclose that the price of the merchandise or services is guaranteed and shall contain the following statement in 12 point bold type:

"THIS CONTRACT GUARANTEES THE BENEFICIARY THE SPECIFIC GOODS, SERVICES, INTERMENT SPACES, ENTOMBMENT SPACES, AND INURNMENT SPACES CONTRACTED FOR. NO ADDITIONAL CHARGES MAY BE REQUIRED FOR DESIGNATED GOODS, SERVICES, AND SPACES. ADDITIONAL CHARGES MAY BE INCURRED FOR UNEXPECTED EXPENSES."

(5) The pre-need sales contract shall provide that if the particular cemetery services, cemetery merchandise, or spaces specified in the pre-need contract are unavailable at the time of delivery, the seller shall be required to furnish services, merchandise, and spaces similar in style and at least equal in quality of material and workmanship.

(6) The pre-need contract shall also disclose any specific penalties to be incurred by the purchaser as a result of failure to make payments; and penalties to be incurred or moneys or refunds to be received as a result of cancellation of the contract.

(7) The pre-need contract shall disclose the nature of the relationship between the provider and the seller.

(8) Each pre-need contract that authorizes the delivery of cemetery merchandise to a licensed and bonded warehouse shall provide that prior to or upon delivery of the merchandise to the warehouse the title to the merchandise and a warehouse receipt shall be delivered to the purchaser or beneficiary. The pre-need contract shall contain the following statement in 12 point bold type:

"THIS CONTRACT AUTHORIZES THE DELIVERY OF MERCHANDISE TO A LICENSED AND BONDED WAREHOUSE FOR STORAGE OF THE MERCHANDISE UNTIL THE MERCHANDISE IS NEEDED BY THE BENEFICIARY. DELIVERY OF THE MERCHANDISE IN THIS MANNER MAY PRECLUDE REFUND OF SALE PROCEEDS THAT ARE ATTRIBUTABLE TO THE DELIVERED MERCHANDISE."

The purchaser shall initial the statement at the time of entry into the pre-need contract.

(9) Each pre-need contract that authorizes the placement of cemetery merchandise at the site of its ultimate use prior to the time that the merchandise is needed by the beneficiary shall contain the following statement in 12 point bold type:

"THIS CONTRACT AUTHORIZES THE PLACEMENT OF MERCHANDISE AT THE SITE OF ITS ULTIMATE USE PRIOR TO THE TIME THAT THE MERCHANDISE IS NEEDED BY THE BENEFICIARY. DELIVERY OF THE MERCHANDISE IN THIS MANNER MAY PRECLUDE REFUND OF SALE PROCEEDS THAT ARE ATTRIBUTABLE TO THE DELIVERED MERCHANDISE."

The purchaser shall initial the statement at the time of entry into the pre-need contract.

(b) Every pre-need sales contract must be in writing. The Comptroller may by rule develop a model pre-need sales contract form that meets the requirements of this Act.

(c) To the extent the Rule is applicable, every pre-need sales contract is subject to the Federal Trade Commission Rule concerning the Cooling-Off Period for Door-to-Door Sales (16 CFR Part 429).

(d) No pre-need sales contract may be entered into in this State unless there is a provider for the cemetery merchandise, cemetery services, and undeveloped interment, inurnment, and entombment spaces being sold. If the seller is not the provider, then the seller must have a binding agreement with a provider, and the identity of the provider and the nature of the agreement between the seller and the provider must be disclosed in the pre-need sales contract at the time of sale and before the receipt of any sale proceeds. The purchaser shall make personal contact with the provider and visit the site of the undeveloped interment, inurnment, or entombment spaces being sold, unless the purchaser waives his or her right to do so. Each pre-need contract that is sold by a seller who is not the provider shall contain the following statements in 12-point bold type and the applicable statements shall be initialed by the purchaser:

"I HAVE MADE PERSONAL CONTACT WITH THE PROVIDER OF THE CEMETERY MERCHANDISE, CEMETERY SERVICES, OR UNDEVELOPED INTERMENT, INURNMENT, OR ENTOMBMENT SPACES SOLD IN THIS CONTRACT.

I HAVE VISITED THE SITE OF THE UNDEVELOPED INTERMENT, INURNMENT, OR ENTOMBMENT SPACES SOLD IN THIS CONTRACT.

I HAVE WAIVED MY RIGHT TO MAKE PERSONAL CONTACT AND/OR VISIT THE PROVIDER OF THE CEMETERY MERCHANDISE, CEMETERY SERVICES, OR UNDEVELOPED INTERMENT, INURNMENT, OR ENTOMBMENT SPACES BEING SOLD IN THIS CONTRACT.

A COPY OF THE PROVIDER'S RULES AND REGULATIONS HAS BEEN MADE AVAILABLE TO ME UPON MY REQUEST."

A separate completed contract shall be issued for funeral merchandise or funeral services covered by the Illinois Funeral or Burial Funds Act, and not covered by this Act, unless the seller is licensed under both Acts and all disclosures are in compliance with both Acts. The failure to disclose the identity of the provider, the nature of the agreement between the seller and the provider, or any changes thereto to the purchaser and beneficiary, or the failure to make the disclosures required by this Section constitutes an intentional violation of this Act.

(e) No pre-need contract may be entered into in this State unless it is accompanied by a funding mechanism permitted under this Act and unless the seller is licensed by the Comptroller as provided in this Act. Nothing in this Act is intended to relieve providers or sellers of pre-need contracts from being licensed under any other Act required for their profession or business or from being subject to the rules promulgated to regulate their profession or business, including rules on solicitation and advertisement.

(f) No pre-need contract may be entered into in this State unless the seller explains to the purchaser the terms of the pre-need contract prior to the purchaser signing and the purchaser initials a statement in the contract confirming that the seller has explained the terms of the contract prior to the purchaser signing.

(g) The State Comptroller shall develop a booklet for consumers in plain English describing the scope, application, and consumer protections of this Act. After the booklet is developed, no pre-need contract may be sold in this State unless the seller distributes to the purchaser prior to the sale a booklet developed or approved for use by the State Comptroller.

(Source: P.A. 91-7, eff. 1-1-00; 92-419, eff. 1-1-02.)

Section 20. The Consumer Fraud and Deceptive Business Practices Act is amended by adding Section 2VV as follows:

(815 ILCS 505/2VV new)

Sec. 2VV. Cemetery or funeral contracts. No person authorized by law to sell funeral services on an at need basis may also sell or arrange for the purchase of cemetery services, cemetery merchandise, or interment, inurnment, or entombment spaces on an at need basis, unless the person is also authorized by law to sell or arrange for the purchase of such cemetery services, merchandise, or spaces and issues to the consumer a separate contract with the provider of such cemetery services, merchandise, or spaces.

Each completed contract shall be numbered and shall contain: (i) the name and address of the purchaser, the name and pertinent information of the person who is to receive the cemetery services, merchandise, or spaces, and the name and address of the seller; (ii) specific identification of such merchandise, type of services to be held by cemetery or crematory personnel, or spaces to be provided and the price of the merchandise, services, or spaces; (iii) the location of the space to be provided, if a specific space is contracted for, indicated on a copy of an overall map of the site or section of the interment, entombment, or inurnment space; and (iv) a description of the type of care furnished by a provider holding a valid license under the Cemetery Care Act that is being purchased to maintain the interment, entombment, or inurnment space, if a specific space is contracted for. If no care is included in the contract, the contract shall state in 11-point bold type: "This contract does not include maintenance care.", and this statement shall be initialed by the purchaser. Upon request by the purchaser, each contract may include a current copy of the provider's rules and regulations pertaining to the site of the interment, entombment, or inurnment spaces, if such spaces are to be provided under the contract. The purchaser shall make personal contact with the provider and visit the site of the undeveloped interment, inurnment, or entombment spaces being sold, unless the purchaser waives his or her right to do so. Each contract that is sold by a seller who is not the provider shall contain the following statements in 12-point bold type and the applicable statements shall be initialed by the purchaser:

"I HAVE MADE PERSONAL CONTACT WITH THE PROVIDER OF THE CEMETERY MERCHANDISE, CEMETERY SERVICES, OR INTERMENT, INURNMENT, OR ENTOMBMENT SPACES SOLD IN THIS CONTRACT.

I HAVE VISITED THE SITE OF THE INTERMENT, INURNMENT, OR ENTOMBMENT SPACES SOLD IN THIS CONTRACT.

I HAVE WAIVED MY RIGHT TO MAKE PERSONAL CONTACT AND VISIT THE PROVIDER OF THE CEMETERY MERCHANDISE, CEMETERY SERVICES, OR INTERMENT, INURNMENT, OR ENTOMBMENT SPACES BEING SOLD IN THIS CONTRACT.

A COPY OF THE PROVIDER'S RULES AND REGULATIONS HAS BEEN MADE AVAILABLE TO ME UPON MY REQUEST." Any person who violates this Section commits an unlawful practice within the meaning of this Act.

Section 99. Effective date. This Act takes effect January 1, 2006.".