Illinois General Assembly - Full Text of HB6412
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Full Text of HB6412  96th General Assembly

HB6412ham001 96TH GENERAL ASSEMBLY

Rep. Joseph M. Lyons

Filed: 3/18/2010

 

 


 

 


 
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1
AMENDMENT TO HOUSE BILL 6412

2     AMENDMENT NO. ______. Amend House Bill 6412 by replacing
3 everything after the enacting clause with the following:
 
4     "Section 5. The Illinois Financial Services Development
5 Act is amended by changing Sections 3 and 8 and by adding
6 Section 8.5 as follows:
 
7     (205 ILCS 675/3)  (from Ch. 17, par. 7003)
8     Sec. 3. As used in this Section:
9     (a) "Financial institution" means any bank with its main
10 office or, after May 31, 1997, a branch in this State, any
11 state or federal savings and loan association or savings bank
12 with its main office or branch in this State, any state or
13 federal credit union with its main office in this State, and
14 any lender licensed under the Consumer Installment Loan Act or
15 the Sales Finance Agency Act.
16     (b) "Revolving credit plan" or "plan" means a plan

 

 

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1 contemplating the extension of credit under an account governed
2 by an agreement between a financial institution and a borrower
3 who is a natural person pursuant to which:
4         (1) The financial institution permits the borrower
5     and, if the agreement governing the plan so provides,
6     persons acting on behalf of or with authorization from the
7     borrower, from time to time to make purchases and to obtain
8     loans by any means whatsoever, including use of a credit
9     device primarily for personal, family or household
10     purposes;
11         (2) the amounts of such purchases and loans are charged
12     to the borrower's account under the revolving credit plan;
13         (3) the borrower is required to pay the financial
14     institution the amounts of all purchases and loans charged
15     to such borrower's account under the plan but has the
16     privilege of paying such amounts outstanding from time to
17     time in full or installments; and
18         (4) interest may be charged and collected by the
19     financial institution from time to time on the outstanding
20     unpaid indebtedness under such plan.
21     (c) "Credit device" means any card, check, identification
22 code or other means of identification contemplated by the
23 agreement governing the plan.
24     (d) "Outstanding unpaid indebtedness" means on any day an
25 amount not in excess of the total amount of purchases and loans
26 charged to the borrower's account under the plan which is

 

 

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1 outstanding and unpaid at the end of the day, after adding the
2 aggregate amount of any new purchases and loans charged to the
3 account as of that day and deducting the aggregate amount of
4 any payments and credits applied to that indebtedness as of
5 that day and, if the agreement governing the plan so provides,
6 may include the amount of any billed and unpaid interest and
7 other charges.
8     (e) "Credit card" means any instrument or device, whether
9 known as a credit card, credit device, credit plate, charge
10 plate, or any other name, issued with or without fee by an
11 issuer for the use of the borrower in obtaining money, goods,
12 services, or anything else of value on credit, but does not
13 include any negotiable instrument as defined in the Uniform
14 Commercial Code, as now or hereafter amended, or a debit card
15 that may indirectly access an overdraft line of credit through
16 a debit to a deposit account.
17     (f) "Credit card account" means a revolving credit plan
18 accessed by a credit card.
19 (Source: P.A. 89-208, eff. 9-29-95.)
 
20     (205 ILCS 675/8)  (from Ch. 17, par. 7008)
21     Sec. 8. Amendment of governing agreement governing
22 revolving credit plans other than credit card accounts.
23     (a) If the agreement governing a revolving credit plan
24 other than a credit card account so provides or allows, a
25 financial institution may at any time or from time to time

 

 

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1 amend the terms of such agreement in accordance with the
2 further provisions of this Section 8. The financial institution
3 shall notify each affected borrower of the amendment in the
4 manner set forth in the agreement governing the plan and in
5 compliance with the requirements of the Truth-in-Lending Act
6 and regulations promulgated thereunder, as in effect from time
7 to time, if applicable.
8     (b) Subject to subsection (c) below, if the terms of the
9 agreement governing the plan, as originally drawn or as amended
10 pursuant to this Section so provide, any amendment may, on and
11 after the date upon which it becomes effective as to a
12 particular borrower, apply to all then outstanding unpaid
13 indebtedness in the borrower's account under the plan,
14 including any such indebtedness which shall have arisen out of
15 purchases made or loans obtained prior to the effective date of
16 the amendment.
17     (c) If such amendment has the effect of increasing the
18 interest or other charges to be paid by the borrower, the
19 financial institution shall mail or deliver to the borrower, at
20 least 30 days before the effective date of the amendment, a
21 clear and conspicuous written notice which shall:
22         (1) describe the amendment and the existing term or
23     terms of the agreement affected by the amendment,
24         (2) set forth the effective date of the amendment,
25         (3) state whether or not the amendment will apply to
26     the outstanding unpaid indebtedness as of the effective

 

 

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1     date of the amendment,
2         (4) state that absent the borrower's written notice to
3     the financial institution within 30 days of the earlier of
4     the mailing or delivery of the notice of amendment that the
5     borrower does not agree to accept the amendment, the
6     amendment will become effective and apply to the borrower's
7     account, and
8         (5) provide an address to which the borrower may send
9     notice of the borrower's election not to accept the
10     amendment and include an addressed postcard that the
11     borrower may return to the financial institution for that
12     purpose.
13     (c-5) If such amendment results in an unfavorable change in
14 the interest or other charges on a revolving credit plan which:
15 (i) relates to a change in the borrower's credit standing, (ii)
16 does not affect all or a substantial portion of a class of the
17 creditor's accounts, and (iii) does not relate to inactivity,
18 default, or delinquency on that revolving credit plan, the
19 financial institution shall include in the notice required by
20 subsection (c) of this Section 8 a statement that is
21 substantially similar to the following:
22
Change in Credit Standing
23         The amendment to the terms of your account relates to a
24     change in your credit standing. The change in your credit
25     standing may have resulted from a default or delinquency on
26     other accounts you may have, or other adverse changes in

 

 

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1     your financial circumstances. If you submit the enclosed
2     postcard or otherwise notify us in a timely manner as
3     provided in this notice that you do not accept the
4     amendment, you will be able to pay off your existing
5     balance at the rate in effect prior to the amendment.
6     However, in that instance, you may not be eligible to
7     obtain additional credit under this plan after the
8     effective date of the amendment. If you do not provide
9     timely notice to us as provided in this notice that you do
10     not accept the amendment, the amendment to the terms of
11     your account will become effective and apply to your
12     account.
13     (c-10) As a condition to the effectiveness of the
14 borrower's notice not to accept the amendment, the financial
15 institution may require the borrower to return all credit
16 devices.
17     Any borrower who gives a timely notice electing not to
18 accept the amendment shall be permitted to pay the outstanding
19 unpaid indebtedness in the borrower's account under the plan in
20 accordance with the terms of the agreement governing the plan
21 without giving effect to the amendment.
22     Notwithstanding the financial institution's receipt of the
23 borrower's notice under item (4) of subsection (c) that the
24 borrower does not accept the amendment, the amendment shall be
25 deemed to have been accepted and effective with respect to the
26 borrower and the borrower's account if the borrower uses the

 

 

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1 credit device to obtain credit under the credit plan on or
2 after the effective date of the amendment, and the amendment
3 shall be deemed effective as of the effective date originally
4 disclosed by the financial institution.
5     (d) For purposes of this Section, the following shall not
6 be deemed an amendment which has the effect of increasing the
7 interest to be paid by the borrower:
8         (1) a decrease in the required amount of periodic
9     installment payments; and
10         (2) a change from a daily periodic rate to a periodic
11     rate other than daily, or from a periodic rate other than
12     daily to a daily periodic rate, provided that there is no
13     resulting change in the annual percentage rate as
14     determined in accordance with the Truth-in-Lending Act and
15     regulations promulgated thereunder, as in effect from time
16     to time.
17 (Source: P.A. 93-287, eff. 1-1-04.)
 
18     (205 ILCS 675/8.5 new)
19     Sec. 8.5. Amendment of agreement governing credit card
20 accounts.
21     (a) Amendment of terms. If the agreement governing a credit
22 card account so provides or allows, then a financial
23 institution may at any time or from time to time amend the
24 terms of such agreement in accordance with the further
25 provisions of this Section. The financial institution shall

 

 

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1 notify each affected borrower of the amendment in the manner
2 set forth in the agreement governing the credit card account
3 and in compliance with the requirements of the Truth-in-Lending
4 Act and regulations promulgated thereunder, as in effect from
5 time to time, if applicable. The provisions of Section 8 of
6 this Act shall not apply to the amendment of the terms of the
7 agreement governing the credit card account.
8     (b) Interest rate increase limited to future transactions.
9 An agreement governing a credit card account may be amended to
10 increase the interest rate on future transactions which may
11 take effect not less than 45 days after notice of the rate
12 increase is provided to the borrower. The interest rate may
13 only be applied to transactions that occur more than 14 days
14 after provision of the notice to the borrower. The notice to
15 the borrower shall disclose the interest rate applicable to new
16 transactions, the date the interest rate will commence, the
17 transactions subject to the increased interest rate, and the
18 transactions subject to the current interest rate. A financial
19 institution may not increase the interest rate under this
20 subsection during the first year after the credit card account
21 is opened.
22     (c) Advance notice and right to reject an increase in fees
23 or charges. An agreement governing a credit card account may be
24 amended to increase fees or charges on or after an effective
25 date that is at least 45 days after provision of a notice to
26 the borrower, provided a financial institution may not increase

 

 

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1 fees or charges on a credit card account during the first year
2 after the credit card account is opened. The notice to the
3 borrower shall:
4         (1) describe the change in terms contained in the
5     amendment;
6         (2) set forth the effective date of the amendment;
7         (3) state that the borrower may reject the amendment
8     prior to the effective date of the amendment;
9         (4) provide an address to which the borrower may send
10     notice of the borrower's election not to accept the
11     amendment and include an addressed postcard that the
12     borrower may return to the financial institution for that
13     purpose, or provide a toll-free telephone number the
14     borrower may use to notify the financial institution of the
15     borrower's rejection of the amendment; and
16         (5) if applicable, a statement that if the borrower
17     rejects the amendment, then the borrower's ability to use
18     the account for further advances will be terminated or
19     suspended.
20     (d) Interest rate increase applicable to current balances.
21 A financial institution may not increase the interest rate on
22 the outstanding unpaid indebtedness under a credit card
23 agreement, except as permitted in the following:
24         (1) Temporary rate exception. A financial institution
25     may increase a promotional interest rate upon the
26     expiration of a specified period of time of at least 6

 

 

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1     months, provided that prior to the commencement of that
2     period, the financial institution has disclosed to the
3     borrower the length of the period and the increased
4     interest rate that would apply after the expiration of the
5     period.
6         (2) Variable rate exception. A financial institution
7     may increase the interest rate of a variable rate credit
8     card account, established in accordance with the
9     provisions of Section 5 of this Act, resulting from
10     increases in an index that is not under the financial
11     institution's control and is available to the general
12     public.
13         (3) Workout and temporary hardship exception. If an
14     interest rate is reduced pursuant to a workout or temporary
15     hardship arrangement, then the interest rate may be
16     increased to the interest rate in effect prior to the
17     reduction due to completion of the workout or temporary
18     hardship arrangement by the borrower or the failure of the
19     borrower to comply with the terms of the workout or
20     temporary hardship arrangement, provided the financial
21     institution has furnished the borrower with a clear and
22     conspicuous disclosure of the terms of the arrangement
23     prior to commencement of the arrangement.
24         (4) Delinquency exception. A financial institution may
25     increase the interest rate if the borrower's required
26     minimum payment has not been received by the financial

 

 

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1     institution within 60 days after the due date for the
2     payment, provided that after the minimum payment is 60 days
3     delinquent a notice is furnished to the borrower 45 days
4     prior to the effective date of the increase stating the
5     reason for the increase and that the increase will
6     terminate not later than 6 months after the effective date
7     of the increase if the financial institution receives the
8     required minimum payments on time during that 6 month
9     period.
10         (5) Servicemember's Civil Relief Act exception. If an
11     interest rate is decreased due to the provisions of 50
12     U.S.C. App. 527 of the Servicemembers Civil Relief Act,
13     then the financial institution may increase the interest
14     rate once those provisions no longer apply, provided the
15     financial institution may not apply to any transactions
16     that occurred prior to the decrease an interest rate
17     greater than the interest rate applied prior to the
18     decrease.
19     (e) Universal default prohibited. A financial institution
20 may not impose an unfavorable change in the interest or other
21 charges on a credit card account which: (i) relates to a change
22 in the borrower's credit standing, (ii) does not affect all or
23 a substantial portion of a class of the creditor's accounts,
24 and (iii) does not relate to inactivity, default, or
25 delinquency on that credit card account.
26     (f) Any borrower who gives a timely notice under subsection

 

 

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1 (c) of this Section rejecting an amendment to increase fees or
2 charges shall be permitted to pay the outstanding unpaid
3 indebtedness in the borrower's credit card account, in
4 accordance with the terms of the agreement governing the credit
5 card account without giving effect to the amendment.
6     (g) For purposes of this Section, the following shall not
7 be deemed an amendment that has the effect of increasing the
8 interest to be paid by the borrower:
9         (1) a decrease in the required amount of periodic
10     installment payments; and
11         (2) a change from a daily periodic rate to a periodic
12     rate other than daily, or from a periodic rate other than
13     daily to a daily periodic rate, provided that there is no
14     resulting change in the annual percentage rate as
15     determined in accordance with the Truth-in-Lending Act and
16     regulations promulgated thereunder, as in effect from time
17     to time.
 
18     Section 10. The Credit Card Issuance Act is amended by
19 changing Section 7.2 as follows:
 
20     (815 ILCS 140/7.2)
21     Sec. 7.2. No credit card issuer shall issue, provide,
22 assign or deliver in any way a credit card account to and in
23 the name of any person under the age of 21 unless the person
24 has submitted a written application and the credit card issuer

 

 

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1 has:
2         (1) financial information that the person has an
3     independent ability to make the required minimum periodic
4     payments on the proposed extension of credit; or
5         (2) financial information that a cosigner, guarantor,
6     or joint applicant who is at least 21 years old has an
7     independent ability to make the required minimum periodic
8     payments on the proposed extension of credit, and a signed
9     agreement of the cosigner, guarantor, or joint applicant to
10     be either jointly liable for any debt on the account or
11     secondarily liable for any debt on the account incurred by
12     the person before the person has attained the age of 21 18
13     without the written approval of that person's parent or
14     legal guardian.
15     Upon delivery of a credit card account to and in the name
16 of any person under the age of 18, the credit card issuer shall
17 also include a pamphlet which details the responsible use of a
18 credit card, an explanation of applicable credit limits,
19 payment requirements and the penalties for the misuse and
20 fraudulent use of a credit card.
21     A person under the age of 18 may be issued a credit card
22 account in that person's name without the written approval of a
23 parent or legal guardian if a person over the age of 18 agrees
24 to be a joint holder of the credit card account and accepts the
25 responsibility for any debt or cost associated with the credit
26 card.

 

 

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1     This Section does not apply to a supplementary card issued
2 to a person under the age of 21 18 that allows that person to
3 access a credit card account in the name of a person over the
4 age of 21 18 if the person over the age of 21 18 requested
5 orally or in writing that the supplementary card be issued to
6 the person under the age of 21 18.
7 (Source: P.A. 88-348.)
 
8     Section 99. Effective date. This Act takes effect upon
9 becoming law.".