Illinois General Assembly - Full Text of SB3523
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Full Text of SB3523  97th General Assembly

SB3523sam001 97TH GENERAL ASSEMBLY

Sen. Jacqueline Y. Collins

Filed: 3/5/2012

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 3523

2    AMENDMENT NO. ______. Amend Senate Bill 3523 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Currency Exchange Act is amended by
5changing Section 3.1 as follows:
 
6    (205 ILCS 405/3.1)  (from Ch. 17, par. 4805)
7    Sec. 3.1. Nothing in this Act shall prevent a currency
8exchange from rendering State or Federal income tax service;
9nor shall the rendering of such service be considered a
10violation of this Act if such service be rendered either by the
11proprietor, any of his employees, or a licensed, regulated tax
12service approved by the Internal Revenue Service. For the
13purpose of this Section, "tax service" does not mean to make or
14offer to make a refund anticipation loan as defined by the Tax
15Refund Anticipation Loan Reform Disclosure Act.
16(Source: P.A. 97-315, eff. 1-1-12.)
 

 

 

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1    Section 10. The Tax Refund Anticipation Loan Disclosure Act
2is amended by changing Sections 1, 5, 10, and 15 and by adding
3Sections 20, 25, 30, 35, and 40 as follows:
 
4    (815 ILCS 177/1)
5    Sec. 1. Short title. This Act may be cited as the Tax
6Refund Anticipation Loan Reform Disclosure Act.
7(Source: P.A. 92-664, eff. 1-1-03.)
 
8    (815 ILCS 177/5)
9    Sec. 5. Definitions. The following definitions apply in
10this Act:
11    "Consumer" means any natural person who, singly or jointly
12with another consumer, is solicited for, applies for, or
13receives the proceeds of a refund anticipation loan or refund
14anticipation check.
15    "Creditor" means any person who makes a refund anticipation
16loan or who takes an assignment of a refund anticipation loan.
17    "Facilitator" means a person who individually or in
18conjunction or cooperation with another person: (i) solicits
19the execution of makes a refund anticipation loan, processes,
20receives, or accepts for delivery an application or agreement
21for a refund anticipation loan or refund anticipation check;
22(ii) services or collects upon , issues a check in payment of
23refund anticipation loan or refund anticipation check;

 

 

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1proceeds, or (iii) in any other manner facilitates acts to
2allow the making of a refund anticipation loan or refund
3anticipation check. If there is no third party facilitator
4because a creditor directly solicits the execution of,
5receives, or accepts an application or agreement for a refund
6anticipation loan or refund anticipation check, that creditor
7shall be considered a facilitator. "Facilitator" does not
8include a bank, savings bank, savings and loan association, or
9credit union, or licensee under the Consumer Installment Loan
10Act operating under the laws of the United States or this State
11and does not include any person who acts solely as an
12intermediary and does not deal with the public in the making of
13the refund anticipation loan.
14    "Person" means an individual, a firm, a partnership, an
15association, a corporation, or another entity. "Person" does
16not, however, mean a bank, savings bank, savings and loan
17association, or credit union operating under the laws of the
18United States or this State.
19    "Refund anticipation check" means a check, stored value
20card, or other payment mechanism: (i) representing the proceeds
21of the consumer's tax refund; (ii) which was issued by a
22depository institution or other person that received a direct
23deposit of the consumer's tax refund or tax credits; and (iii)
24for which the consumer has paid a fee or other consideration
25for such payment mechanism.
26    "Borrower" means a person who receives the proceeds of a

 

 

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1refund anticipation loan.
2    "Refund anticipation loan" means a loan that is secured by
3or that the creditor arranges arranged to be repaid directly or
4indirectly from the proceeds of the consumer's a borrower's
5income tax refund or tax credits refunds. "Refund anticipation
6loan" also includes any sale, assignment, or purchase of a
7consumer's tax refund at a discount or for a fee, whether or
8not the consumer is required to repay the buyer or assignee if
9the Internal Revenue Service denies or reduces the consumer's
10tax refund.
11    "Refund anticipation loan fee" means the charges, fees, or
12other consideration charged or imposed directly or indirectly
13by the creditor facilitator for the making of or in connection
14with a refund anticipation loan. This term includes any charge,
15fee, or other consideration for a deposit account, if the
16deposit account is used for receipt of the consumer's tax
17refund to repay the amount owed on the loan. A "refund
18anticipation loan fee" does not include charges, fees, or other
19consideration charged or imposed in the ordinary course of
20business by a facilitator for services that do not result in
21the making of a loan, including fees for tax return preparation
22and fees for electronic filing of tax returns.
23    "Refund anticipation loan interest rate" means the
24interest rate for a refund anticipation loan calculated as
25follows: the total amount of refund anticipation loan fees
26divided by the loan amount (minus any loan fees), then divided

 

 

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1by the number of days in the loan term, then multiplied by 365
2and expressed as a percentage. The total amount of the refund
3anticipation loan fee used in this calculation shall include
4all refund anticipation loan fees as defined in this Section.
5If a deposit account is established or maintained in whole or
6in part for the purpose of receiving the consumer's tax refund
7to repay the amount owed on a refund anticipation loan: (i) the
8maturity of the loan for the purpose of determining the refund
9anticipation loan interest rate shall be assumed to be the
10estimated date when the tax refund will be deposited in the
11deposit account; and (ii) any fee charged to the consumer for
12such deposit account shall be considered a loan fee and shall
13be included in the calculation of the refund anticipation loan
14interest rate. If no deposit account is established or
15maintained for the repayment of the loan, the maturity of the
16loan shall be assumed to be the estimated date when the tax
17refund is received by the creditor.
18(Source: P.A. 92-664, eff. 1-1-03.)
 
19    (815 ILCS 177/10)
20    Sec. 10. Disclosure requirements. At the time a consumer
21borrower applies for a refund anticipation loan or check, a
22facilitator shall disclose to the consumer borrower on a
23document that is separate from the loan application:
24        (1) the fee for the refund anticipation loan or refund
25    anticipation check fee schedule;

 

 

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1        (1.5) for refund anticipation loans, disclosure of the
2    refund anticipation loan interest rate. The refund
3    anticipation loan interest rate shall be calculated as set
4    forth in Section 5 the Annual Percentage Rate utilizing a
5    10-day time period;
6        (2) the estimated fee for preparing and electronically
7    filing a tax return;
8        (2.5) the total cost to the consumer borrower for
9    utilizing a refund anticipation loan;
10        (3) the estimated date that the loan proceeds will be
11    paid to the consumer borrower if the loan is approved;
12        (4) that the consumer borrower is responsible for
13    repayment of the loan and related fees in the event the tax
14    refund is not paid or not paid in full; and
15        (5) the availability of electronic filing for the
16    income tax return of the consumer borrower and the average
17    time announced by the federal Internal Revenue Service
18    within which the consumer borrower can expect to receive a
19    refund if the consumer's borrower's return is filed
20    electronically and the consumer borrower does not obtain a
21    refund anticipation loan.
22(Source: P.A. 92-664, eff. 1-1-03; 93-287, eff. 1-1-04.)
 
23    (815 ILCS 177/15)
24    Sec. 15. Posting of fee schedule and disclosures. Penalty.
25    (a) A facilitator shall display a schedule showing the

 

 

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1current fees for refund anticipation loans or refund
2anticipation checks facilitated at the office.
3    (b) A facilitator shall display on each fee schedule
4examples of the refund anticipation loan interest rates for
5refund anticipation loans of at least 5 different amounts, such
6as $300, $500, $1,000, $1,500, $2,000, and $5,000. The refund
7anticipation loan interest rate shall be calculated as set
8forth in Section 5 of this Act.
9    (c) A facilitator shall also prominently display on each
10fee schedule: (i) a legend, centered, in bold, capital letters,
11and in one-inch letters stating: "NOTICE CONCERNING REFUND
12ANTICIPATION LOANS" and (ii) the following verbatim statement:
13"When you take out a refund anticipation loan, you are
14borrowing money against your tax refund. If your tax refund is
15less than expected, you will still owe the entire amount of the
16loan. If your refund is delayed, you may have to pay additional
17costs. YOU CAN GET YOUR REFUND IN 8 TO 15 DAYS WITHOUT PAYING
18ANY EXTRA FEES AND TAKING OUT A LOAN. You can have your tax
19return filed electronically and your refund direct deposited
20into your own financial institution account without obtaining a
21loan or paying fees for an extra product.".
22    (d) The postings required by this Section shall be made in
23no less than 28-point type on a document measuring no less than
2416 inches by 20 inches. The postings required by this Section
25shall be displayed in a prominent location at each office where
26the facilitator is facilitating refund anticipation loans.

 

 

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1    (e) A facilitator may not facilitate a refund anticipation
2loan or refund anticipation check unless (i) the disclosures
3required by this Section are displayed and (ii) the fee
4actually charged for the refund anticipation loan or refund
5anticipation check is the same as the fee displayed on the
6schedule.
7    Any person who violates this Act is guilty of a petty
8offense and shall be fined $500 for each offense. In addition,
9a facilitator who violates this Act shall be liable to any
10aggrieved borrower in an amount equal to 3 times the refund
11anticipation loan fee, plus a reasonable attorney's fee, in a
12civil action brought in the circuit court by the aggrieved
13borrower or by the Attorney General on behalf of the aggrieved
14borrower.
15(Source: P.A. 92-664, eff. 1-1-03.)
 
16    (815 ILCS 177/20 new)
17    Sec. 20. Advertising and marketing.
18    (a) A facilitator may not market or advertise a refund
19anticipation loan without including this language verbatim:
20    "(Name of product) is a loan. You can get your refund in 8
21to 15 days without a loan or extra fees if you use e-file and
22direct deposit.".
23    For print advertisements, this information must be printed
24in type size one-half as large as the largest type size in the
25advertisement. For radio and television advertisements, this

 

 

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1information must receive at least 7 seconds of airtime.
2    (b) A facilitator may not market or advertise a refund
3anticipation check without including this language verbatim:
4    "The (name of product) costs (fee for RAC). You can get
5your refund in the same amount of time without this fee if you
6use e-file and direct deposit.".
7    For print advertisements, this information must be in type
8size one-half as large as the largest type size in the
9advertisement. For radio and television advertisements, this
10information must receive at least 7 seconds of airtime.
 
11    (815 ILCS 177/25 new)
12    Sec. 25. Prohibited activities. No person, including any
13officer, agent, employee, or representative, shall:
14    (a) Charge or impose any fee, charge, or other
15consideration in the making or facilitating of a refund
16anticipation loan or refund anticipation check apart from the
17fee charged by the creditor or financial institution that
18provides the loan or check. This prohibition does not include
19any charge or fee imposed by the facilitator to all of its
20customers, such as fees for tax return preparation, if the same
21fee in the same amount is charged to the customers who do not
22receive refund anticipation loans, refund anticipation checks,
23or any other tax related financial product.
24    (b) Fail to comply with any provision of this Act.
25    (c) Directly or indirectly arrange for any third party to

 

 

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1charge any interest, fee, or charge related to a refund
2anticipation loan or refund anticipation check, other than the
3refund anticipation loan or refund anticipation check fee
4imposed by the creditor, including but not limited to: (i)
5charges for insurance; (ii) attorneys fees or other collection
6costs; or (iii) check cashing.
7    (d) Include any of the following provisions in any document
8provided or signed in connection with a refund anticipation
9loan or refund anticipation check, including the loan
10application or agreement:
11        (i) A hold harmless clause;
12        (ii) A waiver of the right to a jury trial, if
13    applicable, in any action brought by or against the
14    consumer;
15        (iii) Any assignment of wages or of other compensation
16    for services;
17        (iv) A provision in which the consumer agrees not to
18    assert any claim or defense arising out of the contract, or
19    to seek any remedies pursuant to Section 35 of this Act;
20        (v) A waiver of any provision of this Act. Any such
21    waiver shall be deemed null, void, and of no effect;
22        (vi) A waiver of the right to injunctive, declaratory,
23    or other equitable relief; or
24        (vii) A provision requiring that any aspect of a
25    resolution of a dispute between the parties to the
26    agreement be kept confidential. This provision shall not

 

 

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1    affect the right of the parties to agree that certain
2    specified information is a trade secret or otherwise
3    confidential, or to later agree, after the dispute arises,
4    to keep a resolution confidential.
5    (e) Take or arrange for a creditor to take a security
6interest in any property of the consumer other than the
7proceeds of the consumer's tax refund to secure payment of a
8refund anticipation loan.
9    (f) Directly or indirectly, individually or in conjunction
10or cooperation with another person, engage in the collection of
11an outstanding or delinquent refund anticipation loan for any
12creditor or assignee, including soliciting the execution of,
13processing, receiving, or accepting an application or
14agreement for a refund anticipation loan or refund anticipation
15check that contains a provision permitting the creditor to
16repay, by offset or other means, an outstanding or delinquent
17refund anticipation loan for that creditor or any creditor from
18the proceeds of the consumer's tax refund.
19    (g) Facilitate any loan that is secured by or that the
20creditor arranges to be repaid directly from the proceeds of
21the consumer's State tax refund from the Illinois State
22Treasury.
 
23    (815 ILCS 177/30 new)
24    Sec. 30. Rate limits for non-bank refund anticipation
25loans.

 

 

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1    (a) No person shall make or facilitate a refund
2anticipation loan for which the refund anticipation loan
3interest rate is greater than 36% per annum. The refund
4anticipation loan interest rate shall be calculated as set
5forth in Section 5. Any refund anticipation loan for which the
6refund anticipation loan interest rate exceeds 36% per annum
7shall be void ab initio.
8    (b) This Section does not apply to persons facilitating for
9or doing business as a bank, savings bank, savings and loan
10association, or credit union chartered under the laws of the
11United States or this State.
 
12    (815 ILCS 177/35 new)
13    Sec. 35. Applicability to certain entities. No obligation
14or prohibition imposed upon a creditor, a person, or a
15facilitator by this Act shall apply to a bank, savings bank,
16savings and loan association, or credit union operating under
17the laws of the United States or this State.
 
18    (815 ILCS 177/40 new)
19    Sec. 40. Violation. A violation of this Act constitutes an
20unlawful practice under the Consumer Fraud and Deceptive
21Business Practices Act.
 
22    Section 15. The Consumer Fraud and Deceptive Business
23Practices Act is amended by adding Section 2NNN as follows:
 

 

 

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1    (815 ILCS 505/2NNN new)
2    Sec. 2NNN. Violations of the Tax Refund Anticipation Loan
3Reform Act. Any person who violates the Tax Refund Anticipation
4Loan Reform Act commits an unlawful practice within the meaning
5of this Act.
 
6    Section 97. Severability. The provisions of this Act are
7severable under Section 1.31 of the Statute on Statutes.
 
8    Section 99. Effective date. This Act takes effect upon
9becoming law.".