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

SB0669sam002 102ND GENERAL ASSEMBLY

Sen. Omar Aquino

Filed: 4/6/2021

 

 


 

 


 
10200SB0669sam002LRB102 15407 SPS 24612 a

1
AMENDMENT TO SENATE BILL 669

2    AMENDMENT NO. ______. Amend Senate Bill 669 by replacing
3everything after the enacting clause with the following:
 
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

 

 

10200SB0669sam002- 2 -LRB102 15407 SPS 24612 a

1or settlement of a debt or obligation of the consumer to a
2creditor on behalf of the consumer.
3    "Debt settlement provider" means: (1) any person or entity
4engaging in, or holding itself out as engaging in, the
5business of providing debt settlement service in exchange for
6any fee or compensation; (2) , or any person who solicits for or
7acts on behalf of any person or entity engaging in, or holding
8itself out as engaging in, the business of providing debt
9settlement service in exchange for any fee or compensation;
10(3) any person or entity engaging in, or holding itself out as
11engaging in the business of student loan debt relief services
12in exchange for any fee or compensation assessed against or
13charged to a consumer; or (4) any person who solicits for or
14acts on behalf of such person or entity engaging in or holding
15itself out as engaging in, the business of student loan debt
16relief services in exchange for any fee or compensation
17assessed against or charged to a consumer. "Debt settlement
18provider" does not include:
19        (1) attorneys licensed, or otherwise authorized, to
20    practice in Illinois who are engaged in the practice of
21    law;
22        (2) escrow agents, accountants, broker dealers in
23    securities, or investment advisors in securities, when
24    acting in the ordinary practice of their professions and
25    through the entity used in the ordinary practice of their
26    profession;

 

 

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1        (3) any bank, agent of a bank, operating subsidiary of
2    a bank, affiliate of a bank, trust company, savings and
3    loan association, savings bank, credit union, crop credit
4    association, development credit corporation, industrial
5    development corporation, title insurance company, title
6    insurance agent, independent escrowee or insurance company
7    operating or organized under the laws of a state or the
8    United States, or any other person authorized to make
9    loans under State law while acting in the ordinary
10    practice of that business;
11        (4) any person who performs credit services for his or
12    her employer while receiving a regular salary or wage when
13    the employer is not engaged in the business of offering or
14    providing debt settlement service;
15        (5) a collection agency licensed pursuant to the
16    Collection Agency Act that is collecting a debt on its own
17    behalf or on behalf of a third party;
18        (6) an organization that is described in Section
19    501(c)(3) and subject to Section 501(q) of Title 26 of the
20    United States Code and exempt from tax under Section
21    501(a) of Title 26 of the United States Code and governed
22    by the Debt Management Service Act;
23        (7) public officers while acting in their official
24    capacities and persons acting under court order;
25        (8) any person while performing services incidental to
26    the dissolution, winding up, or liquidating of a

 

 

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1    partnership, corporation, or other business enterprise; or
2        (9) persons licensed under the Real Estate License Act
3    of 2000 when acting in the ordinary practice of their
4    profession and not holding themselves out as debt
5    settlement providers; or .
6        (10) any institution of higher education as defined in
7    the Higher Education Act of 1965, 20 U.S.C. 1001.
8    "Debt settlement service" means:
9        (1) offering to provide advice or service, or acting
10    as an intermediary between or on behalf of a consumer and
11    one or more of a consumer's creditors, where the primary
12    purpose of the advice, service, or action is to obtain a
13    settlement, adjustment, or satisfaction of the consumer's
14    unsecured debt to a creditor in an amount less than the
15    full amount of the principal amount of the debt or in an
16    amount less than the current outstanding balance of the
17    debt; or
18        (2) offering to provide services related to or
19    providing services advising, encouraging, assisting, or
20    counseling a consumer to accumulate funds for the primary
21    purpose of proposing or obtaining or seeking to obtain a
22    settlement, adjustment, or satisfaction of the consumer's
23    unsecured debt to a creditor in an amount less than the
24    full amount of the principal amount of the debt or in an
25    amount less than the current outstanding balance of the
26    debt; or .

 

 

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1        (3) student loan debt relief.
2    "Debt settlement service" does not include (A) the
3services of attorneys licensed, or otherwise authorized, to
4practice in Illinois who are engaged in the practice of law, or
5(B) debt management service as defined in the Debt Management
6Service Act, (C) the services of a student loan servicer, as
7defined in the Student Loan Servicing Rights Act, or (D) the
8services of any other originator, guarantor, or servicer of
9federal education loans or private education loans.
10    "Enrollment or set up fee" means any fee, obligation, or
11compensation paid or to be paid by the consumer to a debt
12settlement provider in consideration of or in connection with
13establishing a contract or other agreement with a consumer
14related to the provision of debt settlement service.
15    "Federal education loan" means any loan made, guaranteed,
16or insured under Title IV of the federal Higher Education Act
17of 1965.
18    "Maintenance fee" means any fee, obligation, or
19compensation paid or to be paid by the consumer on a periodic
20basis to a debt settlement provider in consideration of
21maintaining the relationship and services to be provided by a
22debt settlement provider in accordance with a contract with a
23consumer related to the provision of debt settlement service.
24    "Principal amount of the debt" means the total amount or
25outstanding balance owed by a consumer to one or more
26creditors for a debt that is included in a contract for debt

 

 

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1settlement service at the time when the consumer enters into a
2contract for debt settlement service.
3    "Savings" means the difference between the principal
4amount of the debt and the amount paid by the debt settlement
5provider to the creditor or negotiated by the debt settlement
6provider and paid by the consumer to the creditor pursuant to a
7settlement negotiated by the debt settlement provider on
8behalf of the consumer as full and complete satisfaction of
9the creditor's claim with regard to that debt.
10    "Secretary" means the Secretary of Financial and
11Professional Regulation.
12    "Settlement fee" means any fee, obligation, or
13compensation paid or to be paid by the consumer to a debt
14settlement provider in consideration of or in connection with
15a completed agreement or other arrangement on the part of a
16creditor to accept less than the principal amount of the debt
17as satisfaction of the creditor's claim against the consumer.
18    "Student loan borrower" means a person who has received or
19agreed to pay a student loan for his or her own educational
20expenses; a parent, grandparent, or other family member who
21has received or agreed to pay a student loan for a family
22member receiving the education; or any co-signer who has
23agreed to share responsibility for repaying a student loan
24with the person receiving the education.
25    "Student loan debt relief" means, in exchange for any fee
26or compensation assessed against or charged to a student loan

 

 

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1borrower, offering to provide advice or service, or acting as
2an intermediary between or on behalf of a consumer and the
3United States Department of Education or any other originator
4or guarantor of federal education loans or one or more of the
5servicers of a student loan borrowers' federal education loan,
6where the primary purpose of the advice, service, or action is
7to (1) negotiate, arrange, or obtain a settlement, adjustment,
8discharge, or satisfaction of the student loan borrower's
9federal education loan debt in an amount less than the full
10amount of the principal amount of the debt, a reduction or
11alteration to the interest rate, a reduction or alteration in
12the amount of monthly payment or fees owed, or in an amount
13less than the current outstanding balance of the debt, (2)
14enroll the student loan borrower in a repayment plan,
15forbearance, or deferment of his or her federal education loan
16debt, (3) apply for consolidation or consolidate the student
17loan borrower's federal education loans, or (4) offer to
18provide any other services related to altering the terms of a
19student loan borrower's federal education loan debt,
20including, but not limited to, a reduction in the amount of
21interest, the principal balance, or the amount of monthly
22payment or fees owed.
23(Source: P.A. 96-1420, eff. 8-3-10.)
 
24    (225 ILCS 429/105)
25    Sec. 105. Advertising and marketing practices.

 

 

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1    (a) A debt settlement provider shall not represent,
2expressly or by implication, any results or outcomes of its
3debt settlement services in any advertising, marketing, or
4other communication to consumers unless the debt settlement
5provider possesses substantiation for such representation at
6the time such representation is made.
7    (b) A debt settlement provider shall not, expressly or by
8implication, make any unfair or deceptive representations, or
9any omissions of material facts, in any of its advertising or
10marketing communications concerning debt settlement services.
11    (c) All advertising and marketing communications
12concerning debt settlement services shall disclose the
13following material information clearly and conspicuously:
14        "Debt settlement services are not appropriate for
15    everyone. Failure to pay your monthly bills in a timely
16    manner will result in increased balances and will harm
17    your credit rating. Not all creditors will agree to reduce
18    principal balance, and they may pursue collection,
19    including lawsuits."
20    (d) All advertising and marketing communications
21concerning student loan debt relief services shall disclose
22the following material information clearly and conspicuously,
23along with the legally registered name of the company:
24        "[Name of company] is a private company, and is not
25    affiliated with the Department of Education or any other
26    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 429/115)
10    Sec. 115. Required pre-sale consumer disclosures and
11warnings.
12    (a) Before the consumer signs a contract, the debt
13settlement provider shall provide an oral and written notice
14to the consumer that clearly and conspicuously discloses all
15of the following:
16        (1) Debt settlement services may not be suitable for
17    all consumers.
18        (2) Using a debt settlement service likely will harm
19    the consumer's credit history and credit score.
20        (3) Using a debt settlement service does not stop
21    creditor collection activity, including creditor lawsuits
22    and garnishments.
23        (4) Not all creditors will accept a reduction in the
24    balance, interest rate, or fees a consumer owes.
25        (5) The consumer should inquire about other means of

 

 

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1    dealing with debt, including, but not limited to,
2    nonprofit credit counseling and bankruptcy.
3        (6) The consumer remains obligated to make periodic or
4    scheduled payments to creditors while participating in a
5    debt settlement plan, and that the debt settlement
6    provider will not make any periodic or scheduled payments
7    to creditors on behalf of the consumer.
8        (7) The failure to make periodic or scheduled payments
9    to a creditor is likely to:
10            (A) harm the consumer's credit history, credit
11        rating, or credit score;
12            (B) lead the creditor to increase lawful
13        collection activity, including litigation, garnishment
14        of the consumer's wages, and judgment liens on the
15        consumer's property; and
16            (C) lead to the imposition by the creditor of
17        interest charges, late fees, and other penalty fees,
18        increasing the principal amount of the debt.
19        (8) The amount of time estimated to be necessary to
20    achieve the represented results.
21        (9) The estimated amount of money or the percentage of
22    debt the consumer must accumulate before a settlement
23    offer will be made to each of the consumer's creditors.
24        (10) For student loan debt relief services, before the
25    student loan borrower signs a contract, the provider shall
26    provide an oral and written notice to the student loan

 

 

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1    borrower that clearly and conspicuously discloses the
2    following:
3            "[Name of company] is a private company, and is
4        not affiliated with the Department of Education or any
5        other academic entity or governmental agency. [Name of
6        company] is not a lender, guarantor, or servicer of
7        federal student loans. You can apply for consolidation
8        and other repayment plans without paid assistance
9        through the United States Department of Education.
10        More information is available through the Department's
11        website or your federal student loan servicer. You can
12        find out who your servicer is through the Department
13        of Education.".
14    (b) The consumer shall sign and date an acknowledgment
15form entitled "Consumer Notice and Rights Form" that states:
16"I, the debtor, have received from the debt settlement
17provider a copy of the form entitled "Consumer Notice and
18Rights Form"." The debt settlement provider or its
19representative shall also sign and date the acknowledgment
20form, which includes the name and address of the debt
21settlement services provider. The acknowledgment form shall be
22in duplicate and incorporated into the "Consumer Notice and
23Rights Form". The original acknowledgment form shall be
24retained by the debt settlement provider, and the duplicate
25copy shall be retained within the form by the consumer.
26    If the acknowledgment form is in electronic form, then it

 

 

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1shall contain the consumer disclosures required by Section
2101(c) of the federal Electronic Signatures in Global and
3National Commerce Act.
4    (c) Except as provided in subsection (d), the The
5requirements of this Section are satisfied if the provider
6provides the following warning verbatim, both orally and in
7writing, with the caption "CONSUMER NOTICE AND RIGHTS FORM" in
8at least 28-point font and the remaining portion in at least
914-point font, to a consumer before the consumer signs a
10contract for the debt settlement provider's services:
 
11
"CONSUMER NOTICE AND RIGHTS FORM

 
12
CAUTION
13    We CANNOT GUARANTEE that you successfully will reduce or
14eliminate your debt.
15    If you stop paying your creditors, there is a strong
16likelihood some or all of the following may happen:
17    - CREDITORS MAY STILL CONTACT YOU AND TRY TO COLLECT.
18    - CREDITORS MAY STILL SUE YOU FOR THE MONEY YOU OWE.
19    - YOUR WAGES OR BANK ACCOUNT MAY STILL BE GARNISHED.
20    - YOUR CREDIT RATING AND CREDIT SCORE LIKELY WILL BE
21HARMED.
22    - NOT ALL CREDITORS WILL AGREE TO ACCEPT A BALANCE
23REDUCTION.
24    - YOU SHOULD CONSIDER ALL YOUR OPTIONS FOR ADDRESSING YOUR

 

 

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1DEBT, SUCH AS CREDIT COUNSELING AND BANKRUPTCY FILING.
2    - THE AMOUNT OF MONEY YOU OWE MAY INCREASE DUE TO CREDITOR
3IMPOSITION OF INTEREST CHARGES, LATE FEES, AND OTHER PENALTY
4FEES.
5    - EVEN IF WE DO SETTLE YOUR DEBT, YOU MAY STILL BE REQUIRED
6TO PAY TAXES ON THE AMOUNT FORGIVEN.
 
7
YOUR RIGHT TO CANCEL
8    If you sign a contract with a Debt Settlement Provider,
9you have the right to cancel at any time and receive a full
10refund of all unearned fees you have paid to the provider and
11all funds placed in your settlement fund that have not been
12paid to any creditors.
 
13
IF YOU ARE DISSATISFIED
14
OR YOU HAVE QUESTIONS
15    If you are dissatisfied with a debt settlement provider or
16have any questions, please bring it to the attention of the
17Illinois Attorney General's Office and the Department of
18Financial and Professional Regulation.
19Attorney General Toll-Free Numbers:
20    Carbondale (800) 243-0607
21    Springfield (800) 243-0618
22    Chicago (800) 386-5438
23    Website for Department of Financial and Professional
24Regulation: www.idfpr.com

 

 

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1I, the debtor, have received from the debt settlement provider
2a copy of the form entitled Consumer Notice and Rights Form.".
3    (d) All providers of student loan debt relief services
4shall include the following disclosure:
5        "[NAME OF COMPANY] IS A PRIVATE COMPANY, AND IS NOT
6    AFFILIATED WITH THE DEPARTMENT OF EDUCATION OR ANY OTHER
7    ACADEMIC ENTITY OR GOVERNMENTAL AGENCY. [NAME OF COMPANY]
8    IS NOT A LENDER, GUARANTOR, OR SERVICER OF FEDERAL STUDENT
9    LOANS. YOU CAN APPLY FOR CONSOLIDATION AND OTHER REPAYMENT
10    PLANS WITHOUT PAID ASSISTANCE THROUGH THE UNITED STATES
11    DEPARTMENT OF EDUCATION. MORE INFORMATION IS AVAILABLE
12    THROUGH THE DEPARTMENT'S WEBSITE OR YOUR FEDERAL STUDENT
13    LOAN SERVICER. YOU CAN FIND OUT WHO YOUR SERVICER IS
14    THROUGH THE DEPARTMENT OF EDUCATION.".
15(Source: P.A. 96-1420, eff. 8-3-10.)
 
16    (225 ILCS 429/125)
17    Sec. 125. Fees.
18    (a) A debt settlement provider shall not charge fees of
19any type or receive compensation from a consumer in a type,
20amount, or timing other than fees or compensation permitted in
21this Section.
22    (b) A debt settlement provider shall not charge or receive
23from a consumer any enrollment fee, set up fee, up front fee of
24any kind, or any maintenance fee, except for a one-time
25enrollment fee of no more than $50.

 

 

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1    (c) A debt settlement provider may charge a settlement
2fee, which shall not exceed an amount greater than 15% of the
3savings. If the amount paid by the debt settlement provider to
4the creditor or negotiated by the debt settlement provider and
5paid by the consumer to the creditor pursuant to a settlement
6negotiated by the debt settlement provider on behalf of the
7consumer as full and complete satisfaction of the creditor's
8claim with regard to that debt is greater than the principal
9amount of the debt, then the debt settlement provider shall
10not be entitled to any settlement fee.
11    (d) A debt settlement provider shall not collect any
12settlement fee from a consumer until a creditor enters into a
13legally enforceable agreement to accept funds in a specific
14dollar amount as full and complete satisfaction of the
15creditor's claim with regard to that debt and those funds are
16provided by the debt settlement provider on behalf of the
17consumer or are provided directly by the consumer to the
18creditor pursuant to a settlement negotiated by the debt
19settlement provider.
20    (e) Any fees charged to a student loan borrower in
21exchange for student loan debt relief shall comply with this
22Section.
23(Source: P.A. 96-1420, eff. 8-3-10; 97-333, eff. 8-12-11.)
 
24    (225 ILCS 429/145)
25    Sec. 145. Prohibited practices. A debt settlement provider

 

 

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1shall not do any of the following:
2        (1) Charge or collect from a consumer any fee not
3    permitted by, in an amount in excess of the maximum amount
4    permitted by, or at a time earlier than permitted by
5    Section 125 of this Act.
6        (2) Advise or represent, expressly or by implication,
7    that consumers should stop making payments to their
8    creditors, lenders, loan servicers, or loan guarantors or
9    government entities.
10        (3) Advise or represent, expressly or by implication,
11    that consumers should stop communicating with their
12    creditors, lenders, loan servicers, loan guarantors, or
13    attorneys or government entities.
14        (4) Change the mailing address on any of a consumer's
15    creditor's statements.
16        (5) Make loans or offer credit or solicit or accept
17    any note, mortgage, or negotiable instrument other than a
18    check signed by the consumer and dated no later than the
19    date of signature.
20        (6) Take any confession of judgment or power of
21    attorney to confess judgment against the consumer or
22    appear as the consumer or on behalf of the consumer in any
23    judicial proceedings.
24        (7) Take any release or waiver of any obligation to be
25    performed on the part of the debt settlement provider or
26    any right of the consumer.

 

 

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1        (8) Advertise, display, distribute, broadcast, or
2    televise services or permit services to be displayed,
3    advertised, distributed, broadcasted, or televised, in any
4    manner whatsoever, that contains any false, misleading, or
5    deceptive statements or representations with regard to any
6    matter, including services to be performed, the fees to be
7    charged by the debt settlement provider, or the effect
8    those services will have on a consumer's credit rating or
9    on creditor collection efforts.
10        (9) Receive any cash, fee, gift, bonus, premium,
11    reward, or other compensation from any person other than
12    the consumer explicitly for the provision of debt
13    settlement service to that consumer.
14        (10) Offer or provide gifts or bonuses to consumers
15    for signing a debt settlement service contract or for
16    referring another potential customer or customer.
17        (11) Disclose to anyone the name or any personal
18    information of a consumer for whom the debt settlement
19    provider has provided or is providing debt settlement
20    service other than to a consumer's own creditors or the
21    debt settlement provider's agents, affiliates, or
22    contractors for the purpose of providing debt settlement
23    service without the prior consent of the consumer.
24        (12) Enter into a contract with a consumer without
25    first providing the disclosures and financial analysis and
26    making the determinations required by this Section.

 

 

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1        (13) Misrepresent any material fact, make a material
2    omission, or make a false promise directed to one or more
3    consumers in connection with the solicitation, offering,
4    contracting, or provision of debt settlement service.
5        (14) Violate the provisions of applicable do not call
6    statutes.
7        (15) Purchase debts or engage in the practice or
8    business of debt collection.
9        (16) Include in a debt settlement agreement any
10    secured debt.
11        (17) Employ an unfair, unconscionable, or deceptive
12    act or practice, including the knowing omission of any
13    material information.
14        (18) Engage in any practice that prohibits or limits
15    the consumer or any creditor from communication directly
16    with one another.
17        (19) Represent or imply to a person participating in
18    or considering debt settlement that purchase of any
19    ancillary goods or services is required.
20        (20) Access or obtain a consumer's or student loan
21    borrower's federal student aid information in violation of
22    federal law.
23(Source: P.A. 96-1420, eff. 8-3-10.)
 
24    Section 99. Effective date. This Act takes effect upon
25becoming law.".