State of Illinois
91st General Assembly

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 1        AN ACT to create the Short-term Loan Act.

 2        Be  it  enacted  by  the People of the State of Illinois,
 3    represented in the General Assembly:

 4        Section 1.  Short title.  This Act may be  cited  as  the
 5    Short-term Loan Act.

 6        Section 5.  Definitions.
 7        "Director" means the Director of Financial Institutions.
 8        "Motor  vehicle  title loan firm" means any business that
 9    loans money to a borrower  in  a  transaction  in  which  the
10    borrower  turns over custody of a title to a motor vehicle as
11    security for the loan.
12        "Net worth" means total assets minus total liabilities.
13        "Payday loan firm" means any business that loans money to
14    a borrower in a transaction in which  the  loan  is  due  and
15    payable upon the next payday of the borrower or any member of
16    the borrower's immediate family.

17        Section  10.  License required to engage in business.  No
18    person, partnership, association, limited liability  company,
19    or  corporation  shall engage in the business of making loans
20    of money for terms of 92 days or less except as authorized by
21    this Act after first obtaining a license from the Director.

22        Section  15.   Application;  fees.   Application  for   a
23    license  shall  be  in  writing,  under oath, and in the form
24    prescribed by the Director.  The applicant  at  the  time  of
25    making   the   application  shall  pay  to  the  Director  an
26    application fee and annual license fee to  be  fixed  by  the
27    Director by rule.  The application fee and the annual license
28    fee  shall  in no case be less than the amounts determined by
29    the Director to be necessary  to  cover  his  or  her  duties
                            -2-                LRB9108880JSpc
 1    prescribed by this Act, including the cost of maintaining and
 2    operating   a   consumer   complaint  system  as  hereinafter
 3    described.

 4        Section 20.  Positive net worth; bond.  Before a  license
 5    is granted, the applicant shall prove in form satisfactory to
 6    the Director that the applicant has a positive net worth of a
 7    minimum of $50,000. An applicant shall maintain a surety bond
 8    in  the  principal  sum of $5,000 issued by a bonding company
 9    authorized to do business in this State and  which  shall  be
10    approved by the Director. This bond shall run to the Director
11    and shall be for the benefit of any person who incurs damages
12    as  a result of the actions of a licensee and who is lawfully
13    awarded these damages pursuant to an appropriate court order.
14    If the  Director  finds  at  any  time  that  a  bond  is  of
15    insufficient  size  or otherwise doubtful, an additional bond
16    in any amount determined by the Director shall  be  filed  by
17    the  licensee  within  30  days  after  written demand by the
18    Director.

19        Section 25.  Appointment of attorney-in-fact for  service
20    of  process.  A  licensee  shall  appoint,  in  writing,  the
21    Director  and his or her successors in office or any official
22    who shall hereafter be charged  with  the  administration  of
23    this  Act  as  attorney-in-fact  upon whom all lawful process
24    against the licensee may be served with the same legal  force
25    and  validity  as  if  served  on the licensee. A copy of the
26    written appointment, duly certified, shall be  filed  in  the
27    office  of  the Director, and a copy thereof certified by him
28    or her shall be sufficient evidence. This  appointment  shall
29    remain  in  effect while any liability remains outstanding in
30    this State against the licensee. When summons is served  upon
31    the  Director  as  attorney-in-fact  for  such  licensee, the
32    Director shall immediately notify the licensee by  registered
                            -3-                LRB9108880JSpc
 1    mail,  enclosing  the summons and specifying the hour and day
 2    of service.

 3        Section 30.  Investigation to determine  whether  license
 4    shall  be  issued.  Upon the filing of an application and the
 5    payment of the required fees, the Director shall  investigate
 6    to  determine  (1)  that  the  reputation  of  the applicant,
 7    including managers, partners, owners, officers  or  directors
 8    of  a limited liability company, is such as to warrant belief
 9    that the business will be operated honestly and fairly within
10    the purposes of this Act and (2) that the applicant meets the
11    positive net worth requirement set forth  in  Section  20  of
12    this  Act.   Unless  the  Director finds that the application
13    meets both of these criteria, he or she  shall  not  issue  a
14    license  and  shall  notify  the  applicant of the denial and
15    return to the applicant the sum paid by the applicant  as  an
16    annual  license  fee,  but  shall retain the application fee.
17    The Director shall approve  or  deny  every  application  for
18    licensure  under  this  Act within 60 days from the filing of
19    the application and submission of the required fees.

20        Section 35.  License; consumer information to be posted.
21        (a) The license shall state the address,  including  city
22    and state, at which the business is to be conducted and shall
23    state  fully  the name of the licensee.  The license shall be
24    conspicuously posted in the place of business of the licensee
25    and shall not be transferable or assignable.
26        (b) In addition to  posting  the  license,  the  licensee
27    shall  legibly  post  in  each  of  his  or her offices where
28    business  is  done  with  the  public,  in  a  format  to  be
29    determined by the Director by rule, the  name,  address,  and
30    telephone  number  of  a short-term consumer lending customer
31    complaint gathering service  or  hotline  that  the  Director
32    shall  use to gather information about each licensee and take
                            -4-                LRB9108880JSpc
 1    appropriate action.

 2        Section 40.  More than one license to same licensee.  Not
 3    more than one place of business shall be maintained under the
 4    same license, but  the  Director  may  issue  more  than  one
 5    license  to  the  same  licensee upon compliance with all the
 6    provisions of this Act governing an original  issuance  of  a
 7    license.

 8        Section  45.   Changing  place  of  business.  Whenever a
 9    licensee changes his or her place of business to  a  location
10    other  than  that  set forth in his or her license, he or she
11    shall give written notice of the change to  the  Director  at
12    least  10  days prior to the relocation.  However, if the new
13    location is more than 15 miles in distance from the  previous
14    location, the licensee shall obtain written approval from the
15    Director prior to the relocation.

16        Section 50.  Annual license fee.  A licensee shall, on or
17    before  December  15  of  each  year, pay to the Director the
18    annual license fee required by Section 15 of this Act for the
19    next succeeding calendar year.  The license shall  expire  on
20    January  1  unless  the  license  fee has been timely paid to
21    renew the license.

22        Section  55.   Expenses.   In  addition  to  his  or  her
23    licensee fee, the licensee shall bear the reasonable  expense
24    of any examination, investigation, or custody by the Director
25    under any provisions of this Act.

26        Section  60.  License expirations and reinstatements.  If
27    a licensee fails to renew his or her license by  December  31
28    of  any  year, the license shall automatically expire and the
29    licensee is not entitled to a hearing; however, the Director,
                            -5-                LRB9108880JSpc
 1    in his or her discretion, may reinstate  an  expired  license
 2    upon  payment  of  the  annual  renewal fee and proof of good
 3    cause for failure to renew.

 4        Section  65.   Deposits.   All  money  received  by   the
 5    Director  under  this Act shall be deposited in the Financial
 6    Institution Fund created under Section  6z-26  of  the  State
 7    Finance Act.

 8        Section 70.  Fines, suspension, or revocation of license.
 9        (a)  The Director may, after 10 days notice by registered
10    mail to the licensee at the address set forth in the license,
11    stating the  contemplated  action  and  the  general  grounds
12    therefor,  fine  the licensee an amount not exceeding $10,000
13    per violation, or revoke or suspend any license issued  under
14    this Act, if he or she finds that:
15             (1)  the  licensee  has  failed  to  comply with any
16        provision of this Act or any  order,  decision,  finding,
17        rule, or direction of the Director lawfully made pursuant
18        to the authority of this Act; or
19             (2)  any  fact  or condition exists which, if it had
20        existed at the time of the original application  for  the
21        license,  clearly  would  have  warranted the Director in
22        refusing to issue the license.
23        (b) The Director may fine, suspend, or  revoke  only  the
24    particular  license with respect to the grounds for which the
25    fine, revocation, or suspension occur or exist,  but  if  the
26    Director   shall   find   that  the  grounds  for  the  fine,
27    suspension, or revocation are of general application  to  all
28    offices  or  to  more  than  one  office of the licensee, the
29    Director shall fine, suspend,  or  revoke  every  license  to
30    which these grounds apply.
31        (c)  No  revocation,  suspension,  or  surrender  of  any
32    license   shall  impair  or  affect  the  obligation  of  any
                            -6-                LRB9108880JSpc
 1    pre-existing lawful contract between  the  licensee  and  any
 2    obligor.
 3        (d)  The  Director  may issue a new license to a licensee
 4    whose license has been revoked when facts or conditions  that
 5    clearly   would  have  warranted  the  Director  in  refusing
 6    originally to issue the license no longer exist.
 7        (f) In every case in which  a  license  is  suspended  or
 8    revoked  or  an  application  for  a  license or renewal of a
 9    license is denied, the Director shall serve the licensee with
10    notice of his or her action, including  a  statement  of  the
11    reasons  for  his  or  her  actions, either personally, or by
12    certified  mail,  return  receipt  requested.    Service   by
13    certified  mail  shall be deemed completed when the notice is
14    deposited in the U.S. Mail.
15        (g) An order assessing  a  fine,  an  order  revoking  or
16    suspending  a  license,  and  an  order  denying renewal of a
17    license shall take effect upon service of  the  order  unless
18    the  licensee  requests, in writing, within 10 days after the
19    date of service, a hearing.  If a hearing is  requested,  the
20    order  shall  be stayed until a final administrative order is
21    entered.
22        (h) If the licensee  requests  a  hearing,  the  Director
23    shall schedule a hearing within 30 days after the request for
24    a hearing unless otherwise agreed to by the parties.
25        (i)  The  hearing  shall  be  held  at the time and place
26    designated  by  the  Director.     The   Director   and   any
27    administrative  law judge designated by him or her shall have
28    the power to  administer  oaths  and  affirmations,  subpoena
29    witnesses  and  compel  their  attendance, take evidence, and
30    require the production of books, papers, correspondence,  and
31    other  records  or  information  that  he  or  she  considers
32    relevant or material to the inquiry.
33        (j) The costs for the administrative hearing shall be set
34    by rule.
                            -7-                LRB9108880JSpc
 1        (k)  The  Director  shall have the authority to prescribe
 2    rules for the administration of this Section.

 3        Section 75.  Closing of business; surrender of license.
 4        (a)  At  least  10  days  prior  to  a  licensee  ceasing
 5    operations, closing business, or filing for  bankruptcy,  the
 6    licensee  shall notify the Director of its action in writing.
 7    With the exception of filing  for  bankruptcy,  the  licensee
 8    shall surrender its license to the Director for cancellation.
 9    The  surrender of the license shall not affect the licensee's
10    civil or criminal  liability  for  acts  committed  prior  to
11    surrender  or entitle the licensee to a return of any part of
12    the annual license fee.
13        (b)  The  licensee  shall  notify  the  Director  of  the
14    location where the books, accounts,  contracts,  and  records
15    will  be maintained and the procedure to ensure prompt return
16    of contracts, titles, and releases to the customers.
17        (c)  The accounts, books, records, and contracts shall be
18    maintained and serviced by the licensee or  another  licensee
19    under this Act, or an entity exempt from licensure under this
20    Act.
21        (d)  The  Director  shall  have  the authority to conduct
22    examinations of the books, records, and loan documents at any
23    time after surrender of the license, filing of bankruptcy, or
24    the cessation of operations.

25        Section 80.  Investigation of conduct  of  business.  For
26    the purpose of discovering violations of this Act or securing
27    information  lawfully required by it, the Director may at any
28    time investigate the  loans  and  business  and  examine  the
29    books,  accounts,  records,  and  files used therein of every
30    licensee  and  of  every  person,  partnership,  association,
31    limited liability company, and  corporation  engaged  in  the
32    business  described  in  Section  10 of this Act, whether the
                            -8-                LRB9108880JSpc
 1    person, partnership, association, limited liability  company,
 2    or  corporation  shall  act  or  claim to act as principal or
 3    agent or within or without the authority  of  this  Act.  For
 4    this  purpose  the  Director  shall  have  free access to the
 5    offices and places  of  business,  books,  accounts,  papers,
 6    records,   files,   safes,   and   vaults  of  such  persons,
 7    partnerships, associations, limited liability companies,  and
 8    corporations.  The Director may require the attendance of and
 9    examine under oath all persons whose testimony he or she  may
10    require  relative to such loans or such business, and in such
11    cases the Director shall have power to  administer  oaths  to
12    all persons called as witnesses.
13        The  Director  shall  make an examination of the affairs,
14    business, office, and records of each licensee at least  once
15    each  year. The Director shall by rule and regulation set the
16    fee to be charged for each examination day, including  travel
17    expenses  for out-of-state licensed locations.  The fee shall
18    reasonably reflect actual costs.   The  Director  shall  also
19    have  authority  to  examine  the  books  and  records of any
20    business made by a former licensee that is being  liquidated,
21    as   the   Director  deems  necessary,  and  may  charge  the
22    examination fees otherwise required for licensees.

23        Section 85.  Books and records. A licensee  shall  retain
24    and  use  in  his  or  her  business  or  at another location
25    approved by the Director such records as are required by  the
26    Director  to  enable  the  Director  to determine whether the
27    licensee is complying with the provisions of this Act and the
28    rules promulgated under this Act. A licensee  shall  preserve
29    the records of any loan for at least 2 years after making the
30    final  entry  for  the loan. Accounting systems maintained in
31    whole or in part by mechanical or electronic data  processing
32    methods that provide information equivalent to that otherwise
33    required  and follow generally accepted accounting principles
                            -9-                LRB9108880JSpc
 1    are acceptable for that purpose, if approved by the  Director
 2    in writing.

 3        Section  90.   Reports.  A licensee shall annually, on or
 4    before the first  day  of  March,  file  a  report  with  the
 5    Director giving such relevant information as the Director may
 6    reasonably  require  concerning  the  business and operations
 7    during the preceding calendar year of each licensed place  of
 8    business  conducted by the licensee. The report shall be made
 9    under oath and in a form prescribed by the Director. Whenever
10    a licensee operates 2 or more licensed offices or whenever  2
11    or  more  affiliated  licensees  operate  licensed offices, a
12    composite report of such group of  licensed  offices  may  be
13    filed  in  lieu  of individual reports. The Director may make
14    and publish annually an analysis and  recapitulation  of  the
15    reports. The Director may fine each licensee $25 for each day
16    beyond March 1 such report is filed.

17        Section 95.  Other business; rules and regulations.  Upon
18    application  by  the  licensee, and approval by the Director,
19    the Director may approve the conduct of other businesses  not
20    specifically permitted by this Act in the licensee's place of
21    business,  unless  the  Director finds that such conduct will
22    conceal or facilitate evasion or violation of this Act.  Such
23    approval  shall  be  in  writing and shall describe the other
24    businesses that may be conducted in the licensed office.  The
25    Director   shall   make  and  enforce  reasonable  rules  and
26    regulations for the conduct of business under this Act in the
27    same office with other businesses  as  may  be  necessary  to
28    prevent evasions or violations of this Act.  The Director may
29    investigate  any business conducted in the licensed office to
30    determine whether any evasion or violation of  this  Act  has
31    occurred.
                            -10-               LRB9108880JSpc
 1        Section   100.    Prohibition  against  taking  power  of
 2    attorney.  No licensee  shall  take  any  power  of  attorney
 3    except  to  acknowledge  the execution of an instrument or to
 4    confess judgement.

 5        Section 105.  Pledge or sale  of  note.  No  licensee  or
 6    other  person  shall  pledge,  hypothecate,  or  sell  a note
 7    entered into under the provisions of this Act by  an  obligor
 8    except  to  another licensee under this Act, a licensee under
 9    the Sales Finance Agency Act,  a  bank,  a  savings  bank,  a
10    savings and loan association, or a credit union created under
11    the  laws  of  this  State  or the United States, or to other
12    persons or entities authorized by the  Director  in  writing.
13    Sales  of  notes by licensees under this Act or other persons
14    shall be made by agreement in writing and shall authorize the
15    Director to  examine  the  loan  documents  so  hypothecated,
16    pledged, or sold.

17        Section 110.  Charges permitted.
18        (a)  A  licensee  may  lend  to  any borrower a principal
19    amount not exceeding $1,000 for a  period  not  exceeding  92
20    days  and  may  charge,  contract  for,  and  receive thereon
21    interest at a rate  agreed  upon  by  the  licensee  and  the
22    obligor   but  in  no  case  exceeding  24%  per  year.   All
23    transactions between licensees and their contractors  on  the
24    one  hand, and obligors on the other, shall be subject to the
25    provisions of this Act.  Nothing in this authorization  shall
26    permit  the further lending by any licensee of any additional
27    sum of money to any borrower in violation of Section  140  of
28    this Act.
29        (b)  For  purpose  of  this  Section, the following terms
30    shall have the meanings ascribed herein.
31        "Applicable interest" for  a  precomputed  loan  contract
32    means  the  amount  of  interest attributable to each monthly
                            -11-               LRB9108880JSpc
 1    installment period.  It is computed as  if  each  installment
 2    period  were one month and any interest charged for extending
 3    the first installment period beyond  one  month  is  ignored.
 4    The applicable interest for any monthly installment period is
 5    that  portion of the precomputed interest that bears the same
 6    ratio to the  total  precomputed  interest  as  the  balances
 7    scheduled to be outstanding during that month bear to the sum
 8    of all scheduled monthly outstanding balances in the original
 9    contract.
10        "Interest-bearing loan" means a loan in which the debt is
11    expressed  as  a  principal  amount  plus interest charged on
12    actual  unpaid  principal  balances  for  the  time  actually
13    outstanding.
14        "Precomputed loan" means a loan  in  which  the  debt  is
15    expressed  as  the  sum of the original principal amount plus
16    interest  computed  actuarially  in  advance,  assuming   all
17    payments will be made when scheduled.
18        (c)  Loans may be interest-bearing or precomputed.
19        (d)  To  compute  time  for  either  interest-bearing  or
20    precomputed  loans  for the calculation of interest and other
21    purposes, a month shall be 1/12th of a year.  A day shall  be
22    1/365th  of a year when calculation is made for a fraction of
23    a month.  When a period of time includes one  or  more  whole
24    months  plus  a  fraction of a month, the licensee may charge
25    interest for the fraction of the month at the rate of 1/365th
26    of the agreed annual rate for each day actually elapsed.
27        (e)  With respect to interest-bearing loans:
28             (1)  Interest shall be computed on unpaid  principal
29        balances  outstanding  from  time  to  time, for the time
30        outstanding, until fully paid.   Each  payment  shall  be
31        applied   first  to  the  accumulated  interest  and  the
32        remainder of the payment applied to the unpaid  principal
33        balance;  provided  however,  that  if  the amount of the
34        payment is insufficient to pay the accumulated  interest,
                            -12-               LRB9108880JSpc
 1        the  unpaid  interest  continues to accumulate to be paid
 2        from the proceeds of subsequent payments and is not added
 3        to the principal balance.
 4             (2)  Interest shall not be  payable  in  advance  or
 5        compounded.
 6             (3)  Loans  may  be  payable  as  agreed between the
 7        parties, including  payment  at  irregular  times  or  in
 8        unequal  amounts  and  rates  that may vary with an index
 9        that is independently verifiable and beyond  the  control
10        of the licensee.
11             (4)  The  lender  or  creditor  may, if the contract
12        provides, collect a delinquency or collection  charge  on
13        each installment in default for a period of not less than
14        10  days in an amount not exceeding 5% of the installment
15        on installments in excess of $200, or $10 on installments
16        of $200 or less, but only one delinquency and  collection
17        charge  may be collected on any installment regardless of
18        the period during which it remains in default.
19        (f)   With respect to precomputed loans:
20             (1) Payments shall be applied in the order in  which
21        they become due.
22             (2)  When  any  loan contract is paid in full before
23        the due date, a  licensee  shall  refund  or  credit  the
24        obligor with the total of the applicable interest for all
25        fully unexpired days.
26             (3)  The  lender  or  creditor  may, if the contract
27        provides, collect a delinquency or collection  charge  on
28        each installment in default for a period of not less than
29        10  days in an amount not exceeding 5% of the installment
30        on installments in excess of $200, or $10 on installments
31        of $200 or less, but only one delinquency  or  collection
32        charge  may be collected on any installment regardless of
33        the period during which it remains in default.
34             (4) Fifteen days  after  the  final  installment  as
                            -13-               LRB9108880JSpc
 1        originally  scheduled or deferred, the licensee may, upon
 2        giving notice to the obligor, convert a precomputed  loan
 3        to  an  interest-bearing  loan  and  compute  and  charge
 4        interest  on that loan at any rate of interest previously
 5        agreed to by the parties to the loan.

 6        Section 115.  Credit insurance.   Voluntary  credit  life
 7    insurance,  credit accident and health insurance, involuntary
 8    unemployment insurance, credit property insurance,  or  other
 9    credit  insurance  policies  approved  or  permitted  by  the
10    Director  of  Insurance  and  any  charge  therefor  which is
11    deducted from the loan or paid by the  obligor  shall  comply
12    with  the Illinois Insurance Code and all lawful requirements
13    of the Director of Insurance related thereto. When there  are
14    2  or more obligors on the loan contract, only one charge for
15    credit  life  insurance  and  credit  accident   and   health
16    insurance  may  be  made and only one of the obligors need be
17    required to be insured, except that  joint  credit  insurance
18    may  cover 2 obligors. Insurance obtained from, by or through
19    a licensee shall be in effect when the  loan  is  transacted.
20    The  purchase  of such insurance through the licensee or from
21    an agent, broker or insurer specified by the  licensee  shall
22    not be a condition precedent to the granting of the loan.

23        Section 120.  Property insurance.
24        (a)  A  licensee  may  require  the  obligor  to  provide
25    property  damage insurance on real and personal property, all
26    or part of which serves as security against reasonable  risks
27    of  loss,  damage,  and  destruction in connection with loans
28    exceeding an original principal amount of  $500.  The  amount
29    and  term of the insurance shall be reasonable in relation to
30    the amount and term of the loan contract  and  the  type  and
31    value of the property, and the insurance shall be procured in
32    accordance  with  the  insurance  laws  of  this  State.  The
                            -14-               LRB9108880JSpc
 1    purchase  of  such  insurance through the licensee or from an
 2    agent, broker or insurer specified by the licensee shall  not
 3    be  a  condition  precedent to the granting of the loan.  The
 4    premium  charged  shall  not  exceed  that  charged  by   the
 5    insurance company.
 6        (b)  If the obligor fails to furnish evidence that he has
 7    procured insurance on the property, the licensee may purchase
 8    substitute  insurance that may be substantially equivalent to
 9    or more limited than coverage  the  obligor  is  required  to
10    maintain.   Such  insurance  must  comply with the Collateral
11    Protection Act.

12        Section 125.  Extra  charges  prohibited.  No  amount  in
13    addition  to  the  charges  authorized  by  this Act shall be
14    directly or indirectly charged, contracted for, or  received,
15    except  (1)  lawful fees paid to any public officer or agency
16    to record, file  or  release  security;  (2)  (i)  costs  and
17    disbursements  actually  incurred  in  connection with a real
18    estate loan, for  any  title  insurance,  title  examination,
19    abstract of title, survey, or appraisal, or paid to a trustee
20    in  connection with a trust deed, and (ii) in connection with
21    a real estate loan those charges authorized by  Section  4.1a
22    of  the  Interest  Act, whether called "points" or otherwise,
23    which charges are imposed as a condition for making the  loan
24    and  are  not  refundable  in  the event of prepayment of the
25    loan;  (3)  costs  and  disbursements,  including  reasonable
26    attorney's fees, incurred in legal proceedings to  collect  a
27    loan  or  to  realize on a security after default; and (4) an
28    amount not exceeding $25, plus any actual  expenses  incurred
29    in  connection  with  a  check  or  draft that is not honored
30    because of insufficient or uncollected funds  or  because  no
31    such  account  exists.   This  Section  does not prohibit the
32    receipt of a commission, dividend, charge, or  other  benefit
33    by the licensee or by an employee, affiliate, or associate of
                            -15-               LRB9108880JSpc
 1    the licensee from the insurance permitted by Sections 115 and
 2    120  of  this  Act  or from insurance in lieu of perfecting a
 3    security  interest  provided  that  the  premiums  for   such
 4    insurance  do  not  exceed  the  fees that otherwise could be
 5    contracted for by the licensee under this Section.  Obtaining
 6    any of the items referred to in clause (i) of  item  (2)   of
 7    this   Section  through  the  licensee  or  from  any  person
 8    specified by the licensee shall not be a condition  precedent
 9    to the granting of the loan.

10        Section  130.   Disclosure  of terms of contract.  In any
11    loan transaction under this Act, the licensee  must  disclose
12    all  of the following items to the obligor of the loan before
13    the transaction is consummated:
14        (1) The amount and date of the loan contract.
15        (2) The original principal amount of the loan.
16        (3) Any deduction from the loan made by the licensee  for
17    any  purpose  prior  to  the  loan  being  transferred to the
18    obligor.
19        (4) Any payment made by the obligor  in  connection  with
20    obtaining the loan.
21        (5) The date on which the finance charge begins to accrue
22    if different from the date of the transaction.
23        (6)   The   total  amount  of  the  loan  charge  with  a
24    description of each amount included using the  term  "finance
25    charge".
26        (7)  The finance charge expressed as an annual percentage
27    rate  using  the  term  "annual  percentage  rate".   "Annual
28    percentage rate" means the nominal annual percentage rate  of
29    finance  charge  determined  in accordance with the actuarial
30    method of computation  with  an  accuracy  at  least  to  the
31    nearest  1/4  of  1%;  or  at  the  option of the licensee by
32    application of the United States  rule  so  that  it  may  be
33    disclosed with an accuracy at least to the nearest 1/4 of 1%.
                            -16-               LRB9108880JSpc
 1        (8)  For  all  payday  loans,  the fact that a post-dated
 2    check may be presented to a financial institution for payment
 3    in full on the date for which it has been made out.
 4        (9)  The number, amount  and  due  dates  or  periods  of
 5    payments  scheduled  to  repay  the  loan and the sum of such
 6    payments using the term "total of payments".
 7        (10)  The amount or method of computing the amount of any
 8    default, delinquency, or similar charges payable in the event
 9    of late payments.
10        (11)  The right of the obligor to prepay the loan in full
11    on any installment date and the fact that such prepayment  in
12    full will reduce the insurance charge for the loan.
13        (12)  A  description or identification of the type of any
14    security interest held or to be retained or acquired  by  the
15    licensee   in   connection   with   the   loan  and  a  clear
16    identification of the property to which the security interest
17    relates. If after-acquired property will be  subject  to  the
18    security  interest,  or if other or future indebtedness is or
19    may be secured by any  such  property,  this  fact  shall  be
20    clearly  set  forth  in  conjunction  with the description or
21    identification  of  the  type  of  security  interest   held,
22    retained or acquired.
23        (13)  A  description  of  any  penalty charge that may be
24    imposed by the licensee for prepayment of  the  principal  of
25    the   obligation   with  an  explanation  of  the  method  of
26    computation of such penalty and the conditions under which it
27    may be imposed.
28        (14)  Identification and description  of  the  method  of
29    computing  any  unearned portion of the finance charge in the
30    event of prepayment of the loan, and if the licensee uses the
31    "Rule of 78ths" method, including a statement explaining such
32    method substantially as follows:
33             Unearned finance charges under the Rule of 78ths are
34        computed by calculating for all fully  unexpired  monthly
                            -17-               LRB9108880JSpc
 1        installment periods, as originally scheduled or deferred,
 2        which  follow  the  day of prepayment, the portion of the
 3        precomputed interest that bears the  same  ratio  to  the
 4        total  precomputed  interest as the balances scheduled to
 5        be outstanding during  that  monthly  installment  period
 6        bear  to  the  sum  of  all scheduled monthly outstanding
 7        balances originally contracted for.
 8        The description shall also  include  an  example  of  its
 9    application   solely   for   purposes   of   illustration  in
10    substantially the following form:
12    Unearned    Original    Sum of balances due every month after
13                            prepayment
14            =            X  ___________________________________
15    Charge      Charge*     Sum of balances due every month of
16                            contract
17    *for Finance Charge (excluding any charges added for a  first
18    payment  period  of  more than one month) or credit insurance
19    charges.
20    Example:  12 monthly payments of $10  (balance  is  $120  1st
21    month,  $110 2nd month, and so on), $20 Finance Charge.  If 5
22    payments are prepaid in full, unearned Finance Charge is:
23                           50+40+30+20+10
24          $20 x _________________________________    =$3.85
25               120+110+100+90+80+70+60+50+40+30+20+10
26        The terms "finance charge" and "annual  percentage  rate"
27    shall  be  printed  more conspicuously than other terminology
28    required by this Section.
29        At the time disclosures  are  made,  the  licensee  shall
30    deliver  to  the  obligor  a  duplicate  of the instrument or
31    statement by which the required disclosures are made  and  on
32    which  the  licensee  and  obligor  are  identified and their
33    addresses stated.  All  of  the  disclosures  shall  be  made
34    clearly,  conspicuously  and  in meaningful sequence and made
                            -18-               LRB9108880JSpc
 1    together on either:
 2             (i)  the note or  other  instrument  evidencing  the
 3        obligation.   Where   a   creditor   elects   to  combine
 4        disclosures with the contract,  security  agreement,  and
 5        evidence  of  a  transaction  in  a  single document, the
 6        disclosures required under this Section shall be made  on
 7        the face of the document, on the reverse side, or on both
 8        sides, provided that the amount of the finance charge and
 9        the  annual  percentage  rate shall appear on the face of
10        the document, and, if  the  reverse  side  is  used,  the
11        printing  on  both sides of the document shall be equally
12        clear and  conspicuous,  both  sides  shall  contain  the
13        statement,   "NOTICE:   See   other  side  for  important
14        information", and the place for the  obligor's  signature
15        shall  be  provided  following  the  full  content of the
16        document; or
17             (ii)  One  side  of  a  separate   statement   which
18        identifies the transaction.
19        The  amount  of the finance charge shall be determined as
20    the sum of all charges, payable directly or indirectly by the
21    obligor and imposed directly or indirectly by the licensee as
22    an incident to or as a condition to the extension of  credit,
23    whether  paid  or payable by the obligor, any other person on
24    behalf of the obligor, to the licensee or to a  third  party,
25    including any of the following types of charges:
26                  (A)  Interest, time price differential, and any
27             amount  payable  under a discount or other system of
28             additional charges.
29                  (B)  Service,   transaction,    activity,    or
30             carrying charge.
31                  (C)  Loan fee, points, finder's fee, or similar
32             charge.
33                  (D)  Fee  for  an  appraisal, investigation, or
34             credit report.
                            -19-               LRB9108880JSpc
 1                  (E)  Charges  or  premiums  for  credit   life,
 2             accident,  health,  or  loss  of  income  insurance,
 3             written  in  connection  with any credit transaction
 4             unless:
 5                       (a)  the   insurance   coverage   is   not
 6                  required by  the  licensee  and  this  fact  is
 7                  clearly  and conspicuously disclosed in writing
 8                  to the obligor; and
 9                       (b)  any obligor desiring  such  insurance
10                  coverage  gives  specific  dated and separately
11                  signed affirmative written indication  of  such
12                  desire  after  receiving  written disclosure to
13                  him or her of the cost of such insurance.
14                  (F)  Charges or premiums for insurance, written
15             in connection with any credit  transaction,  against
16             loss  of  or damage to property or against liability
17             arising out of the  ownership  or  use  of  property
18             unless  a clear, conspicuous, and specific statement
19             in writing is  furnished  by  the  licensee  to  the
20             obligor  setting  forth the cost of the insurance if
21             obtained from or through the  licensee  and  stating
22             that the obligor may choose the person through which
23             the insurance is to be obtained.
24                  (G)  Premium  or  other  charge  for  any other
25             guarantee  or  insurance  protecting  the   licensee
26             against the obligor's default or other credit loss.
27                  (H)  Any  charge  imposed  by  a  licensee upon
28             another licensee  for  purchasing  or  accepting  an
29             obligation  of an obligor if the obligor is required
30             to pay any part  of  that  charge  in  cash,  as  an
31             addition  to  the obligation, or as a deduction from
32             the proceeds of the obligation.
33        (15)  A late payment, delinquency, default, reinstatement
34    or other charge is not a finance charge if imposed for actual
                            -20-               LRB9108880JSpc
 1    unanticipated late payment,  delinquency,  default  or  other
 2    occurrence.
 3        (16)  A  licensee  who complies with the federal Truth in
 4    Lending Act, amendments thereto, and any  regulations  issued
 5    or  which  may be issued thereunder, shall be deemed to be in
 6    compliance with the provisions of this Section,  except  with
 7    respect  to  the  disclosure  in  item (14), which may be set
 8    forth in any manner.

 9        Section 135.  No real estate security.  A licensee  shall
10    not  take any security interest in real estate, except a lien
11    which results from obtaining a judgement.

12        Section 140.  Maximum term and amount. The loan  contract
13    shall  provide  for  repayment  of  the principal and charges
14    within 92 days from  the  date  of  the  loan  contract.   No
15    licensee   shall  furnish,  loan,  or  otherwise  provide  an
16    additional  sum  of  money   to   any   obligor   under   any
17    circumstances  during,  on,  or  within  24  hours  after the
18    expiration  of  the  loan  contract,  and   any   contractual
19    agreement  entered  into by the licensee and the obligor with
20    respect to the transfer of money in violation of this Section
21    shall be null and void.  No licensee shall permit an  obligor
22    to owe any licensee or any affiliate of a licensee (including
23    a  corporation  owned or managed by the licensee) or agent of
24    any licensee an  aggregate  principal  amount  of  more  than
25    $1,000 at any time for loans transacted pursuant to this Act.

26        Section 145.  Advertising.
27        (a)  Advertising  for loans transacted under this Act may
28    not be false, misleading,  or  deceptive.   Advertising  that
29    states  a  rate or amount of charge for a loan must state the
30    rate as an annual percentage rate. No licensee may  advertise
31    in  any  manner  so as to indicate or imply that his interest
                            -21-               LRB9108880JSpc
 1    rates or charges for loans  are  in  any  way  "recommended",
 2    "approved", "set" or "established" by the State government or
 3    by this Act.
 4        (b)  If  any  advertisement to which this Section applies
 5    states the amount of  any  installment  payment,  the  dollar
 6    amount  of  any finance charge, or the number of installments
 7    or the period of  repayment,  then  the  advertisement  shall
 8    state all of the following items:
 9             (1)  The amount of the loan.
10             (2)  The  number, amount, and due dates or period of
11        payments scheduled  to  repay  the  indebtedness  if  the
12        credit is extended.
13             (3)  The  rate of the finance charge expressed as an
14        annual percentage rate.

15        Section 150.  Incentives.  A licensee may not  pay  money
16    or  any other thing of value to any person as an incentive or
17    inducement to apply for a loan, to borrow money, or to  refer
18    potential borrowers to the licensee.

19        Section 155.  Redemption of repossessed vehicle; transfer
20    of  certificate  of  title.  Where the licensee repossesses a
21    motor vehicle that was used as collateral and which  is  used
22    primarily  for  the  obligor's  personal, family or household
23    purposes, the licensee shall be subject to  the  requirements
24    of  and  shall  transfer the certificate of title pursuant to
25    Section 3-114 of the Illinois Vehicle Code.

26        Section 160. Collections; disciplinary action.  Licensees
27    and their contractors shall be bound by the Collection Agency
28    Act and shall be liable for  disciplinary  action,  including
29    refusal  to  issue  a  license,  refusal  to renew a license,
30    revocation of  license,  suspension  of  license,  probation,
31    reprimand,  or any other disciplinary action the Director may
                            -22-               LRB9108880JSpc
 1    deem  proper,  including  fines  not  to  exceed  $1,000  per
 2    licensee per  complaint,  for  any  act  that  constitutes  a
 3    violation of Section 9 of the Collection Agency Act.

 4        Section 165. Collections; elderly or disabled persons.
 5        (a)  Any licensee who commits a violation of Section 9 of
 6    the Collection Agency Act when the victim of the violation is
 7    an  elderly  person  or  disabled person shall be guilty of a
 8    Class A misdemeanor.  With respect to this Section,  "elderly
 9    person" means a person 60 years of age or older and "disabled
10    person"  means a person who suffers from a permanent physical
11    or  mental  impairment  resulting   from   disease,   injury,
12    functional disorder, or congenital condition.
13        (b)  The  fine  for a Class A misdemeanor committed under
14    this Section shall be not more than $10,000.

15        Section  170.  Payday   lending;   threat   of   criminal
16    prosecution.   No  licensee  or  contractor  for any licensee
17    shall at any time communicate with any  obligor  to  threaten
18    them  with  criminal  prosecution,  criminal  conviction,  or
19    criminal  sentencing when the alleged criminal act upon which
20    the threat is predicated is the act of  writing  a  postdated
21    personal  check  which is not made good by the obligor at the
22    time and date written on the check.

23        Section 175. Penalties for violation.
24        (a)  Any person who engages in business as a  short  term
25    lender  without  the  license  required  by this Act shall be
26    guilty of a Class 4 felony.
27        (b) The obligor, prior to the expiration of 2 years after
28    the date of his or her last scheduled  payment,  may  recover
29    such  reasonable  attorney's  fees and court costs as a court
30    may assess against any licensee or lender for a violation  of
31    Section  10, 95, 110, 115, 120, 125, 130, 140, 145, 155, 160,
                            -23-               LRB9108880JSpc
 1    165, or 170.  The balance due under the  terms  of  the  loan
 2    contract  shall be reduced by the amount which the obligor is
 3    thus entitled to recover.  A bona fide error by a licensee in
 4    calculating charges or rebates is  not  a  violation  if  the
 5    licensee  corrects  the  error within a reasonable time after
 6    discovery.
 7        (c)  A license issued under this Act may  be  revoked  if
 8    the  licensee,  or  any  directors,  managers  of  a  limited
 9    liability  company, partners, or officer thereof is convicted
10    of a felony.
11        (d)  No provision of this Section imposing any  liability
12    shall apply to any act done or omitted in conformity with any
13    rule  or  written  interpretation  thereof  by  the Director,
14    notwithstanding that after such act or omission has occurred,
15    such  rule  or  interpretation  is  amended,  rescinded,   or
16    determined  by  judicial or other authority to be invalid for
17    any reason.  All interpretations must be written  and  signed
18    by   the   Chief  Counsel  of  the  Department  of  Financial
19    Institutions and approved by the Director.

20        Section 180.  Cease and desist.
21        (a)  The Director may issue a cease and desist  order  to
22    any  licensee,  or  other  person  doing business without the
23    required license, when in the opinion of  the  Director,  the
24    licensee,  or  other  person,  is  violating  or  is about to
25    violate any provision of this Act or any rule or  requirement
26    imposed in writing by the Director as a condition of granting
27    any authorization permitted by this Act.
28        (b)  The  Director  may  issue  a  cease and desist order
29    prior to a hearing.
30        (c)  The Director  shall  serve  notice  of  his  or  her
31    action,  designated as a cease and desist order made pursuant
32    to this Section, including a statement of the reasons for the
33    action,  either  personally  or  by  certified  mail,  return
                            -24-               LRB9108880JSpc
 1    receipt requested.  Service by certified mail shall be deemed
 2    completed when the notice is deposited in the U.S. mail.
 3        (d)  Within 15 days of service of the  cease  and  desist
 4    order,  the licensee or other person may request, in writing,
 5    a hearing.
 6        (e)  The Director shall schedule a hearing within 30 days
 7    after the request for a hearing unless otherwise agreed to by
 8    the parties.
 9        (f)  The Director shall have the authority  to  prescribe
10    rules for the administration of this Section.
11        (g)  If  it  is  determined  that  the  Director  had the
12    authority to issue the cease and desist order, he or she  may
13    issue  such orders as may be reasonably necessary to correct,
14    eliminate, or remedy such conduct.
15        (h)  The powers vested in the Director  by  this  Section
16    are  additional  to  any  and  all  other powers and remedies
17    vested in the Director by law, and nothing  in  this  Section
18    shall  be  construed  as  requiring  that  the Director shall
19    employ the power conferred in this Section instead of or as a
20    condition precedent to the exercise of  any  other  power  or
21    remedy vested in the Director.
22        (i)  The cost for the administrative hearing shall be set
23    by rule.

24        Section 185.  Civil action.  A claim of violation of this
25    Act may be asserted in a civil action.

26        Section  190.   Scope  of Act. This Act does not apply to
27    licensees under the  Consumer  Installment  Loan  Act  making
28    loans  of  more  than  $1,000 of any duration or loans of any
29    amount with  a  term  of  93  days  or  longer,  any  person,
30    partnership,   association,  limited  liability  company,  or
31    corporation doing business under and as permitted by any  law
32    of  this  State  or  of  the United States relating to banks,
                            -25-               LRB9108880JSpc
 1    savings and  loan  associations,  savings  banks,  or  credit
 2    unions,  or  licensees under the Residential Mortgage License
 3    Act for residential mortgage loans made pursuant to that Act.
 4    This Act does not apply to business loans.

 5        Section 195.  Rules. The Director may  make  and  enforce
 6    such reasonable rules, orders, decisions, and findings as the
 7    execution  and  enforcement  of  the  provisions  of this Act
 8    require.  All rules  shall  be  printed  and  copies  thereof
 9    mailed to all licensees.

10        Section  200.   Judicial review. All final administrative
11    decisions of the  Director  hereunder  shall  be  subject  to
12    judicial   review   pursuant   to   the   provisions  of  the
13    Administrative   Review   Law,   and   all   amendments   and
14    modifications  thereof,  and  any  rules   adopted   pursuant
15    thereto.

16        Section  205.   Injunction;  civil  penalty; costs. If it
17    appears to the Director that  a  person  or  any  entity  has
18    committed  or  is  about to commit a violation of this Act, a
19    rule promulgated under this Act, or an order of the Director,
20    the Director may apply to the  circuit  court  for  an  order
21    enjoining  the  person or entity from violating or continuing
22    to violate this Act, the rule, or order and for injunctive or
23    other relief that the nature of the case may require and may,
24    in addition, request the court to assess a civil  penalty  up
25    to $1,000 along with costs and attorney's fees.

26        Section  210.   Severability.  The provisions of this Act
27    are severable under Section 1.31 of the Statute on Statutes.

28        Section 215.  Applicability.  This Act shall not apply to
29    any contract or transaction made before January 1, 2001.
                            -26-               LRB9108880JSpc
 1        Section 295.  The Financial Institutions Code is  amended
 2    by changing Section 8 as follows:

 3        (20 ILCS 1205/8) (from Ch. 17, par. 109)
 4        Sec.  8.  The  Director  shall  direct  and supervise all
 5    Department  administrative  and  technical   activities,   in
 6    addition  to  the  duties  imposed upon him elsewhere in this
 7    Code, and shall:
 8        (1)  Apply and carry out this Code and the laws  and  all
 9    rules adopted in pursuance thereof.
10        (2)  Appoint,  subject to the provisions of the Personnel
11    Code, such employees of the Department and such  experts  and
12    special   assistants   as  may  be  necessary  to  carry  out
13    effectively the provisions of this Code.
14        (3)  Foster   and   develop   programs   with   financial
15    institutions, for the best interests of  these  institutions,
16    their services and the people of the State of Illinois.
17        (4)  Attend  meetings  of  the Advisory Boards created by
18    laws relating to financial institutions.
19        (5)  Make   continuous    studies    and    report    his
20    recommendations  to  the  Governor for the improvement of the
21    Department.
22        (6)  Make an annual report  regarding  the  work  of  the
23    Department  and  such  special  reports  as  he  may consider
24    desirable to the Governor, or as the Governor may request.
25        (6.5)  Operate an electronic consumer complaint reception
26    service by telephone, computer, or any other means  that  the
27    Director  finds appropriate to receive and compile complaints
28    from consumers concerning the operations of  licensees  under
29    the Short-term Loan Act.
30        (7)  Perform  any other lawful acts which he may consider
31    necessary  or  desirable  to  carry  out  the  purposes   and
32    provisions of this Law.
33    (Source: Laws 1957, p. 369.)
                            -27-               LRB9108880JSpc
 1        Section   297.  The Consumer Fraud and Deceptive Business
 2    Practices Act is amended by changing Section 2E as follows:

 3        (815 ILCS 505/2E) (from Ch. 121 1/2, par. 262E)
 4        Sec. 2E.  Any person who  is  regularly  engaged  in  the
 5    business  of providing or furnishing merchandise to consumers
 6    or in making loans to consumers and who has committed in  any
 7    calendar  year  3  or  more  violations, as determined in any
 8    civil or criminal proceeding, of the "Consumer Finance  Act";
 9    the "Consumer Installment Loan Act,"; the "Retail Installment
10    Sales Act,"; the "Motor Vehicle Retail Installment Sales Act,
11    the  Interest  Act,  the  Illinois  Wage  Assignment Act, the
12    Short-term Loan Act,"; "An Act to revise the law in  relation
13    to  the  rate  of interest and to repeal certain acts therein
14    named", approved May 24, 1879, as amended; "An Act to promote
15    the welfare of wage-earners by regulating the  assignment  of
16    wages,  and prescribing a penalty for the violation thereof",
17    approved July 1, 1935, as amended; or Part 8 of  Article  XII
18    of  the  Code  of Civil Procedure, as amended, or of any 2 or
19    more of those Acts, is guilty of an unlawful practice  within
20    the  meaning  of  this Act. Nothing in this Section prohibits
21    the prosecution of a person under the Acts  specified  herein
22    as well as under this Act.
23    (Source: P.A. 82-783.)

24        Section  299.   Effective  date.   This  Act takes effect
25    January 1, 2001.

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