Public Act 102-0298
 
SB0669 EnrolledLRB102 15407 SPS 20770 b

    AN ACT concerning regulation.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The Debt Settlement Consumer Protection Act is
amended by changing Sections 10, 105, 115, 125, and 145 as
follows:
 
    (225 ILCS 429/10)
    Sec. 10. Definitions. As used in this Act:
    "Consumer" means any person who purchases or contracts for
the purchase of debt settlement services or a student loan
borrower.
    "Consumer settlement account" means any account or other
means or device in which payments, deposits, or other
transfers from a consumer are arranged, held, or transferred
by or to a debt settlement provider for the accumulation of the
consumer's funds in anticipation of proffering an adjustment
or settlement of a debt or obligation of the consumer to a
creditor on behalf of the consumer.
    "Debt settlement provider" means: (1) any person or entity
engaging in, or holding itself out as engaging in, the
business of providing debt settlement service in exchange for
any fee or compensation; (2) , or any person who solicits for or
acts on behalf of any person or entity engaging in, or holding
itself out as engaging in, the business of providing debt
settlement service in exchange for any fee or compensation;
(3) any person or entity engaging in, or holding itself out as
engaging in the business of student loan debt relief services
in exchange for any fee or compensation assessed against or
charged to a consumer; or (4) any person who solicits for or
acts on behalf of such person or entity engaging in or holding
itself out as engaging in, the business of student loan debt
relief services in exchange for any fee or compensation
assessed against or charged to a consumer. "Debt settlement
provider" does not include:
        (1) attorneys licensed, or otherwise authorized, to
    practice in Illinois who are engaged in the practice of
    law;
        (2) escrow agents, accountants, broker dealers in
    securities, or investment advisors in securities, when
    acting in the ordinary practice of their professions and
    through the entity used in the ordinary practice of their
    profession;
        (3) any bank, agent of a bank, operating subsidiary of
    a bank, affiliate of a bank, trust company, savings and
    loan association, savings bank, credit union, crop credit
    association, development credit corporation, industrial
    development corporation, title insurance company, title
    insurance agent, independent escrowee or insurance company
    operating or organized under the laws of a state or the
    United States, or any other person authorized to make
    loans under State law while acting in the ordinary
    practice of that business;
        (4) any person who performs credit services for his or
    her employer while receiving a regular salary or wage when
    the employer is not engaged in the business of offering or
    providing debt settlement service;
        (5) a collection agency licensed pursuant to the
    Collection Agency Act that is collecting a debt on its own
    behalf or on behalf of a third party;
        (6) an organization that is described in Section
    501(c)(3) and subject to Section 501(q) of Title 26 of the
    United States Code and exempt from tax under Section
    501(a) of Title 26 of the United States Code and governed
    by the Debt Management Service Act;
        (7) public officers while acting in their official
    capacities and persons acting under court order;
        (8) any person while performing services incidental to
    the dissolution, winding up, or liquidating of a
    partnership, corporation, or other business enterprise; or
        (9) persons licensed under the Real Estate License Act
    of 2000 when acting in the ordinary practice of their
    profession and not holding themselves out as debt
    settlement providers; or .
        (10) any institution of higher education as defined in
    the Higher Education Act of 1965, 20 U.S.C. 1001.
    "Debt settlement service" means:
        (1) offering to provide advice or service, or acting
    as an intermediary between or on behalf of a consumer and
    one or more of a consumer's creditors, where the primary
    purpose of the advice, service, or action is to obtain a
    settlement, adjustment, or satisfaction of the consumer's
    unsecured debt to a creditor in an amount less than the
    full amount of the principal amount of the debt or in an
    amount less than the current outstanding balance of the
    debt; or
        (2) offering to provide services related to or
    providing services advising, encouraging, assisting, or
    counseling a consumer to accumulate funds for the primary
    purpose of proposing or obtaining or seeking to obtain a
    settlement, adjustment, or satisfaction of the consumer's
    unsecured debt to a creditor in an amount less than the
    full amount of the principal amount of the debt or in an
    amount less than the current outstanding balance of the
    debt; or .
        (3) student loan debt relief.
    "Debt settlement service" does not include (A) the
services of attorneys licensed, or otherwise authorized, to
practice in Illinois who are engaged in the practice of law, or
(B) debt management service as defined in the Debt Management
Service Act, (C) the services of a student loan servicer, as
defined in the Student Loan Servicing Rights Act, or (D) the
services of any other originator, guarantor, or servicer of
federal education loans or private education loans.
    "Enrollment or set up fee" means any fee, obligation, or
compensation paid or to be paid by the consumer to a debt
settlement provider in consideration of or in connection with
establishing a contract or other agreement with a consumer
related to the provision of debt settlement service.
    "Federal education loan" means any loan made, guaranteed,
or insured under Title IV of the federal Higher Education Act
of 1965.
    "Maintenance fee" means any fee, obligation, or
compensation paid or to be paid by the consumer on a periodic
basis to a debt settlement provider in consideration of
maintaining the relationship and services to be provided by a
debt settlement provider in accordance with a contract with a
consumer related to the provision of debt settlement service.
    "Principal amount of the debt" means the total amount or
outstanding balance owed by a consumer to one or more
creditors for a debt that is included in a contract for debt
settlement service at the time when the consumer enters into a
contract for debt settlement service.
    "Savings" means the difference between the principal
amount of the debt and the amount paid by the debt settlement
provider to the creditor or negotiated by the debt settlement
provider and paid by the consumer to the creditor pursuant to a
settlement negotiated by the debt settlement provider on
behalf of the consumer as full and complete satisfaction of
the creditor's claim with regard to that debt.
    "Secretary" means the Secretary of Financial and
Professional Regulation.
    "Settlement fee" means any fee, obligation, or
compensation paid or to be paid by the consumer to a debt
settlement provider in consideration of or in connection with
a completed agreement or other arrangement on the part of a
creditor to accept less than the principal amount of the debt
as satisfaction of the creditor's claim against the consumer.
    "Student loan borrower" means a person who has received or
agreed to pay a student loan for his or her own educational
expenses; a parent, grandparent, or other family member who
has received or agreed to pay a student loan for a family
member receiving the education; or any co-signer who has
agreed to share responsibility for repaying a student loan
with the person receiving the education.
    "Student loan debt relief" means, in exchange for any fee
or compensation assessed against or charged to a student loan
borrower, offering to provide advice or service, or acting as
an intermediary between or on behalf of a consumer and the
United States Department of Education or any other originator
or guarantor of federal education loans or one or more of the
servicers of a student loan borrower's federal education loan,
where the primary purpose of the advice, service, or action is
to (1) negotiate, arrange, or obtain a settlement, adjustment,
discharge, or satisfaction of the student loan borrower's
federal education loan debt in an amount less than the full
amount of the principal amount of the debt, a reduction or
alteration to the interest rate, a reduction or alteration in
the amount of monthly payment or fees owed, or in an amount
less than the current outstanding balance of the debt, (2)
enroll the student loan borrower in a repayment plan,
forbearance, or deferment of his or her federal education loan
debt, (3) apply for consolidation or consolidate the student
loan borrower's federal education loans, or (4) offer to
provide any other services related to altering the terms of a
student loan borrower's federal education loan debt,
including, but not limited to, a reduction in the amount of
interest, the principal balance, or the amount of monthly
payment or fees owed.
(Source: P.A. 96-1420, eff. 8-3-10.)
 
    (225 ILCS 429/105)
    Sec. 105. Advertising and marketing practices.
    (a) A debt settlement provider shall not represent,
expressly or by implication, any results or outcomes of its
debt settlement services in any advertising, marketing, or
other communication to consumers unless the debt settlement
provider possesses substantiation for such representation at
the time such representation is made.
    (b) A debt settlement provider shall not, expressly or by
implication, make any unfair or deceptive representations, or
any omissions of material facts, in any of its advertising or
marketing communications concerning debt settlement services.
    (c) All advertising and marketing communications
concerning debt settlement services shall disclose the
following material information clearly and conspicuously:
        "Debt settlement services are not appropriate for
    everyone. Failure to pay your monthly bills in a timely
    manner will result in increased balances and will harm
    your credit rating. Not all creditors will agree to reduce
    principal balance, and they may pursue collection,
    including lawsuits."
    (d) All advertising and marketing communications
concerning student loan debt relief services shall disclose
the following material information clearly and conspicuously,
along with the legally registered name of the company:
        "[Name of company] is a private company, and is not
    affiliated with the Department of Education or any other
    academic entity or governmental agency. [Name of company]
    is not a lender, guarantor, or servicer of federal student
    loans. You can apply for consolidation and other repayment
    plans without paid assistance through the United States
    Department of Education. More information is available
    through the Department's website or your federal student
    loan servicer. You can find out who your servicer is
    through the Department of Education.".
(Source: P.A. 96-1420, eff. 8-3-10.)
 
    (225 ILCS 429/115)
    Sec. 115. Required pre-sale consumer disclosures and
warnings.
    (a) Before the consumer signs a contract, the debt
settlement provider shall provide an oral and written notice
to the consumer that clearly and conspicuously discloses all
of the following:
        (1) Debt settlement services may not be suitable for
    all consumers.
        (2) Using a debt settlement service likely will harm
    the consumer's credit history and credit score.
        (3) Using a debt settlement service does not stop
    creditor collection activity, including creditor lawsuits
    and garnishments.
        (4) Not all creditors will accept a reduction in the
    balance, interest rate, or fees a consumer owes.
        (5) The consumer should inquire about other means of
    dealing with debt, including, but not limited to,
    nonprofit credit counseling and bankruptcy.
        (6) The consumer remains obligated to make periodic or
    scheduled payments to creditors while participating in a
    debt settlement plan, and that the debt settlement
    provider will not make any periodic or scheduled payments
    to creditors on behalf of the consumer.
        (7) The failure to make periodic or scheduled payments
    to a creditor is likely to:
            (A) harm the consumer's credit history, credit
        rating, or credit score;
            (B) lead the creditor to increase lawful
        collection activity, including litigation, garnishment
        of the consumer's wages, and judgment liens on the
        consumer's property; and
            (C) lead to the imposition by the creditor of
        interest charges, late fees, and other penalty fees,
        increasing the principal amount of the debt.
        (8) The amount of time estimated to be necessary to
    achieve the represented results.
        (9) The estimated amount of money or the percentage of
    debt the consumer must accumulate before a settlement
    offer will be made to each of the consumer's creditors.
        (10) For student loan debt relief services, before the
    student loan borrower signs a contract, the provider shall
    provide an oral and written notice to the student loan
    borrower that clearly and conspicuously discloses the
    following:
            "[Name of company] is a private company, and is
        not affiliated with the Department of Education or any
        other academic entity or governmental agency. [Name of
        company] is not a lender, guarantor, or servicer of
        federal student loans. You can apply for consolidation
        and other repayment plans without paid assistance
        through the United States Department of Education.
        More information is available through the Department's
        website or your federal student loan servicer. You can
        find out who your servicer is through the Department
        of Education.".
    (b) The consumer shall sign and date an acknowledgment
form entitled "Consumer Notice and Rights Form" that states:
"I, the debtor, have received from the debt settlement
provider a copy of the form entitled "Consumer Notice and
Rights Form"." The debt settlement provider or its
representative shall also sign and date the acknowledgment
form, which includes the name and address of the debt
settlement services provider. The acknowledgment form shall be
in duplicate and incorporated into the "Consumer Notice and
Rights Form". The original acknowledgment form shall be
retained by the debt settlement provider, and the duplicate
copy shall be retained within the form by the consumer.
    If the acknowledgment form is in electronic form, then it
shall contain the consumer disclosures required by Section
101(c) of the federal Electronic Signatures in Global and
National Commerce Act.
    (c) Except as provided in subsection (d), the The
requirements of this Section are satisfied if the provider
provides the following warning verbatim, both orally and in
writing, with the caption "CONSUMER NOTICE AND RIGHTS FORM" in
at least 28-point font and the remaining portion in at least
14-point font, to a consumer before the consumer signs a
contract for the debt settlement provider's services:
 
"CONSUMER NOTICE AND RIGHTS FORM

 
CAUTION
    We CANNOT GUARANTEE that you successfully will reduce or
eliminate your debt.
    If you stop paying your creditors, there is a strong
likelihood some or all of the following may happen:
    - CREDITORS MAY STILL CONTACT YOU AND TRY TO COLLECT.
    - CREDITORS MAY STILL SUE YOU FOR THE MONEY YOU OWE.
    - YOUR WAGES OR BANK ACCOUNT MAY STILL BE GARNISHED.
    - YOUR CREDIT RATING AND CREDIT SCORE LIKELY WILL BE
HARMED.
    - NOT ALL CREDITORS WILL AGREE TO ACCEPT A BALANCE
REDUCTION.
    - YOU SHOULD CONSIDER ALL YOUR OPTIONS FOR ADDRESSING YOUR
DEBT, SUCH AS CREDIT COUNSELING AND BANKRUPTCY FILING.
    - THE AMOUNT OF MONEY YOU OWE MAY INCREASE DUE TO CREDITOR
IMPOSITION OF INTEREST CHARGES, LATE FEES, AND OTHER PENALTY
FEES.
    - EVEN IF WE DO SETTLE YOUR DEBT, YOU MAY STILL BE REQUIRED
TO PAY TAXES ON THE AMOUNT FORGIVEN.
 
YOUR RIGHT TO CANCEL
    If you sign a contract with a Debt Settlement Provider,
you have the right to cancel at any time and receive a full
refund of all unearned fees you have paid to the provider and
all funds placed in your settlement fund that have not been
paid to any creditors.
 
IF YOU ARE DISSATISFIED
OR YOU HAVE QUESTIONS
    If you are dissatisfied with a debt settlement provider or
have any questions, please bring it to the attention of the
Illinois Attorney General's Office and the Department of
Financial and Professional Regulation.
Attorney General Toll-Free Numbers:
    Carbondale (800) 243-0607
    Springfield (800) 243-0618
    Chicago (800) 386-5438
    Website for Department of Financial and Professional
Regulation: www.idfpr.com
I, the debtor, have received from the debt settlement provider
a copy of the form entitled Consumer Notice and Rights Form.".
    (d) All providers of student loan debt relief services
shall include the following disclosure:
        "[NAME OF COMPANY] IS A PRIVATE COMPANY, AND IS NOT
    AFFILIATED WITH THE DEPARTMENT OF EDUCATION OR ANY OTHER
    ACADEMIC ENTITY OR GOVERNMENTAL AGENCY. [NAME OF COMPANY]
    IS NOT A LENDER, GUARANTOR, OR SERVICER OF FEDERAL STUDENT
    LOANS. YOU CAN APPLY FOR CONSOLIDATION AND OTHER REPAYMENT
    PLANS WITHOUT PAID ASSISTANCE THROUGH THE UNITED STATES
    DEPARTMENT OF EDUCATION. MORE INFORMATION IS AVAILABLE
    THROUGH THE DEPARTMENT'S WEBSITE OR YOUR FEDERAL STUDENT
    LOAN SERVICER. YOU CAN FIND OUT WHO YOUR SERVICER IS
    THROUGH THE DEPARTMENT OF EDUCATION.".
(Source: P.A. 96-1420, eff. 8-3-10.)
 
    (225 ILCS 429/125)
    Sec. 125. Fees.
    (a) A debt settlement provider shall not charge fees of
any type or receive compensation from a consumer in a type,
amount, or timing other than fees or compensation permitted in
this Section.
    (b) A debt settlement provider shall not charge or receive
from a consumer any enrollment fee, set up fee, up front fee of
any kind, or any maintenance fee, except for a one-time
enrollment fee of no more than $50.
    (c) A debt settlement provider may charge a settlement
fee, which shall not exceed an amount greater than 15% of the
savings. If the amount paid by the debt settlement provider to
the creditor or negotiated by the debt settlement provider and
paid by the consumer to the creditor pursuant to a settlement
negotiated by the debt settlement provider on behalf of the
consumer as full and complete satisfaction of the creditor's
claim with regard to that debt is greater than the principal
amount of the debt, then the debt settlement provider shall
not be entitled to any settlement fee.
    (d) A debt settlement provider shall not collect any
settlement fee from a consumer until a creditor enters into a
legally enforceable agreement to accept funds in a specific
dollar amount as full and complete satisfaction of the
creditor's claim with regard to that debt and those funds are
provided by the debt settlement provider on behalf of the
consumer or are provided directly by the consumer to the
creditor pursuant to a settlement negotiated by the debt
settlement provider.
    (e) Any fees charged to a student loan borrower in
exchange for student loan debt relief shall comply with this
Section.
(Source: P.A. 96-1420, eff. 8-3-10; 97-333, eff. 8-12-11.)
 
    (225 ILCS 429/145)
    Sec. 145. Prohibited practices. A debt settlement provider
shall not do any of the following:
        (1) Charge or collect from a consumer any fee not
    permitted by, in an amount in excess of the maximum amount
    permitted by, or at a time earlier than permitted by
    Section 125 of this Act.
        (2) Advise or represent, expressly or by implication,
    that consumers should stop making payments to their
    creditors, lenders, loan servicers, or loan guarantors or
    government entities.
        (3) Advise or represent, expressly or by implication,
    that consumers should stop communicating with their
    creditors, lenders, loan servicers, loan guarantors, or
    attorneys or government entities.
        (4) Change the mailing address on any of a consumer's
    creditor's statements.
        (5) Make loans or offer credit or solicit or accept
    any note, mortgage, or negotiable instrument other than a
    check signed by the consumer and dated no later than the
    date of signature.
        (6) Take any confession of judgment or power of
    attorney to confess judgment against the consumer or
    appear as the consumer or on behalf of the consumer in any
    judicial proceedings.
        (7) Take any release or waiver of any obligation to be
    performed on the part of the debt settlement provider or
    any right of the consumer.
        (8) Advertise, display, distribute, broadcast, or
    televise services or permit services to be displayed,
    advertised, distributed, broadcasted, or televised, in any
    manner whatsoever, that contains any false, misleading, or
    deceptive statements or representations with regard to any
    matter, including services to be performed, the fees to be
    charged by the debt settlement provider, or the effect
    those services will have on a consumer's credit rating or
    on creditor collection efforts.
        (9) Receive any cash, fee, gift, bonus, premium,
    reward, or other compensation from any person other than
    the consumer explicitly for the provision of debt
    settlement service to that consumer.
        (10) Offer or provide gifts or bonuses to consumers
    for signing a debt settlement service contract or for
    referring another potential customer or customer.
        (11) Disclose to anyone the name or any personal
    information of a consumer for whom the debt settlement
    provider has provided or is providing debt settlement
    service other than to a consumer's own creditors or the
    debt settlement provider's agents, affiliates, or
    contractors for the purpose of providing debt settlement
    service without the prior consent of the consumer.
        (12) Enter into a contract with a consumer without
    first providing the disclosures and financial analysis and
    making the determinations required by this Section.
        (13) Misrepresent any material fact, make a material
    omission, or make a false promise directed to one or more
    consumers in connection with the solicitation, offering,
    contracting, or provision of debt settlement service.
        (14) Violate the provisions of applicable do not call
    statutes.
        (15) Purchase debts or engage in the practice or
    business of debt collection.
        (16) Include in a debt settlement agreement any
    secured debt.
        (17) Employ an unfair, unconscionable, or deceptive
    act or practice, including the knowing omission of any
    material information.
        (18) Engage in any practice that prohibits or limits
    the consumer or any creditor from communication directly
    with one another.
        (19) Represent or imply to a person participating in
    or considering debt settlement that purchase of any
    ancillary goods or services is required.
        (20) Access or obtain a consumer's or student loan
    borrower's federal student aid information in violation of
    federal law.
(Source: P.A. 96-1420, eff. 8-3-10.)
 
    Section 99. Effective date. This Act takes effect upon
becoming law.