HB5833 94TH GENERAL ASSEMBLY

LRB094 21348 MJR 59696 b

94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
HB5833

Introduced 09/21/06, by Rep. Edward J. Acevedo

SYNOPSIS AS INTRODUCED:

205 ILCS 670/12.10 new

Amends the Consumer Installment Loan Act. Provides provisions concerning consumer protections, prohibited acts, required disclosures, and members of the military for loans under the Act with a finance charge exceeding an annual percentage rate of 36% for which the lender accepts any of the following as security for the loan: (1) one or more checks dated on the date written with an agreement to hold them for a period of days before deposit or presentment or one or more checks dated subsequent to the date written with an agreement to hold them for deposit; (2) one or more authorizations to debit a consumer's bank account; or (3) an interest in a consumer's wages, including, but not limited to, a wage assignment.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning regulation.

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

Section 5. The Consumer Installment Loan Act is amended by adding Section 12.10 as follows:

(205 ILCS 670/12.10 new)

Sec. 12.10. Consumer loans; Consumer protections; prohibited acts; required disclosures; members of the military.

(a) This Section applies to any loan under this Act with a finance charge exceeding an annual percentage rate of 36% for which the lender accepts any of the following as security for the loan:

(1) One or more checks dated on the date written with an agreement to hold them for a period of days before deposit or presentment or one or more checks dated subsequent to the date written with an agreement to hold them for deposit.

(2) One or more authorizations to debit a consumer's bank account.

(3) An interest in a consumer's wages, including, but not limited to, a wage assignment.

(b) A lender making a loan under this Section must use a consumer reporting service database certified under Article 2 of the Payday Loan Reform Act to verify that the loan would be allowed under the Payday Loan Reform Act. No loan under this Section may be made if the consumer has an existing loan made under the Payday Loan Reform Act, if the consumer is in a repayment plan under the Payday Loan Reform Act, or if the consumer is in a cooling-off period under the Payday Loan Reform Act, and no loan under this Section may be used to pay off an existing loan made under the Payday Loan Reform Act.

(c) A lender making a loan under this Section must itemize all fees and interest on the loan document. Other than a one-time, non-sufficient funds fee of no more than $25, no additional fees or penalties may be charged. The database fee incurred when a loan is executed may not be passed on to the consumer. Interest on the loan must stop accruing at the date of default.

(d) A lender making a loan under this Section may not do any of the following:

(1) Threaten to use or use the criminal process in this or any other state to collect on the loan.

(2) Include any of the following provisions in the loan documents:

(A) A confession of judgment clause.

(B) A waiver of the right to a jury trial, if applicable, in any action brought by or against the consumer, unless the waiver is included in an allowed arbitration clause.

(C) A mandatory arbitration clause that is oppressive, unfair, unconscionable, or substantially in derogation of the rights of consumers.

(D) A provision in which the consumer agrees not to assert any claim or defense arising out of the contract.

(3) Take any security interest in real estate.

(4) Charge for or attempt to collect attorney's fees, court costs, or arbitration costs incurred in connection with the collection of a loan under this Section.

(e) Before a consumer loan is made, a lender shall deliver to the consumer a pamphlet prepared by the Secretary that does all of the following:

(1) Explains, in simple English and Spanish, all of the consumer's rights and responsibilities in a consumer loan transaction.

(2) Includes a toll-free number to the Secretary's office to handle concerns or provide information about whether a lender is licensed, whether complaints have been filed with the Secretary, and the resolution of those complaints.

(3) Provides information regarding the availability of debt management services.

(f) A lender making a loan under this Section shall provide consumers with a written agreement that may be kept by the consumer. The written agreement must include the following information in English and in the language in which the loan was negotiated:

(1) the name and address of the lender making the consumer loan and the name and title of the individual employee who signs the agreement on behalf of the licensee;

(2) disclosures required by the federal Truth in Lending Act;

(3) a clear description of the consumer's payment obligations under the loan;

(4) the following statement, in at least 14-point bold typeface: "You cannot be prosecuted in criminal court to collect this loan.". The information required to be disclosed under this subdivision (4) must be conspicuously disclosed in the loan document and must be located immediately preceding the signature of the consumer; and

(5) the following statement, in at least 14-point bold typeface: "WARNING: This loan is not intended to meet long-term financial needs. This loan should be used only to meet short-term cash needs. The cost of your loan may be higher than loans offered by other lending institutions. This loan is regulated by the Department of Financial and Professional Regulation.".

(g) The following shall apply to loans under this Section made to members of the military:

(1) A lender may not garnish the wages or salaries of a consumer who is a member of the military.

(2) In addition to any rights and obligations provided under the federal Servicemembers Civil Relief Act, a lender shall suspend and defer collection activity against a consumer who is a member of the military and who has been deployed to a combat or combat-support posting for the duration of the deployment.

(3) A lender may not knowingly contact the military chain of command of a consumer who is a member of the military in an effort to collect on a consumer loan.

(4) A lender must honor the terms of any repayment plan that they have entered into with a consumer, including a repayment agreement negotiated through military counselors or third-party credit counselors.