Bill Text: IL HB3461 | 2023-2024 | 103rd General Assembly | Engrossed

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Bill Title: Amends the Credit Services Organizations Act. Changes the name of the Act to the Credit Repair Organizations Act. Provides that the Director of Financial and Professional Regulation shall oversee the activities of credit repair organizations and compliance with the Act. Provides that a credit repair organization shall submit a report every 6 months to the Director containing specified information. Provides that the Director may adopt rules necessary to administer the Act. Makes changes in provisions concerning contracts between a buyer and a credit repair organization; registration of credit repair organizations; violations of the Act; and remedies. Repeals provisions concerning surety bonds. Defines terms. Repeals provisions concerning surety bonds. Amends the Consumer Fraud and Deceptive Business Practices Act to make conforming changes. Effective January 1, 2024.

Spectrum: Partisan Bill (Democrat 9-0)

Status: (Introduced) 2023-10-31 - Added Co-Sponsor Rep. Will Guzzardi [HB3461 Detail]

Download: Illinois-2023-HB3461-Engrossed.html

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AN ACT concerning business.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Consumer Fraud and Deceptive Business
Practices Act is amended by changing Section 2Z as follows:
(815 ILCS 505/2Z) (from Ch. 121 1/2, par. 262Z)
Sec. 2Z. Violations of other Acts. Any person who
knowingly violates the Automotive Repair Act, the Automotive
Collision Repair Act, the Home Repair and Remodeling Act, the
Dance Studio Act, the Physical Fitness Services Act, the
Hearing Instrument Consumer Protection Act, the Illinois Union
Label Act, the Installment Sales Contract Act, the Job
Referral and Job Listing Services Consumer Protection Act, the
Travel Promotion Consumer Protection Act, the Credit Repair
Services Organizations Act, the Automatic Telephone Dialers
Act, the Pay-Per-Call Services Consumer Protection Act, the
Telephone Solicitations Act, the Illinois Funeral or Burial
Funds Act, the Cemetery Oversight Act, the Cemetery Care Act,
the Safe and Hygienic Bed Act, the Illinois Pre-Need Cemetery
Sales Act, the High Risk Home Loan Act, the Payday Loan Reform
Act, the Predatory Loan Prevention Act, the Mortgage Rescue
Fraud Act, subsection (a) or (b) of Section 3-10 of the
Cigarette Tax Act, subsection (a) or (b) of Section 3-10 of the

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Cigarette Use Tax Act, the Electronic Mail Act, the Internet
Caller Identification Act, paragraph (6) of subsection (k) of
Section 6-305 of the Illinois Vehicle Code, Section 11-1431,
18d-115, 18d-120, 18d-125, 18d-135, 18d-150, or 18d-153 of the
Illinois Vehicle Code, Article 3 of the Residential Real
Property Disclosure Act, the Automatic Contract Renewal Act,
the Reverse Mortgage Act, Section 25 of the Youth Mental
Health Protection Act, the Personal Information Protection
Act, or the Student Online Personal Protection Act commits an
unlawful practice within the meaning of this Act.
(Source: P.A. 100-315, eff. 8-24-17; 100-416, eff. 1-1-18;
100-863, eff. 8-14-18; 101-658, eff. 3-23-21.)
Section 10. The Credit Services Organizations Act is
amended by changing Sections 1, 3, 5, 6, 7, 8, 9, 11, 14, and
15, and by adding Sections 5.5 and 17 as follows:
(815 ILCS 605/1) (from Ch. 121 1/2, par. 2101)
Sec. 1. This Act shall be known and may be cited as the
"Credit Repair Services Organizations Act".
(Source: P.A. 85-1384.)
(815 ILCS 605/3) (from Ch. 121 1/2, par. 2103)
Sec. 3. As used in this Act:
(a) "Buyer" means an individual who is solicited to
purchase or who purchases the services of a credit repair

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services organization.
(b) "Consumer reporting agency" has the meaning assigned
by Section 603(f), Fair Credit Reporting Act (15 U.S.C.
Section 1681a(f)).
(c) "Extension of Credit" means the right to defer payment
of a debt or to incur a debt and defer its payment offered or
granted primarily for personal, family, or household purposes.
(d) "Credit Repair Services Organization" means a person
who, with respect to the extension of credit by others and in
return for the payment of money or other valuable
consideration, provides, or represents that the person can or
will provide, any of the following services:
(i) improving a buyer's credit record, history, or
rating;
(ii) obtaining an extension of credit for a buyer; or
(iii) providing advice or assistance to a buyer with
regard to either subsection (i) or (ii).
"Credit Repair Services Organization" does not include any
of the following:
(i) a person authorized to make loans or extensions of
credit under the laws of this State or the United States
who is subject to regulation and supervision by this State
or the United States, or a lender approved by the United
States Secretary of Housing and Urban Development for
participation in a mortgage insurance program under the
National Housing Act (12 U.S.C. Section 1701 et seq.);

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(ii) a bank or savings and loan association whose
deposits or accounts are eligible for insurance by the
Federal Deposit Insurance Corporation or the Federal
Savings and Loan Insurance Corporation, or a subsidiary of
such a bank or savings and loan association;
(iii) a credit union doing business in this State;
(iv) a nonprofit organization exempt from taxation
under Section 501(c)(3) of the Internal Revenue Code of
1986, provided that such organization does not charge or
receive any money or other valuable consideration prior to
or upon the execution of a contract or other agreement
between the buyer and the nonprofit organization;
(v) a person licensed as a real estate broker by this
state if the person is acting within the course and scope
of that license;
(vi) an attorney licensed or otherwise authorized to
practice in this State if: a person licensed to practice
law in this State acting within the course and scope of the
person's practice as an attorney;
(1) the attorney's practice does not principally
involve services regulated by this Act, other than
litigation;
(2) the attorney does not have any relationship
with a credit repair organization that provides
services regulated by this Act; or
(3) any services provided by the attorney that are

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regulated by this Act and are incidental to the
primary purpose of the representation;
(vii) a broker-dealer registered with the Securities
and Exchange Commission or the Commodity Futures Trading
Commission acting within the course and scope of that
regulation;
(viii) a consumer reporting agency; and
(ix) a residential mortgage loan broker or banker who
is duly licensed under the Illinois Residential Mortgage
License Act of 1987.
(e) "Person" means an individual, corporation,
partnership, joint venture or any business entity.
(f) "Consumer report" has the meaning assigned by Section
1681a(d) of the Fair Credit Reporting Act (15 U.S.C. Section
1681a(d)).
(g) "Contract start date" means the date the consumer
entered into a contract with a credit repair organization.
(h) "Director" means the Director of Financial and
Professional Regulation.
(i) "Permanent change" means any removal of negative items
from a consumer's credit report or any change that turns a
negative item on a consumer's credit report into a neutral or
positive item change to the consumer's credit report that
remains in place for at least 6 months.
(Source: P.A. 88-120.)

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(815 ILCS 605/5) (from Ch. 121 1/2, par. 2105)
Sec. 5. No credit repair services organization, its
salespersons, agents or representatives, or any independent
contractor who sells or attempts to sell the services of a
credit repair services organization shall:
(1) Charge or receive any money or other valuable
consideration prior to:
(A) the full and complete achievement of a permanent
change; and
(B) demonstrating achievement of the permanent change
by providing the buyer with:
(i) a copy of the buyer's credit report pulled on
or before the contract start date;
(ii) a second copy of the buyer's credit report,
pulled after the contract start date, that shows the
change for which the buyer is to be charged if the
change persists for 6 months; and
(iii) a third copy of the buyer's credit report,
pulled 6 months after the issuance of the copy
described in item (ii), that shows the persistence of
the change described in item (ii) performance of the
services the credit services organization has agreed
to perform for or on behalf of the buyer, unless the
credit services organization has, in conformity with
Section 10 of this Act, obtained a surety bond issued
by a surety company licensed to do business in this

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State. If a credit services organization is in
compliance with this subsection the salespersons,
agents, and representatives who sell the services of
such organization shall not be required to obtain the
surety bond provided for by this Act.
(1.5) Deny a buyer's request for a copy of all
communications contemporaneously sent to a credit reporting
agency related to the achievement of a specified permanent
change.
(2) Charge or receive any money or other valuable
consideration solely for the referral of a buyer to a retail
seller who will or may extend credit to the buyer if such
extension of credit is in substantially the same terms as
those available to the general public.
(2.5) Pay, offer, or receive any money or other variable
consideration for the referral of a buyer to or from the credit
repair organization.
(2.6) Represent temporary changes to a buyer's credit
report, as described in paragraph (4) of subsection (b) of
Section 5.5 as successful results in advertisements.
(3) Make, or advise any buyer to make, any statement that
is untrue or misleading, or that should be known by the
exercise of reasonable care to be untrue or misleading, with
respect to a buyer's credit reporting agency or to any person
who has extended credit to a buyer or to whom a buyer has made
application for an extension of credit.

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(4) Make or use any untrue or misleading representations
in the offer or sale of the services of a credit repair
services organization or engage, directly or indirectly, in
any act, practice or course of business intended to defraud or
deceive a buyer in connection with the office or sale of such
services; including but not limited to: the amount or type of
credit a consumer can expect to receive as a result of the
performance of the services offered; the qualifications,
training or experience of its personnel; or the amount of
credit improvement the consumer can expect to receive as a
result of the services.
(Source: P.A. 85-1384.)
(815 ILCS 605/5.5 new)
Sec. 5.5. Duties of the Director.
(a) The Director shall oversee the activities of credit
repair organizations and compliance with this Act.
(b) A credit repair organization shall submit a report
every 6 months to the Director, in a form and manner as the
Director may prescribe, containing the following information:
(1) the number of buyers under contract with the
credit repair organization during the reporting term;
(2) the number of credit report items questioned for
each buyer under contract through a dispute, a complaint,
or some other documented action by the credit repair
organization since the contract start date;

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(3) the number of items successfully removed from each
buyer's credit report;
(4) the number of items reinserted in a buyer's credit
reports within 6 months;
(5) the number of items that stayed off a buyer's
credit reports for 6 or more months; and
(6) any additional information as determined by the
Director.
(c) A credit repair organization shall file with the
Director, every 6 months, the statistical proof that confirms
the information used to demonstrate successful results in
advertisements, including, but not limited to, advertisements
sent by mail, posted on the Internet, printed in newspapers or
other publications, and sent electronically by text or e-mail.
(d) The Director shall routinely audit the accuracy of the
advertisements sent by credit services organizations.
(e) The Director shall issue an annual report to the
General Assembly, including a compilation of the statistical
proof received from credit repair organizations as described
in subsection (c) and an assessment of the quality of services
provided by credit repair organizations to consumers.
(815 ILCS 605/6) (from Ch. 121 1/2, par. 2106)
Sec. 6. Before the execution of a contract or other form of
agreement between a buyer and a credit repair services
organization or before the receipt by any such organization of

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money or other valuable consideration, whichever occurs first,
such organization shall provide the buyer with a statement, in
writing, containing the following:
(1) a complete and accurate statement of the buyer's
right to review any file on the buyer maintained by a
consumer reporting agency, as provided under the Fair
Credit Reporting Act (15 U.S.C. Section 1681 et seq.);
(2) a statement that the buyer may review his consumer
reporting agency file at no charge if a request therefor
is made to such agency within 30 days after receipt by the
buyer of notice that credit has been denied and if such
request is not made within the allotted time, the
approximate charge to the buyer for such review;
(3) a complete and accurate statement of the buyer's
right to dispute the completeness or accuracy of any item
contained in any file on the buyer maintained by a
consumer reporting agency;
(4) (blank); a complete and detailed description of
the services to be performed by the credit services
organization and the total cost to the buyer for such
services;
(5) a statement notifying the buyer that: (i) credit
reporting agencies have no obligation to remove
information from credit reports unless the information is
erroneous, cannot be verified or is more than 7 years old;
and (ii) credit reporting agencies have no obligation to

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remove information concerning bankruptcies unless such
information is more than 10 years old;
(6) (blank); and a statement asserting the buyer's
right to proceed against the surety bond required under
Section 10; and
(7) (blank). the name and business address of any such
surety company together with the name and the number of
the account.
The credit repair services organization shall maintain on
file, for a period of 2 years after the date the statement is
provided, an exact copy of the statement, signed by the buyer,
acknowledging receipt of the statement.
(Source: P.A. 91-357, eff. 7-29-99.)
(815 ILCS 605/7) (from Ch. 121 1/2, par. 2107)
Sec. 7. (a) Each contract between the buyer and a credit
repair services organization for the purchase of the services
of the credit repair services organization shall be in
writing, dated, signed by the buyer, and shall include all of
the following:
(1) A complete and detailed description of the terms and
conditions of payment described in Section 5, whether to the
credit repair organization or to another person. a conspicuous
statement in boldfaced type, in immediate proximity to the
space reserved for the signature of the buyer, as follows:
"You, the buyer, may cancel this contract at any time

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before midnight of the third day after the date of the
transaction. See the attached notice of cancellation form for
an explanation of this right";
(2) A complete and detailed description of the
cancellation policy of the credit repair organization, that
shall include the following provisions: the terms and
conditions of payment, including the total of all payments to
be made by the buyer, whether to the credit services
organization or to another person;
(A) If a buyer seeks to stop using the services of a
credit repair organization, the buyer shall submit a
request to the credit repair organization to cancel the
contract. A credit repair organization shall allow
submission of a cancellation request electronically.
(B) A credit repair organization that has received a
request to cancel services for a buyer shall process the
cancellation within 15 days after the postmark of any
written request or of receipt of an electronic request,
and cease to conduct any additional work on behalf of the
buyer.
(C) Consumers whose cancellation requests are
processed and completed, remain obligated to pay for any
permanent change resulting from actions taken by the
credit repair organization during the contract term from
the contract start date through the date the cancellation
is processed.

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(3) A a full and detailed description of the services to be
performed by the credit repair services organization for the
buyer, including all guarantees and all promises of full or
partial refunds, and the estimated date by which the services
are to be performed or the estimated length of time for
performing the services. ; and
(4) The the address of the credit repair services
organization's principal place of business and the name and
address of its agent in the State authorized to receive
service of process.
(b) (Blank). The contract must have two easily detachable
copies of a notice of cancellation. The notice must be in
boldfaced type and in the following form:
"Notice of Cancellation"
"You may cancel this contract, without any penalty or
obligation, within three days after the date the contract is
signed.
If you cancel, any payment made by you under this contract
will be returned within 10 days after the date of receipt by
the seller of your cancellation notice.
To cancel this contract, mail or deliver a signed, dated
copy of this cancellation notice, or other written notice to:
(name of seller) at (address of seller) (place of
business) not later than midnight (date)
I hereby cancel this transaction."
.............................. .............................

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(date) (purchaser's signature)
(c) The credit repair services organization shall give to
the buyer a copy of the completed contract and all other
documents the credit repair services organization requires the
buyer to sign at the time they are signed.
(Source: P.A. 85-1384.)
(815 ILCS 605/8) (from Ch. 121 1/2, par. 2108)
Sec. 8. (a) Any contract for services which does not
comply with applicable provisions of this article shall be
void and unenforceable as contrary to public policy. Any
waiver by a buyer of the provisions of this Act shall be deemed
void and unenforceable by a credit services organization as
contrary to public policy. Any attempt by a credit repair
services organization to have a buyer waive rights granted by
this Act shall constitute a violation of this Act.
(b) The provisions of this Act shall apply to any person
who seeks to evade its application by any device, subterfuge,
or pretense, including, without limitation:
(1) instructing or suggesting that a buyer make
payments into an account controlled by a third party;
(2) using any agents, affiliates, or subsidiaries in
an attempt to avoid the application of the provisions of
this Act; or
(3) having any affiliation or other business
arrangement with an entity that is exempt from the

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provisions of this Act for the purpose of evading the
provisions of this Act.
(c) A violation of this Section shall constitute a
violation of this Act.
(Source: P.A. 85-1384.)
(815 ILCS 605/9) (from Ch. 121 1/2, par. 2109)
Sec. 9. (a) A credit repair services organization shall
file a registration statement with the Secretary of State
before conducting business in this State. The registration
statement shall contain:
(1) the name and address of the credit repair services
organization;
(2) the name and address of the registered agent
authorized to accept service of process on behalf of the
credit repair services organization;
(3) the name and address of any person who directly or
indirectly owns or controls 10 percent or more of the
outstanding shares of stock in the credit repair services
organization; and
(4) the name, numbers, and location of the surety
company issuing a surety bond maintained as required by
Section 10 of this Act.
(b) The registration statement must also contain either:
(1) a full and complete disclosure of any litigation
or unresolved complaint filed with a governmental

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authority of this State, any other state or the United
States relating to the operation of the credit repair
services organization; or
(2) a notarized statement that states that there has
been no litigation or unresolved complaint filed with a
governmental authority of this State, any other state or
the United States relating to the operation of the credit
repair services organization.
(c) The credit repair services organization shall update
such statement not later than the 90th day after the date on
which a change in the information required in the statement
occurs.
(d) Each credit repair services organization registering
under this Section shall maintain a copy of the registration
statement in their files. The credit repair services
organization shall allow a buyer to inspect the registration
statement on request.
(e) The Secretary of State may charge each credit repair
services organization that files a registration statement a
reasonable fee not to exceed $100 to cover the cost of filing.
(Source: P.A. 85-1384.)
(815 ILCS 605/11) (from Ch. 121 1/2, par. 2111)
Sec. 11. (a) Any person injured by a violation of this Act
or by the credit repair services organization's breach of a
contract entered into pursuant to Section 7 of this Act, may

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bring any action for recovery of actual damages. Such person
may also be awarded punitive damages, reasonable attorney's
fees and court costs.
(b) A violation of this Act shall be subject to a civil
penalty of $5,000 for a first offense and $10,000 for a second
and any subsequent offense.
(Source: P.A. 85-1384.)
(815 ILCS 605/14) (from Ch. 121 1/2, par. 2114)
Sec. 14. (a) In an action under this Act the burden of
proving an exemption under paragraph (d) of Section 3 is on the
person claiming the exemption.
(b) Proof of reliance shall not be required to pursue a
claim based on misrepresentation, false statements, or the
omission of any material fact.
(Source: P.A. 85-1384.)
(815 ILCS 605/15) (from Ch. 121 1/2, par. 2115)
Sec. 15. The remedies provided by this Act are in addition
to other remedies provided by law. A violation of this Act
shall also constitute a violation of the Consumer Fraud and
Deceptive Business Practices Act. A violation of the
Telemarketing and Consumer Fraud and Abuse Prevention Act (15
U.S.C. Section 6101 et seq.), and its implementing
regulations, 16 CFR 310.1 et
seq., or of the Credit Repair
Organizations Act (15 U.S.C. Section 1679 et seq.) shall also

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be a violation of this Act.
(Source: P.A. 85-1384.)
(815 ILCS 605/17 new)
Sec. 17. Rulemaking. The Director may adopt rules
necessary to administer this Act.
(815 ILCS 605/10 rep.)
Section 15. The Credit Services Organizations Act is
amended by repealing Section 10.
Section 99. Effective date. This Act takes effect January
1, 2024.