Bill Text: IL SB3410 | 2013-2014 | 98th General Assembly | Introduced
Bill Title: Amends the Payday Loan Reform Act. Authorizes a municipality to limit the number of licensees located in the municipality beginning January 1, 2015. Provides that the limit established by a municipality may be no less than 5. Provides for the Department of Financial and Professional Regulation to randomly nonrenew licenses if the renewed license would result in a number of licenses in excess of the municipal limit. Reduces maximum permissible finance charges.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Failed) 2015-01-13 - Session Sine Die [SB3410 Detail]
Download: Illinois-2013-SB3410-Introduced.html
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1 | AN ACT concerning regulation.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Payday Loan Reform Act is amended by | |||||||||||||||||||||
5 | changing Sections 2-5 and 3-5 as follows:
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6 | (815 ILCS 122/2-5)
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7 | Sec. 2-5. Loan terms. | |||||||||||||||||||||
8 | (a) Without affecting the right of a consumer to prepay at | |||||||||||||||||||||
9 | any time without cost or penalty, no payday loan may have a | |||||||||||||||||||||
10 | minimum term of less than 13 days. | |||||||||||||||||||||
11 | (b) Except for an installment payday loan as defined in | |||||||||||||||||||||
12 | this Section,
no payday loan may be made to a consumer if the | |||||||||||||||||||||
13 | loan would result in the consumer being indebted to one or more | |||||||||||||||||||||
14 | payday lenders for a period in excess of 45 consecutive days. | |||||||||||||||||||||
15 | Except as provided under subsection (c) of this Section and | |||||||||||||||||||||
16 | Section 2-40, if a consumer has or has had loans outstanding | |||||||||||||||||||||
17 | for a period in excess of 45 consecutive days, no payday lender | |||||||||||||||||||||
18 | may offer or make a loan to the consumer for at least 7 | |||||||||||||||||||||
19 | calendar days after the date on which the outstanding balance | |||||||||||||||||||||
20 | of all payday loans made during the 45 consecutive day period | |||||||||||||||||||||
21 | is paid in full. For purposes of this subsection, the term | |||||||||||||||||||||
22 | "consecutive days" means a series of continuous calendar days | |||||||||||||||||||||
23 | in which the consumer has an outstanding balance on one or more |
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1 | payday loans; however, if a payday loan is made to a consumer | ||||||
2 | within 6 days or less after the outstanding balance of all | ||||||
3 | loans is paid in full, those days are counted as "consecutive | ||||||
4 | days" for purposes of this subsection. | ||||||
5 | (c) Notwithstanding anything in this Act to the contrary, a | ||||||
6 | payday loan
shall also include any installment loan otherwise | ||||||
7 | meeting the definition of
payday loan contained in Section | ||||||
8 | 1-10, but that has a term agreed by the
parties of not less | ||||||
9 | than 112 days and not exceeding 180 days; hereinafter an
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10 | "installment payday loan". The following provisions shall | ||||||
11 | apply:
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12 | (i) Any installment payday loan must be fully | ||||||
13 | amortizing, with a finance
charge calculated on the | ||||||
14 | principal balances scheduled to be outstanding and
be | ||||||
15 | repayable in substantially equal and consecutive | ||||||
16 | installments, according
to a payment schedule agreed by the | ||||||
17 | parties with not less than 13 days and
not more than one | ||||||
18 | month between payments; except that the first installment
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19 | period may be longer than the remaining installment periods | ||||||
20 | by not more than
15 days, and the first installment payment | ||||||
21 | may be larger than the remaining
installment payments by | ||||||
22 | the amount of finance charges applicable to the
extra days. | ||||||
23 | In calculating finance charges under this subsection, when | ||||||
24 | the first installment period is longer than the remaining | ||||||
25 | installment periods, the amount of the finance charges | ||||||
26 | applicable to the extra days shall not be greater than |
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1 | $7.75 $15.50 per $100 of the original principal balance | ||||||
2 | divided by the number of days in a regularly scheduled | ||||||
3 | installment period and multiplied by the number of extra | ||||||
4 | days determined by subtracting the number of days in a | ||||||
5 | regularly scheduled installment period from the number of | ||||||
6 | days in the first installment period. | ||||||
7 | (ii) An installment payday loan may be refinanced by a | ||||||
8 | new installment
payday loan one time during the term of the | ||||||
9 | initial loan; provided that the
total duration of | ||||||
10 | indebtedness on the initial installment payday loan | ||||||
11 | combined
with the total term of indebtedness of the new | ||||||
12 | loan refinancing that initial
loan, shall not exceed 180 | ||||||
13 | days. For purposes of this Act, a refinancing
occurs when | ||||||
14 | an existing installment payday loan is paid from the | ||||||
15 | proceeds of
a new installment payday loan. | ||||||
16 | (iii) In the event an installment payday loan is paid | ||||||
17 | in full prior to
the date on which the last scheduled | ||||||
18 | installment payment before maturity is
due, other than | ||||||
19 | through a refinancing, no licensee may offer or make a | ||||||
20 | payday
loan to the consumer for at least 2 calendar days | ||||||
21 | thereafter. | ||||||
22 | (iv) No installment payday loan may be made to a | ||||||
23 | consumer if the loan would
result in the consumer being | ||||||
24 | indebted to one or more payday lenders for a
period in | ||||||
25 | excess of 180 consecutive days. The term "consecutive days" | ||||||
26 | does not include the date on which a consumer makes the |
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1 | final installment payment. | ||||||
2 | (d) (Blank). | ||||||
3 | (e) No lender may make a payday loan to a consumer if the | ||||||
4 | total of all payday loan payments coming due within the first | ||||||
5 | calendar month of the loan, when combined with the payment | ||||||
6 | amount of all of the consumer's other outstanding payday loans | ||||||
7 | coming due within the same month, exceeds the lesser of: | ||||||
8 | (1) $1,000; or | ||||||
9 | (2) in the case of one or more payday loans, 25% of the | ||||||
10 | consumer's gross monthly income; or | ||||||
11 | (3) in the case of one or more installment payday | ||||||
12 | loans, 22.5% of the consumer's gross monthly income; or | ||||||
13 | (4) in the case of a payday loan and an installment | ||||||
14 | payday loan, 22.5% of the consumer's gross monthly income. | ||||||
15 | No loan shall be made to a consumer who has an outstanding | ||||||
16 | balance on 2 payday loans, except that, for a period of 12 | ||||||
17 | months after the effective date of this amendatory Act of the | ||||||
18 | 96th General Assembly, consumers with an existing CILA loan may | ||||||
19 | be issued an installment loan issued under this Act from the | ||||||
20 | company from which their CILA loan was issued. | ||||||
21 | (e-5) Except as provided in subsection (c)(i), no lender | ||||||
22 | may charge more than $7.75 $15.50 per $100 loaned on any payday | ||||||
23 | loan, or more than $7.75 $15.50 per $100 on the initial | ||||||
24 | principal balance and on the principal balances scheduled to be | ||||||
25 | outstanding during any installment period on any installment | ||||||
26 | payday loan. Except for installment payday loans and except as |
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1 | provided in Section 2-25, this charge is considered fully | ||||||
2 | earned as of the date on which the loan is made. For purposes | ||||||
3 | of determining the finance charge earned on an installment | ||||||
4 | payday loan, the disclosed annual percentage rate shall be | ||||||
5 | applied to the principal balances outstanding from time to time | ||||||
6 | until the loan is paid in full, or until the maturity date, | ||||||
7 | which ever occurs first. No finance charge may be imposed after | ||||||
8 | the final scheduled maturity date. | ||||||
9 | When any loan contract is paid in full, the licensee shall | ||||||
10 | refund any unearned finance charge. The unearned finance charge | ||||||
11 | that is refunded shall be calculated based on a method that is | ||||||
12 | at least as favorable to the consumer as the actuarial method, | ||||||
13 | as defined by the federal Truth in Lending Act. The sum of the | ||||||
14 | digits or rule of 78ths method of calculating prepaid interest | ||||||
15 | refunds is prohibited. | ||||||
16 | (f) A lender may not take or attempt to take an interest in | ||||||
17 | any of the consumer's personal property to secure a payday | ||||||
18 | loan. | ||||||
19 | (g) A consumer has the right to redeem a check or any other | ||||||
20 | item described in the definition of payday loan under Section | ||||||
21 | 1-10 issued in connection with a payday loan from the lender | ||||||
22 | holding the check or other item at any time before the payday | ||||||
23 | loan becomes payable by paying the full amount of the check or | ||||||
24 | other item.
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25 | (Source: P.A. 96-936, eff. 3-21-11; 97-421, eff. 1-1-12.)
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1 | (815 ILCS 122/3-5)
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2 | Sec. 3-5. Licensure. | ||||||
3 | (a) A license to make a payday loan shall state the | ||||||
4 | address,
including city and state, at which
the business is to | ||||||
5 | be conducted and shall state fully the name of the licensee.
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6 | The license shall be conspicuously posted in the place of | ||||||
7 | business of the
licensee and shall not be transferable or | ||||||
8 | assignable.
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9 | (b) An application for a license shall be in writing and in | ||||||
10 | a form
prescribed by the Secretary. The Secretary may not issue | ||||||
11 | a payday loan
license unless and until the following findings | ||||||
12 | are made:
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13 | (1) that the financial responsibility, experience, | ||||||
14 | character, and general
fitness of the applicant are such as | ||||||
15 | to command the confidence of the public
and to warrant the | ||||||
16 | belief that the business will be operated lawfully and
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17 | fairly and within the provisions and purposes of this Act; | ||||||
18 | and
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19 | (2) that the applicant has submitted such other | ||||||
20 | information as the
Secretary may deem necessary ; and . | ||||||
21 | (3) that the issuance of the license would not result | ||||||
22 | in the number of licenses being issued for locations in a | ||||||
23 | municipality exceeding any limit upon the number of | ||||||
24 | licensed locations authorized by the municipality.
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25 | (c) A license shall be issued for no longer than one year, | ||||||
26 | and no renewal
of a license may be provided if a licensee has |
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1 | substantially violated this
Act and has not cured the violation | ||||||
2 | to the satisfaction of the Department or if the renewal of the | ||||||
3 | license would result in a number of licenses in a municipality | ||||||
4 | exceeding the limit upon the number of licensed locations | ||||||
5 | authorized by the municipality. If a municipality establishes a | ||||||
6 | limit on the number of licensed locations that is less than the | ||||||
7 | number of licenses sought to be renewed, the Department shall | ||||||
8 | randomly determine which licenses to refuse to renew .
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9 | (d) A licensee shall appoint, in writing, the Secretary as | ||||||
10 | attorney-in-fact
upon whom all lawful process against the | ||||||
11 | licensee may be served with the
same legal force and validity | ||||||
12 | as if served on the licensee. A copy of the
written | ||||||
13 | appointment, duly certified, shall be filed in the office of | ||||||
14 | the
Secretary, and a copy thereof certified by the Secretary | ||||||
15 | shall be sufficient
evidence to subject a licensee to | ||||||
16 | jurisdiction in a court of law. This appointment shall remain | ||||||
17 | in effect while any liability remains
outstanding in this State | ||||||
18 | against the licensee. When summons is served upon
the Secretary | ||||||
19 | as attorney-in-fact for a licensee, the Secretary shall | ||||||
20 | immediately
notify the licensee by registered mail, enclosing | ||||||
21 | the summons and specifying
the hour and day of service.
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22 | (e) A licensee must pay an annual fee of $1,000. In | ||||||
23 | addition to the
license fee, the reasonable expense of any | ||||||
24 | examination or hearing
by the Secretary under any provisions of | ||||||
25 | this Act shall be borne by
the licensee. If a licensee fails to | ||||||
26 | renew its license by December 31,
its license
shall |
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1 | automatically expire; however, the Secretary, in his or her | ||||||
2 | discretion,
may reinstate an expired license upon:
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3 | (1) payment of the annual fee within 30 days of the | ||||||
4 | date of
expiration; and
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5 | (2) proof of good cause for failure to renew.
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6 | (f) Not more than one place of business shall be maintained | ||||||
7 | under the
same license, but the Secretary may issue more than | ||||||
8 | one license to the same
licensee upon compliance with all the | ||||||
9 | provisions of this Act governing
issuance of a single license. | ||||||
10 | The location, except those locations already in
existence as of | ||||||
11 | June 1, 2005, may not be within one mile of a
horse race track | ||||||
12 | subject to the Illinois Horse Racing Act of 1975,
within one | ||||||
13 | mile of a facility at which gambling is conducted under the
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14 | Riverboat Gambling Act, within one mile of the location at | ||||||
15 | which a
riverboat subject to the Riverboat Gambling Act docks, | ||||||
16 | or within one mile of
any State of Illinois or United States | ||||||
17 | military base or naval installation.
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18 | (g) No licensee shall conduct the business of making loans | ||||||
19 | under this
Act within any office, suite, room, or place of | ||||||
20 | business in which (1) any loans are offered or made under the | ||||||
21 | Consumer Installment Loan Act other than title secured loans as | ||||||
22 | defined in subsection (a) of Section 15 of the Consumer | ||||||
23 | Installment Loan Act and governed by Title 38, Section 110.330 | ||||||
24 | of the Illinois Administrative Code or (2) any other
business | ||||||
25 | is solicited or engaged in unless the other business is | ||||||
26 | licensed by the Department or, in the opinion of the Secretary, |
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1 | the
other business would not be contrary to the best interests | ||||||
2 | of consumers and
is authorized by the Secretary in writing.
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3 | (g-5) Notwithstanding subsection (g) of this Section, a | ||||||
4 | licensee may obtain a license under the Consumer Installment | ||||||
5 | Loan Act (CILA) for the exclusive purpose and use of making | ||||||
6 | title secured loans, as defined in subsection (a) of Section 15 | ||||||
7 | of CILA and governed by Title 38, Section 110.300 of the | ||||||
8 | Illinois Administrative Code. A licensee may continue to | ||||||
9 | service Consumer Installment Loan Act loans that were | ||||||
10 | outstanding as of the effective date of this amendatory Act of | ||||||
11 | the 96th General Assembly. | ||||||
12 | (h) The Secretary shall maintain a list of licensees that | ||||||
13 | shall be
available to interested consumers and lenders and the | ||||||
14 | public. The Secretary
shall maintain a toll-free number whereby | ||||||
15 | consumers may obtain
information about licensees. The | ||||||
16 | Secretary shall also establish a complaint
process under which | ||||||
17 | an aggrieved consumer
may file a complaint against a licensee | ||||||
18 | or non-licensee who violates any
provision of this Act.
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19 | (i) A municipality may by ordinance limit the number of | ||||||
20 | licensees under this Act that may be located in the | ||||||
21 | municipality on and after January 1, 2015. The limit | ||||||
22 | established by the municipality may not be fewer than 5 | ||||||
23 | licenses. | ||||||
24 | (Source: P.A. 96-936, eff. 3-21-11 .)
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