97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB3523

Introduced 2/8/2012, by Sen. Jacqueline Y. Collins

SYNOPSIS AS INTRODUCED:
205 ILCS 405/3.1 from Ch. 17, par. 4805
815 ILCS 177/1
815 ILCS 177/5
815 ILCS 177/10
815 ILCS 177/15
815 ILCS 177/20 new
815 ILCS 177/25 new
815 ILCS 177/30 new
815 ILCS 177/35 new
815 ILCS 505/2NNN new

Amends the Tax Refund Anticipation Loan Disclosure Act. Changes the short title of the Act to the Tax Refund Anticipation Loan Reform Act. Makes changes concerning disclosure requirements, prohibited activities, interest rate limits for non-bank refund anticipation loans, and defined terms. Provides a calculation for the refund anticipation loan interest rate. Provides that a person who violates the Tax Refund Anticipation Loan Reform Act commits an unlawful practice under the Consumer Fraud and Deceptive Practices Act. Makes conforming changes in the Currency Exchange Act and the Consumer Fraud and Deceptive Business Practices Act. Contains a severability provision. Effective immediately.
LRB097 18601 JLS 65596 b

A BILL FOR

SB3523LRB097 18601 JLS 65596 b
1 AN ACT concerning tax refunds.
2 Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4 Section 5. The Currency Exchange Act is amended by changing
5Section 3.1 as follows:
6 (205 ILCS 405/3.1) (from Ch. 17, par. 4805)
7 Sec. 3.1. Nothing in this Act shall prevent a currency
8exchange from rendering State or Federal income tax service;
9nor shall the rendering of such service be considered a
10violation of this Act if such service be rendered either by the
11proprietor, any of his employees, or a licensed, regulated tax
12service approved by the Internal Revenue Service. For the
13purpose of this Section, "tax service" does not mean to make or
14offer to make a refund anticipation loan as defined by the Tax
15Refund Anticipation Loan Reform Disclosure Act.
16(Source: P.A. 97-315, eff. 1-1-12.)
17 Section 10. The Tax Refund Anticipation Loan Disclosure Act
18is amended by changing Sections 1, 5, 10, and 15 and by adding
19Sections 20, 25, 30, and 35 as follows:
20 (815 ILCS 177/1)
21 Sec. 1. Short title. This Act may be cited as the Tax

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1Refund Anticipation Loan Reform Disclosure Act.
2(Source: P.A. 92-664, eff. 1-1-03.)
3 (815 ILCS 177/5)
4 Sec. 5. Definitions. The following definitions apply in
5this Act:
6 "Consumer" means any natural person who, singly or jointly
7with another consumer, is solicited for, applies for, or
8receives the proceeds of a refund anticipation loan or refund
9anticipation check.
10 "Creditor" means any person who makes a refund anticipation
11loan or who takes an assignment of a refund anticipation loan.
12 "Facilitator" means a person who individually or in
13conjunction or cooperation with another person: (i) solicits
14the execution of makes a refund anticipation loan, processes,
15receives, or accepts for delivery an application or agreement
16for a refund anticipation loan or refund anticipation check;
17(ii) services or collects upon , issues a check in payment of
18refund anticipation loan or refund anticipation check;
19proceeds, or (iii) in any other manner facilitates acts to
20allow the making of a refund anticipation loan or refund
21anticipation check. If there is no third party facilitator
22because a creditor directly solicits the execution of,
23receives, or accepts an application or agreement for a refund
24anticipation loan or refund anticipation check, that creditor
25shall be considered a facilitator. "Facilitator" does not

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1include a bank, savings and loan association, or credit union,
2or licensee under the Consumer Installment Loan Act operating
3under the laws of the United States or this State and does not
4include any person who acts solely as an intermediary and does
5not deal with the public in the making of the refund
6anticipation loan.
7 "Person" means an individual, a firm, a partnership, an
8association, a corporation, or another entity.
9 "Refund anticipation check" means a check, stored value
10card, or other payment mechanism: (i) representing the proceeds
11of the consumer's tax refund; (ii) which was issued by a
12depository institution or other person that received a direct
13deposit of the consumer's tax refund or tax credits; and (iii)
14for which the consumer has paid a fee or other consideration
15for such payment mechanism.
16 "Borrower" means a person who receives the proceeds of a
17refund anticipation loan.
18 "Refund anticipation loan" means a loan that is secured by
19or that the creditor arranges arranged to be repaid directly or
20indirectly from the proceeds of the consumer's a borrower's
21income tax refund or tax credits refunds. "Refund anticipation
22loan" also includes any sale, assignment, or purchase of a
23consumer's tax refund at a discount or for a fee, whether or
24not the consumer is required to repay the buyer or assignee if
25the Internal Revenue Service denies or reduces the consumer's
26tax refund.

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1 "Refund anticipation loan fee" means the charges, fees, or
2other consideration charged or imposed directly or indirectly
3by the creditor facilitator for the making of or in connection
4with a refund anticipation loan. This term includes any charge,
5fee, or other consideration for a deposit account, if the
6deposit account is used for receipt of the consumer's tax
7refund to repay the amount owed on the loan. A "refund
8anticipation loan fee" does not include charges, fees, or other
9consideration charged or imposed in the ordinary course of
10business by a facilitator for services that do not result in
11the making of a loan, including fees for tax return preparation
12and fees for electronic filing of tax returns.
13 "Refund anticipation loan interest rate" means the
14interest rate for a refund anticipation loan calculated as
15follows: the total amount of refund anticipation loan fees
16divided by the loan amount (minus any loan fees), then divided
17by the number of days in the loan term, then multiplied by 365
18and expressed as a percentage. The total amount of the refund
19anticipation loan fee used in this calculation shall include
20all refund anticipation loan fees as defined in this Section.
21If a deposit account is established or maintained in whole or
22in part for the purpose of receiving the consumer's tax refund
23to repay the amount owed on a refund anticipation loan: (i) the
24maturity of the loan for the purpose of determining the refund
25anticipation loan interest rate shall be assumed to be the
26estimated date when the tax refund will be deposited in the

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1deposit account; and (ii) any fee charged to the consumer for
2such deposit account shall be considered a loan fee and shall
3be included in the calculation of the refund anticipation loan
4interest rate. If no deposit account is established or
5maintained for the repayment of the loan, the maturity of the
6loan shall be assumed to be the estimated date when the tax
7refund is received by the creditor.
8(Source: P.A. 92-664, eff. 1-1-03.)
9 (815 ILCS 177/10)
10 Sec. 10. Disclosure requirements. At the time a consumer
11borrower applies for a refund anticipation loan or check, a
12facilitator shall disclose to the consumer borrower on a
13document that is separate from the loan application:
14 (1) the fee for the refund anticipation loan or refund
15 anticipation check fee schedule;
16 (1.5) for refund anticipation loans, disclosure of the
17 refund anticipation loan interest rate. The refund
18 anticipation loan interest rate shall be calculated as set
19 forth in Section 5 the Annual Percentage Rate utilizing a
20 10-day time period;
21 (2) the estimated fee for preparing and electronically
22 filing a tax return;
23 (2.5) the total cost to the consumer borrower for
24 utilizing a refund anticipation loan;
25 (3) the estimated date that the loan proceeds will be

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1 paid to the consumer borrower if the loan is approved;
2 (4) that the consumer borrower is responsible for
3 repayment of the loan and related fees in the event the tax
4 refund is not paid or not paid in full; and
5 (5) the availability of electronic filing for the
6 income tax return of the consumer borrower and the average
7 time announced by the federal Internal Revenue Service
8 within which the consumer borrower can expect to receive a
9 refund if the consumer's borrower's return is filed
10 electronically and the consumer borrower does not obtain a
11 refund anticipation loan.
12(Source: P.A. 92-664, eff. 1-1-03; 93-287, eff. 1-1-04.)
13 (815 ILCS 177/15)
14 Sec. 15. Posting of fee schedule and disclosures. Penalty.
15 (a) A facilitator shall display a schedule showing the
16current fees for refund anticipation loans or refund
17anticipation checks facilitated at the office.
18 (b) A facilitator shall display on each fee schedule
19examples of the refund anticipation loan interest rates for
20refund anticipation loans of at least 5 different amounts, such
21as $300, $500, $1,000, $1,500, $2,000, and $5,000. The refund
22anticipation loan interest rate shall be calculated as set
23forth in Section 5 of this Act.
24 (c) A facilitator shall also prominently display on each
25fee schedule: (i) a legend, centered, in bold, capital letters,

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1and in one-inch letters stating: "NOTICE CONCERNING REFUND
2ANTICIPATION LOANS" and (ii) the following verbatim statement:
3"When you take out a refund anticipation loan, you are
4borrowing money against your tax refund. If your tax refund is
5less than expected, you will still owe the entire amount of the
6loan. If your refund is delayed, you may have to pay additional
7costs. YOU CAN GET YOUR REFUND IN 8 TO 15 DAYS WITHOUT PAYING
8ANY EXTRA FEES AND TAKING OUT A LOAN. You can have your tax
9return filed electronically and your refund direct deposited
10into your own bank account without obtaining a loan or paying
11fees for an extra product.".
12 (d) The postings required by this Section shall be made in
13no less than 28-point type on a document measuring no less than
1416 inches by 20 inches. The postings required by this Section
15shall be displayed in a prominent location at each office where
16the facilitator is facilitating refund anticipation loans.
17 (e) A facilitator may not facilitate a refund anticipation
18loan or refund anticipation check unless (i) the disclosures
19required by this Section are displayed and (ii) the fee
20actually charged for the refund anticipation loan or refund
21anticipation check is the same as the fee displayed on the
22schedule.
23 Any person who violates this Act is guilty of a petty
24offense and shall be fined $500 for each offense. In addition,
25a facilitator who violates this Act shall be liable to any
26aggrieved borrower in an amount equal to 3 times the refund

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1anticipation loan fee, plus a reasonable attorney's fee, in a
2civil action brought in the circuit court by the aggrieved
3borrower or by the Attorney General on behalf of the aggrieved
4borrower.
5(Source: P.A. 92-664, eff. 1-1-03.)
6 (815 ILCS 177/20 new)
7 Sec. 20. Advertising and marketing.
8 (a) A facilitator may not market or advertise a refund
9anticipation loan without including this language verbatim:
10 "(Name of product) is a loan. You can get your refund in 8
11to 15 days without a loan or extra fees if you use e-file and
12direct deposit.".
13 For print advertisements, this information must be printed
14in type size one-half as large as the largest type size in the
15advertisement. For radio and television advertisements, this
16information must receive at least 7 seconds of airtime.
17 (b) A facilitator may not market or advertise a refund
18anticipation check without including this language verbatim:
19 "The (name of product) costs (fee for RAC). You can get
20your refund in the same amount of time without this fee if you
21use e-file and direct deposit.".
22 For print advertisements, this information must be in type
23size one-half as large as the largest type size in the
24advertisement. For radio and television advertisements, this
25information must receive at least 7 seconds of airtime.

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1 (815 ILCS 177/25 new)
2 Sec. 25. Prohibited activities. No person, including any
3officer, agent, employee, or representative, shall:
4 (a) Charge or impose any fee, charge, or other
5consideration in the making or facilitating of a refund
6anticipation loan or refund anticipation check apart from the
7fee charged by the creditor or bank that provides the loan or
8check. This prohibition does not include any charge or fee
9imposed by the facilitator to all of its customers, such as
10fees for tax return preparation, if the same fee in the same
11amount is charged to the customers who do not receive refund
12anticipation loans, refund anticipation checks, or any other
13tax related financial product.
14 (b) Fail to comply with any provision of this Act.
15 (c) Directly or indirectly arrange for any third party to
16charge any interest, fee, or charge related to a refund
17anticipation loan or refund anticipation check, other than the
18refund anticipation loan or refund anticipation check fee
19imposed by the creditor, including but not limited to: (i)
20charges for insurance; (ii) attorneys fees or other collection
21costs; or (iii) check cashing.
22 (d) Include any of the following provisions in any document
23provided or signed in connection with a refund anticipation
24loan or refund anticipation check, including the loan
25application or agreement:

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1 (i) A hold harmless clause;
2 (ii) A waiver of the right to a jury trial, if
3 applicable, in any action brought by or against the
4 consumer;
5 (iii) Any assignment of wages or of other compensation
6 for services;
7 (iv) A provision in which the consumer agrees not to
8 assert any claim or defense arising out of the contract, or
9 to seek any remedies pursuant to Section 35 of this Act;
10 (v) A waiver of any provision of this Act. Any such
11 waiver shall be deemed null, void, and of no effect;
12 (vi) A waiver of the right to injunctive, declaratory,
13 or other equitable relief; or
14 (vii) A provision requiring that any aspect of a
15 resolution of a dispute between the parties to the
16 agreement be kept confidential. This provision shall not
17 affect the right of the parties to agree that certain
18 specified information is a trade secret or otherwise
19 confidential, or to later agree, after the dispute arises,
20 to keep a resolution confidential.
21 (e) Take or arrange for a creditor to take a security
22interest in any property of the consumer other than the
23proceeds of the consumer's tax refund to secure payment of a
24refund anticipation loan.
25 (f) Directly or indirectly, individually or in conjunction
26or cooperation with another person, engage in the collection of

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1an outstanding or delinquent refund anticipation loan for any
2creditor or assignee, including soliciting the execution of,
3processing, receiving, or accepting an application or
4agreement for a refund anticipation loan or refund anticipation
5check that contains a provision permitting the creditor to
6repay, by offset or other means, an outstanding or delinquent
7refund anticipation loan for that creditor or any creditor from
8the proceeds of the consumer's tax refund.
9 (g) Facilitate any loan that is secured by or that the
10creditor arranges to be repaid directly from the proceeds of
11the consumer's State tax refund from the Illinois State
12Treasury.
13 (815 ILCS 177/30 new)
14 Sec. 30. Rate limits for non-bank refund anticipation
15loans.
16 (a) No person shall make or facilitate a refund
17anticipation loan for which the refund anticipation loan
18interest rate is greater than 36% per annum. The refund
19anticipation loan interest rate shall be calculated as set
20forth in Section 5. Any refund anticipation loan for which the
21refund anticipation loan interest rate exceeds 36% per annum
22shall be void ab initio.
23 (b) This Section does not apply to persons facilitating for
24or doing business as a bank, thrift, savings association, or
25credit union chartered under the laws of the United States or

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1this State.
2 (815 ILCS 177/35 new)
3 Sec. 35. Violation. A violation of this Act constitutes an
4unlawful practice under the Consumer Fraud and Deceptive
5Business Practices Act.
6 Section 15. The Consumer Fraud and Deceptive Business
7Practices Act is amended by adding Section 2NNN as follows:
8 (815 ILCS 505/2NNN new)
9 Sec. 2NNN. Violations of the Tax Refund Anticipation Loan
10Disclosure Reform Act. Any person who violates the Tax Refund
11Anticipation Loan Reform Act commits an unlawful practice
12within the meaning of this Act.
13 Section 97. Severability. The provisions of this Act are
14severable under Section 1.31 of the Statute on Statutes.
15 Section 99. Effective date. This Act takes effect upon
16becoming law.