Bill Text: IL SB3523 | 2011-2012 | 97th General Assembly | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: 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.

Spectrum: Strong Partisan Bill (Democrat 12-1)

Status: (Failed) 2013-01-08 - Session Sine Die [SB3523 Detail]

Download: Illinois-2011-SB3523-Amended.html

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Sen. Jacqueline Y. Collins

Filed: 3/5/2012

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AMENDMENT TO SENATE BILL 3523
AMENDMENT NO. ______. Amend Senate Bill 3523 by replacing
everything after the enacting clause with the following:
"Section 5. The Currency Exchange Act is amended by
changing Section 3.1 as follows:
(205 ILCS 405/3.1) (from Ch. 17, par. 4805)
Sec. 3.1. Nothing in this Act shall prevent a currency
exchange from rendering State or Federal income tax service;
nor shall the rendering of such service be considered a
violation of this Act if such service be rendered either by the
proprietor, any of his employees, or a licensed, regulated tax
service approved by the Internal Revenue Service. For the
purpose of this Section, "tax service" does not mean to make or
offer to make a refund anticipation loan as defined by the Tax
Refund Anticipation Loan Reform Disclosure Act.
(Source: P.A. 97-315, eff. 1-1-12.)

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Section 10. The Tax Refund Anticipation Loan Disclosure Act
is amended by changing Sections 1, 5, 10, and 15 and by adding
Sections 20, 25, 30, 35, and 40 as follows:
(815 ILCS 177/1)
Sec. 1. Short title. This Act may be cited as the Tax
Refund Anticipation Loan Reform Disclosure Act.
(Source: P.A. 92-664, eff. 1-1-03.)
(815 ILCS 177/5)
Sec. 5. Definitions. The following definitions apply in
this Act:
"Consumer" means any natural person who, singly or jointly
with another consumer, is solicited for, applies for, or
receives the proceeds of a refund anticipation loan or refund
anticipation check.
"Creditor" means any person who makes a refund anticipation
loan or who takes an assignment of a refund anticipation loan.
"Facilitator" means a person who individually or in
conjunction or cooperation with another person: (i) solicits
the execution of makes a refund anticipation loan, processes,
receives, or accepts for delivery an application or agreement
for a refund anticipation loan or refund anticipation check;
(ii) services or collects upon , issues a check in payment of
refund anticipation loan or refund anticipation check;

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proceeds, or (iii) in any other manner facilitates acts to
allow the making of a refund anticipation loan or refund
anticipation check. If there is no third party facilitator
because a creditor directly solicits the execution of,
receives, or accepts an application or agreement for a refund
anticipation loan or refund anticipation check, that creditor
shall be considered a facilitator. "Facilitator" does not
include a bank, savings bank, savings and loan association, or
credit union, or licensee under the Consumer Installment Loan
Act operating under the laws of the United States or this State
and does not include any person who acts solely as an
intermediary and does not deal with the public in the making of
the refund anticipation loan.
"Person" means an individual, a firm, a partnership, an
association, a corporation, or another entity. "Person" does
not, however, mean a bank, savings bank, savings and loan
association, or credit union operating under the laws of the
United States or this State.
"Refund anticipation check" means a check, stored value
card, or other payment mechanism: (i) representing the proceeds
of the consumer's tax refund; (ii) which was issued by a
depository institution or other person that received a direct
deposit of the consumer's tax refund or tax credits; and (iii)
for which the consumer has paid a fee or other consideration
for such payment mechanism.
"Borrower" means a person who receives the proceeds of a

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refund anticipation loan.
"Refund anticipation loan" means a loan that is secured by
or that the creditor arranges arranged to be repaid directly or
indirectly from the proceeds of the consumer's a borrower's
income tax refund or tax credits refunds. "Refund anticipation
loan" also includes any sale, assignment, or purchase of a
consumer's tax refund at a discount or for a fee, whether or
not the consumer is required to repay the buyer or assignee if
the Internal Revenue Service denies or reduces the consumer's
tax refund.
"Refund anticipation loan fee" means the charges, fees, or
other consideration charged or imposed directly or indirectly
by the creditor facilitator for the making of or in connection
with a refund anticipation loan. This term includes any charge,
fee, or other consideration for a deposit account, if the
deposit account is used for receipt of the consumer's tax
refund to repay the amount owed on the loan. A "refund
anticipation loan fee" does not include charges, fees, or other
consideration charged or imposed in the ordinary course of
business by a facilitator for services that do not result in
the making of a loan, including fees for tax return preparation
and fees for electronic filing of tax returns.
"Refund anticipation loan interest rate" means the
interest rate for a refund anticipation loan calculated as
follows: the total amount of refund anticipation loan fees
divided by the loan amount (minus any loan fees), then divided

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by the number of days in the loan term, then multiplied by 365
and expressed as a percentage. The total amount of the refund
anticipation loan fee used in this calculation shall include
all refund anticipation loan fees as defined in this Section.
If a deposit account is established or maintained in whole or
in part for the purpose of receiving the consumer's tax refund
to repay the amount owed on a refund anticipation loan: (i) the
maturity of the loan for the purpose of determining the refund
anticipation loan interest rate shall be assumed to be the
estimated date when the tax refund will be deposited in the
deposit account; and (ii) any fee charged to the consumer for
such deposit account shall be considered a loan fee and shall
be included in the calculation of the refund anticipation loan
interest rate. If no deposit account is established or
maintained for the repayment of the loan, the maturity of the
loan shall be assumed to be the estimated date when the tax
refund is received by the creditor.
(Source: P.A. 92-664, eff. 1-1-03.)
(815 ILCS 177/10)
Sec. 10. Disclosure requirements. At the time a consumer
borrower applies for a refund anticipation loan or check, a
facilitator shall disclose to the consumer borrower on a
document that is separate from the loan application:
(1) the fee for the refund anticipation loan or refund
anticipation check fee schedule;

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(1.5) for refund anticipation loans, disclosure of the
refund anticipation loan interest rate. The refund
anticipation loan interest rate shall be calculated as set
forth in Section 5 the Annual Percentage Rate utilizing a
10-day time period;
(2) the estimated fee for preparing and electronically
filing a tax return;
(2.5) the total cost to the consumer borrower for
utilizing a refund anticipation loan;
(3) the estimated date that the loan proceeds will be
paid to the consumer borrower if the loan is approved;
(4) that the consumer borrower is responsible for
repayment of the loan and related fees in the event the tax
refund is not paid or not paid in full; and
(5) the availability of electronic filing for the
income tax return of the consumer borrower and the average
time announced by the federal Internal Revenue Service
within which the consumer borrower can expect to receive a
refund if the consumer's borrower's return is filed
electronically and the consumer borrower does not obtain a
refund anticipation loan.
(Source: P.A. 92-664, eff. 1-1-03; 93-287, eff. 1-1-04.)
(815 ILCS 177/15)
Sec. 15. Posting of fee schedule and disclosures. Penalty.
(a) A facilitator shall display a schedule showing the

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current fees for refund anticipation loans or refund
anticipation checks facilitated at the office.
(b) A facilitator shall display on each fee schedule
examples of the refund anticipation loan interest rates for
refund anticipation loans of at least 5 different amounts, such
as $300, $500, $1,000, $1,500, $2,000, and $5,000. The refund
anticipation loan interest rate shall be calculated as set
forth in Section 5 of this Act.
(c) A facilitator shall also prominently display on each
fee schedule: (i) a legend, centered, in bold, capital letters,
and in one-inch letters stating: "NOTICE CONCERNING REFUND
ANTICIPATION LOANS" and (ii) the following verbatim statement:
"When you take out a refund anticipation loan, you are
borrowing money against your tax refund. If your tax refund is
less than expected, you will still owe the entire amount of the
loan. If your refund is delayed, you may have to pay additional
costs. YOU CAN GET YOUR REFUND IN 8 TO 15 DAYS WITHOUT PAYING
ANY EXTRA FEES AND TAKING OUT A LOAN. You can have your tax
return filed electronically and your refund direct deposited
into your own financial institution account without obtaining a
loan or paying fees for an extra product.".
(d) The postings required by this Section shall be made in
no less than 28-point type on a document measuring no less than
16 inches by 20 inches. The postings required by this Section
shall be displayed in a prominent location at each office where
the facilitator is facilitating refund anticipation loans.

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(e) A facilitator may not facilitate a refund anticipation
loan or refund anticipation check unless (i) the disclosures
required by this Section are displayed and (ii) the fee
actually charged for the refund anticipation loan or refund
anticipation check is the same as the fee displayed on the
schedule.
Any person who violates this Act is guilty of a petty
offense and shall be fined $500 for each offense. In addition,
a facilitator who violates this Act shall be liable to any
aggrieved borrower in an amount equal to 3 times the refund
anticipation loan fee, plus a reasonable attorney's fee, in a
civil action brought in the circuit court by the aggrieved
borrower or by the Attorney General on behalf of the aggrieved
borrower.
(Source: P.A. 92-664, eff. 1-1-03.)
(815 ILCS 177/20 new)
Sec. 20. Advertising and marketing.
(a) A facilitator may not market or advertise a refund
anticipation loan without including this language verbatim:
"(Name of product) is a loan. You can get your refund in 8
to 15 days without a loan or extra fees if you use e-file and
direct deposit.".
For print advertisements, this information must be printed
in type size one-half as large as the largest type size in the
advertisement. For radio and television advertisements, this

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information must receive at least 7 seconds of airtime.
(b) A facilitator may not market or advertise a refund
anticipation check without including this language verbatim:
"The (name of product) costs (fee for RAC). You can get
your refund in the same amount of time without this fee if you
use e-file and direct deposit.".
For print advertisements, this information must be in type
size one-half as large as the largest type size in the
advertisement. For radio and television advertisements, this
information must receive at least 7 seconds of airtime.
(815 ILCS 177/25 new)
Sec. 25. Prohibited activities. No person, including any
officer, agent, employee, or representative, shall:
(a) Charge or impose any fee, charge, or other
consideration in the making or facilitating of a refund
anticipation loan or refund anticipation check apart from the
fee charged by the creditor or financial institution that
provides the loan or check. This prohibition does not include
any charge or fee imposed by the facilitator to all of its
customers, such as fees for tax return preparation, if the same
fee in the same amount is charged to the customers who do not
receive refund anticipation loans, refund anticipation checks,
or any other tax related financial product.
(b) Fail to comply with any provision of this Act.
(c) Directly or indirectly arrange for any third party to

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charge any interest, fee, or charge related to a refund
anticipation loan or refund anticipation check, other than the
refund anticipation loan or refund anticipation check fee
imposed by the creditor, including but not limited to: (i)
charges for insurance; (ii) attorneys fees or other collection
costs; or (iii) check cashing.
(d) Include any of the following provisions in any document
provided or signed in connection with a refund anticipation
loan or refund anticipation check, including the loan
application or agreement:
(i) A hold harmless clause;
(ii) A waiver of the right to a jury trial, if
applicable, in any action brought by or against the
consumer;
(iii) Any assignment of wages or of other compensation
for services;
(iv) A provision in which the consumer agrees not to
assert any claim or defense arising out of the contract, or
to seek any remedies pursuant to Section 35 of this Act;
(v) A waiver of any provision of this Act. Any such
waiver shall be deemed null, void, and of no effect;
(vi) A waiver of the right to injunctive, declaratory,
or other equitable relief; or
(vii) A provision requiring that any aspect of a
resolution of a dispute between the parties to the
agreement be kept confidential. This provision shall not

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affect the right of the parties to agree that certain
specified information is a trade secret or otherwise
confidential, or to later agree, after the dispute arises,
to keep a resolution confidential.
(e) Take or arrange for a creditor to take a security
interest in any property of the consumer other than the
proceeds of the consumer's tax refund to secure payment of a
refund anticipation loan.
(f) Directly or indirectly, individually or in conjunction
or cooperation with another person, engage in the collection of
an outstanding or delinquent refund anticipation loan for any
creditor or assignee, including soliciting the execution of,
processing, receiving, or accepting an application or
agreement for a refund anticipation loan or refund anticipation
check that contains a provision permitting the creditor to
repay, by offset or other means, an outstanding or delinquent
refund anticipation loan for that creditor or any creditor from
the proceeds of the consumer's tax refund.
(g) Facilitate any loan that is secured by or that the
creditor arranges to be repaid directly from the proceeds of
the consumer's State tax refund from the Illinois State
Treasury.
(815 ILCS 177/30 new)
Sec. 30. Rate limits for non-bank refund anticipation
loans.

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(a) No person shall make or facilitate a refund
anticipation loan for which the refund anticipation loan
interest rate is greater than 36% per annum. The refund
anticipation loan interest rate shall be calculated as set
forth in Section 5. Any refund anticipation loan for which the
refund anticipation loan interest rate exceeds 36% per annum
shall be void ab initio.
(b) This Section does not apply to persons facilitating for
or doing business as a bank, savings bank, savings and loan
association, or credit union chartered under the laws of the
United States or this State.
(815 ILCS 177/35 new)
Sec. 35. Applicability to certain entities. No obligation
or prohibition imposed upon a creditor, a person, or a
facilitator by this Act shall apply to a bank, savings bank,
savings and loan association, or credit union operating under
the laws of the United States or this State.
(815 ILCS 177/40 new)
Sec. 40. Violation. A violation of this Act constitutes an
unlawful practice under the Consumer Fraud and Deceptive
Business Practices Act.
Section 15. The Consumer Fraud and Deceptive Business
Practices Act is amended by adding Section 2NNN as follows:

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(815 ILCS 505/2NNN new)
Sec. 2NNN. Violations of the Tax Refund Anticipation Loan
Reform Act. Any person who violates the Tax Refund Anticipation
Loan Reform Act commits an unlawful practice within the meaning
of this Act.
Section 97. Severability. The provisions of this Act are
severable under Section 1.31 of the Statute on Statutes.
Section 99. Effective date. This Act takes effect upon
becoming law.".