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

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

Sen. Jacqueline Y. Collins

Filed: 3/23/2012

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1
AMENDMENT TO SENATE BILL 3523
2 AMENDMENT NO. ______. Amend Senate Bill 3523 by replacing
3everything after the enacting clause with the following:
4 "Section 5. The Currency Exchange Act is amended by
5changing Section 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.)

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1 Section 10. The Tax Refund Anticipation Loan Disclosure Act
2is amended by changing Sections 1, 5, 10, and 15 and by adding
3Sections 20, 25, 30, 35, and 40 as follows:
4 (815 ILCS 177/1)
5 Sec. 1. Short title. This Act may be cited as the Tax
6Refund Anticipation Loan Reform Disclosure Act.
7(Source: P.A. 92-664, eff. 1-1-03.)
8 (815 ILCS 177/5)
9 Sec. 5. Definitions. The following definitions apply in
10this Act:
11 "Consumer" means any natural person who, singly or jointly
12with another consumer, is solicited for, applies for, or
13receives the proceeds of a refund anticipation loan or refund
14anticipation check.
15 "Creditor" means any person who makes a refund anticipation
16loan or who takes an assignment of a refund anticipation loan.
17 "Facilitator" means a person who individually or in
18conjunction or cooperation with another person: (i) solicits
19the execution of makes a refund anticipation loan, processes,
20receives, or accepts for delivery an application or agreement
21for a refund anticipation loan or refund anticipation check;
22(ii) services or collects upon , issues a check in payment of
23refund anticipation loan or refund anticipation check;

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1proceeds, or (iii) in any other manner facilitates acts to
2allow the making of a refund anticipation loan or refund
3anticipation check. If there is no third party facilitator
4because a creditor directly solicits the execution of,
5receives, or accepts an application or agreement for a refund
6anticipation loan or refund anticipation check, that creditor
7shall be considered a facilitator. "Facilitator" does not
8include a bank, savings bank, savings and loan association, or
9credit union, or licensee under the Consumer Installment Loan
10Act operating under the laws of the United States or this State
11and does not include any person who acts solely as an
12intermediary and does not deal with the public in the making of
13the refund anticipation loan.
14 "Person" means an individual, a firm, a partnership, an
15association, a corporation, or another entity. "Person" does
16not, however, mean a bank, savings bank, savings and loan
17association, or credit union operating under the laws of the
18United States or this State.
19 "Refund anticipation check" means a check, stored value
20card, or other payment mechanism: (i) representing the proceeds
21of the consumer's tax refund; (ii) which was issued by a
22depository institution or other person that received a direct
23deposit of the consumer's tax refund or tax credits; and (iii)
24for which the consumer has paid a fee or other consideration
25for such payment mechanism.
26 "Borrower" means a person who receives the proceeds of a

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1refund anticipation loan.
2 "Refund anticipation loan" means a loan that is secured by
3or that the creditor arranges arranged to be repaid directly
4from the proceeds of the consumer's a borrower's income tax
5refund or tax credits refunds. "Refund anticipation loan" also
6includes any sale, assignment, or purchase of a consumer's tax
7refund at a discount or for a fee, whether or not the consumer
8is required to repay the buyer or assignee if the Internal
9Revenue Service denies or reduces the consumer's tax refund.
10 "Refund anticipation loan fee" means the charges, fees, or
11other consideration charged or imposed directly or indirectly
12by the creditor facilitator for the making of or in connection
13with a refund anticipation loan. This term includes any charge,
14fee, or other consideration for a deposit account, if the
15deposit account is used for receipt of the consumer's tax
16refund to repay the amount owed on the loan. A "refund
17anticipation loan fee" does not include charges, fees, or other
18consideration charged or imposed in the ordinary course of
19business by a facilitator for services that do not result in
20the making of a loan, including fees for tax return preparation
21and fees for electronic filing of tax returns.
22 "Refund anticipation loan interest rate" means the
23interest rate for a refund anticipation loan calculated as
24follows: the total amount of refund anticipation loan fees
25divided by the loan amount (minus any loan fees), then divided
26by the number of days in the loan term, then multiplied by 365

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1and expressed as a percentage. The total amount of the refund
2anticipation loan fee used in this calculation shall include
3all refund anticipation loan fees as defined in this Section.
4If a deposit account is established or maintained in whole or
5in part for the purpose of receiving the consumer's tax refund
6to repay the amount owed on a refund anticipation loan: (i) the
7maturity of the loan for the purpose of determining the refund
8anticipation loan interest rate shall be assumed to be the
9estimated date when the tax refund will be deposited in the
10deposit account; and (ii) any fee charged to the consumer for
11such deposit account shall be considered a loan fee and shall
12be included in the calculation of the refund anticipation loan
13interest rate. If no deposit account is established or
14maintained for the repayment of the loan, the maturity of the
15loan shall be assumed to be the estimated date when the tax
16refund is received by the creditor.
17(Source: P.A. 92-664, eff. 1-1-03.)
18 (815 ILCS 177/10)
19 Sec. 10. Disclosure requirements. At the time a consumer
20borrower applies for a refund anticipation loan or check, a
21facilitator shall disclose to the consumer borrower on a
22document that is separate from the loan application:
23 (1) the fee for the refund anticipation loan or refund
24 anticipation check fee schedule;
25 (1.5) for refund anticipation loans, disclosure of the

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1 refund anticipation loan interest rate. The refund
2 anticipation loan interest rate shall be calculated as set
3 forth in Section 5 the Annual Percentage Rate utilizing a
4 10-day time period;
5 (2) the estimated fee for preparing and electronically
6 filing a tax return;
7 (2.5) for refund anticipation loans, the total cost to
8 the consumer borrower for utilizing a refund anticipation
9 loan;
10 (3) for refund anticipation loans, the estimated date
11 that the loan proceeds will be paid to the consumer
12 borrower if the loan is approved;
13 (4) for refund anticipation loans, that the consumer
14 borrower is responsible for repayment of the loan and
15 related fees in the event the tax refund is not paid or not
16 paid in full; and
17 (5) for refund anticipation loans, the availability of
18 electronic filing for the income tax return of the consumer
19 borrower and the average time announced by the federal
20 Internal Revenue Service within which the consumer
21 borrower can expect to receive a refund if the consumer's
22 borrower's return is filed electronically and the consumer
23 borrower does not obtain a refund anticipation loan.
24(Source: P.A. 92-664, eff. 1-1-03; 93-287, eff. 1-1-04.)
25 (815 ILCS 177/15)

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1 Sec. 15. Posting of fee schedule and disclosures. Penalty.
2 (a) A facilitator shall display a schedule showing the
3current fees for refund anticipation loans, if refund
4anticipation loans are offered, or refund anticipation checks,
5if refund anticipation checks are offered, facilitated at the
6office.
7 (b) A facilitator who offers refund anticipation loans
8shall display on each fee schedule examples of the refund
9anticipation loan interest rates for refund anticipation loans
10of at least 5 different amounts, such as $300, $500, $1,000,
11$1,500, $2,000, and $5,000. The refund anticipation loan
12interest rate shall be calculated as set forth in Section 5 of
13this Act.
14 (c) A facilitator who offers refund anticipation loans
15shall also prominently display on each fee schedule: (i) a
16legend, centered, in bold, capital letters, and in one-inch
17letters stating: "NOTICE CONCERNING REFUND ANTICIPATION LOANS"
18and (ii) the following verbatim statement: "When you take out a
19refund anticipation loan, you are borrowing money against your
20tax refund. If your tax refund is less than expected, you will
21still owe the entire amount of the loan. If your refund is
22delayed, you may have to pay additional costs. YOU CAN GET YOUR
23REFUND IN 8 TO 15 DAYS WITHOUT PAYING ANY EXTRA FEES AND TAKING
24OUT A LOAN. You can have your tax return filed electronically
25and your refund direct deposited into your own financial
26institution account without obtaining a loan or paying fees for

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1an extra product.".
2 (d) The postings required by this Section shall be made in
3no less than 28-point type on a document measuring no less than
416 inches by 20 inches. The postings required by this Section
5shall be displayed in a prominent location at each office where
6the facilitator is facilitating refund anticipation loans.
7 (e) A facilitator may not facilitate a refund anticipation
8loan or refund anticipation check unless (i) the disclosures
9required by this Section are displayed and (ii) the fee
10actually charged for the refund anticipation loan or refund
11anticipation check is the same as the fee displayed on the
12schedule.
13 Any person who violates this Act is guilty of a petty
14offense and shall be fined $500 for each offense. In addition,
15a facilitator who violates this Act shall be liable to any
16aggrieved borrower in an amount equal to 3 times the refund
17anticipation loan fee, plus a reasonable attorney's fee, in a
18civil action brought in the circuit court by the aggrieved
19borrower or by the Attorney General on behalf of the aggrieved
20borrower.
21(Source: P.A. 92-664, eff. 1-1-03.)
22 (815 ILCS 177/20 new)
23 Sec. 20. Advertising and marketing.
24 (a) A facilitator may not market or advertise a refund
25anticipation loan without including this language verbatim:

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1 "(Name of product) is a loan. You can get your refund in 8
2to 15 days without a loan or extra fees if you use e-file and
3direct deposit.".
4 For print advertisements, this information must be printed
5in type size one-half as large as the largest type size in the
6advertisement. For radio and television advertisements, this
7information must receive at least 7 seconds of airtime.
8 (b) A facilitator may not market or advertise a refund
9anticipation check without including this language verbatim:
10 "The (name of product) costs (fee for RAC). You can get
11your refund in the same amount of time without this fee if you
12use e-file and direct deposit.".
13 For print advertisements, this information must be in type
14size 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 (815 ILCS 177/25 new)
18 Sec. 25. Prohibited activities. No person, including any
19officer, agent, employee, or representative, shall:
20 (a) Charge or impose any fee, charge, or other
21consideration in the making or facilitating of a refund
22anticipation loan or refund anticipation check apart from the
23fee charged by the creditor or financial institution that
24provides the loan or check. This prohibition does not include
25any charge or fee imposed by the facilitator to all of its

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1customers, such as fees for tax return preparation, if the same
2fee in the same amount is charged to the customers who do not
3receive refund anticipation loans, refund anticipation checks,
4or any other tax related financial product.
5 (b) Fail to comply with any provision of this Act.
6 (c) Directly or indirectly arrange for any third party to
7charge any interest, fee, or charge related to a refund
8anticipation loan or refund anticipation check, other than the
9refund anticipation loan or refund anticipation check fee
10imposed by the creditor, including but not limited to: (i)
11charges for insurance; (ii) attorneys fees or other collection
12costs; or (iii) check cashing.
13 (d) Include any of the following provisions in any document
14provided or signed in connection with a refund anticipation
15loan or refund anticipation check, including the loan
16application or agreement:
17 (i) A hold harmless clause;
18 (ii) A waiver of the right to a jury trial, if
19 applicable, in any action brought by or against the
20 consumer;
21 (iii) Any assignment of wages or of other compensation
22 for services;
23 (iv) A provision in which the consumer agrees not to
24 assert any claim or defense arising out of the contract, or
25 to seek any remedies pursuant to Section 35 of this Act;
26 (v) A waiver of any provision of this Act. Any such

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1 waiver shall be deemed null, void, and of no effect;
2 (vi) A waiver of the right to injunctive, declaratory,
3 or other equitable relief; or
4 (vii) A provision requiring that any aspect of a
5 resolution of a dispute between the parties to the
6 agreement be kept confidential. This provision shall not
7 affect the right of the parties to agree that certain
8 specified information is a trade secret or otherwise
9 confidential, or to later agree, after the dispute arises,
10 to keep a resolution confidential.
11 (e) Take or arrange for a creditor to take a security
12interest in any property of the consumer other than the
13proceeds of the consumer's tax refund to secure payment of a
14refund anticipation loan.
15 (f) Directly or indirectly, individually or in conjunction
16or cooperation with another person, engage in the collection of
17an outstanding or delinquent refund anticipation loan for any
18creditor or assignee, including soliciting the execution of,
19processing, receiving, or accepting an application or
20agreement for a refund anticipation loan or refund anticipation
21check that contains a provision permitting the creditor to
22repay, by offset or other means, an outstanding or delinquent
23refund anticipation loan for that creditor or any creditor from
24the proceeds of the consumer's tax refund.
25 (g) Facilitate any loan that is secured by or that the
26creditor arranges to be repaid directly from the proceeds of

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1the consumer's State tax refund from the Illinois State
2Treasury.
3 (815 ILCS 177/30 new)
4 Sec. 30. Rate limits for non-bank refund anticipation
5loans.
6 (a) No person shall make or facilitate a refund
7anticipation loan for which the refund anticipation loan
8interest rate is greater than 36% per annum. The refund
9anticipation loan interest rate shall be calculated as set
10forth in Section 5. Any refund anticipation loan for which the
11refund anticipation loan interest rate exceeds 36% per annum
12shall be void ab initio.
13 (b) This Section does not apply to persons facilitating for
14or doing business as a bank, savings bank, savings and loan
15association, or credit union chartered under the laws of the
16United States or this State.
17 (815 ILCS 177/35 new)
18 Sec. 35. Applicability to certain entities. No obligation
19or prohibition imposed upon a creditor, a person, or a
20facilitator by this Act shall apply to a bank, savings bank,
21savings and loan association, or credit union operating under
22the laws of the United States or this State.
23 (815 ILCS 177/40 new)

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1 Sec. 40. Violation. A violation of this Act constitutes an
2unlawful practice under the Consumer Fraud and Deceptive
3Business Practices Act.
4 Section 15. The Consumer Fraud and Deceptive Business
5Practices Act is amended by adding Section 2NNN as follows:
6 (815 ILCS 505/2NNN new)
7 Sec. 2NNN. Violations of the Tax Refund Anticipation Loan
8Reform Act. Any person who violates the Tax Refund Anticipation
9Loan Reform Act commits an unlawful practice within the meaning
10of this Act.
11 Section 97. Severability. The provisions of this Act are
12severable under Section 1.31 of the Statute on Statutes.
13 Section 99. Effective date. This Act takes effect upon
14becoming law.".
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