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.".