|
| Public Act 103-0974
|
| SB3314 Enrolled | LRB103 39360 SPS 69523 b |
|
|
|
AN ACT concerning business.
|
Be it enacted by the People of the State of Illinois, |
represented in the General Assembly:
|
Section 5. The Consumer Legal Funding Act is amended by |
changing Sections 5, 25, 30, 55, 65, 135, 165, and 170 as |
follows:
|
(815 ILCS 121/5) |
Sec. 5. Definitions. |
"Advertise" means publishing or disseminating any written, |
electronic, or printed communication, or any communication by |
means of recorded telephone messages or transmitted on radio, |
television, the Internet, or similar communications media, |
including film strips, motion pictures, and videos, published, |
disseminated, circulated, or placed before the public, |
directly or indirectly, for the purpose of inducing a consumer |
to enter into a consumer legal funding. |
"Charges" means the fees, as set forth in Section 25, to be |
paid to the consumer legal funding company by or on behalf of |
the consumer above the funded amount provided by or on behalf |
of the company to an Illinois consumer pursuant to this Act. |
"Consumer" means a natural person who has a pending legal |
claim and who resides or is domiciled in Illinois. |
"Consumer legal funding" or "funding" means a nonrecourse |
|
transaction in which a company purchases and a consumer |
transfers to the company an unvested, contingent future |
interest in the potential net proceeds of a settlement or |
judgment obtained from the consumer's legal claim; and in |
which, if no proceeds are obtained from the consumer's legal |
claim, the consumer is not required to repay the company the |
consumer legal funding amount or charges. |
"Consumer legal funding company" or "company" means a |
person or entity that enters into, purchases, or services a |
consumer legal funding transaction with an Illinois consumer. |
"Consumer legal funding company" does not include: |
(1) an immediate family member of the consumer; |
(2) a bank, lender, financing entity, or other special |
purpose entity: |
(A) that provides financing to a consumer legal |
funding company; or |
(B) to which a consumer legal funding company |
grants a security interest or transfers any rights or |
interest in a consumer legal funding; or |
(3) an attorney or accountant who provides services to |
a consumer. |
"Department" means the Department of Financial and |
Professional Regulation. |
"Funded amount" means the amount of moneys provided to, or |
on behalf of, the consumer in the consumer legal funding. |
"Funded amount" does not include charges except for charges |
|
that are deducted from the funded amount. |
"Funding date" means the date on which the funded amount |
is transferred to the consumer by the consumer legal funding |
company either by personal delivery; via wire, ACH, or other |
electronic means; or mailed by insured, certified, or |
registered United States mail. |
"Immediate family member" means a parent; sibling; child |
by blood, adoption, or marriage; spouse; grandparent; or |
grandchild. |
"Legal claim" means a bona fide civil claim or cause of |
action. |
"Resolution amount" means the funded amount plus the |
agreed-upon charges that are delivered to the consumer legal |
funding company on the resolution date. |
"Resolution date" means the date the resolution amount is |
delivered to the consumer legal funding company. |
"Secretary" means the Secretary of Financial and |
Professional Regulation or the Secretary's designee. |
(Source: P.A. 102-987, eff. 5-27-22.)
|
(815 ILCS 121/25) |
Sec. 25. Fees. |
(a) The fee charged by a consumer legal funding company to |
the consumer shall be calculated as not more than 18% of the |
funded amount, assessed on the outset of every 6 months. |
(b) In addition, a consumer legal funding company may |
|
charge a document preparation fee not to exceed $75, which may |
be deducted from the funded amount. This fee is to be used to |
defray the ordinary cost of opening, administering, and |
terminating a consumer legal funding. |
(c) A consumer legal funding company shall not collect any |
additional fees unless otherwise specified in this Act. |
(d) No charges may accrue on a consumer legal funding for |
more than 42 months after the funding date of the consumer |
legal funding. No consumer legal funding may be refinanced |
except as authorized by rule. Notwithstanding the foregoing, a |
consumer legal funding company may assess charges on any |
additional amounts provided after the funding date for 42 |
months after the additional funding date. |
(e) Notwithstanding any other law, a consumer legal |
funding may be refinanced as authorized by rule. The |
Department shall publish first notice of a rule concerning the |
refinancing of consumer legal fundings in the Illinois |
Register in accordance with the Illinois Administrative |
Procedure Act within 120 days after the effective date of this |
amendatory Act of the 103rd General Assembly. |
(Source: P.A. 102-987, eff. 5-27-22.)
|
(815 ILCS 121/30) |
Sec. 30. Disclosures. All consumer legal funding contracts |
shall contain the disclosures specified in this Section, which |
shall constitute material terms of the contract. Unless |
|
otherwise specified, the disclosures shall be typed in at |
least 12-point bold-type font and be placed clearly and |
conspicuously within the contract as follows: |
(1) On the front page under appropriate headings, |
language specifying: |
(A) the funded amount to be paid to the consumer or |
on the consumer's behalf by the consumer legal funding |
company; |
(B) an itemization of charges; |
(C) the maximum total amount to be paid by the |
consumer to the company, including the funded amount |
and all fees; and |
(D) a payment schedule to include the resolution |
amount, listing dates, and the amount due at the end of |
each 6-month period from the funding date, until the |
date the maximum amount is due to the company by the |
consumer to satisfy the amount due pursuant to the |
contract. |
(2) Pursuant to the provisions set forth in paragraph |
(2) of subsection (a) of Section 10, within the body of the |
contract: "CONSUMER'S RIGHT TO CANCELLATION: You may |
cancel this contract without penalty or further obligation |
within 14 business days after the funding date if you |
either: |
(A) return to the consumer legal funding company |
the full amount of the funds disbursed to you or on |
|
your behalf by delivering the company's uncashed check |
to the company's office in person; or |
(B) place in the mail, by mail service materially |
equivalent to United States Postal Service certified |
mail, addressed to the company at the address |
specified in the contract, a notice of cancellation |
and include in such mailing a return of the full amount |
of funds disbursed to you or on your behalf in the form |
of the company's uncashed check or a registered or |
certified check or money order." |
(3) Within the body of the contract: "The consumer |
legal funding company shall have no role in deciding |
whether, when, and how much the legal claim is settled |
for, however, the consumer and consumer's attorney must |
notify the company of the outcome of the legal claim by |
settlement or adjudication before the resolution date. The |
company may seek updated information about the status of |
the legal claim but in no event shall the company |
interfere with the independent professional judgment of |
the attorney in the handling of the legal claim or any |
settlement thereof." |
(4) Within the body of the contract, in all capital |
letters in at least 12-point bold-type font contained |
within a box: "THE FUNDED AMOUNT AND AGREED-UPON CHARGES |
SHALL BE PAID ONLY FROM THE PROCEEDS OF YOUR LEGAL CLAIM, |
AND SHALL BE PAID ONLY TO THE EXTENT THAT THERE ARE |
|
AVAILABLE PROCEEDS FROM YOUR LEGAL CLAIM. YOU WILL NOT OWE |
[INSERT NAME OF THE CONSUMER LEGAL FUNDING COMPANY] |
ANYTHING IF THERE ARE NO REMAINING PROCEEDS AVAILABLE FROM |
YOUR LEGAL CLAIM, UNLESS YOU OR YOUR ATTORNEY HAVE |
COMMITTED FRAUD AGAINST THE CONSUMER LEGAL FUNDING |
COMPANY. NOTWITHSTANDING ANYTHING TO THE CONTRARY, YOU MAY |
REFINANCE THE FUNDED AMOUNT AND AGREED UPON CHARGES AS |
AUTHORIZED BY RULE." |
(5) Located immediately above the place on the |
contract where the consumer's signature is required, in |
12-point font: "Do not sign this contract before you read |
it completely or if it contains any blank spaces. You are |
entitled to a completely filled-in copy of the contract. |
Before you sign this contract, you should obtain the |
advice of an attorney. Depending on the circumstances, you |
may want to consult a tax, public or private benefits |
planning, or financial professional. You acknowledge that |
your attorney in the legal claim has provided no tax, |
public or private benefit planning, or financial advice |
regarding this transaction." |
(6) The consumer legal funding company shall provide |
the consumer with information on accessing a financial |
coaching program no later than the funding date. |
(Source: P.A. 102-987, eff. 5-27-22.)
|
(815 ILCS 121/55) |
|
Sec. 55. Consumer legal funding license scope. |
(a) It shall be unlawful for any person or entity to |
operate as a consumer legal funding company provider in this |
State except as authorized by this Act and without first |
having obtained a license in accordance with this Act. No |
person or entity may engage in any device, subterfuge, or |
pretense to evade the requirements of this Act. However, any |
company that has a license in good standing under the Consumer |
Installment Loan Act on the effective date of this Act shall be |
entitled to make consumer legal fundings under the terms of |
this Act upon the effective date of this Act if that company |
files an application for a consumer legal funding license |
within 60 days after the Department issues forms for the |
filing of that application and until the Department approves |
or denies the application for a funding license. Any consumer |
legal funding contract made by any person or entity in |
violation of this subsection shall be null and void and the |
person or entity who entered into the consumer legal funding |
transaction shall have no right to collect, attempt to |
collect, receive, or retain any principal, interest, or |
charges related to the consumer legal funding transaction. |
(b) The provisions of this Act do not apply to a bank, |
savings bank, savings association, or credit union organized |
under the laws of this State, any other state, or under the |
laws of the United States. |
(c) Any consumer legal funding made by a person not |
|
licensed under this Act, including a person holding an |
inactive license, and not exempt under this Act shall be null |
and void, and no person or entity shall have any right to |
collect, attempt to collect, receive, or retain any principal, |
fee, interest, or charges related to the funding. |
(Source: P.A. 102-987, eff. 5-27-22.)
|
(815 ILCS 121/65) |
Sec. 65. License application process; investigation. |
(a) The Secretary may issue a license upon completion of |
all of the following: |
(1) the filing of an application for a license with |
the Secretary or the Nationwide Multistate Licensing |
System and Registry as required by the Secretary; |
(2) the filing with the Secretary of a listing of |
judgments entered against and bankruptcy petitions by the |
license applicant for the preceding 10 years; |
(3) the filing of an audited balance sheet, including |
all footnotes prepared by a certified public accountant in |
accordance with generally accepted accounting principles |
and generally accepted auditing standards; notwithstanding |
the requirements of this subsection, an applicant that is |
a subsidiary may submit audited consolidated financial |
statements of its parent, intermediary parent, or ultimate |
parent if the consolidated statements are supported by |
consolidating statements that include the applicant's |
|
financial statement; if the consolidating statements are |
unaudited, the applicant's chief financial officer shall |
attest to the applicant's financial statements disclosed |
in the consolidating statements; and |
(4) an investigation of the averments required by |
Section 80, which investigation must allow the Secretary |
to issue positive findings stating that the financial |
responsibility, experience, character, and general fitness |
of the license applicant; of the members thereof if the |
license applicant is a partnership or association; of the |
officers and directors thereof if the license applicant is |
a corporation; and of the managers and members that retain |
any authority or responsibility under the operating |
agreement if the license applicant is a limited liability |
company are such as to command the confidence of the |
community and to warrant belief that the business will be |
operated honestly, fairly, and efficiently within the |
purpose of this Act; if the Secretary does not so find, he |
or she shall not issue the license and shall notify the |
license applicant of the denial. The Secretary may impose |
conditions on a license if the Secretary determines that |
those conditions are necessary or appropriate. These |
conditions shall be imposed in writing and shall continue |
in effect for a period prescribed by the Secretary. |
(b) All licenses shall be issued to the license applicant. |
Upon receipt of the license, a consumer legal funding licensee |
|
shall be authorized to engage in the business regulated by |
this Act. The license shall remain in full force and effect |
until it expires, it is surrendered by the licensee, or it is |
revoked or suspended as provided by this Act. |
(c) The Secretary may, for good cause shown, waive, in |
part, any of the requirements of this Section. |
(Source: P.A. 102-987, eff. 5-27-22.)
|
(815 ILCS 121/135) |
Sec. 135. Suspension; revocation of licenses; fines. |
(a) Upon written notice to a licensee, the Secretary may |
suspend or revoke any license issued pursuant to this Act if, |
in the notice, he or she makes a finding of one or more of the |
following: |
(1) that through separate acts or an act or a course of |
conduct, the licensee has violated any provisions of this |
Act, any rule adopted by the Department, or any other law, |
rule, or regulation of this State or the United States; |
(2) that any fact or condition exists that, if it had |
existed at the time of the original application for the |
license, would have warranted the Secretary in refusing |
originally to issue the license; or |
(3) that if a licensee is other than an individual, |
any ultimate equitable owner, officer, director, or member |
of the licensed partnership, association, corporation, or |
other entity has acted or failed to act in a way that would |
|
be cause for suspending or revoking a license to that |
party as an individual. |
(b) No license shall be suspended or revoked, except as |
provided in this Section, nor shall any licensee be fined |
without notice of his or her right to a hearing as provided in |
subsection (n). |
(c) The Secretary, on good cause shown that an emergency |
exists, may suspend any license for a period not exceeding 180 |
days, pending investigation. |
(d) The provisions of subsection (d) of Section 95 shall |
not affect a licensee's civil or criminal liability for acts |
committed before surrender of a license. |
(e) No revocation, suspension, or surrender of any license |
shall impair or affect the obligation of any preexisting |
lawful contract between the licensee and any person. |
(f) Every license issued under this Act shall remain in |
force and effect until the license expires without renewal, is |
surrendered, is revoked, or is suspended in accordance with |
the provisions of this Act, but the Secretary shall have |
authority to reinstate a suspended license or to issue a new |
license to a licensee whose license has been revoked if no fact |
or condition then exists which would have warranted the |
Secretary in refusing originally to issue that license under |
this Act. |
(g) Whenever the Secretary revokes or suspends a license |
issued pursuant to this Act or fines a licensee under this Act, |
|
he or she shall execute a written order to that effect. The |
Secretary shall serve a copy of the order upon the licensee. |
Any such order may be reviewed in the manner provided by |
Section 170. |
(h) If the Secretary finds any person in violation of the |
grounds set forth in subsection (p), he or she may enter an |
order imposing one or more of the following penalties: |
(1) revocation of license; |
(2) suspension of a license subject to reinstatement |
upon satisfying all reasonable conditions the Secretary |
may specify; |
(3) placement of the licensee or applicant on |
probation for a period of time and subject to all |
reasonable conditions as the Secretary may specify; |
(4) issuance of a reprimand; |
(5) imposition of a fine not to exceed $25,000 for |
each count of separate offense; except that a fine may be |
imposed that shall not exceed $75,000 for each separate |
count of offense in violation of paragraph (2) or (14) of |
subsection (p) (i); |
(6) denial of a license; or |
(7) restitution for the benefit of consumers. |
(i) (Blank). The Secretary may, after 10 days' notice by |
certified mail to the licensee at the address set forth in the |
license stating the contemplated action and in general the |
grounds therefor, fine the licensee an amount not exceeding |
|
$10,000 per violation or revoke or suspend any license issued |
under this Act if he or she finds that: |
(1) the licensee has failed to comply with any |
provision of this Act, any rule adopted pursuant to this |
Act, or any order, decision, finding, or direction of the |
Secretary lawfully made pursuant to the authority of this |
Act; or |
(2) any fact or condition exists which, if it had |
existed at the time of the original application for the |
license, clearly would have warranted the Secretary in |
refusing to issue the license. |
(j) The Secretary may fine, suspend, or revoke only the |
particular license with respect to which grounds for the fine, |
revocation, or suspension occur or exist, but if the Secretary |
finds that grounds for revocation are of general application |
to all offices or to more than one office of the licensee, the |
Secretary shall fine, suspend, or revoke every license to |
which the grounds apply. |
(k) No revocation, suspension, or surrender of any license |
shall impair or affect the obligation of any preexisting |
lawful contract between the licensee and any obligor. |
(l) The Secretary may issue a new license to a licensee |
whose license has been revoked when facts or conditions which |
clearly would have warranted the Secretary in refusing |
originally to issue the license no longer exist. |
(m) In every case in which a license is suspended or |
|
revoked or an application for a license or renewal of a license |
is denied, the Secretary shall serve the licensee with notice |
of his or her action, including a statement of the reasons for |
his or her actions, either personally or by certified mail. |
Service by certified mail shall be deemed completed when the |
notice is deposited in the U.S. mail. |
(n) An order assessing a fine, an order revoking or |
suspending a license, or an order denying renewal of a license |
shall take effect upon service of the order unless the |
licensee requests a hearing, in writing, within 10 days after |
the date of service. If a hearing is requested, the order shall |
be stayed until a final administrative order is entered. |
(1) If the licensee requests a hearing, the Secretary |
shall schedule a hearing within 30 days after the request |
for a hearing unless otherwise agreed to by the parties. |
(2) The hearing shall be held at the time and place |
designated by the Secretary. The Secretary and any |
administrative law judge designated by him or her shall |
have the power to administer oaths and affirmations, |
subpoena witnesses and compel their attendance, take |
evidence, and require the production of books, papers, |
correspondence, and other records or information that he |
or she considers relevant or material to the inquiry. |
(o) The costs of administrative hearings conducted |
pursuant to this Section shall be paid by the licensee. |
(p) The following acts shall constitute grounds for which |
|
the disciplinary actions specified in subsection (h) may be |
taken: |
(1) being convicted or found guilty, regardless of |
pendency of an appeal, of a crime in any jurisdiction that |
involves fraud, dishonest dealing, or any other act of |
moral turpitude; |
(2) fraud, misrepresentation, deceit, or negligence in |
any relation to any consumer legal funding; |
(3) a material or intentional misstatement of fact on |
an initial or renewal application; |
(3.5) any fact or condition exists that, if it had |
existed at the time of the original application for the |
license, would have warranted the Secretary in refusing to |
originally issue the license; |
(4) insolvency or filing under any provision of the |
United States Bankruptcy Code as a debtor; |
(5) failure to account or deliver to any person any |
property, such as any money, fund, deposit, check, draft, |
or other document or thing of value, that has come into his |
or her hands and that is not his or her property or that he |
or she is not in law or equity entitled to retain, under |
the circumstances and at the time which has been agreed |
upon or is required by law, or, in the absence of a fixed |
time, upon demand of the person entitled to such |
accounting and delivery; |
(6) failure to disburse funds in accordance with |
|
agreements; |
(7) having a license, or the equivalent, to practice |
any profession or occupation revoked, suspended, or |
otherwise acted against, including the denial of licensure |
by a licensing authority of this State or another state, |
territory, or country, for fraud, dishonest dealing, or |
any other act of moral turpitude; |
(8) failure to comply with an order of the Secretary |
or rule adopted under the provisions of this Act; |
(9) engaging in activities regulated by this Act |
without a current, active license unless specifically |
exempted by this Act; |
(10) failure to pay in a timely manner any fee, |
charge, or fine under this Act; |
(11) failure to maintain, preserve, and keep available |
for examination all books, accounts, or other documents |
required by the provisions of this Act and the rules of the |
Department; |
(12) refusing, obstructing, evading, or unreasonably |
delaying an investigation, information request, or |
examination authorized under this Act, or refusing, |
obstructing, evading, or unreasonably delaying compliance |
with the Secretary's subpoena or subpoena duces tecum; |
(13) failure to comply with or a violation of any |
provision of this Act; and |
(14) any unfair, deceptive, or abusive business |
|
practice. |
(q) A licensee shall be subject to the disciplinary |
actions specified in this Act for violations of subsection (i) |
by any officer, director, shareholder, joint venture, partner, |
ultimate equitable owner, or employee of the licensee. |
(r) A licensee shall be subject to suspension or |
revocation for unauthorized employee actions only if there is |
a pattern of repeated violations by employees, the licensee |
has knowledge of the violations, or there is substantial harm |
to a consumer. A licensee may be subject to fine for employee |
actions, whether authorized or unauthorized, whether there is |
a pattern of repeated violations or no pattern of repeated |
violations. |
(s) Any licensee may submit an application to surrender a |
license, but, upon the Secretary approving the surrender, it |
shall not affect the licensee's civil or criminal liability |
for acts committed before surrender or entitle the licensee to |
a return of any part of the license fee. |
(Source: P.A. 102-987, eff. 5-27-22.)
|
(815 ILCS 121/165) |
Sec. 165. Rules of the Department. |
(a) In addition to such powers as may be prescribed by this |
Act, the Department is hereby authorized and empowered to |
adopt rules consistent with the purposes of this Act, |
including, but not limited to: |
|
(1) rules in connection with the activities of |
licensees or unlicensed consumer legal funding companies |
as may be necessary and appropriate for the protection of |
consumers in this State; |
(2) rules as may be necessary and appropriate to |
define improper or fraudulent business practices in |
connection with the activities of licensees in servicing |
consumer legal fundings; |
(3) rules that define the terms used in this Act and as |
may be necessary and appropriate to interpret and |
implement the provisions of this Act; and |
(4) rules as may be necessary for the enforcement and |
administration of this Act; and . |
(5) rules to permit the refinancing of consumer legal |
fundings. |
(b) The Secretary is hereby authorized and empowered to |
make specific rulings, demands, and findings that he or she |
deems necessary for the proper conduct of the consumer legal |
funding company industry. |
(Source: P.A. 102-987, eff. 5-27-22.)
|
