Bill Text: IL SB3410 | 2013-2014 | 98th General Assembly | Introduced

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Bill Title: Amends the Payday Loan Reform Act. Authorizes a municipality to limit the number of licensees located in the municipality beginning January 1, 2015. Provides that the limit established by a municipality may be no less than 5. Provides for the Department of Financial and Professional Regulation to randomly nonrenew licenses if the renewed license would result in a number of licenses in excess of the municipal limit. Reduces maximum permissible finance charges.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Failed) 2015-01-13 - Session Sine Die [SB3410 Detail]

Download: Illinois-2013-SB3410-Introduced.html

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98TH GENERAL ASSEMBLY State of Illinois 2013 and 2014 SB3410 Introduced 2/14/2014, by Sen. Andy Manar SYNOPSIS AS INTRODUCED:
815 ILCS 122/2-5
815 ILCS 122/3-5
Amends the Payday Loan Reform Act. Authorizes a municipality to limit the number of licensees located in the municipality beginning January 1, 2015. Provides that the limit established by a municipality may be no less than 5. Provides for the Department of Financial and Professional Regulation to randomly nonrenew licenses if the renewed license would result in a number of licenses in excess of the municipal limit. Reduces maximum permissible finance charges.
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A BILL FOR
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AN ACT concerning regulation.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Payday Loan Reform Act is amended by
changing Sections 2-5 and 3-5 as follows:
(815 ILCS 122/2-5)
Sec. 2-5. Loan terms.
(a) Without affecting the right of a consumer to prepay at
any time without cost or penalty, no payday loan may have a
minimum term of less than 13 days.
(b) Except for an installment payday loan as defined in
this Section, no payday loan may be made to a consumer if the
loan would result in the consumer being indebted to one or more
payday lenders for a period in excess of 45 consecutive days.
Except as provided under subsection (c) of this Section and
Section 2-40, if a consumer has or has had loans outstanding
for a period in excess of 45 consecutive days, no payday lender
may offer or make a loan to the consumer for at least 7
calendar days after the date on which the outstanding balance
of all payday loans made during the 45 consecutive day period
is paid in full. For purposes of this subsection, the term
"consecutive days" means a series of continuous calendar days
in which the consumer has an outstanding balance on one or more

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payday loans; however, if a payday loan is made to a consumer
within 6 days or less after the outstanding balance of all
loans is paid in full, those days are counted as "consecutive
days" for purposes of this subsection.
(c) Notwithstanding anything in this Act to the contrary, a
payday loan shall also include any installment loan otherwise
meeting the definition of payday loan contained in Section
1-10, but that has a term agreed by the parties of not less
than 112 days and not exceeding 180 days; hereinafter an
"installment payday loan". The following provisions shall
apply:
(i) Any installment payday loan must be fully
amortizing, with a finance charge calculated on the
principal balances scheduled to be outstanding and be
repayable in substantially equal and consecutive
installments, according to a payment schedule agreed by the
parties with not less than 13 days and not more than one
month between payments; except that the first installment
period may be longer than the remaining installment periods
by not more than 15 days, and the first installment payment
may be larger than the remaining installment payments by
the amount of finance charges applicable to the extra days.
In calculating finance charges under this subsection, when
the first installment period is longer than the remaining
installment periods, the amount of the finance charges
applicable to the extra days shall not be greater than

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$7.75 $15.50 per $100 of the original principal balance
divided by the number of days in a regularly scheduled
installment period and multiplied by the number of extra
days determined by subtracting the number of days in a
regularly scheduled installment period from the number of
days in the first installment period.
(ii) An installment payday loan may be refinanced by a
new installment payday loan one time during the term of the
initial loan; provided that the total duration of
indebtedness on the initial installment payday loan
combined with the total term of indebtedness of the new
loan refinancing that initial loan, shall not exceed 180
days. For purposes of this Act, a refinancing occurs when
an existing installment payday loan is paid from the
proceeds of a new installment payday loan.
(iii) In the event an installment payday loan is paid
in full prior to the date on which the last scheduled
installment payment before maturity is due, other than
through a refinancing, no licensee may offer or make a
payday loan to the consumer for at least 2 calendar days
thereafter.
(iv) No installment payday loan may be made to a
consumer if the loan would result in the consumer being
indebted to one or more payday lenders for a period in
excess of 180 consecutive days. The term "consecutive days"
does not include the date on which a consumer makes the

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final installment payment.
(d) (Blank).
(e) No lender may make a payday loan to a consumer if the
total of all payday loan payments coming due within the first
calendar month of the loan, when combined with the payment
amount of all of the consumer's other outstanding payday loans
coming due within the same month, exceeds the lesser of:
(1) $1,000; or
(2) in the case of one or more payday loans, 25% of the
consumer's gross monthly income; or
(3) in the case of one or more installment payday
loans, 22.5% of the consumer's gross monthly income; or
(4) in the case of a payday loan and an installment
payday loan, 22.5% of the consumer's gross monthly income.
No loan shall be made to a consumer who has an outstanding
balance on 2 payday loans, except that, for a period of 12
months after the effective date of this amendatory Act of the
96th General Assembly, consumers with an existing CILA loan may
be issued an installment loan issued under this Act from the
company from which their CILA loan was issued.
(e-5) Except as provided in subsection (c)(i), no lender
may charge more than $7.75 $15.50 per $100 loaned on any payday
loan, or more than $7.75 $15.50 per $100 on the initial
principal balance and on the principal balances scheduled to be
outstanding during any installment period on any installment
payday loan. Except for installment payday loans and except as

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provided in Section 2-25, this charge is considered fully
earned as of the date on which the loan is made. For purposes
of determining the finance charge earned on an installment
payday loan, the disclosed annual percentage rate shall be
applied to the principal balances outstanding from time to time
until the loan is paid in full, or until the maturity date,
which ever occurs first. No finance charge may be imposed after
the final scheduled maturity date.
When any loan contract is paid in full, the licensee shall
refund any unearned finance charge. The unearned finance charge
that is refunded shall be calculated based on a method that is
at least as favorable to the consumer as the actuarial method,
as defined by the federal Truth in Lending Act. The sum of the
digits or rule of 78ths method of calculating prepaid interest
refunds is prohibited.
(f) A lender may not take or attempt to take an interest in
any of the consumer's personal property to secure a payday
loan.
(g) A consumer has the right to redeem a check or any other
item described in the definition of payday loan under Section
1-10 issued in connection with a payday loan from the lender
holding the check or other item at any time before the payday
loan becomes payable by paying the full amount of the check or
other item.
(Source: P.A. 96-936, eff. 3-21-11; 97-421, eff. 1-1-12.)

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(815 ILCS 122/3-5)
Sec. 3-5. Licensure.
(a) A license to make a payday loan shall state the
address, including city and state, at which the business is to
be conducted and shall state fully the name of the licensee.
The license shall be conspicuously posted in the place of
business of the licensee and shall not be transferable or
assignable.
(b) An application for a license shall be in writing and in
a form prescribed by the Secretary. The Secretary may not issue
a payday loan license unless and until the following findings
are made:
(1) that the financial responsibility, experience,
character, and general fitness of the applicant are such as
to command the confidence of the public and to warrant the
belief that the business will be operated lawfully and
fairly and within the provisions and purposes of this Act;
and
(2) that the applicant has submitted such other
information as the Secretary may deem necessary; and .
(3) that the issuance of the license would not result
in the number of licenses being issued for locations in a
municipality exceeding any limit upon the number of
licensed locations authorized by the municipality.
(c) A license shall be issued for no longer than one year,
and no renewal of a license may be provided if a licensee has

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substantially violated this Act and has not cured the violation
to the satisfaction of the Department or if the renewal of the
license would result in a number of licenses in a municipality
exceeding the limit upon the number of licensed locations
authorized by the municipality. If a municipality establishes a
limit on the number of licensed locations that is less than the
number of licenses sought to be renewed, the Department shall
randomly determine which licenses to refuse to renew.
(d) A licensee shall appoint, in writing, the Secretary as
attorney-in-fact upon whom all lawful process against the
licensee may be served with the same legal force and validity
as if served on the licensee. A copy of the written
appointment, duly certified, shall be filed in the office of
the Secretary, and a copy thereof certified by the Secretary
shall be sufficient evidence to subject a licensee to
jurisdiction in a court of law. This appointment shall remain
in effect while any liability remains outstanding in this State
against the licensee. When summons is served upon the Secretary
as attorney-in-fact for a licensee, the Secretary shall
immediately notify the licensee by registered mail, enclosing
the summons and specifying the hour and day of service.
(e) A licensee must pay an annual fee of $1,000. In
addition to the license fee, the reasonable expense of any
examination or hearing by the Secretary under any provisions of
this Act shall be borne by the licensee. If a licensee fails to
renew its license by December 31, its license shall

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automatically expire; however, the Secretary, in his or her
discretion, may reinstate an expired license upon:
(1) payment of the annual fee within 30 days of the
date of expiration; and
(2) proof of good cause for failure to renew.
(f) Not more than one place of business shall be maintained
under the same license, but the Secretary may issue more than
one license to the same licensee upon compliance with all the
provisions of this Act governing issuance of a single license.
The location, except those locations already in existence as of
June 1, 2005, may not be within one mile of a horse race track
subject to the Illinois Horse Racing Act of 1975, within one
mile of a facility at which gambling is conducted under the
Riverboat Gambling Act, within one mile of the location at
which a riverboat subject to the Riverboat Gambling Act docks,
or within one mile of any State of Illinois or United States
military base or naval installation.
(g) No licensee shall conduct the business of making loans
under this Act within any office, suite, room, or place of
business in which (1) any loans are offered or made under the
Consumer Installment Loan Act other than title secured loans as
defined in subsection (a) of Section 15 of the Consumer
Installment Loan Act and governed by Title 38, Section 110.330
of the Illinois Administrative Code or (2) any other business
is solicited or engaged in unless the other business is
licensed by the Department or, in the opinion of the Secretary,

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the other business would not be contrary to the best interests
of consumers and is authorized by the Secretary in writing.
(g-5) Notwithstanding subsection (g) of this Section, a
licensee may obtain a license under the Consumer Installment
Loan Act (CILA) for the exclusive purpose and use of making
title secured loans, as defined in subsection (a) of Section 15
of CILA and governed by Title 38, Section 110.300 of the
Illinois Administrative Code. A licensee may continue to
service Consumer Installment Loan Act loans that were
outstanding as of the effective date of this amendatory Act of
the 96th General Assembly.
(h) The Secretary shall maintain a list of licensees that
shall be available to interested consumers and lenders and the
public. The Secretary shall maintain a toll-free number whereby
consumers may obtain information about licensees. The
Secretary shall also establish a complaint process under which
an aggrieved consumer may file a complaint against a licensee
or non-licensee who violates any provision of this Act.
(i) A municipality may by ordinance limit the number of
licensees under this Act that may be located in the
municipality on and after January 1, 2015. The limit
established by the municipality may not be fewer than 5
licenses.
(Source: P.A. 96-936, eff. 3-21-11.)