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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:
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| 815 ILCS 122/2-5 | | 815 ILCS 122/3-5 | |
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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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| 1 | | AN ACT concerning regulation.
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| 2 | | Be it enacted by the People of the State of Illinois,
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| 3 | | represented in the General Assembly:
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| 4 | | Section 5. The Payday Loan Reform Act is amended by |
| 5 | | changing Sections 2-5 and 3-5 as follows:
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| 6 | | (815 ILCS 122/2-5)
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| 7 | | Sec. 2-5. Loan terms. |
| 8 | | (a) Without affecting the right of a consumer to prepay at |
| 9 | | any time without cost or penalty, no payday loan may have a |
| 10 | | minimum term of less than 13 days. |
| 11 | | (b) Except for an installment payday loan as defined in |
| 12 | | this Section,
no payday loan may be made to a consumer if the |
| 13 | | loan would result in the consumer being indebted to one or more |
| 14 | | payday lenders for a period in excess of 45 consecutive days. |
| 15 | | Except as provided under subsection (c) of this Section and |
| 16 | | Section 2-40, if a consumer has or has had loans outstanding |
| 17 | | for a period in excess of 45 consecutive days, no payday lender |
| 18 | | may offer or make a loan to the consumer for at least 7 |
| 19 | | calendar days after the date on which the outstanding balance |
| 20 | | of all payday loans made during the 45 consecutive day period |
| 21 | | is paid in full. For purposes of this subsection, the term |
| 22 | | "consecutive days" means a series of continuous calendar days |
| 23 | | in which the consumer has an outstanding balance on one or more |
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| 1 | | payday loans; however, if a payday loan is made to a consumer |
| 2 | | within 6 days or less after the outstanding balance of all |
| 3 | | loans is paid in full, those days are counted as "consecutive |
| 4 | | days" for purposes of this subsection. |
| 5 | | (c) Notwithstanding anything in this Act to the contrary, a |
| 6 | | payday loan
shall also include any installment loan otherwise |
| 7 | | meeting the definition of
payday loan contained in Section |
| 8 | | 1-10, but that has a term agreed by the
parties of not less |
| 9 | | than 112 days and not exceeding 180 days; hereinafter an
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| 10 | | "installment payday loan". The following provisions shall |
| 11 | | apply:
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| 12 | | (i) Any installment payday loan must be fully |
| 13 | | amortizing, with a finance
charge calculated on the |
| 14 | | principal balances scheduled to be outstanding and
be |
| 15 | | repayable in substantially equal and consecutive |
| 16 | | installments, according
to a payment schedule agreed by the |
| 17 | | parties with not less than 13 days and
not more than one |
| 18 | | month between payments; except that the first installment
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| 19 | | period may be longer than the remaining installment periods |
| 20 | | by not more than
15 days, and the first installment payment |
| 21 | | may be larger than the remaining
installment payments by |
| 22 | | the amount of finance charges applicable to the
extra days. |
| 23 | | In calculating finance charges under this subsection, when |
| 24 | | the first installment period is longer than the remaining |
| 25 | | installment periods, the amount of the finance charges |
| 26 | | applicable to the extra days shall not be greater than |
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| 1 | | $7.75 $15.50 per $100 of the original principal balance |
| 2 | | divided by the number of days in a regularly scheduled |
| 3 | | installment period and multiplied by the number of extra |
| 4 | | days determined by subtracting the number of days in a |
| 5 | | regularly scheduled installment period from the number of |
| 6 | | days in the first installment period. |
| 7 | | (ii) An installment payday loan may be refinanced by a |
| 8 | | new installment
payday loan one time during the term of the |
| 9 | | initial loan; provided that the
total duration of |
| 10 | | indebtedness on the initial installment payday loan |
| 11 | | combined
with the total term of indebtedness of the new |
| 12 | | loan refinancing that initial
loan, shall not exceed 180 |
| 13 | | days. For purposes of this Act, a refinancing
occurs when |
| 14 | | an existing installment payday loan is paid from the |
| 15 | | proceeds of
a new installment payday loan. |
| 16 | | (iii) In the event an installment payday loan is paid |
| 17 | | in full prior to
the date on which the last scheduled |
| 18 | | installment payment before maturity is
due, other than |
| 19 | | through a refinancing, no licensee may offer or make a |
| 20 | | payday
loan to the consumer for at least 2 calendar days |
| 21 | | thereafter. |
| 22 | | (iv) No installment payday loan may be made to a |
| 23 | | consumer if the loan would
result in the consumer being |
| 24 | | indebted to one or more payday lenders for a
period in |
| 25 | | excess of 180 consecutive days. The term "consecutive days" |
| 26 | | does not include the date on which a consumer makes the |
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| 1 | | final installment payment. |
| 2 | | (d) (Blank). |
| 3 | | (e) No lender may make a payday loan to a consumer if the |
| 4 | | total of all payday loan payments coming due within the first |
| 5 | | calendar month of the loan, when combined with the payment |
| 6 | | amount of all of the consumer's other outstanding payday loans |
| 7 | | coming due within the same month, exceeds the lesser of: |
| 8 | | (1) $1,000; or |
| 9 | | (2) in the case of one or more payday loans, 25% of the |
| 10 | | consumer's gross monthly income; or |
| 11 | | (3) in the case of one or more installment payday |
| 12 | | loans, 22.5% of the consumer's gross monthly income; or |
| 13 | | (4) in the case of a payday loan and an installment |
| 14 | | payday loan, 22.5% of the consumer's gross monthly income. |
| 15 | | No loan shall be made to a consumer who has an outstanding |
| 16 | | balance on 2 payday loans, except that, for a period of 12 |
| 17 | | months after the effective date of this amendatory Act of the |
| 18 | | 96th General Assembly, consumers with an existing CILA loan may |
| 19 | | be issued an installment loan issued under this Act from the |
| 20 | | company from which their CILA loan was issued. |
| 21 | | (e-5) Except as provided in subsection (c)(i), no lender |
| 22 | | may charge more than $7.75 $15.50 per $100 loaned on any payday |
| 23 | | loan, or more than $7.75 $15.50 per $100 on the initial |
| 24 | | principal balance and on the principal balances scheduled to be |
| 25 | | outstanding during any installment period on any installment |
| 26 | | payday loan. Except for installment payday loans and except as |
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| 1 | | provided in Section 2-25, this charge is considered fully |
| 2 | | earned as of the date on which the loan is made. For purposes |
| 3 | | of determining the finance charge earned on an installment |
| 4 | | payday loan, the disclosed annual percentage rate shall be |
| 5 | | applied to the principal balances outstanding from time to time |
| 6 | | until the loan is paid in full, or until the maturity date, |
| 7 | | which ever occurs first. No finance charge may be imposed after |
| 8 | | the final scheduled maturity date. |
| 9 | | When any loan contract is paid in full, the licensee shall |
| 10 | | refund any unearned finance charge. The unearned finance charge |
| 11 | | that is refunded shall be calculated based on a method that is |
| 12 | | at least as favorable to the consumer as the actuarial method, |
| 13 | | as defined by the federal Truth in Lending Act. The sum of the |
| 14 | | digits or rule of 78ths method of calculating prepaid interest |
| 15 | | refunds is prohibited. |
| 16 | | (f) A lender may not take or attempt to take an interest in |
| 17 | | any of the consumer's personal property to secure a payday |
| 18 | | loan. |
| 19 | | (g) A consumer has the right to redeem a check or any other |
| 20 | | item described in the definition of payday loan under Section |
| 21 | | 1-10 issued in connection with a payday loan from the lender |
| 22 | | holding the check or other item at any time before the payday |
| 23 | | loan becomes payable by paying the full amount of the check or |
| 24 | | other item.
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| 25 | | (Source: P.A. 96-936, eff. 3-21-11; 97-421, eff. 1-1-12.)
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| 1 | | (815 ILCS 122/3-5)
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| 2 | | Sec. 3-5. Licensure. |
| 3 | | (a) A license to make a payday loan shall state the |
| 4 | | address,
including city and state, at which
the business is to |
| 5 | | be conducted and shall state fully the name of the licensee.
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| 6 | | The license shall be conspicuously posted in the place of |
| 7 | | business of the
licensee and shall not be transferable or |
| 8 | | assignable.
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| 9 | | (b) An application for a license shall be in writing and in |
| 10 | | a form
prescribed by the Secretary. The Secretary may not issue |
| 11 | | a payday loan
license unless and until the following findings |
| 12 | | are made:
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| 13 | | (1) that the financial responsibility, experience, |
| 14 | | character, and general
fitness of the applicant are such as |
| 15 | | to command the confidence of the public
and to warrant the |
| 16 | | belief that the business will be operated lawfully and
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| 17 | | fairly and within the provisions and purposes of this Act; |
| 18 | | and
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| 19 | | (2) that the applicant has submitted such other |
| 20 | | information as the
Secretary may deem necessary; and . |
| 21 | | (3) that the issuance of the license would not result |
| 22 | | in the number of licenses being issued for locations in a |
| 23 | | municipality exceeding any limit upon the number of |
| 24 | | licensed locations authorized by the municipality.
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| 25 | | (c) A license shall be issued for no longer than one year, |
| 26 | | and no renewal
of a license may be provided if a licensee has |
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| 1 | | substantially violated this
Act and has not cured the violation |
| 2 | | to the satisfaction of the Department or if the renewal of the |
| 3 | | license would result in a number of licenses in a municipality |
| 4 | | exceeding the limit upon the number of licensed locations |
| 5 | | authorized by the municipality. If a municipality establishes a |
| 6 | | limit on the number of licensed locations that is less than the |
| 7 | | number of licenses sought to be renewed, the Department shall |
| 8 | | randomly determine which licenses to refuse to renew.
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| 9 | | (d) A licensee shall appoint, in writing, the Secretary as |
| 10 | | attorney-in-fact
upon whom all lawful process against the |
| 11 | | licensee may be served with the
same legal force and validity |
| 12 | | as if served on the licensee. A copy of the
written |
| 13 | | appointment, duly certified, shall be filed in the office of |
| 14 | | the
Secretary, and a copy thereof certified by the Secretary |
| 15 | | shall be sufficient
evidence to subject a licensee to |
| 16 | | jurisdiction in a court of law. This appointment shall remain |
| 17 | | in effect while any liability remains
outstanding in this State |
| 18 | | against the licensee. When summons is served upon
the Secretary |
| 19 | | as attorney-in-fact for a licensee, the Secretary shall |
| 20 | | immediately
notify the licensee by registered mail, enclosing |
| 21 | | the summons and specifying
the hour and day of service.
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| 22 | | (e) A licensee must pay an annual fee of $1,000. In |
| 23 | | addition to the
license fee, the reasonable expense of any |
| 24 | | examination or hearing
by the Secretary under any provisions of |
| 25 | | this Act shall be borne by
the licensee. If a licensee fails to |
| 26 | | renew its license by December 31,
its license
shall |
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| 1 | | automatically expire; however, the Secretary, in his or her |
| 2 | | discretion,
may reinstate an expired license upon:
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| 3 | | (1) payment of the annual fee within 30 days of the |
| 4 | | date of
expiration; and
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| 5 | | (2) proof of good cause for failure to renew.
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| 6 | | (f) Not more than one place of business shall be maintained |
| 7 | | under the
same license, but the Secretary may issue more than |
| 8 | | one license to the same
licensee upon compliance with all the |
| 9 | | provisions of this Act governing
issuance of a single license. |
| 10 | | The location, except those locations already in
existence as of |
| 11 | | June 1, 2005, may not be within one mile of a
horse race track |
| 12 | | subject to the Illinois Horse Racing Act of 1975,
within one |
| 13 | | mile of a facility at which gambling is conducted under the
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| 14 | | Riverboat Gambling Act, within one mile of the location at |
| 15 | | which a
riverboat subject to the Riverboat Gambling Act docks, |
| 16 | | or within one mile of
any State of Illinois or United States |
| 17 | | military base or naval installation.
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| 18 | | (g) No licensee shall conduct the business of making loans |
| 19 | | under this
Act within any office, suite, room, or place of |
| 20 | | business in which (1) any loans are offered or made under the |
| 21 | | Consumer Installment Loan Act other than title secured loans as |
| 22 | | defined in subsection (a) of Section 15 of the Consumer |
| 23 | | Installment Loan Act and governed by Title 38, Section 110.330 |
| 24 | | of the Illinois Administrative Code or (2) any other
business |
| 25 | | is solicited or engaged in unless the other business is |
| 26 | | licensed by the Department or, in the opinion of the Secretary, |
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| 1 | | the
other business would not be contrary to the best interests |
| 2 | | of consumers and
is authorized by the Secretary in writing.
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| 3 | | (g-5) Notwithstanding subsection (g) of this Section, a |
| 4 | | licensee may obtain a license under the Consumer Installment |
| 5 | | Loan Act (CILA) for the exclusive purpose and use of making |
| 6 | | title secured loans, as defined in subsection (a) of Section 15 |
| 7 | | of CILA and governed by Title 38, Section 110.300 of the |
| 8 | | Illinois Administrative Code. A licensee may continue to |
| 9 | | service Consumer Installment Loan Act loans that were |
| 10 | | outstanding as of the effective date of this amendatory Act of |
| 11 | | the 96th General Assembly. |
| 12 | | (h) The Secretary shall maintain a list of licensees that |
| 13 | | shall be
available to interested consumers and lenders and the |
| 14 | | public. The Secretary
shall maintain a toll-free number whereby |
| 15 | | consumers may obtain
information about licensees. The |
| 16 | | Secretary shall also establish a complaint
process under which |
| 17 | | an aggrieved consumer
may file a complaint against a licensee |
| 18 | | or non-licensee who violates any
provision of this Act.
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| 19 | | (i) A municipality may by ordinance limit the number of |
| 20 | | licensees under this Act that may be located in the |
| 21 | | municipality on and after January 1, 2015. The limit |
| 22 | | established by the municipality may not be fewer than 5 |
| 23 | | licenses. |
| 24 | | (Source: P.A. 96-936, eff. 3-21-11.)
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