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| [ Introduced ] | [ Engrossed ] | [ House Amendment 003 ] |
91_HB2704ham001
LRB9105543LDmbam01
1 AMENDMENT TO HOUSE BILL 2704
2 AMENDMENT NO. . Amend House Bill 2704 by replacing
3 the title with the following:
4 "AN ACT to create the Deferred Presentment Act."; and
5 by replacing everything after the enacting clause with the
6 following:
7 "Section 1. Short title. This Act may be known as the
8 Deferred Presentment Act.
9 Section 5. Definitions. As used in this Act, unless the
10 context requires otherwise:
11 "Check" means any personal check, draft, money order,
12 personal money order, traveler's check, or other demand
13 instrument for the transmission or payment of money.
14 "Deferred presentment transaction" means a transaction
15 whereby a personal check is cashed by a person licensed under
16 this Act and, by mutual agreement between the licensee and
17 the maker of the check, its presentment or negotiation is
18 deferred for a period of time not to exceed 31 days.
19 "Department" means the Department of Financial
20 Institutions.
21 "Director" means the Director of Financial Institutions.
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1 "Maker" means any person who writes a check and upon
2 whose personal account the check is drawn.
3 "Licensee" means a person duly licensed by the Department
4 to engage in the deferred presentment business pursuant to
5 the provisions of this Act.
6 "Payor financial institution" means a financial
7 institution upon which a check used in a deferred presentment
8 transaction is drawn.
9 "Renewal" means the termination of an existing deferred
10 presentment agreement solely by the payment of fees then due
11 the licensee and the substitution of a new check drawn by the
12 maker pursuant to a new deferred presentment agreement.
13 "Service fee" or "fee" means the fee authorized in
14 Section 35 for the deferral of the presentment of a check
15 pursuant to this Act. This fee shall not be deemed to be
16 interest for any purpose under State law.
17 Section 10. Authority to transact business. Except as
18 provided in Section 15, no person shall engage in the
19 business of accepting deferred presentment transactions for a
20 fee or other consideration without having first obtained a
21 license from the Department. However, any person authorized
22 (under current licensing provisions for small lenders in
23 Illinois) may engage in the business of accepting deferred
24 presentment transactions until the Department has acted upon
25 his or her application for a license under this Act, provided
26 the application is filed within 60 days of the effective date
27 of this Act.
28 Section 15. Application. This Act does not apply to:
29 (1) A bank, savings institution, credit union, or farm
30 credit system organized under the laws of the United States
31 or any State; or
32 (2) A person principally engaged in the bona fide retail
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1 sale of goods or services who does not hold himself or
2 herself out as being in the deferred presentment business
3 who, either as an incident to or independently of a retail
4 sale or service, from time to time cashes checks, drafts, or
5 money orders without a fee or other consideration.
6 Section 20. License. An application for a license
7 pursuant to this Act shall be made in compliance with and
8 governed in all respects by the provisions of this Act.
9 Notwithstanding any other law to the contrary, the business
10 of deferred presentment services conducted in accordance with
11 this Act shall not be subject to or controlled by any other
12 statute governing the imposition of interest, fees, or loan
13 charges.
14 Section 25. Records; annual reports.
15 (a) A licensee shall maintain records in conformity with
16 generally accepted accounting principles and practices in a
17 manner that will enable the Department to determine whether
18 the licensee is complying with the provisions of this Act.
19 The record keeping system of a licensee shall be sufficient
20 if he or she makes the required information reasonably
21 available. The records need not be kept in the place of
22 business where deferred presentment agreements are made if
23 the Department is given free access to the records wherever
24 they are located. The records pertaining to any deferred
25 presentment transaction need not be preserved for more than 2
26 years after making the final entry relating to the
27 transaction.
28 (b) On or before April 15 of each year, a licensee shall
29 file with the Department a composite annual report in the
30 form prescribed by the Department relating to all deferred
31 presentment transactions entered into by him or her. The
32 Department shall consult with comparable officials in other
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1 states for the purpose of making the kinds of information
2 required in annual reports uniform among the States.
3 Information contained in annual reports shall be confidential
4 and may be published only in composite form.
5 Section 30. Examinations and investigations.
6 (a) The Department shall examine periodically at
7 intervals it deems appropriate the business and records of
8 every licensee. For these purposes the Department shall have
9 free and reasonable access to the offices, places of
10 business, and records of the licensee.
11 (b) If a licensee's records are located outside this
12 State, the licensee, at his or her option, shall make them
13 available to the Department at a convenient location within
14 this State or pay the reasonable and necessary expenses for
15 the Department or its representative to examine them at the
16 place where they are maintained. The Department may
17 designate representatives, including comparable officials of
18 the State in which the records are located, to inspect them
19 on its behalf.
20 (c) For the purposes of this Section, the Department may
21 administer oaths or affirmations and, upon its own motion or
22 upon the request of any party, may subpoena witnesses, compel
23 their attendance, adduce evidence, and require the production
24 of any matter that is relevant to the investigation,
25 including the existence, description, nature, custody,
26 condition, and location of any books, documents, or other
27 tangible things and the identity and location of persons
28 having knowledge of relevant facts or any other matter
29 reasonably calculated to lead to the discovery of admissible
30 evidence.
31 (d) Upon failure without lawful excuse to obey a
32 subpoena or to give testimony and upon reasonable notice to
33 all persons affected thereby, the Department may apply to a
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1 civil court for an order compelling compliance.
2 Section 35. Authorized fees and procedures.
3 A licensee may engage in deferred presentment
4 transactions, subject to the following:
5 (1) No person not previously licensed by the Department
6 to make loans shall engage in deferred presentment
7 transactions without first obtaining a license under the
8 provisions of this Act.
9 (2) No licensee shall charge fees in excess of 20% of
10 the amount advanced to the maker of the check for which
11 presentment or negotiation is deferred.
12 (3) No deferred presentment agreement shall be for a
13 period of time in excess of 31 days.
14 (4) Makers who write a check for a deferred presentment
15 transaction on an account that was closed on the date of the
16 transaction or that is closed prior to the agreed upon
17 negotiation date of the deferred presentment are subject to
18 all civil and criminal penalties available at law. If a
19 check is returned to the licensee from a payor financial
20 institution due to insufficient funds, closed account, or
21 stop payment order, the licensee may pursue all legally
22 available civil means to collect the check including, but not
23 limited to, the collection of all charges imposed on the
24 licensee by the payor financial institution. Except as
25 otherwise provided in this Act, an individual who issues a
26 personal check to a licensee under a deferred presentment
27 agreement is not subject to criminal penalty.
28 (5) Proceeds to the maker in a deferred presentment
29 transaction may be made in the form of a licensee's business
30 check, money order, or cash; provided, however, that no
31 additional fee may be charged by a licensee for cashing the
32 licensee's check.
33 (6) No licensee may renew any deferred presentment
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1 transaction more than 3 consecutive times, after which the
2 deferred presentment check must be paid off in cash or its
3 equivalent by the maker or deposited by the licensee. No
4 additional fees may be collected by a licensee after a
5 deferred presentment transaction has been renewed 3
6 consecutive times until that transaction has been completed.
7 A transaction is complete when a check is presented for
8 payment, deposited, or redeemed by the maker by payment in
9 full in cash to the licensee.
10 (7) The maker of the check shall have the right to
11 redeem the check from the licensee at any time prior to the
12 negotiation or presentment of the check by making payment to
13 the licensee of the full amount of the check.
14 (8) The face amount of a check taken for deferred
15 presentment may not exceed $1,000, exclusive of the fees
16 allowed by this Act.
17 (9) Each deferred presentment transaction must be
18 documented by a written agreement. The written agreement
19 must contain the name or trade name of the licensee, the
20 transaction date, the amount of the check, and a statement of
21 the total amount of fees charged, expressed both as a dollar
22 amount and its effective annual percentage rate (APR). The
23 written agreement must authorize the licensee to defer
24 presentment or negotiation of the check until a specific
25 date, not later than 31 days from the date the check is
26 accepted by the licensee.
27 (10) A licensee under this Act shall charge only those
28 fees specifically authorized in this Section.
29 Section 40. Conduct of business other than making loans.
30 A licensee may carry on other business at a location where he
31 or she engages in deferred presentment transactions, unless
32 he or she carries on such other business for the purpose of
33 evasion or violation of this Act.
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1 Section 45. Violations; suspension or revocation of
2 licenses. The Director may, upon 10 days notice to the
3 licensee by United States mail directed to the licensee at
4 the address set forth in the license, stating the
5 contemplated action and in general the grounds therefor, and
6 upon reasonable opportunity to be heard prior to such action,
7 fine, suspend, or revoke any license issued hereunder if he
8 or she finds that:
9 (1) The licensee has failed to pay the annual
10 license fee or to comply with any order, decision, or
11 finding of the Director made pursuant to this Act;
12 (2) The licensee has violated any provision of this
13 Act or any regulation or direction made by the Director
14 under this Act;
15 (3) Any fact or condition exists which, if it had
16 existed at the time of the original application for such
17 license, would have warranted the Director in refusing
18 the issuance of the license;
19 (4) The licensee has not operated the deferred
20 presentment business at the location licensed for a
21 period of 60 consecutive days, unless the licensee was
22 prevented from operating during such period by reason of
23 events or acts beyond the licensee's control.
24 Prior to suspension or revocation of a license issued
25 under this Act, the Director may but is not required to fine
26 a licensee up to a maximum of $100 a day.
27 The Director may fine, suspend or revoke only the
28 particular license or licenses for particular places of
29 business or locations with respect to which grounds for
30 revocation may occur or exist; except that if he or she finds
31 that such grounds for revocation are of general application
32 to all places of business or locations, or that such grounds
33 for fines, suspension, or revocation have occurred or exist
34 with respect to a substantial number of places of business or
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1 locations, he or she may fine, suspend, or revoke all of the
2 licenses issued to the licensee.
3 A licensee may surrender any license by delivering to the
4 Director written notice that he or she thereby surrenders
5 such license, but such surrender shall not affect such
6 licensee's civil or criminal liability for acts committed
7 prior to such surrender or entitle such licensee to a return
8 of any part of the annual license fee or fees.
9 Every license issued under this Act shall remain in force
10 until it expires, or is surrendered, suspended, or revoked in
11 accordance with this Act, but the Director may on his or her
12 own motion issue a new license to a licensee whose license
13 was revoked if no fact or condition then exists that clearly
14 would have warranted the Director in refusing originally the
15 issuance of the license under this Act.
16 No license shall be revoked until the licensee has had
17 notice of a hearing thereon and an opportunity to be heard.
18 When any license is so revoked, the Director shall within 20
19 days thereafter, prepare and keep on file in his or her
20 office a written order or decision of revocation that shall
21 contain his or her findings with respect thereto and the
22 reasons supporting the revocation and shall send by United
23 States mail a copy thereof to the licensee at the address set
24 forth in the license within 5 days after the filing in his or
25 her office of such order, finding, or decision. A review of
26 any such order, finding, or decision may be had in the same
27 manner as provided in Section 22.01 of the Currency Exchange
28 Act.".