Bill Amendment: IL SB3314 | 2023-2024 | 103rd General Assembly

NOTE: For additional amemendments please see the Bill Drafting List

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Bill Title: CONSUMER LEGAL-REFINANCING

Status: 2024-05-17 - Third Reading/Final Action Deadline Extended-9(b) May 24, 2024 [SB3314 Detail]

Download: Illinois-2023-SB3314-House_Amendment_002.html

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Rep. Curtis J. Tarver, II

Filed: 5/7/2024

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AMENDMENT TO SENATE BILL 3314
AMENDMENT NO. ______. Amend Senate Bill 3314 by replacing
everything after the enacting clause with the following:
"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.

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"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

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(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.)

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(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

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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

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(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

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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

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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

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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

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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

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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

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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

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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

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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

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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,

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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

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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

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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.)

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(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.

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(Source: P.A. 102-987, eff. 5-27-22.)