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

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Bill Title: Amends the Consumer Legal Funding Act. Provides that, notwithstanding any other law, a consumer legal funding may be refinanced as authorized by rule. Provides that the Department of Financial and Professional Regulation 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 the amendatory Act. Authorizes the Department to adopt rules to permit the refinancing of consumer legal fundings. Makes conforming changes to contract disclosures.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Engrossed) 2024-04-24 - Assigned to Financial Institutions and Licensing Committee [SB3314 Detail]

Download: Illinois-2023-SB3314-Engrossed.html

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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 25, 30, and 165 as follows:
(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

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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

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(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

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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

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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 121/165)
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

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