2023 Illinois Compiled Statutes › Chapter 815 - BUSINESS TRANSACTIONS › 815 ILCS 122/ - Payday Loan Reform Act. › Article 2 - Payday Loans

(815 ILCS 122/Art. 2 heading)
Article 2.  Payday Loans
(Source: P.A. 94-13, eff. 12-6-05.)
(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)  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 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) (Blank).
(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.
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 March 21, 2011 (the effective date of Public Act 96-936), 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) A lender shall not contract for or receive a charge exceeding a 36% annual percentage rate on the unpaid balance of the amount financed for a payday loan. For purposes of this Section, the annual percentage rate shall be calculated as such rate is calculated using the system for calculating a military annual percentage rate under 32 CFR 232.4 as in effect on the effective date of this amendatory Act of the 101st General Assembly.
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.
(h) (Blank).
(Source: P.A. 100-201, eff. 8-18-17; 101-563, eff. 8-23-19; 101-658, eff. 3-23-21.)
(815 ILCS 122/2-7)
Sec. 2-7. Wage assignments.  Any payday loan that is a transaction in which the lender accepts a wage assignment must meet the requirements of this Act, the requirements of the Illinois Wage Assignment Act, and the requirements of 16 C.F.R. 444.2(a)(3)(i)(2003, no subsequent amendments or editions are included). A violation of this Section constitutes a material violation of the Payday Loan Reform Act.
(Source: P.A. 94-13, eff. 12-6-05.)
(815 ILCS 122/2-10)
Sec. 2-10. Permitted fees.
(a) If there are insufficient funds to pay a check, Automatic Clearing House (ACH) debit, or any other item described in the definition of payday loan under Section 1-10 on the day of presentment and only after the lender has incurred an expense, a lender may charge a fee not to exceed $25.  Only one such fee may be collected by the lender with respect to a particular check, ACH debit, or item even if it has been deposited and returned more than once. A lender shall present the check, ACH debit, or other item described in the definition of payday loan under Section 1-10 for payment not more than twice. A fee charged under this subsection (a) is a lender's exclusive charge for late payment.
(a-5) A lender may charge a borrower a fee not to exceed $1 for the
verification required under Section 2-15 of this Act in connection with a payday loan. In no event may a fee be greater than the amount charged by the certified consumer reporting service. Only one such fee may
be collected by the lender with respect to a particular loan.
(b) Except for the finance charges described in Section 2-5  and as specifically allowed by this Section, a lender may not impose on a consumer any additional finance charges, interest, fees, or charges of any sort for any purpose.
(Source: P.A. 100-1168, eff. 6-1-19; 101-658, eff. 3-23-21.)
(815 ILCS 122/2-15)
Sec. 2-15. Verification.
(a) Before entering into a loan agreement with a consumer, a lender must use a commercially reasonable method of verification to verify that the proposed loan agreement is permissible under this Act.
(b) Within 6 months after the effective date of this Act, the Department shall certify that one or more consumer reporting service databases are commercially reasonable methods of verification.  Upon certifying that a consumer reporting service database is a commercially reasonable method of verification, the Department shall:
(1) provide reasonable notice to all licensees     identifying the commercially reasonable methods of verification that are available; and
(2) immediately upon certification, require each     licensee to use a commercially reasonable method of verification as a means of complying with subsection (a) of this Section.
(c) Except as otherwise provided in this Section, all personally identifiable information regarding any consumer obtained by way of the certified database and maintained by the Department is strictly confidential and shall be exempt from disclosure under Section 7(1)(b)(i) of the Freedom of Information Act.
(d) Notwithstanding any other provision of law to the contrary, a consumer seeking a payday loan may make a direct inquiry to the consumer reporting service to request a more detailed explanation of the basis for a consumer reporting service's determination that the consumer is ineligible for a new payday loan.
(e) In certifying a commercially reasonable method of verification, the Department shall ensure that the certified database:
(1) provides real-time access through an Internet     connection or, if real-time access through an Internet connection becomes unavailable to lenders due to a consumer reporting service's technical problems incurred by the consumer reporting service, through alternative verification mechanisms, including, but not limited to, verification by telephone;
(2) is accessible to the Department and to licensees     in order to ensure compliance with this Act and in order to provide any other information that the Department deems necessary;
(3) requires licensees to input whatever information     is required by the Department;
(4) maintains a real-time copy of the required     reporting information that is available to the Department at all times and is the property of the Department;
(5) provides licensees only with a statement that a     consumer is eligible or ineligible for a new payday loan and a description of the reason for the determination; and
(6) contains safeguards to ensure that all     information contained in the database regarding consumers is kept strictly confidential.
(f) The licensee shall update the certified database by inputting all information required under item (3) of subsection (e):
(1) on the same day that a payday loan is made;
(2) on the same day that a consumer elects a     repayment plan, as provided in Section 2-40; and
(3) on the same day that a consumer's payday loan is     paid in full.
(g) A licensee may rely on the information contained in the certified database as accurate and is not subject to any administrative penalty or liability as a result of relying on inaccurate information contained in the database.
(h) The certified consumer reporting service shall indemnify the licensee against all claims and actions arising from illegal or willful or wanton acts on the part of the certified consumer reporting service.
(i) The certified consumer reporting service may charge a verification
fee not to exceed $1 upon a loan being made or entered into the
database. The certified consumer reporting service shall not charge any
additional fees or charges.
(Source: P.A. 100-1168, eff. 6-1-19; 101-658, eff. 3-23-21.)
(815 ILCS 122/2-17)
Sec. 2-17. Consumer reporting services qualification and bonding.
(a) Each consumer reporting service shall have at all times a net worth of not less than $1,000,000 calculated in accordance with generally accepted accounting principles.
(b) Each application for certification under this Act shall be accompanied by a surety bond acceptable to the Department in the amount of $1,000,000.  The surety bond shall be in a form satisfactory to the Department and shall run to the State of Illinois for the benefit of any claimants against the consumer reporting service to secure the faithful performance of its obligations under this Act.  The aggregate liability of the surety may exceed the principal sum of the bond. Claimants against the consumer reporting service may themselves bring suit directly on the surety bond or the Department may bring suit on behalf of claimants, either in one action or in successive actions.
(c) The surety bond shall remain in effect until cancellation, which may occur only after 90 days' written notice to the Department.  Cancellation shall not affect any liability incurred or accrued during that period.
(d) The surety bond shall remain in place for 5 years after the consumer reporting service ceases operation in the State.
(e) The surety bond proceeds and any cash or other collateral posted as security by a consumer reporting service shall be deemed by operation of law to be held in trust for any claimants under this Act in the event of the bankruptcy of the consumer reporting service.
(f) To the extent that any indemnity or fine exceeds the amount of the surety bond described under this Section, the consumer reporting service shall be liable for that amount.
(g) Each application for certification under this Act shall be accompanied by a nonrefundable investigation fee of $2,500, together with an initial certification fee of $1,000.
(h) On or before March 1 of each year, each consumer reporting service qualified under this Section shall pay to the Department a certification fee in the amount of $1,000.
(i) Each consumer reporting service shall maintain at all times an ID
Theft Red Flag Program that meets the standards established by the Federal
Trade Commission's Red Flags Rule, promulgated under the Fair and Accurate
Credit Transactions Act of 2003.
(Source: P.A. 96-936, eff. 3-21-11.)
(815 ILCS 122/2-20)
Sec. 2-20. Required disclosures.
(a) Before a payday loan is made, a lender shall
deliver to the consumer a pamphlet prepared by the Secretary that:
(1) explains, in simple English and Spanish, all of     the consumer's rights and responsibilities in a payday loan transaction;
(2) includes a toll-free number to the Secretary's     office to handle concerns or provide information about whether a lender is licensed, whether complaints have been filed with the Secretary, and the resolution of those complaints; and
(3) provides information regarding the availability     of debt management services.
(b) Lenders shall provide consumers with a written agreement that may be kept by the
consumer. The written agreement must include the following information in
English and in the language in which the loan was negotiated:
(1) the name and address of the lender making the     payday loan, and the name and title of the individual employee who signs the agreement on behalf of the lender;
(2) disclosures required by the federal Truth in     Lending Act;
(3) a clear description of the consumer's payment     obligations under the loan;
(4) the following statement, in at least 14-point     bold type face: "You cannot be prosecuted in criminal court to collect this loan."   The information required to be disclosed under this subdivision (4) must be conspicuously disclosed in the loan document and shall be located immediately preceding the signature of the consumer; and
(5) the following statement, in at least 14-point     bold type face:
"WARNING: This loan is not intended to meet long-term     financial needs. This loan should be used only to meet short-term cash needs. The cost of your loan may be higher than loans offered by other lending institutions. This loan is regulated by the Department of Financial and Professional Regulation."
(c) The following notices in English and Spanish must be conspicuously posted by a lender in each location of
a business providing payday loans:
(1) A notice that informs consumers that the lender     cannot use the criminal process against a consumer to collect any payday loan.
(2) The schedule of all  finance charges to be     charged on loans with an example of the amounts that would be charged on a $100 loan payable in 13 days and a $400 loan payable in 30 days, giving the corresponding annual percentage rate.
(3) In one-inch bold type, a notice to the public in     the lending area of each business location containing the following statement:
"WARNING: This loan is not intended to meet long-term     financial needs. This loan should be used only to meet short-term cash needs. The cost of your loan may be higher than loans offered by other lending institutions. This loan is regulated by the Department of Financial and Professional Regulation."
(4) In one-inch bold type, a notice to the public in     the lending area of each business location containing the following statement:
"INTEREST-FREE REPAYMENT PLAN:  If you still owe on     one or more payday loans after 35 days, you are entitled to enter into a repayment plan.  The repayment plan will give you at least 55 days to repay your loan in installments with no additional finance charges, interest, fees, or other charges of any kind."
(Source: P.A. 101-658, eff. 3-23-21.)
(815 ILCS 122/2-25)
Sec. 2-25. Right to cancel future payment obligations. A consumer may cancel future payment obligations on a payday loan, without cost or finance charges, no later than the end of the second business day immediately following the day on which the payday loan agreement was executed.  To cancel future payment obligations on a payday loan, the consumer must inform the lender in writing that the consumer wants to cancel the future payment obligations on the payday loan and must return the uncashed proceeds, check or cash, in an amount equal to the principal amount of the loan.
(Source: P.A. 94-13, eff. 12-6-05.)
(815 ILCS 122/2-30)
Sec. 2-30. Rollovers prohibited.  Rollover of a payday loan by any lender is prohibited. This Section does not prohibit entering into a repayment plan, as provided under Section 2-40.
(Source: P.A. 101-658, eff. 3-23-21.)
(815 ILCS 122/2-35)
Sec. 2-35. Proceeds and payments.
(a) A lender may issue the proceeds of a loan in the form of a check drawn on the lender's bank account, in cash, by money order, by debit card, or by electronic funds transfer.  When the proceeds are issued in the form of a check drawn on the lender's bank account, by money order, or by electronic funds transfer, the lender may not charge a fee for cashing the check, money order, or electronic funds transfer.  When the proceeds are issued in cash, the lender must provide the consumer with written verification of the cash transaction and shall maintain a record of the transaction for at least 3 years.
(b) After each payment made in full or in part on any loan, the lender shall give the consumer making the payment either a signed, dated receipt or a signed, computer-generated receipt showing the amount paid and the balance due on the loan.
(c) Before a loan is made, the lender must provide the consumer, or each consumer if there is more than one, with a copy of the loan documents described in Section 2-20.
(d) The holder or assignee of any loan agreement or of any check written by a consumer in connection with a payday loan takes the loan agreement or check subject to all claims and defenses of the consumer against the maker.
(e) Upon receipt of a check from a consumer for a loan, the lender must immediately stamp the back of the check with an endorsement that states:  "This check is being negotiated as part of a loan under the Payday Loan Reform Act, and any holder of this check takes it subject to all claims and defenses of the maker."
(f) Loan payments may be electronically debited from the consumer's bank account.  Except as provided by federal law, the lender must obtain prior written approval from the consumer.
(g) A consumer may prepay on a loan in increments of $5 or more at any time without cost or penalty.
(h) A loan is made on the date on which a loan agreement is signed by both parties, regardless of whether the lender gives any moneys to the consumer on that date.
(Source: P.A. 94-13, eff. 12-6-05.)
(815 ILCS 122/2-40)
Sec. 2-40. Repayment plan.
(a) At the time a payday loan is made, the lender must provide the consumer with a separate written notice signed by the consumer of the consumer's right to request a repayment plan. The written notice must comply with the requirements of subsection (c).
(b) The loan agreement must include the following language in at least 14-point bold type:  IF YOU STILL OWE ON ONE OR MORE PAYDAY LOANS AFTER 35 DAYS, YOU ARE ENTITLED TO ENTER INTO A REPAYMENT PLAN.  THE REPAYMENT PLAN WILL GIVE YOU AT LEAST 55 DAYS TO REPAY YOUR LOAN IN INSTALLMENTS WITH NO ADDITIONAL FINANCE CHARGES, INTEREST, FEES, OR OTHER CHARGES OF ANY KIND.
(c) At the time a payday loan is made, on the first page of the loan agreement and in a separate document signed by the consumer, the following shall be inserted in at least 14-point bold type:  I UNDERSTAND THAT IF I STILL OWE ON ONE OR MORE PAYDAY LOANS AFTER 35 DAYS, I AM ENTITLED TO ENTER INTO A REPAYMENT PLAN THAT WILL GIVE ME AT LEAST 55 DAYS TO REPAY THE LOAN IN INSTALLMENTS WITH NO ADDITIONAL FINANCE CHARGES, INTEREST, FEES, OR OTHER CHARGES OF ANY KIND.
(d) If the consumer has or has had one or more payday loans outstanding for 35 consecutive days, any payday loan outstanding on the 35th consecutive day shall be payable under the terms of a repayment plan as provided for in this Section, if the consumer requests the repayment plan. As to any loan that becomes eligible for a repayment plan under this subsection, the consumer has until 28 days after the default date of the loan to request a repayment plan. Within 48 hours after the request for a repayment plan is made, the lender must prepare the repayment plan agreement and both parties must execute the agreement. Execution of the repayment plan agreement shall be made in the same manner in which the loan was made and shall be evidenced in writing.
(e) The terms of the repayment plan for a payday loan must include the following:
(1) The lender may not impose any charge on the     consumer for requesting or using a repayment plan. Performance of the terms of the repayment plan extinguishes the consumer's obligation on the loan.
(2) No lender shall charge the consumer any finance     charges, interest, fees, or other charges of any kind, except a fee for insufficient funds, as provided under Section 2-10.
(3) The consumer shall be allowed to repay the loan     in at least 4 equal installments with at least 13 days between installments, provided that the term of the repayment plan does not exceed 90 days.  The first payment under the repayment plan shall not be due before at least 13 days after the repayment plan is signed by both parties.  The consumer may prepay the amount due under the repayment plan at any time, without charge or penalty.
(4) The length of time between installments may be     extended by the parties so long as the total period of repayment does not exceed 90 days.  Any such modification must be in writing and signed by both parties.
(f) Notwithstanding any provision of law to the contrary, a lender is prohibited from making a payday loan to a consumer who has a payday loan outstanding under a repayment plan and for at least 14 days after the outstanding balance of the loan under the repayment plan and the outstanding balance of all other payday loans outstanding during the term of the repayment plan are paid in full.
(g) A lender may not accept postdated checks for payments under a repayment plan.
(h) Notwithstanding any provision of law to the contrary, a lender may voluntarily agree to enter into a repayment plan with a consumer at any time.
If a consumer is eligible for a repayment plan under subsection (d), any repayment agreement constitutes a repayment plan under this Section and all provisions of this Section apply to that agreement.
(i) (Blank).
(Source: P.A. 101-658, eff. 3-23-21.)
(815 ILCS 122/2-45)
Sec. 2-45. Default.
(a) No legal proceeding of any kind, including, but not limited to, a lawsuit or arbitration, may be filed or initiated against a consumer to collect on a payday loan until 28 days after the default date of the loan, or, in the case of a payday loan under a repayment plan, for 28 days after the default date under the terms of the repayment plan.
(b) Upon and after default, a lender shall not charge the consumer any finance charges, interest, fees, or charges of any kind, other than the insufficient fund fee described in Section 2-10.
(c) Notwithstanding whether a loan is or has been in default, once the loan becomes subject to a repayment plan, the loan shall not be construed to be in default until the default date provided under the terms of the repayment plan.
(Source: P.A. 101-658, eff. 3-23-21.)
(815 ILCS 122/2-50)
Sec. 2-50. Practices concerning members of the military.
(a) A lender may not garnish the wages or salaries of a consumer who is a member of the military.
(b) In addition to any rights and obligations provided under the federal Servicemembers Civil Relief Act, a lender shall suspend and defer collection activity against a consumer who is a member of the military and who has been deployed to a combat or combat support posting for the duration of the deployment.
(c) A lender may not knowingly contact the military chain of command of a consumer who is a member of the military in an effort to collect on a payday loan.
(d) Lenders must honor the terms of any repayment plan that they have entered into with any consumer, including a repayment agreement negotiated through military counselors or third-party credit counselors.
(Source: P.A. 94-13, eff. 12-6-05.)
(815 ILCS 122/2-51)
Sec. 2-51. Violation of Federal law constitutes a violation of this Act with respect to practices concerning members of the military and their dependents. Notwithstanding any other provision of law, a violation of any provision of Section 670 of the John Warner National Defense Authorization Act  for Fiscal Year 2007, Public Law 109-364, or any regulation adopted pursuant thereto shall be deemed to be a violation of this Act.
(Source: P.A. 97-413, eff. 1-1-12.)
(815 ILCS 122/2-55)
Sec. 2-55. Information, reporting, and examination.
(a) A licensee shall keep and use books, accounts, and records that
will enable the Secretary to determine if the licensee is complying with the
provisions of this Act and maintain any other records as required by the
Secretary.
(b) A licensee shall collect and maintain information annually for a report that shall
disclose in detail and under appropriate headings:
(1) the total number of payday loans made during the     preceding calendar year;
(2) the total number of payday loans outstanding as     of December 31 of the preceding calendar year;
(3) the minimum, maximum, and average dollar amount     of payday loans made during the preceding calendar year;
(4) the average annual percentage rate and the     average term of payday loans made during the preceding calendar year; and
(5) the total number of payday loans paid in full,     the total number of loans that went into default, and the total number of loans written off during the preceding calendar year.
The report shall be verified by the oath or affirmation of the owner,
manager, or president of the licensee. The report must be filed with the
Secretary no later than  March 1 of the year following the year for which
the report discloses the information specified in this subsection (b). The
Secretary may impose upon the licensee a fine of $25 per day for each day
beyond the filing deadline that the report is not filed.
(c) No later than July 31 of the second year following the effective date of this Act, the Department shall publish a biennial report that contains a compilation of aggregate data concerning the payday lending industry and shall make the report available to the Governor, the General Assembly, and the general public.
(d) The Department shall have the authority to conduct examinations of
the books, records, and loan documents at any time.
(Source: P.A. 94-13, eff. 12-6-05.)
(815 ILCS 122/2-60)
Sec. 2-60. Advertising.
(a) Advertising for loans transacted under this Act may not be false,
misleading, or deceptive. Payday loan advertising, if it states a rate or amount of
charge for a loan, must state the rate as an annual percentage rate. No
licensee may advertise in any manner so as to indicate or imply that its
 rates or charges for loans are in any way recommended, approved,
set, or established by the State government or by this Act.
(b) If any advertisement to which this Section applies states the
amount of any installment payment, the dollar amount of any finance charge,
or the number of installments or the period of repayment, then the
advertisement shall state all of the following items:
(1) The amount of the loan.
(2) The number, amount, and due dates or period of     payments scheduled to repay the indebtedness if the credit is extended.
(3) The finance charge expressed as an annual     percentage rate.
(Source: P.A. 94-13, eff. 12-6-05.)