(815 ILCS 122/1-1)
    Sec. 1-1. Short title. This Act may be cited as the Payday Loan Reform Act.
(Source: P.A. 94-13, eff. 12-6-05.)

    (815 ILCS 122/1-5)
    Sec. 1-5. Purpose and construction. The purpose of this Act is to protect consumers who enter into payday loans and to regulate the lenders of payday loans. This Act shall be construed as a consumer protection law for all purposes. This Act shall be liberally construed to effectuate its purpose.
(Source: P.A. 94-13, eff. 12-6-05.)

    (815 ILCS 122/1-10)
    Sec. 1-10. Definitions. As used in this Act:
    "Check" means a "negotiable instrument", as defined in Article 3 of the Uniform Commercial Code, that is drawn on a financial institution.
    "Commercially reasonable method of verification" or "certified database" means a consumer reporting service database certified by the Department as effective in verifying that a proposed loan agreement is permissible under this Act, or, in the absence of the Department's certification, any reasonably reliable written verification by the consumer concerning (i) whether the consumer has any outstanding payday loans, (ii) the principal amount of those outstanding payday loans, and (iii) whether any payday loans have been paid in full by the consumer in the preceding 7 days.
    "Consumer" means any natural person who, singly or jointly with another consumer, enters into a loan.
    "Consumer reporting service" means an entity that provides a database certified by the Department.
    "Department" means the Department of Financial and Professional Regulation.
    "Secretary" means the Secretary of Financial and Professional Regulation.
    "Gross monthly income" means monthly income as demonstrated by official documentation of the income, including, but not limited to, a pay stub or a receipt reflecting payment of government benefits, for the period 30 days prior to the date on which the loan is made.
    "Lender" and "licensee" mean any person or entity, including any affiliate or subsidiary of a lender or licensee, that offers or makes a payday loan, buys a whole or partial interest in a payday loan, arranges a payday loan for a third party, or acts as an agent for a third party in making a payday loan, regardless of whether approval, acceptance, or ratification by the third party is necessary to create a legal obligation for the third party, and includes any other person or entity if the Department determines that the person or entity is engaged in a transaction that is in substance a disguised payday loan or a subterfuge for the purpose of avoiding this Act.
    "Loan agreement" means a written agreement between a lender and consumer to make a loan to the consumer, regardless of whether any loan proceeds are actually paid to the consumer on the date on which the loan agreement is made.
    "Member of the military" means a person serving in the armed forces of the United States, the Illinois National Guard, or any reserve component of the armed forces of the United States. "Member of the military" includes those persons engaged in (i) active duty, (ii) training or education under the supervision of the United States preliminary to induction into military service, or (iii) a period of active duty with the State of Illinois under Title 10 or Title 32 of the United States Code pursuant to order of the President or the Governor of the State of Illinois.
    "Outstanding balance" means the total amount owed by the consumer on a loan to a lender, including all principal, finance charges, fees, and charges of every kind.
    "Payday loan" or "loan" means a loan with a finance charge exceeding an annual percentage rate of 36% and with a term that does not exceed 120 days, including any transaction conducted via any medium whatsoever, including, but not limited to, paper, facsimile, Internet, or telephone, in which:
        (1) A lender accepts one or more checks dated on

    (815 ILCS 122/1-15)
    Sec. 1-15. Applicability.
    (a) Except as otherwise provided in this Section, this Act applies to any lender that offers or makes a payday loan to a consumer in Illinois.
    (b) The provisions of this Act apply to any person or entity that seeks to evade its applicability by any device, subterfuge, or pretense whatsoever.
    (c) Retail sellers who cash checks incidental to a retail sale and who charge no more than the fees as provided by the Check Cashing Act per check for the service are exempt from the provisions of this Act.
    (d) Banks, savings banks, savings and loan associations, credit unions, and insurance companies organized, chartered, or holding a certificate of authority to do business under the laws of this State or any other state or under the laws of the United States are exempt from the provisions of this Act.
    (e) A lender, as defined in Section 1-10, that is an agent for a bank, savings bank, savings and loan association, credit union, or insurance company for the purpose of brokering, selling, or otherwise offering payday loans made by the bank, savings bank, savings and loan association, credit union, or insurance company shall be subject to all of the provisions of this Act, except those provisions related to finance charges.
(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 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) No lender may make a payday loan to a consumer if the total principal amount of the loan, when combined with the principal amount of all of the consumer's other outstanding payday loans, exceeds $1,000 or 25% of the consumer's gross monthly income, whichever is less.
    (d) No payday loan may be made to a consumer who has an outstanding balance on 2 payday loans.
    (e) No lender may charge more than $15.50 per $100 loaned on any payday loan over the term of the loan. Except as provided in Section 2-25, this charge is considered fully earned as of the date on which the loan is made.
    (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.
(Source: P.A. 94-13, eff. 12-6-05.)

    (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.
    (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. 94-13, eff. 12-6-05.)

    (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

    (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.
(Source: P.A. 94-13, eff. 12-6-05.)

    (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

    (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. 94-13, eff. 12-6-05.)

    (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