AFSA Files Suit Against Ill. Bill Limiting Credit Access
On June 2, the Illinois Financial Services Association and AFSA jointly filed a lawsuit against the State of Illinois and the Illinois Department of Financial and Professional Regulation (DFPR) in the Circuit Court of Cook County over SB 1792 / Public Act 101-0658, the “Predatory Loan Prevention Act,” which took effect on March 23. Although the act’s stated purpose is to protect consumers, its provisions will leave Illinois consumers worse off by limiting the availability of safe and affordable forms of credit.
The act also includes a requirement that Consumer Installment Loan Act (CILA) licensees report loan information to a state database; however, the company that manages the existing database, Veritec Solutions, does not currently have the technological capacity to accommodate licensees reporting to the system as required by the new law.
The DFPR stated it would not enforce the reporting requirements until the database is ready, but the law independently requires industry to report, putting AFSA members in a circle of impossibility. The lawsuit seeks to prohibit the state or DFPR from implementing the database reporting requirements in the act and any other relief that the court deems fair.
In addition to the database reporting requirements, the act’s imposition of a 36% rate cap using the military annual percentage rate (MAPR) on all credit extended—including traditional installment loans and vehicle retail installment contracts—will greatly reduce consumers’ ability to access safe and affordable forms of credit. AFSA estimates that the new MAPR will exclude approximately 1/3 of Illinois consumers from small dollar credit. AFSA previously sent a letter to the governor requesting that he veto the bill.
June 7th, 2021 by Dan Bucherer