The Illinois Regulatory Authority publishes Frequently Asked Questions about the Prevention of Predatory Loans Act and a Database Reporting Notice Ballard Spahr LLP

The Illinois Department of Financial and Professional Regulation (DFPR) enacted the Predatory Loan Prevention Act frequently asked Questions (PLPA). The PLPA came into force on March 23, 2021, on the day it came into force by Governor Pritzker. The DFPR also gave a “Note on the consumer registration database and on the Prevention of Robbery Loans“(Note).

The PLPA extended the 36% “all-in” funding limit of the military annual percentage of the federal military loan law to “any individual or legal person who offers or gives a loan to an Illinois consumer,” except through a legally exempted entity. (The bill that includes the PLPA also amended the Illinois Consumer Installment Loan Act (CILA) and Payday Loan Reform Act (PLRA) to apply the same MAPR cap of 36%.)

frequently asked Questions. The FAQs explicitly state that the PLPA has no effect on contracts that were legally concluded before March 23, 2021. Such contracts remain in effect and the lender can continue to service them. In addition to confirming the effective date of the PLPA on March 23, the FAQs cover the following topics:

  • Calculations of the rate cap and APR
  • fees
  • Payday and title-secured loans under the PLPA
  • Reporting on the condition database
  • PLRA and CILA license
  • License fee
  • investigation

note. Prior to the entry into force of the PLPA, only lenders providing certain higher priced loans with annualized interest rates in excess of 36% were required to report credit information to a government database maintained by Veritec. The PLPA now requires all licensed lenders, regardless of the interest rate charged, to pay Veritec fees for each loan and to report information about the loan to the database. Since the PLPA went into effect immediately and Veritec’s onboarding typically takes several months, lenders in Illinois initially faced Catch-22, either breaking the amended law or suspending all lending operations. To address this dilemma, the notice provides that the DFPR “does not intend to take adverse regulatory or enforcement actions for breaches of reporting obligations” under applicable Illinois law until further notice.

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