On August 7, Illinois enacted Senate Bill 2457, amending the Collection Agency Act and removing its January 1, 2026 repeal date under the Regulatory Sunset Act. The law retains the licensing framework for collection agencies and debt buyers while revising definitions, exemptions, and enforcement provisions under the Act.
The amendments update key terms, clarify which entities are exempt from licensing, and strengthen the Illinois Department of Financial and Professional Regulation’s (IDFPR) authority over licensing, disciplinary actions, and unlicensed activity. The changes also refine rules for agencies collecting court-ordered child support, including fee limitations and conduct requirements.
Specifically, the provisions in Senate Bill 2457 include, among other things:
- Expanded licensing exemptions. The law adds new exemption categories such as licensed student loan servicers, consumer installment lenders, pawnbrokers, and motor vehicle retail sellers collecting their own contracts, while retaining existing exemptions for banks, credit unions, and licensed attorneys.
- Clarified licensing requirement for out-of-state agencies. The law permits unlicensed collection only if the agency is licensed in its home state, collects solely through interstate communications, and Illinois grants reciprocal privileges.
- Expanded disciplinary powers and prohibited conduct. The law retains a broad list of prohibited collection practices and increases the IDFPR’s fine authority to $10,000 per violation.
- Procedural updates. The law updates investigation, hearing, and consent order provisions, authorizes electronic service of notices, and modifies rehearing and appeal processes.
Putting It Into Practice: Illinois’ debt collection amendments follow similar recent changes in California’s debt collection framework (previously discussed here). Debt collectors should monitor this trend and ensure their state licenses and collection practices are up to date to maintain compliance.
