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Bill to create dealer trust fund moves from House to Senate

April 15, 2011
A three-member board, including one person representing dealers, would oversee the proposed Dealer Recovery Trust Fund, as details of the legislation take shape in Springfield.
That person would be selected by Illinois Secretary of State Jesse White and Attorney General Lisa Madigan or their delegates, who would constitute the other two-thirds of the board.
Illinois House Bill 880 now rests with the Senate after the lower chamber passed it 91-19 on April 15. 
The dealer-subsidized fund is sought by Madigan’s office to help consumers hurt by other dealers who close without paying off trade-in liens.
Under terms of the bill, The Dealer Recovery Trust Fund would add a $500 charge to the annual license fee of the main place of business of each new- and used-vehicle dealer and each motorcycle dealer, plus $50 for each additional place of business. At that rate, the secretary of state’s office estimates the fund would collect more than $2.2 million in its first year.
The legislation provides that when the fund balance reaches $3.5 million as of Aug. 31, collection of the fee would be suspended the following year for dealers who did not have a claim paid from the fund; or a suspended or revoked license; or have any civil penalties assessed against them during the previous three years.
Consumers and dealers could file a claim against the fund if they buy a vehicle on or after Oct. 1, 2011, from a dealer who goes out of business without settling a trade-in lien. A claim could not exceed $35,000. A three-member Dealer Recovery Trust Fund Board would consider such claims.
Among recent changes to the House bill, the three-member board would consist of Secretary of State Jesse White and Attorney General Lisa Madigan, or their delegates; and someone selected by White and Madigan or their delegates to represent Illinois automobile dealers.
The Illinois Automobile Dealers Association would serve as fund administrator and would maintain a list for White’s office of all dealers who paid the annual fee. White could suspend or revoke the license of a dealer who fails to pay the fee.
Proceeds in the fund could be used only to help victims of dealership closings, and any interest generated by the fund must be deposited into the fund—language that would prevent the General Assembly from using the interest money to shore up the state budget.
The attorney general’s office estimates unpaid liens of $5 million statewide. The office is suing seven closed dealers to recoup some of that.