Phone: 630-495-2282 Fax: 630-495-2260 Map/Directions

Dealer Recovery Trust Fund clears Illinois General Assembly

June 10, 2011
Illinois legislation to create a Dealer Recovery Trust Fund has advanced to Gov. Pat Quinn, after state’s General Assembly passed the measure May 31, the final day of the lawmakers’ spring session. Quinn has about a month to consider the matter.
The fund, which would help people harmed by dealerships that close without settling liens on trade-ins, would be endowed by adding $500 to the price of an annual license for new- and used-vehicle dealers and motorcycle dealers.
The state attorney general’s office sought to create the Dealer Recovery Trust Fund after talking to consumers who said they were harmed by the unpaid liens. Assistant Illinois Attorney General Greg Grzeskiewicz described consumers who subsequently saw their credit scores damaged while they were saddled with two vehicle loan payments. Grzeskiewicz said Illinois is the only state without a recovery fund or a bonding mechanism to help those consumers.
Under the legislation, annual dealer licenses would increase $500 for a dealer’s established place of business and $50 for each additional place of business. The secretary of state’s office currently counts 895 new-vehicle dealers, 2,831 used-car dealers, and 771 motorcycle dealers, meaning the fund would collect more than $2.2 million in its first year.
If the fund balance exceeds $3.5 million on Aug. 31 of any given year, 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 would be eligible to file a claim against the fund if they purchase a vehicle on or after Oct. 1, 2011, from a dealer who goes out of business without satisfying a trade-in lien. A claim could not exceed $35,000.
A dealer who sells 25 or fewer vehicles a year would be exempt from the $500 fund surcharge. The proposed Dealer Recovery Trust Fund Board, which would oversee the fund, would be comprised of the Illinois attorney general and secretary of state, or their delegates; and someone to represent “Illinois automobile dealers” who alternately would come from the ranks of franchised and independent dealers.
The CATA and the IADA, involved in shaping the legislation, were able to steer endowment of the fund toward a hike in dealer licenses and away from more costly surety bonds.