LRB-4567/1
MDK:lmk:rs
2005 - 2006 LEGISLATURE
April 3, 2006 - Introduced by Representatives Sherman, Boyle, Nelson and
Musser, cosponsored by Senator Lassa. Referred to Committee on Financial
Institutions.
AB1164,1,3 1An Act to amend 422.202 (2m) (a), 422.203 (1) and 422.415 (2) (intro.); and to
2create
421.109 of the statutes; relating to: penalties for late or delinquent
3payments under the Wisconsin Consumer Act.
Analysis by the Legislative Reference Bureau
This bill prohibits, under certain circumstances, a merchant from imposing a
late payment penalty on a customer in a transaction subject to the Wisconsin
Consumer Act (WCA). Under current law, the WCA applies, with certain exceptions,
to transactions for real or personal property, services, money, or credit that are
entered into for personal, family, or household purposes. In addition, for the WCA
to apply to a transaction, the cash price or amount financed must be $25,000 or less.
Except for certain credit transactions, the WCA does not impose restrictions on
penalties for late or delinquent payments.
Under this bill, if a customer's payment to a merchant of an amount owed for
a transaction subject to the WCA is received by the merchant no later than 28 days
after the date that the merchant sends the customer a bill for the amount, the
merchant may not impose any charge, fee, penalty, or interest for late or delinquent
payment. In addition, the merchant may not report the customer's payment as a late
or delinquent payment to any credit reporting agency.
The bill applies to any transaction that is subject to the WCA, including a credit
transaction. Under current law, for certain types of credit transactions, a merchant
is allowed to impose a delinquency charge only if a customer's payment is not made
on or before the tenth day after its scheduled due date or, if the merchant and

customer have agreed to defer the amount due, on or before the tenth day after the
deferred due date. Under the bill, a merchant involved in such a credit transaction
may impose a delinquency charge for a payment that is not made on or before the
tenth day after its scheduled due date, but only if the merchant is otherwise allowed
to impose a delinquency charge under the bill as described above. If the merchant
and customer have agreed to defer the amount due, current law, rather than the bill,
applies to the delinquency charge.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB1164, s. 1 1Section 1. 421.109 of the statutes is created to read:
AB1164,2,2 2421.109 Late payments. (1) In this section:
AB1164,2,83 (a) "Credit report" means means any written, oral, or other communication of
4any information by a credit reporting agency bearing on an individual's
5creditworthiness, credit standing, or credit capacity, which is used or is expected to
6be used, or collected in whole or in part, for a purpose specified in 15 USC 1681b or
7for the purpose of serving as a factor in establishing the individual's eligibility for any
8credit to be used primarily for personal, family, or household purposes.
AB1164,2,159 (b) "Credit reporting agency" means any person who, for fees, dues, or other
10compensation, or on a cooperative nonprofit basis, regularly engages in whole or in
11part in the business of assembling or evaluating credit or other information on
12individuals for the purpose of preparing credit reports that the credit reporting
13agency furnishes to 3rd parties, but does not include any governmental agency whose
14records are maintained primarily for traffic safety, law enforcement, or licensing
15purposes.
AB1164,2,1716 (c) "Send" means to deposit in the mail, deposit for delivery by a service other
17than the United States postal service, or transmit by an electronic mail service.
AB1164,3,4
1(2) If a customer's payment to a merchant of an amount owed for a consumer
2transaction is received by the merchant no later than 28 days after the date that the
3merchant sends the customer a bill for the amount, the merchant may not do any of
4the following:
AB1164,3,65 (a) Impose any charge, fee, penalty, or interest for late or delinquent payment
6of the amount.
AB1164,3,87 (b) Report the customer's payment as a late or delinquent payment to any credit
8reporting agency.
AB1164, s. 2 9Section 2. 422.202 (2m) (a) of the statutes is amended to read:
AB1164,3,1610 422.202 (2m) (a) A creditor may charge, collect and receive other fees and
11charges, in addition to the finance charge authorized under s. 422.201, that are
12agreed upon by the creditor and the customer. These other fees and charges may
13include periodic membership fees, cash advance fees, charges for exceeding a
14designated credit limit, charges for late payments, charges for providing copies of
15documents and, charges for the return of a dishonored check or other payment
16instrument, and, except as provided in s. 421.109, charges for late payments.
AB1164, s. 3 17Section 3. 422.203 (1) of the statutes is amended to read:
AB1164,3,2518 422.203 (1) With respect to a consumer credit transaction other than one
19pursuant to an open-end credit plan, the parties may, subject to s. 421.109, agree to
20a delinquency charge on any installment not paid in full on or before its scheduled
21due date, except that if a deferral is made under s. 422.204, the parties may agree
22to a delinquency charge on any installment not paid in full on or before
the 10th day
23after its scheduled or deferred due date in an amount not to. A delinquency charge
24under this subsection may not
exceed $10 or 5% of the unpaid amount of the
25installment, whichever is less.
AB1164, s. 4
1Section 4. 422.415 (2) (intro.) of the statutes is amended to read:
AB1164,4,52 422.415 (2) (intro.) A change that is adverse to the interests of the customer
3with respect to outstanding balances or that imposes or alters a charge permitted
4under s. 422.202 (2m), except for a charge for later payment, may be made if any of
5the following conditions is met:
AB1164, s. 5 6Section 5. Initial applicability.
AB1164,4,87 (1) This act first applies to consumer transactions that are entered into,
8extended, modified, or renewed on the effective date of this subsection.
AB1164,4,99 (End)
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