LRB-1920/2
MDK:nwn:md
2009 - 2010 LEGISLATURE
August 26, 2009 - Introduced by Representatives Hintz, Milroy, Hixson, Colon,
Richards, Benedict, Berceau, Bernard Schaber, Black, Clark, Cullen,
Danou, Dexter, Garthwaite, Hebl, Hilgenberg, Hraychuck, Hubler,
Kessler, Mason, Molepske Jr., Nass, Nelson, A. Ott, Pasch, Pocan,
Pope-Roberts, Roys, Schneider, Seidel, Sherman, Sinicki, Smith, Soletski,
Spanbauer, Steinbrink, Toles, Turner, Van Akkeren, Vruwink, Young,
Ziegelbauer and Zigmunt, cosponsored by Senators Hansen, Carpenter,
Coggs, Ellis, Grothman, Jauch, A. Lasee, Lassa, Lehman, Miller, Risser,
Robson, Taylor, Vinehout and Wirch. Referred to Committee on Financial
Institutions.
AB392,1,3
1An Act to renumber and amend 138.09 (1d);
to amend 138.09 (1m) (a); and
2to create 138.09 (1d) (b) and 138.09 (7m) of the statutes;
relating to: finance
3charges for licensed lenders.
Analysis by the Legislative Reference Bureau
Under current law, a lender other than a bank, savings bank, savings and loan
association, or credit union (financial institution) generally must obtain a license
from the Division of Banking in the Department of Financial Institutions (DFI) to
assess a finance charge for a consumer loan that is greater than 18 percent. This type
of lender is generally referred to as a "licensed lender." With certain limited
exceptions, current law provides no maximum finance charge for a consumer loan
made by a licensed lender.
The bill changes the licensing requirement so that it is based on the amount of
a loan, rather than the finance charge. Under the bill, a lender other than a financial
institution must obtain a license if the lender makes a consumer loan of $5,000 or
less.
The bill also prohibits a lender who is so licensed from assessing a finance
charge on a consumer loan that exceeds 36 percent per year. Under the bill, "finance
charge" has the same definition as under the Wisconsin Consumer Act, which is also
administered by DFI. The bill requires that DFI enforce the foregoing prohibition.
A person who violates the prohibition is subject to the same penalty that applies
under current law to a licensed lender who does not obtain a license, which is a fine
of not more than $500, imprisonment for not more than six months, or both. In
addition, the bill allows a borrower to bring an action against a lender who violates
the prohibition to recover damages in an amount equal to the greater of the following:
1) twice the amount of the finance charge in connection with the loan made to the
borrower; or 2) the actual damages, including incidental and consequential damages,
sustained by the borrower by reason of the violation. The bill also allows the
borrower to recover the costs of the action, including reasonable attorney fees.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB392, s. 1
1Section
1. 138.09 (1d) of the statutes is renumbered 138.09 (1d) (intro.) and
2amended to read:
AB392,2,33
138.09
(1d) (intro.) In this section
, "division":
AB392,2,4
4(a) "Division" means the division of banking.
AB392, s. 2
5Section
2. 138.09 (1d) (b) of the statutes is created to read:
AB392,2,66
138.09
(1d) (b) "Finance charge" has the meaning given in s. 421.301 (20).
AB392, s. 3
7Section
3. 138.09 (1m) (a) of the statutes is amended to read:
AB392,3,28
138.09
(1m) (a) Before any person may do business under this section or charge
9the interest authorized by sub. (7) and before any creditor other than a bank, savings
10bank, savings and loan association or credit union may
assess a finance charge on 11make a consumer loan
in excess of
18% per year $5,000 or less, that person shall first
12obtain a license from the division. Applications for a license shall be in writing and
13upon forms provided for this purpose by the division. An applicant at the time of
14making an application shall pay to the division a nonrefundable $300 fee for
15investigating the application and a $500 annual license fee for the period
16terminating on the last day of the current calendar year. If the cost of the
17investigation exceeds $300, the applicant shall upon demand of the division pay to
1the division the amount by which the cost of the investigation exceeds the
2nonrefundable fee.
AB392, s. 4
3Section
4. 138.09 (7m) of the statutes is created to read:
AB392,3,54
138.09
(7m) (a) No creditor who is licensed under sub. (1m) may assess a
5finance charge on a consumer loan that is more than 36 percent per year.
AB392,3,116
(b) If a creditor makes a consumer loan that violates par. (a), the borrower may
7bring an action against the creditor for an amount equal to twice the amount of the
8finance charge in connection with the loan, or the actual damages, including any
9incidental and consequential damages, sustained by the borrower by reason of the
10violation, whichever is greater, and, notwithstanding s. 814.04 (1), the costs of the
11action, including reasonable attorney fees.
AB392,3,1413
(1) This act first applies to loans made, refinanced, or consolidated on the
14effective date of this subsection.
AB392,3,1716
(1) This act takes effect on the first day of the 3rd month beginning after
17publication.
