The lender has knowledge, including knowledge from the lender's course of dealing with other customers of the seller or lessor or from the lender's records, or written notice of substantial complaints by such other customers, that such seller or lessor fails or refuses to perform the seller's or lessor's contracts with them and that such merchant fails to remedy such complaints within a reasonable time; or
With respect to a loan which constitutes an interlocking consumer loan solely by reason of sub. (3) (f)
, the lender shall be liable as provided in sub. (4)
only if the lender receives notice of the customer's claim or defense within 12 months after the transaction is charged against the customer's account, and the unpaid balance of such a loan for purposes of sub. (4)
shall be determined pursuant to the method set forth in s. 422.418
Consumer defenses in interlocking loans and credit card transactions; recent statutes, policies and a proposal. Littlefield, 1973 WLR 471.
Notice of assignment. 422.409(1)
The customer is authorized to pay the assignor until the customer receives notification of assignment of the rights to payment pursuant to a consumer credit transaction and that payment is to be made to the assignee. A notification which does not reasonably identify the rights assigned is ineffective. If requested by the customer, the assignee must seasonably furnish reasonable proof that the assignment has been made and unless the assignee does so the customer may pay the assignor.
The notification of assignment shall be in writing and addressed to the customer at the customer's address as stated in the contract, shall be accompanied by a copy of the contract or shall identify the contract, describe the goods or services, state the names of the assignor and the customer, the name and address of the assignee, the number, amount and due dates or periods of payments scheduled to repay the indebtedness and, except in the case of a transaction secured by a first lien mortgage or equivalent security interest for the purpose of the acquisition of a dwelling, the total of payments. A provision in the assigned contract that the customer waives or will not assert claims or defenses against the assignee under s. 422.407 (2)
shall not be effective unless the notification of assignment also contains a clear and conspicuous statement that the customer has 12 months within which to notify the assignee in writing of any complaints, claims or defenses the customer may have against the assignor and that if the customer does not give such notice, the assignee or subsequent assignees will have the right to enforce the contract free of such claims or defenses subject to chs. 421
Such fees do not exceed 5% of the amount of the judgment entered against the customer, or $100 in the event no judgment is so entered and the dispute is settled prior to judgment.
The fees are payable to a licensed attorney who is not an employee of the licensed lender.
The fees do not exceed 5% of the amount of the judgment entered against the customer, or $100 in the event a judgment is not entered and the dispute is settled before judgment.
422.412 Restriction on liability in consumer lease.
In a consumer lease, the obligation of a customer upon expiration of the lease may not exceed the average payment allocable to a monthly period under the lease. This limitation does not apply to charges for damages to the leased property occasioned by other than normal use or for other default.
History: 1971 c. 239
; 1997 a. 302
422.413 Limitation on default charges. 422.413(2g)(a)
Expenses of taking and holding the collateral if paid to persons not related to the creditor.
Expenses for cleaning and restoring the appearance of the collateral, not to exceed $100.
Expenses for repair of damage to the collateral if covered by insurance, not to exceed the lesser of any deductible amount or $250.
Expenses for any repair to the collateral which increase the selling price of the collateral, not to exceed the amount by which the selling price is increased because of the repairs, if paid to persons not related to the creditor. The selling price of the collateral before repairs shall be established by any reasonable method, at no cost to the customer.
The satisfaction of indebtedness secured by any subordinate security interest in the collateral, subject to the restrictions set forth in s. 409.615 (1) (c)
422.415 Changes in open-end credit terms. 422.415(1)
Except as provided in sub. (2)
, no creditor shall make any change in the terms of open-end credit plans that is adverse to the interests of the customer with respect to any outstanding balances or that imposes or alters a charge permitted under s. 422.202 (2m)
. For the purposes of this section, a change shall be presumed to be adverse if the result thereof is to increase the rate of the finance charge or the amount of the periodic payment due. Outstanding balances shall be determined on the assumption that all payments shall be credited first to any finance charges that may be due and then to the payment of debts in the order in which the entries to the account showing the debts were made.
The change is required by legislation, regulations or administrative rules becoming effective after the date of the agreement with the customer and the creditor has mailed or delivered to the customer written notice disclosing such proposed change not less than 3 months prior to the effective date of such change or such lesser period of time as may be available before such change is required to be made.
In an open-end credit plan in which more than one person may be obligated for extensions of credit, any person may terminate his or her liability for future extensions of credit under the plan by giving written notice to the creditor of the person's termination of liability. The person's liability for future extensions of credit under the plan shall continue as to loans extended to, or purchases made by, any other person under the plan for 15 business days after the creditor's receipt of the termination notice. The terminating person's liability may not exceed the greater of the requested and contracted for credit limit under the plan or the balance outstanding under the plan on the receipt of the termination notice plus $500.
Notwithstanding sub. (1)
, a person remains liable for loans extended to, or purchases made by, the person after giving the termination notice.
History: 1981 c. 45
With respect to a consumer loan, in addition to the limitations on security interests required by 12 CFR 227.13
(d), 12 CFR 535.2
(a) (4) or 16 CFR 444.2
(a) 4, if any, a lender may not take a security interest, other than a purchase money security interest, in:
Real property if the obligation secured is less than $1,000.
422.418 Security interests: consolidations; open-end credit plans. 422.418(1)(1)
The parties may agree in a consolidation agreement under s. 422.206
that the creditor may secure the consolidated obligation by a security interest in property in which the creditor has an existing security interest as a result of the prior transaction which is one of those agreed to become consolidated.
If obligations consolidated or financed pursuant to an open-end credit plan arise from 2 or more transactions made on the same day, payments received by the creditor are deemed, for the purpose of determining the amount of the obligation secured by the various security interests, to have been applied first to the payment of the smallest obligation.
Waivers prohibited. 422.419(1)(a)
The merchant or other person acting on the merchant's behalf is given authority to enter the customer's dwelling or to commit any breach of the peace in the course of taking possession of collateral securing the transaction;
422.421 Variable rate transaction. 422.421(1)(a)
"Approved index" means any relevant index approved by the administrator that is beyond the control of the creditor and is verifiable by the customer.
"Consummation" with respect to a variable rate transaction other than one pursuant to an open-end credit plan means the time at which a customer becomes contractually obligated on the variable rate transaction.
"Consummation" with respect to a variable rate transaction pursuant to an open-end credit plan means the time at which a creditor accepts a customer's application and authorizes the customer's participation in the plan or the time at which an amendment to an existing open-end credit plan is accepted by or becomes binding on the customer under sub. (11)
or s. 422.415
"Variable rate transaction" means any open-end credit plan and any consumer credit transaction other than one pursuant to an open-end credit plan, the terms of which permit the rate of finance charge to be adjusted from time to time during the term of the plan or transaction other than by an adjustment under s. 422.415
, but does not include any consumer credit transaction the terms of which permit only the rates of finance charge that are initially numerically specified in any document evidencing the plan or transaction.
The relationship between approved index values and the rates of finance charge.
The provisions under par. (a) 5.
may specify limited magnitudes of decreases in the rate of finance charge if the provisions specify limited magnitudes of increases that are at least as restrictive.
If a creditor fails at any time to increase the rate of finance charge to the extent permitted by the provisions under par. (a)
, the creditor may not carry over and add any portion of the increase to any subsequent adjustment. Failure at any time to increase the rate of finance charge to the extent permitted by the provisions under par. (a)
does not affect in any way the creditor's right to prospectively reestablish the relationship between approved index values and the rates of finance charge in accordance with the provisions under par. (a)
Adjustments in the rate of finance charge of a variable rate transaction that are not based upon changes in an approved index shall be made in accordance with provisions set forth in the documents evidencing the variable rate transaction, including provisions specifying all of the following:
If based upon changes in an index other than an approved index, the relationship between index values and the rates of finance charge.
The method of implementing any rounding of the rates of finance charge.
The provisions under par. (a)
may not specify a date for adjustment that is earlier than 3 months after the date of consummation of the variable rate transaction.
The maximum increase which may be carried over to a succeeding 12-month period under par. (d)
is the difference between the rate of finance charge as of the commencement of the preceding 12-month period plus 2% and the highest rate of finance charge actually imposed during that 12-month period, or one percent, whichever is less.
The notice under subd. 1.
shall be mailed or delivered not later than 30 days after the effective date of the adjustment if the adjustment is implemented by any change other than a change under subd. 2.
If the final payment in a variable rate transaction, other than one pursuant to an open-end credit plan, exceeds the final payment disclosed to the customer prior to consummation by more than 50% but not less than $100 as a result of adjustments in the rate of finance charge during the term of the variable rate transaction, the creditor shall give the customer written notice of the estimated amount of the final payment at least 90 days but not more than 180 days prior to the due date of the final payment. The notice shall be mailed or delivered to the customer at the customer's last-known address appearing on the records of the creditor. If the variable rate transaction involves more than one customer, notice given to any customer satisfies this requirement. Notwithstanding the terms of the variable rate transaction, the final payment shall not be due until the later of the originally scheduled due date or 90 days after mailing or delivering the notice and the customer shall not be in default during that period if the customer continues to make payments in the scheduled amounts and with the scheduled frequency in effect immediately prior to the final payment until the total amount due has been paid in full.
Upon prepayment in full of the unpaid balance of a variable rate transaction, an amount not less than the unearned portion of the finance charge, if any, calculated according to s. 422.209 (2) (b)
shall be rebated to the customer.
Parties to an open-end credit plan entered into before or within 6 months after September 1, 1984, may agree to an amendment to the plan in accordance with the requirements of sub. (3)
to permit the rate of finance charge for existing and future balances to be adjusted from time to time in accordance with the provisions of this section, only as provided under pars. (b)
or under s. 422.415
The notice under subd. 1.
provides for acceptance or rejection by the customer as provided in either or both of the following:
If a customer rejects an amendment as provided in the notice under par. (b) 2.
, the creditor shall permit the customer to pay existing balances under existing terms and the creditor may either close the account to future transactions or continue the account under existing terms.
CREDIT SERVICES ORGANIZATIONS
In this subchapter:
"Buyer" means a natural person or customer who is solicited to purchase or who purchases the services of a credit services organization.
"Credit services organization" means a person or merchant who, with respect to the extension of credit by others, sells, provides or performs, or represents that the person will sell, provide or perform, any of the following services in return for the payment of money or for other valuable consideration:
A bank or savings and loan association whose deposits or accounts are insured by the federal deposit insurance corporation, or a credit union whose deposits or accounts are insured by the national credit union administration.
A nonprofit organization described under section 501
(c) (3) of the internal revenue code and exempt from taxation under section 501
(a) of the internal revenue code.
A person licensed as an adjustment service company under s. 218.02
if the person is acting within the course and scope of that license.
A person licensed to practice law in this state if the person is rendering services within the course and scope of his or her practice as an attorney at law.
"Extension of credit" means the right to defer payment of debt or to incur debt and defer its payment, that is offered or granted for debt that is incurred primarily for personal, family or household purposes.
Registration requirements. 422.502(1)
A person may not act as a credit services organization unless the person has been issued a certificate of registration from the administrator and the person has complied with the bond or letter of credit requirements under sub. (3)
A person desiring to act as a credit services organization shall apply to the administrator for a certificate of registration on a form prescribed by the administrator and shall pay the administrator a registration fee of $100.
A person desiring to act as a credit services organization shall obtain a surety bond that is issued by a surety company admitted to do business in this state or an irrevocable letter of credit from a federally insured bank or savings and loan association located in this state. The bond or letter of credit shall be in an amount equal to $25,000.
Prohibited activities. 422.503(1)
A credit services organization, and its salespersons, agents and representatives who offer or sell the services of the credit services organization, may not do any of the following:
Charge or receive any money or other valuable consideration solely for referral of the buyer to a merchant who will or may extend credit to the buyer, if the credit extended to the buyer is upon substantially the same terms as is credit that is available to the general public.
Information statement. 422.504(2)
The information statement under sub. (1)
shall include all of the following information:
Notice of the buyer's right to proceed against the bond or letter of credit obtained by the credit services organization, a description of procedures that the buyer is to follow to proceed against the bond or letter of credit, and the name and address of the surety company that issued the bond or the name and address of the financial institution that issued the letter of credit.
History: 1991 a. 244