AB849: Bill Text

AB849,12,12 (d) If the rental-purchase company fails to file a written response within the time provided under par. (b), files a timely written response but fails to request a contested case hearing under s. 227.42 or files a timely written response requesting a contested case hearing but, in the opinion of the department, the matter fails to satisfy all of the conditions under s. 227.42 (1) (a) to (d), the department may issue an order suspending or revoking the rental-purchase company's registration under sub. (1). If the rental-purchase company files a timely written response containing a proper request for a contested case hearing under s. 227.42, any order of the department suspending or revoking the rental-purchase company's registration shall be stayed pending completion of proceedings under ch. 227.

AB849,12,15 subchapter iv rent-to-own agreements and disclosure requirements

AB849,12,18 435.401 General requirements of disclosure. (1) Form, location, size and time of disclosure. The information required under s. 435.402 shall satisfy all of the following requirements:

AB849,12,19 (a) The information shall be clearly and conspicuously disclosed.

AB849,12,20 (b) The information shall be disclosed in writing.

AB849,12,22 (c) The information shall be disclosed on the face of the rent-to-own agreement above the line for the lessee's signature.

AB849,12,23 (d) The information shall be disclosed in not less than 8-point standard type.

AB849,12,25 (e) The information shall be disclosed at or before the time that the lessee becomes legally obligated under the rent-to-own agreement.

AB849,13,4 (2) Accuracy of disclosure. The information required under s. 435.402 must be accurate as of the time that it is disclosed to the lessee. If any information subsequently becomes inaccurate as a result of any act, occurrence or agreement by the lessee, the resulting inaccuracy is not a violation of this chapter.

AB849,13,9 (3) Copy of rent-to-own agreement. The rental-purchase company shall provide the lessee with a copy of the completed rent-to-own agreement signed by the lessee. If more than one lessee is legally obligated under the same rent-to-own agreement, delivery of a copy of the completed rent-to-own agreement to one of the lessees shall satisfy this subsection.

AB849,13,12 435.402 Required provisions of rent-to-own agreement. A rental-purchase company shall include all of the following information, to the extent applicable, in every rent-to-own agreement:

AB849,13,17 (1) Description. A brief description of the rental property, sufficient to identify the rental property to the lessee and the rental-purchase company, including an identification number and a statement indicating whether the rental property is new or used. A statement that incorrectly indicates that new rental property is used is not a violation of this chapter.

AB849,13,23 (2) Cash price. The price at which the rental-purchase company would sell the rental property to the lessee if the lessee were to pay for the rental property in full on the date on which the rent-to-own agreement is executed, along with a statement that, if the lessee intends to acquire ownership of the rental property and is able to pay for the property in full or is able to obtain credit to finance the purchase, the lessee may be able to purchase similar property from a retailer at a lower cost.

AB849,13,24 (3) Rental payment. The periodic rental payment for the rental property.

AB849,14,5 (4) Up-front payment. Any payment required of the lessee at the time that the agreement is executed or at the time that the rental property is delivered, including the initial rental payment, any application or processing charge, any delivery fee, any charge for a liability damage waiver or for other optional services agreed to by the lessee, and the applicable tax.

AB849,14,8 (5) Payment to acquire ownership. The total number, total dollar amount and timing of all periodic rental payments necessary to acquire ownership of the rental property.

AB849,14,14 (6) Other charges and fees. A statement that the total dollar amount of all periodic rental payments necessary to acquire ownership of the rental property does not include other charges or fees that a lessee may incur, such as application, processing or delivery charges, or late payment, reinstatement, default or pickup fees. These charges and fees shall be separately identified in the rental-purchase agreement, and the amount of each charge and fee shall be disclosed.

AB849,14,19 (7) Summary of early-purchase option. A statement summarizing the terms of the lessee's option to acquire ownership of the rental property, including a statement indicating that the lessee has the right to exercise an early purchase option and indicating the price, or the formula or method for determining the price, at which the rental property may be purchased under the early-purchase option.

AB849,15,2 (8) Responsibility for theft or damage. A statement that, unless otherwise agreed, the lessee is responsible for the fair market value of the rental property, determined according to the early-purchase option formula or method, if the rental property is stolen, damaged or destroyed while in the possession of or subject to the control of the lessee. The statement shall indicate that the fair market value will be determined as of the date on which the rental property is stolen, damaged or destroyed.

AB849,15,9 (9) Service and warranty. A statement identifying the party responsible for maintaining or servicing the rental property during the term of the rent-to-own agreement, together with a description of that responsibility, and a statement that if any part of a manufacturer's express warranty covers the rental property when the lessee acquires ownership of the rental property the manufacturer's express warranty will be transferred to the lessee, if the transfer is allowed by the terms of the manufacturer's express warranty.

AB849,15,12 (10) Termination at option of lessee. A statement that the lessee may terminate the agreement at any time without penalty by voluntarily surrendering or returning the rental property in good repair.

AB849,15,14 (11) Right to reinstate. A brief explanation of the lessee's right to reinstate a rent-to-own agreement under s. 435.602.

AB849,15,23 (12) Rental, not purchase. A statement that the lessee will not own the rental property until the lessee has made all of the periodic rental payments necessary to acquire ownership or has exercised the lessee's early-purchase option. The rental-purchase company shall also include a notice reading substantially as follows: "You are renting this property. You will not own the property until you make all of the periodic rental payments necessary to acquire ownership or until you exercise your early-purchase option. If you do not make your periodic rental payments as scheduled or exercise your early-purchase option, the lessor may repossess the property."

AB849,16,2 (13) Information about rental-purchase company and lessee. The names of the rental-purchase company and the lessee, the rental-purchase company's business address and telephone number, the lessee's address and the date on which the rent-to-own agreement is executed.

AB849,16,5 435.403 Prohibited provisions of rent-to-own agreement. A rental-purchase company may not include any of the following provisions in a rent-to-own agreement:

AB849,16,6 (1) Confession. A confession of judgment.

AB849,16,9 (2) Security. A provision granting the rental-purchase company a security interest in any property except the rental property delivered by the rental-purchase company under the rent-to-own agreement.

AB849,16,13 (3) Repossession. A provision authorizing a rental-purchase company or an agent of the rental-purchase company to enter the lessee's premises or to commit a breach of the peace in the repossession of rental property delivered by the rental-purchase company under the rent-to-own agreement.

AB849,16,16 (4) Waiver. A waiver of a defense or counterclaim, or a waiver of any right to assert any claim that the lessee may have against the rental-purchase company or an agent of the rental-purchase company or a waiver of any provision of this chapter.

AB849,16,19 (5) Overpayment. A provision requiring periodic rental payments totaling more than the total dollar amount of all periodic rental payments necessary to acquire ownership, as disclosed in the rental-purchase agreement.

AB849,16,21 (6) Insurance. A provision requiring the purchase of insurance from the rental-purchase company to insure the rental property.

AB849,17,2 435.404 Liability waiver. A rental-purchase company may offer a liability waiver to the lessee. The terms of the waiver shall be provided to the lessee in writing and the face of the writing shall clearly disclose that the lessee is not required to purchase the waiver. The fee for the waiver may not exceed 10% of the periodic rental payment due under the rent-to-own agreement.

AB849,17,8 435.405 Early-purchase option. An early-purchase option under a rent-to-own agreement shall permit the lessee to purchase the rental property for cash at any time after the initial periodic rental payment. As a condition of exercising the early-purchase option, the rental-purchase company may require the lessee to be current on the payments under the lessee's rent-to-own agreement or to pay any past-due rental charges and other outstanding fees that are owed.

AB849,17,11 435.406 Receipts and statements. (1) Receipts due upon request. Upon the request of a lessee, a rental-purchase company shall provide a written receipt to the lessee for any payment made by the lessee.

AB849,17,19 (2) Statement due the lessee. Upon the request of a lessee, a rental-purchase company shall provide a written statement to the lessee showing the lessee's payment history under each rent-to-own agreement between the lessee and the rental-purchase company. A rental-purchase company is not required to provide a statement covering any rent-to-own agreement that terminated more than one year prior to the date of the lessee's request. A rental-purchase company may provide a single statement covering all rent-to-own agreements or separate statements for each rent-to-own agreement, at the rental-purchase company's option.

AB849,17,24 (3) Statement due the 3rd party. Upon the written request of a lessee, made during the term of or no later than one year after the termination of a rent-to-own agreement, a rental-purchase company shall provide a written statement to any person designated by the lessee, showing the lessee's payment history under the rent-to-own agreement.

AB849,18,2 subchapter v marketing

AB849,18,7 435.501 Price cards displayed. (1) Price cards; generally. Except as provided under sub. (2), a rental-purchase company shall display a card or tag that clearly and conspicuously states all of the following information on or next to any property displayed or offered by the rental-purchase company for rent under a rent-to-own agreement:

AB849,18,8 (a) The cash price that an individual would pay to purchase the property.

AB849,18,10 (b) The amount of the periodic rental payment and the term over which the payment must be made.

AB849,18,12 (c) The total number and total dollar amount of all periodic rental payments necessary to acquire ownership of the property under a rent-to-own agreement.

AB849,18,13 (d) Whether the property is new or used.

AB849,18,18 (2) Exceptions. If property is offered for rent under a rent-to-own agreement through a catalog or if the size of the property is such that displaying a card or tag on or next to the property is impractical, a rental-purchase company may make the disclosures required under sub. (1) in a catalog or list that is readily available to prospective lessees.

AB849,18,23 435.502 Advertising. (1) Disclosure required. Except as provided under sub. (2), if an advertisement for a rent-to-own agreement refers to or states the amount of a payment for any property and the right to acquire ownership of that property, the rental-purchase company shall ensure that the advertisement clearly and conspicuously states all of the following:

AB849,18,24 (a) That the transaction advertised is a rent-to-own agreement.

AB849,19,2 (b) The total number and total dollar amount of all periodic rental payments necessary to acquire ownership of the property.

AB849,19,5 (c) That the lessee does not acquire ownership of the property if the lessee fails to make all periodic rental payments or other payments necessary to acquire ownership of the property.

AB849,19,8 (2) Exception. Subsection (1) does not apply to an in-store display or to an advertisement that is published in the yellow pages of a telephone directory or in a similar directory of businesses.

AB849,19,15 435.503 Referral transactions. (1) Prohibited referral transactions. No rental-purchase company may induce any individual to enter into a rent-to-own agreement by giving or offering to give a rebate or discount to the individual in consideration of the individual's giving to the rental-purchase company the names of prospective lessees, if the earning of the rebate or discount is contingent upon the occurrence of any event that takes place after the time that the individual enters into the rent-to-own agreement.

AB849,19,22 (2) Authorized referral transactions. After entering into a rent-to-own agreement, a rental-purchase company may give or offer to give a rebate or discount to the lessee under the rent-to-own agreement, in consideration of the lessee's giving to the rental-purchase company the names of prospective lessees. A rebate or discount under this subsection may be contingent upon the occurrence of any event that takes place after the time that the names are given to the rental-purchase company.

AB849,19,25 subchapter vi rental payments and collections

AB849,20,10 435.601 Late payment, grace period and late fees. (1) Late fee; generally. If a lessee fails to make a periodic rental payment when due under a rent-to-own agreement or if, at the end of any rental term, the lessee fails to return the rental property or to renew the rent-to-own agreement for an additional term, the rental-purchase company may require the lessee to pay a late fee. Except as provided under sub. (4), this subsection does not apply if the lessee's failure to return the rental property or failure to renew the rent-to-own agreement at the end of the rental term is due to the lessee's exercise of an early-purchase option under the rent-to-own agreement or is due to the lessee making all periodic rental payments necessary to acquire ownership of the rental property.

AB849,20,12 (2) Grace periods. The following grace periods shall apply to periodic rental payments made with respect to a rental-purchase agreement:

AB849,20,15 (a) For an agreement that is renewed on a weekly basis, no late fee may be assessed for a periodic rental payment that is made within 2 days after the date on which the payment is due.

AB849,20,18 (b) For an agreement that is renewed for a term that is longer than one week, no late fee may be assessed for a periodic rental payment that is made within 5 days after the date on which the payment is due.

AB849,20,20 (3) Collection, recording and limitation of late fees. Late fees are subject to all of the following limitations:

AB849,20,21 (a) A late fee may not exceed $5 for each past-due periodic rental payment.

AB849,20,23 (b) A late fee may be collected only once on each periodic rental payment due, regardless of how long the payment remains past due.

AB849,20,25 (c) Payments received shall be applied first to the payment of any rent that is due and then to late fees and any other charges.

AB849,21,2 (d) A late fee may be collected at the time that the late fee accrues or at any time afterward.

AB849,21,5 (4) Effect of outstanding late fee on transfer of ownership. A rental-purchase company may require payment of any outstanding late fees before transferring ownership of rental property to a lessee.

AB849,21,9 435.602 Reinstatement of terminated rent-to-own agreement. (1) Reinstatement, generally. A lessee may reinstate a terminated rent-to-own agreement without losing any rights or options previously acquired if all of the following conditions apply:

AB849,21,11 (a) The lessee returned or surrendered the rental property within 5 days after the termination of the rent-to-own agreement.

AB849,21,16 (b) Not more than 21 days have passed after the date on which the rental property was returned to the rental-purchase company or, if the lessee has paid two-thirds or more of the total number of periodic rental payments necessary to acquire ownership of the rental property, not more than 45 days have passed since the date on which the rental property was returned to the rental-purchase company.

AB849,21,20 (2) Authorized conditions on reinstatement. As a condition of reinstatement under this section, the rental-purchase company may require the payment of all past-due rental charges, any applicable late fees, a reinstatement fee not to exceed $5 and the periodic rental payment for an additional term.

AB849,22,2 (3) Effect of repossession on reinstatement. Nothing in this section prohibits a rental-purchase company from attempting to repossess rental property upon termination of a rent-to-own agreement, but repossession efforts do not affect the lessee's right to reinstate the rent-to-own agreement as long as the rental property is voluntarily returned or surrendered within 5 days after the termination of the rent-to-own agreement.

AB849,22,7 (4) Property available upon reinstatement. Upon reinstatement, the rental-purchase company shall provide the lessee with the same rental property, if the property is available and is in the same condition as when it was returned to the rental-purchase company, or with substitute rental property of comparable quality and condition.

AB849,22,17 435.603 Reduced periodic rental payment due to reduced income. (1) Reduction in amount of periodic rental payments; required evidence. (a) Reduction in amount of periodic rental payments. If a lessee's monthly income is reduced by 25% or more due to pregnancy, disability, involuntary job loss or involuntary reduction in the amount of hours worked or wages earned, the rental-purchase company shall reduce the amount of each periodic rental payment due under the rent-to-own agreement by the same percentage that the lessee's monthly income is reduced or by 50%, whichever is less, for the period of time during which the lessee's income is reduced. This subsection only applies if all of the following conditions are satisfied:

AB849,22,20 1. The total dollar amount of periodic rental payments made by the lessee under the rent-to-own agreement equals more than 50% of the total dollar amount of periodic rental payments necessary to acquire ownership of the rental property.

AB849,22,22 2. The lessee has provided the rental-purchase company with reasonable evidence of the amount and cause of the reduction in the lessee's monthly income.

AB849,23,2 (b) Evidence of continued reduction in income. At reasonable intervals after reducing the amount of a periodic rental payment under par. (a), a rental-purchase company may require the lessee to provide evidence of the lessee's monthly income and evidence that the cause of the reduction in the lessee's monthly income has not abated.

AB849,23,7 (2) Increase in number of periodic rental payments. Except as provided in sub. (4), if a rental-purchase company reduces the amount of a periodic rental payment under sub. (1) (a), the rental-purchase company may increase the total number of periodic rental payments necessary to acquire ownership of the rental property.

AB849,23,13 (3) Increase in amount of periodic rental payments. Except as provided in sub. (4), if a rental-purchase company reduces the amount of a periodic rental payment under sub. (1) (a) and if, subsequently, the lessee's monthly income is increased, the rental-purchase company may increase, by the same percentage that the lessee's monthly income is increased, the amount of each periodic rental payment due after the date on which the lessee's monthly income is increased.

AB849,23,20 (4) Limitation on increases. If a rental-purchase company, under sub. (2) or (3), increases the amount or number of periodic rental payments due under a rent-to-own agreement, the increase only affects the rights or duties of the lessee to the extent authorized in sub. (2) or (3). No rental-purchase company, acting under sub. (2) or (3), may increase the total dollar amount of periodic rental payments necessary to acquire ownership of the rental property, or the amount of a periodic rental payment, to greater than the amount disclosed in the rent-to-own agreement.

AB849,23,22 435.604 Default and right to cure. (1) Default; generally. A lessee is in default under a rent-to-own agreement if any of the following applies:

AB849,24,2 (a) The lessee fails to return the rental property within 7 days after the date on which the last term for which a periodic rental payment was made expires, unless the lessee has exercised an early-purchase option or has made all periodic rental payments necessary to acquire ownership of the rental property.

AB849,24,4 (b) The lessee materially breaches any other provision of the rent-to-own agreement.

AB849,24,8 (2) Default; necessary for lessee liability. No cause of action shall accrue against a lessee with respect to the lessee's obligations under a rent-to-own agreement except upon default and the expiration of any applicable period of time allowed for cure of the default.

AB849,24,15 (3) Notice of default; general requirement. Except as provided in sub. (4), as a condition precedent to bringing an action against a lessee arising out of the lessee's default, a rental-purchase company shall provide a written notice of the default and of the right to cure the default to the lessee. The notice shall specify the default and the action required to cure the default and shall inform the lessee that if the default is not cured within 15 days after the notice is given the rental-purchase company will have the right to bring an action against the lessee.

AB849,24,20 (4) Notice of default; exception. A rental-purchase company is not required to provide a notice of default and right to cure as a condition precedent to bringing an action against a lessee if each of the following occurred twice during the 12 months before the date of the current default with respect to the same rent-to-own agreement:

AB849,24,21 (a) The lessee was in default.

AB849,24,23 (b) The rental-purchase company gave the lessee written notice of the default and of the lessee's right to cure under sub. (3).

AB849,24,24 (c) The lessee cured the default.

AB849,25,4 (5) Request for voluntary surrender of property. A rental-purchase company may request the voluntary return or surrender of rental property prior to the declaration of a default and the sending of written notice of default and right to cure. A request under this subsection is subject to the requirements of s. 435.605.

AB849,25,8 435.605 Rental-purchase company collection practices. In attempting to recover possession of rental property or to collect past-due periodic rental payments or other charges owed under a rent-to-own agreement, a rental-purchase company may not do any of the following:

AB849,25,10 (1) Use of force. Use or threaten to use force or violence to cause physical harm to the lessee or the lessee's property or to a person related to the lessee.

AB849,25,15 (2) Criminal prosecution. Threaten criminal prosecution, unless the rental-purchase company reasonably believes, in good faith, that the lessee has violated a law of this state and, as a result of the violation, is subject to penalties including a fine or imprisonment or both and the rental-purchase company intends to seek the filing of criminal charges against the lessee.

AB849,25,18 (3) Disclosure of false information. Disclose or threaten to disclose information adversely affecting the lessee's reputation for creditworthiness with knowledge or reason to know that the information is false.

AB849,25,25 (4) Communication with lessee's employer. Initiate or threaten to initiate communication with the lessee's employer prior to obtaining final judgment against the lessee, except for the purpose of enforcing an assignment of earnings under s. 435.606. This subsection does not prohibit a rental-purchase company from communicating with a lessee's employer solely to verify employment status or earnings or to determine if the employer has an established debt counseling service or procedure.