13. A statement that the lessee may terminate the rental-purchase agreement
at any time, without penalty, by surrendering the rental property in good repair.
14. A description of the lessee's right to reinstate the rental-purchase
agreement.
15. A statement indicating that the lessee does not own the rental property and
will not own the property until exercising an early-purchase option or making all
rental payments necessary to acquire ownership.
The bill also prohibits the inclusion of certain provisions in a rental-purchase
agreement. The prohibited provisions include the following: (1) a confession of
judgment; (2) a provision granting the rental-purchase company a security interest
in property other than the rental property; (3) a provision granting the
rental-purchase company permission to enter the lessee's premises or commit a
breach of the peace in repossessing the rental property; (4) a waiver of any defense
or counterclaim or any provision of the bill's requirements; (5) a provision requiring
rental payments totaling more than the total dollar amount of all rental payments
necessary to acquire ownership; (6) a provision requiring the lessee to purchase
insurance from the rental-purchase company to insure the rental property; and (7)
a provision requiring the lessee to pay attorney fees. Several of these prohibitions
are similar to prohibitions contained in the consumer act.
The bill imposes other requirements on rental-purchase agreements, including
the following: (1) the bill limits the cash price of the rental property to no more than
twice the amount paid by the rental-purchase company to the wholesaler or
manufacturer; (2) the bill limits total charges for rental services and all required fees
or charges, except for taxes, in a transaction to no more than the cash price of the
rental property; and (3) the bill regulates the amount and timing of late fees that may
be charged to a lessee.
Disclosures
All required provisions of a rental-purchase agreement must be clearly and
conspicuously disclosed to the lessee on the face of the rental-purchase agreement
in at least eight-point standard type, except for certain provisions that must be
disclosed in at least ten-point boldface type. The lessee's payment obligations must
be evidenced by a single, dated instrument that includes the signatures of the
rental-purchase company and lessee. As under the consumer act, the bill requires
the rental-purchase company to provide the lessee, or one lessee if there are multiple
lessees under the same agreement, with a copy of the executed rental-purchase
agreement. In addition, a rental-purchase company must provide the lessee with
a receipt for any payment made by the lessee in cash, or upon request, for any other
type of payment. With certain exceptions, upon the request of a lessee, a
rental-purchase company must also provide the lessee or a person the lessee
designates with a copy of the lessee's payment history. The rental-purchase
company may charge a fee if a lessee or designated person requests more than one
copy in any 12-month period.
Related transactions
Under the bill, a rental-purchase company must offer an early-purchase
option to a lessee and may offer a liability waiver to a lessee. The bill includes a
formula for determining the maximum that may be charged for early purchase. The
terms of a liability waiver and the fact that the lessee is not required to purchase the
waiver must be disclosed to the lessee in writing. The fee for the liability waiver may
not equal more than 10 percent of the rental payment due under the rental-purchase
agreement. The bill permits a lessee to cancel a liability waiver at the end of any
rental term.
Marketing and advertising
The bill provides that advertising for rental-purchase agreements is subject to
the consumer act's prohibitions and remedies regarding false, misleading, or
deceptive advertising. The bill also creates requirements for advertising
rental-purchase agreements. With certain exceptions, the bill requires a
rental-purchase company to display a card or tag on or next to any property offered
for rent, indicating whether the property is new or used and indicating the cash price
of the property, the amount of the rental payment, and the term over which the rental
payment must be made, and the total number and total dollar amount of all rental
payments necessary to acquire ownership of the property. In addition, a
rental-purchase company must ensure that an advertisement for a rental-purchase
agreement that refers to the amount of a payment for a specific item of property also
states that the advertisement is for a rental-purchase agreement and that the lessee
does not acquire ownership of the property if the lessee fails to make all rental
payments necessary to acquire ownership. The advertisement must also include the
total number and total dollar amount of all rental payments necessary to acquire
ownership of the property.
The bill also allows a rental-purchase company to give or offer to give a rebate
or discount to a current lessee, in consideration of the lessee's giving the
rental-purchase company the names of prospective lessees.
Right to reduced amount of rental payments and right to reinstatement
Under the bill, a lessee has the right to reinstate a terminated rental-purchase
agreement, as long as the lessee returned the rental property within seven days after
termination and not more than 60 days have passed since the return date or, if the
lessee paid at least two-thirds of the total number of rental payments necessary to
acquire ownership, not more than 120 days have passed since the return date. A
rental-purchase company may require the payment of a $5 reinstatement fee, all
past-due rental charges, the rental payment for the next term, and any applicable
late fees as a condition of reinstatement. Upon reinstatement, a rental-purchase
company must provide a lessee with the same rental property, if available and in the
same condition as when it was returned, or with comparable quality rental property.
Default and right to cure
The bill establishes a notice procedure that a rental-purchase company must,
with certain exceptions, follow if a lessee defaults under a rental-purchase
agreement. The bill defines "default" as either (1) a breach of the rental-purchase
agreement that materially impairs the condition, value, or protection of the rental
property, or (2) a failure to return rental property within seven days after the
expiration of the term for which the last payment was made.
Before giving a lessee a notice of default, a rental-purchase company may first
request the lessee to surrender voluntarily the applicable rental property. Before
filing an action against a lessee arising out of the lessee's default, a rental-purchase
company must give to the lessee a written notice of the default and of the lessee's
right, within 15 days after receiving the notice, to cure the default. The notice must
specify, among other things, the actions required to cure the default. If the lessee
received a similar notice and cured the applicable default at least twice during the
year preceding the current default, the bill allows a rental-purchase company to file
an action without providing the written notice.
Collection practices
Under the bill, rental-purchase companies are subject to the same prohibitions
regarding collection practices that apply to other consumer transactions under the
consumer act. As a result, rental-purchase companies are prohibited from doing the
following in attempting to recover rental property or collect amounts owed under a
rental-purchase agreement:
1. Using or threatening to use force or violence.
2. Disclosing or threatening to disclose false information relating to the
creditworthiness of the lessee.
3. Harassing or threatening the lessee or a relative of the lessee.
4. Using obscene language in communicating with the lessee or a relative of the
lessee.
5. Using a communication that falsely simulates legal, judicial, or
governmental process.
6. Threatening to file an action against the lessee, unless the action is of a type
that the rental-purchase company files in the regular course of business or unless
the rental-purchase company intends to file the action.
7. Threatening criminal prosecution.
8. With certain exceptions, communicating with the lessee's employer.
9. Engaging in other specified conduct.
Unconscionable conduct
The bill requires the division to promulgate rules that prohibit conduct that the
division declares to be unconscionable regarding rental-purchase agreements. In
promulgating the rules, the division must consider factors under current law that the
division must consider for declaring conduct to be unconscionable in consumer credit
transactions. The bill also allows a court to void a provision of a rental-purchase
agreement that the court finds to be unconscionable. This authority is similar to a
court's authority under current law with respect to consumer credit transactions,
except that if a rental-purchase company complies with the bill's limits on cash
prices, a court may not find that the price of goods under a rental-purchase
agreement is unconscionable.
Penalties and remedies
A rental-purchase company that willfully and knowingly violates the bill's
requirements is subject to a fine of not more than $2,000, which is the penalty under
current law that applies to willful and knowing violations of the consumer act.
The bill also generally provides that a rental-purchase company that violates
the bill's requirements is liable to a lessee damaged as a result of the violation for the
amount of actual damages sustained as a result of the violation, including incidental
and consequential damages, as well as for the costs of the action and reasonable
attorney fees. In addition, the lessee is entitled to recover an amount equal to 25
percent of the total amount of payments necessary to acquire ownership under the
rental-purchase agreement. This additional recovery is subject to a $100 minimum
and a $1,000 maximum. However, if a rental-purchase company includes a
prohibited provision in a rental-purchase agreement, these remedies do not apply.
Instead, the rental-purchase company must surrender to the lessee the rental
property and any amounts paid under the rental-purchase agreement.
The bill also provides that class actions based on violations of the bill are, with
one exception, subject to the same requirements that apply to class actions for
violations of the consumer act under current law. The exception is that, for certain
willful and knowing violations of the bill's requirements, the total liability of a
rental-purchase company is subject to a limit of $500,000 (plus costs and attorney
fees), instead of the $100,000 limit (plus costs and attorneys fees) that applies under
current law.
For further information see the state and local 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:
AB587, s. 1
1Section
1. Subchapter XI of chapter 218 [precedes 218.60] of the statutes is
2created to read:
AB587,7,55
rental-purchase companies
AB587,7,6
6218.60 Definitions. In this subchapter:
AB587,7,8
7(1) "Division" means the division of banking in the department of financial
8institutions.
AB587,7,9
9(2) "Rental-purchase agreement" has the meaning given in s. 421.301 (37u).
AB587,7,10
10(3) "Rental-purchase company" has the meaning given in s. 421.301 (37v).
AB587,7,12
11218.61 License required. No person may operate as a rental-purchase
12company without a valid license issued by the division under this subchapter.
AB587,7,17
13218.62 Application for license; fees; bond. (1) Application. (a) An
14application for a license under this subchapter shall be made to the division, in
15writing, in the form prescribed by the division. In addition to any other information
16that may be required by the division, an application for a license under this
17subchapter shall include all of the following:
AB587,7,1818
1. If the applicant is an individual, the applicant's social security number.
AB587,8,2
12. If the applicant is not an individual, the applicant's federal employer
2identification number.
AB587,8,43
(b) The division may not disclose any information received under par. (a) 1. or
42. to any person except as follows:
AB587,8,65
1. The division may disclose the information to the department of revenue for
6the sole purpose of requesting certifications under s. 73.0301.
AB587,8,97
2. The division may disclose the information to the department of workforce
8development in accordance with a memorandum of understanding entered into
9under s. 49.857.
AB587,8,12
10(2) Application fees. At the time of applying to the division for a license under
11this subchapter, the applicant shall pay any applicable fee specified by the division
12by rule.
AB587,8,15
13(3) Bond. The division may require an applicant or licensee to file with the
14division and maintain in force a bond, in a form prescribed by and acceptable to the
15division, and in an amount determined by the division.
AB587,8,24
16218.63 Issuance or denial of license.
(1) Investigation. Upon the filing of
17an application under s. 218.62 (1) and the payment of any applicable fee, the division
18shall perform an investigation. Except as provided in sub. (3), if the division finds
19that the character, general fitness, and financial responsibility of the applicant; the
20members of the applicant, if the applicant is a partnership, limited liability company,
21or association; and the officers and directors of the applicant, if the applicant is a
22corporation warrant the belief that the business will be operated in compliance with
23any provision of chs. 421 to 427 relating to rental-purchase agreements, the division
24shall issue a license to the applicant.
AB587,9,6
1(2) Denial; notice; hearing. Except as provided in sub. (3), the division may
2deny an application made under s. 218.62 (1) by providing written notice to the
3applicant stating the grounds for the denial. Except as provided in sub. (3), a person
4whose application is denied may request a hearing under s. 227.44 within 30 days
5after the date of denial. The division may appoint a hearing examiner under s. 227.46
6to conduct the hearing.
AB587,9,8
7(3) Denial; child or family support or tax delinquency. The division may not
8issue a license under this chapter if any of the following applies:
AB587,9,109
(a) The applicant fails to provide the information required under s. 218.62 (1)
10(a).
AB587,9,1511
(b) The department of revenue certifies under s. 73.0301 that the applicant is
12liable for delinquent taxes. An applicant for whom a license is not issued under this
13paragraph for delinquent taxes is entitled to a notice under s. 73.0301 (2) (b) 1. b. and
14a hearing under s. 73.0301 (5) (a) but is not entitled to any other notice or hearing
15under this section.
AB587,9,2516
(c) The applicant fails to comply, after appropriate notice, with a subpoena or
17warrant issued by the department of workforce development or a county child
18support agency under s. 59.53 (5) and related to paternity or child support
19proceedings or is delinquent in making court-ordered payments of child or family
20support, maintenance, birth expenses, medical expenses, or other expenses related
21to the support of a child or former spouse, as provided in a memorandum of
22understanding entered into under s. 49.857. An applicant whose application is
23denied under this paragraph for delinquent payments is entitled to a notice and
24hearing under s. 49.857, but is not entitled to any other notice or hearing under this
25section.
AB587,10,4
1218.64 Licenses; other business. (1) Licensed locations. A license issued
2under this subchapter shall specify the location at which the licensee is permitted
3to conduct business. A separate license shall be required for each place of business
4maintained by the licensee.
AB587,10,5
5(2) Assignment. A license issued under this subchapter is not assignable.
AB587,10,7
6(3) Posting. A licensee shall post its license in a conspicuous place at the
7location specified in the license.
AB587,10,12
8(4) Term of license; fee. Every license shall remain in force until suspended
9or revoked in accordance with this subchapter or surrendered by the licensee. Every
10licensee shall, on or before June 1 of each year, pay to the division an annual license
11fee specified by the division by rule and, if required by the division, provide a rider
12or endorsement to increase the amount of any bond required under s. 218.62 (3).
AB587,10,17
13(5) Other business prohibited. No licensee may conduct business as a
14rental-purchase company within any office, room, or place of business in which any
15other business is solicited or engaged in, unless the licensee is authorized to do so,
16in writing, by the division. For the purpose of this subsection, the division may not
17unreasonably withhold any such authorization.
AB587,10,21
18218.65 Revocation, suspension, and restriction of license. (1) 19Discretionary suspension or revocation. The division may issue an order
20suspending or revoking a license issued under this subchapter if the division finds
21that any of the following applies:
AB587,10,2422
(a) The licensee has violated any provision of chs. 421 to 427 relating to
23rental-purchase agreements, any rules promulgated under any such provision, or
24any lawful order of the division under s. 218.68 (1).
AB587,11,3
1(b) A fact or condition exists that, if it had existed at the time of the original
2application for the license, would have warranted the division's refusing to issue the
3license.
AB587,11,54
(c) The licensee has made a material misstatement in an application for a
5license or in any information furnished to the division.
AB587,11,76
(d) The licensee has failed to pay the annual license fee required under s. 218.64
7(4) or has failed to maintain in effect any bond required under s. 218.62 (3).
AB587,11,108
(e) The licensee has failed to provide any additional information, data, or
9records required by the division, within the time period prescribed under s. 218.66
10(2).
AB587,11,1311
(f) The licensee has failed to pay any penalties due under s. 425.312, 425.401,
12or 426.301 within 30 days after receiving notice, by certified mail, that the penalties
13are due.
AB587,11,25
14(2) Mandatory restriction or suspension; child or family support. The
15division shall restrict or suspend a license issued under this subchapter if the
16division finds that the licensee is an individual who fails to comply, after appropriate
17notice, with a subpoena or warrant issued by the department of workforce
18development or a county child support agency under s. 59.53 (5) and related to
19paternity or child support proceedings or who is delinquent in making court-ordered
20payments of child or family support, maintenance, birth expenses, medical expenses,
21or other expenses related to the support of a child or former spouse, as provided in
22a memorandum of understanding entered into under s. 49.857. A licensee whose
23license is restricted or suspended under this subsection is entitled to a notice and
24hearing only as provided in a memorandum of understanding entered into under s.
2549.857 and is not entitled to any other notice or hearing under this section.
AB587,12,6
1(3) Mandatory revocation; delinquent taxes. The division shall revoke a
2license issued under this subchapter if the department of revenue certifies under s.
373.0301 that the licensee is liable for delinquent taxes. A licensee whose license is
4revoked under this subsection for delinquent taxes is entitled to a notice under s.
573.0301 (2) (b) 1. b. and a hearing under s. 73.0301 (5) (a) but is not entitled to any
6other notice or hearing under this section.
AB587,12,14
7(4) Revocation and suspension procedure. Except as provided in subs. (2) and
8(3), no license shall be revoked or suspended except after a hearing under this
9subchapter. A complaint stating the grounds for suspension or revocation together
10with a notice of hearing shall be delivered to the licensee at least 5 days in advance
11of the hearing. In the event the licensee cannot be found, the complaint and notice
12of hearing may be left at the place of business stated in the license and this shall be
13considered the equivalent of delivering the notice of hearing and complaint to the
14licensee.
AB587,12,22
15218.66 Modification of license. (1) Change in place of business. No
16licensee may change its place of business to another location without the prior
17approval of the division, which approval shall not be unreasonably withheld. A
18licensee shall provide the division with at least 15 days' prior written notice of a
19proposed change under this section and shall pay any applicable fees specified by the
20division by rule. Upon approval by the division of the new location, the division shall
21issue an amended license, specifying the date on which the amended license is issued
22and the new location.
AB587,13,7
23(2) Other changes. Except as provided in sub. (1), a licensee shall notify the
24division of any material change to the information provided in the licensee's original
25application for a license under this subchapter or provided in a previous notice of
1change filed by the licensee with the division under this subsection. A licensee shall
2provide the notice required under this subsection within 10 days after the change.
3The licensee shall provide any additional information, data, and records about the
4change to the division within 20 days after the division requests the information,
5data, or records. The division shall determine the cost of investigating and
6processing the change. The licensee shall pay the division's cost within 30 days after
7the division demands payment.
AB587,13,11
8(3) Division approval of other changes. Any change that is subject to the
9notice requirement under sub. (2) is subject to the approval of the division. In
10reviewing the change, the division shall apply the same criteria as the criteria for
11approval of an original license application.
AB587,13,16
12218.67 Annual report; records. (1) Annual report. On or before March 31
13of each year, a licensee shall file a report with the division giving such reasonable and
14relevant information as the division may require concerning the business and
15operations conducted by the licensee. The licensee shall make the report in the form
16prescribed by the division.
AB587,13,21
17(2) Books and records. A licensee shall keep such books and records in the
18licensed location as, in the opinion of the division, will enable the division to enforce
19any provision of chs. 421 to 427 relating to rental-purchase agreements. Every
20licensee shall preserve its records of a rental-purchase agreement for at least 2 years
21after making any final entry with respect to the rental-purchase agreement.
AB587,13,25
22218.68 Powers and duties of division; administration. (1) Orders. The
23division may issue any general order or special order in execution of or
24supplementary to any provision in chs. 421 to 427 relating to rental-purchase
25agreements, but any such order may not conflict with any such provision.
AB587,14,15
1(2) Investigations and examinations. For the purpose of discovering violations
2of any provision in chs. 421 to 427 relating to rental-purchase agreements, the
3division may investigate or examine the business of a licensee transacted under any
4provision of chs. 421 to 427 relating to rental-purchase agreements. The place of
5business, books of accounts, papers, records, safes, and vaults of the licensee shall
6be open to the division for the purpose of an investigation or examination, and the
7division has authority to examine under oath all persons whose testimony is required
8for an investigation or examination. The division shall determine the cost of an
9investigation or examination. The licensee shall pay the cost of an investigation or
10examination. The licensee shall pay the cost of any hearing held for the purpose of
11this subsection, including witness fees, unless the division or a court finds that the
12licensee has not violated any provision of chs. 421 to 427 relating to rental-purchase
13agreements. The licensee shall pay all costs owing under this subsection within 30
14days after the division demands payment. The state may maintain an action for the
15recovery of any costs owing under this subsection.
AB587,14,19
16(3) Verified complaint; mandatory investigation. If 5 or more persons file a
17verified complaint with the division alleging that a rental-purchase company has
18engaged in an act that is subject to action by the division, the division shall
19immediately commence an investigation pursuant to sub. (2).
AB587,14,21
20(4) Rules. The division may promulgate rules for the administration of any
21provision in this subchapter relating to rental-purchase agreements.
AB587,14,24
22(5) Testimonial powers and powers to secure evidence. The division has the
23same power to conduct hearings, take testimony, and secure evidence as is provided
24to the division in ss. 217.17 and 217.18.
AB587,15,5
1(6) Enforcement. The division may investigate any provision in chs. 421 to 427
2relating to rental-purchase agreements or any lawful orders issued under sub. (1)
3to determine if any such provision or lawful order is being violated. The division may
4report any such violations to the attorney general or the district attorney of the
5proper county for prosecution.
AB587, s. 2
6Section
2. 220.02 (2) (b) of the statutes is amended to read:
AB587,15,107
220.02
(2) (b) The lending of money under s. 138.09 or those relating to finance
8companies, motor vehicle dealers, adjustment service companies, community
9currency exchanges
, rental-purchase companies, and collection agencies under ch.
10218.