AB447: Bill Text Engrossed

5. Allows a customer to bring an action against a payday loan provider who makes a payday loan that violates the bill. In such an action, the customer may obtain an amount equal to twice the interest, fees, and charges charged for the loan, or the actual damages, whichever is greater, as well as costs and attorney fees.

6. Provides that whoever violates the bill is subject to a criminal fine of not less than $500 nor more than $1,000, imprisonment for not more than 6 months, or both.

7. Requires any licensed lender, upon making a loan for a term of more than 90 days, to report the loan to a credit reporting agency, which is referred to as a consumer reporting agency under federal law.

8. Prohibits a licensed lender from requiring a schedule of payments by a borrower under which: 1) any one payment is not equal or substantially equal to all other payments; or 2) the intervals between any consecutive payments differ substantially.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB447-engrossed, s. 1 Section 1. 20.144 (1) (g) of the statutes is amended to read:

AB447-engrossed,4,10 20.144 (1) (g) General program operations. The amounts in the schedule for the general program operations of the department of financial institutions. Except as provided in pars. (a), (h), (i), (j), and (u), all moneys received by the department, other than by the office of credit unions and the division of banking, and 88% of all moneys received by the department's division of banking shall be credited to this appropriation, but any balance at the close of a fiscal year under this appropriation shall lapse to the general fund. Annually, $200,000 of the amounts received under this appropriation account shall be transferred to the appropriation account under s. 20.575 (1) (g).

AB447-engrossed, s. 2 Section 2. 20.144 (1) (j) of the statutes is created to read:

AB447-engrossed,5,4 20.144 (1) (j) Payday loan database and financial literacy. All moneys received under s. 138.14 (8) (e), for developing and administering, or contracting for the development and administration of, the database under s. 138.14 (8) and for promoting financial literacy.

AB447-engrossed, s. 3 Section 3. 138.09 (8) (f) of the statutes is created to read:

AB447-engrossed,5,7 138.09 (8) (f) When making a payday loan, as defined in s. 138.14 (1) (g), comply with s. 138.14 and rules promulgated under s. 138.14.

AB447-engrossed, s. 4 Section 4. 138.09 (8) (g) of the statutes is created to read:

AB447-engrossed,5,10 138.09 (8) (g) Upon making a loan for a term of more than 90 days, report the loan to a consumer reporting agency, as defined in 15 USC 1681a (f).

AB447-engrossed, s. 5 Section 5. 138.09 (8) (h) of the statutes is created to read:

AB447-engrossed,5,15 138.09 (8) (h) Make no loan which requires a schedule of payments by a borrower under which any one payment is not equal or substantially equal to all other payments, or under which the intervals between any consecutive payments differ substantially.

AB447-engrossed, s. 6 Section 6. 138.14 of the statutes is created to read:

AB447-engrossed,5,17 138.14 Payday loan providers. (1) Definitions. In this section:

AB447-engrossed,5,18 (a) "Applicant" means an individual who seeks to obtain a payday loan.

AB447-engrossed,5,19 (b) "Check" has the meaning given in s. 403.104 (6).

AB447-engrossed,5,21 (c) "Customer" means an individual who enters into a payday loan with a payday loan provider.

AB447-engrossed,5,23 (d) "Division" means the division of banking in the department of financial institutions.

AB447-engrossed,6,3 (e) "Financial establishment" means any organization that is authorized to do business under state or federal law and that holds a demand deposit, savings deposit, or other asset account belonging to an individual.

AB447-engrossed,6,4 (f) "Organization" has the meaning given in s. 19.42 (11).

AB447-engrossed,6,5 (g) "Payday loan" means any of the following:

AB447-engrossed,6,12 1. A transaction between an individual with an account at a financial establishment and another person, including a person who is not physically located in this state, in which the person agrees to accept from the individual one or more checks, to hold the check or checks for a period of time before negotiating or presenting the check or checks for payment, and to loan to the individual, for a term of 90 days or less, before negotiating or presenting the check or checks for payment, an amount that is agreed to by the individual.

AB447-engrossed,6,19 2. A transaction between an individual with an account at a financial establishment and another person, including a person who is not physically located in this state, in which the person agrees to accept the individual's authorization to initiate one or more electronic fund transfers from the account, to wait a period of time before initiating the electronic fund transfer or transfers, and to loan to the individual, for a term of 90 days or less, before initiating the electronic fund transfer or transfers, an amount that is agreed to by the individual.

AB447-engrossed,6,21 (h) "Payday loan provider" means a person who is required to be licensed under s. 138.09 and who makes payday loans.

AB447-engrossed,7,2 (i) "Rollover" or "rolled over" means the refinancing, renewal, amendment, or extension of a payday loan beyond its original date of maturity. "Rollover" or "rolled over" includes the consolidation of payday loans and any transaction in which a payday loan is repaid with the proceeds of another payday loan made by the same payday loan provider.

AB447-engrossed,7,5 (2) Disclosure requirements. (a) Before any payday loan provider enters into a payday loan with an applicant, the payday loan provider shall do all of the following:

AB447-engrossed,7,8 1. Disclose to the applicant the total amount of all fees and costs, in dollars, to be paid by the applicant for the loan assuming that the loan is paid in full at the end of the loan term.

AB447-engrossed,7,10 2. Disclose to the applicant the annual percentage rate to be paid by the applicant on the loan assuming that the loan is paid in full at the end of the loan term.

AB447-engrossed,7,12 3. Provide to the applicant a copy of the written informational materials specified in sub. (4).

AB447-engrossed,7,14 4. Disclose to the applicant that he or she has the right to rescind the loan transaction as provided in sub. (6).

AB447-engrossed,7,16 5. Disclose to the applicant the service charge that may apply under sub. (3) (g).

AB447-engrossed,7,18 6. Disclose to the applicant the payment requirements that may apply under sub. (7) (a) if the loan is not paid in full at the end of the loan term.

AB447-engrossed,7,20 (b) A payday loan provider shall retain, for at least 3 years after the origination date of any payday loan, a record of compliance with par. (a) with respect to the loan.

AB447-engrossed,7,23 (3) Loan restrictions. (a) No payday loan provider may make a payday loan that exceeds, in principal amount, interest, and all other fees and charges, $600 or 35 percent of the applicant's gross biweekly income, whichever is less.

AB447-engrossed,8,5 (b) No payday loan provider may make a payday loan to individual who is liable for repayment of any amount on a payday loan made by another payday loan provider. No payday loan provider may make a payday loan to an individual if less than 24 hours have elapsed since the individual repaid another payday loan in full or, if repayment is subject to sub. (7) (a), if less than a time period equal to the applicant's pay period has elapsed since the individual repaid the loan in full under sub. (7) (a).

AB447-engrossed,8,7 (c) No payday loan provider may require the payment of any interest on a payday loan that accrues after the original maturity date of the payday loan.

AB447-engrossed,8,10 (d) Except as provided in par. (g), no payday loan provider may impose any penalty on a customer arising from the customer's prepayment of or default or late payment on a payday loan, including any payment under sub. (7) (a).

AB447-engrossed,8,13 (e) No payday loan provider may accept from a customer a check or authorization to initiate an electronic fund transfer if the amount of the check or authorization exceeds the amount specified in par. (a).

AB447-engrossed,8,14 (f) A payday loan provider may not rollover a payday loan.

AB447-engrossed,8,21 (g) A payday loan provider may present a customer's check for payment no more than once. For each customer authorization to initiate an electronic fund transfer from the customer's account, a payday loan provider may initiate an electronic fund transfer no more than once. The only charge that a payday loan provider may impose for dishonor of a customer's check or denial of the payday loan provider's instruction to execute an electronic fund transfer is a service charge that does not exceed $15.

AB447-engrossed,9,2 (4) Informational materials. (a) The division shall develop written informational materials on payday loans and the payday loan industry. These informational materials shall be designed to educate individuals regarding the operation and potential costs of payday loans and of other options for borrowing funds that may be available.

AB447-engrossed,9,6 (b) The informational materials under par. (a) shall include a clear and conspicuous notice that a payday loan is not intended to meet long-term financial needs and that a payday loan applicant should use a payday loan only to provide funds in a financial emergency.

AB447-engrossed,9,9 (c) The informational materials under par. (a) shall include all of the following information, based upon aggregated information from reports submitted under sub. (5) for the most recent reporting period:

AB447-engrossed,9,10 1. The average annual percentage rate for payday loans.

AB447-engrossed,9,12 2. The percentage of customers originating payday loans who defaulted on the loan.

AB447-engrossed,9,14 3. The percentage of customers originating payday loans whose payment method was dishonored or denied for insufficient funds.

AB447-engrossed,9,16 4. The percentage of customers originating payday loans that resulted in repayment under sub. (7) (a).

AB447-engrossed,9,20 (d) The informational materials under par. (a) shall include a summary of all actions that the payday loan provider may take against a payday loan customer if the customer defaults on the payday loan or if the customer's check or electronic fund transfer is dishonored or denied for insufficient funds.

AB447-engrossed,9,22 (e) The division shall annually update the informational materials under par. (a), based upon the division's analysis of reports received under sub. (5).

AB447-engrossed,9,25 (f) The division shall make copies of the informational materials under par. (a) available, upon request, to payday loan providers and to the public, including making these informational materials available on the Internet site of the department of financial institutions. The division may charge payday loan providers a reasonable fee for printed copies of informational materials supplied under this paragraph.

AB447-engrossed,10,16 (5) Reporting and record keeping. (a) On or before March 15 of each year, every payday loan provider shall make an annual report to the division. The report shall cover business relating to payday loans made by the payday loan provider during the preceding calendar year and shall include any relevant information required by the division. The report shall be made upon forms prescribed by the division and shall be signed and verified by the oath or affirmation of the payday loan provider if an individual, one of the partners if a partnership, a member or manager if a limited liability company, or an officer of the corporation or association if a corporation or association. A payday loan provider may include the information required to be reported under this subsection in the payday loan provider's report under s. 138.09 (3) (f), if the information required under this subsection is stated separately in the report from information relating to the payday loan provider's other business.

AB447-engrossed,10,18 (b) The division shall require that the report under par. (a) include, for the applicable reporting period, all of the following aggregated information:

AB447-engrossed,10,19 1. The number of payday loans originated by the payday loan provider.

AB447-engrossed,10,21 2. The average of the total amount of all fees and costs, in dollars, and the average loan term, for all payday loans of the payday loan provider.

AB447-engrossed,10,23 3. Based upon the information specified in subd. 2., the average annual percentage rate for all payday loans of the payday loan provider.

AB447-engrossed,10,25 4. The number of payday loans originated by the payday loan provider that resulted in repayment under sub. (7) (a).

AB447-engrossed,11,2 5. The number of payday loans originated by the payday loan provider that resulted in default on the loan by the customer.

AB447-engrossed,11,8 6. The number of payday loans originated by the payday loan provider on which the customer's payment method was dishonored or denied because the customer's check was drawn on, or the customer's authorization to initiate an electronic fund transfer was from, an account at a financial establishment containing insufficient funds when the check was presented for payment or the electronic fund transfer was initiated.

AB447-engrossed,11,14 (6) Rescission. A customer may rescind a payday loan, before the close of business on the next day of business after the loan is made, or, if the place of business where the loan is made is open 24 hours, before 5 p.m. on the next day of business after the loan is made, by returning to the payday loan provider the proceeds of the payday loan. The payday loan provider may not charge the customer any fee for rescinding the payday loan as provided in this subsection.

AB447-engrossed,11,19 (7) Repayment after term of loan. (a) Except as provided in par. (b), if a customer fails to repay a payday loan in full at the end of the loan term, the payday loan provider shall offer the customer the opportunity to repay the outstanding balance of the loan in four equal installments with due dates coinciding with the customer's pay period schedule.

AB447-engrossed,11,24 (b) If a payday loan provider offers a customer the opportunity to make repayment under par. (a), then, during the 12-month period following the offer, no payday loan provider, including the payday loan provider making the offer, is required to offer the customer another opportunity to repay a payday loan under par. (a).

AB447-engrossed,12,10 (8) Database. (a) The division shall develop and administer, or contract for the development and administration of, a database that provides payday loan providers with real-time access, through an Internet connection, to all payday loan information necessary for payday loan providers to comply with this section. The database shall assign a unique identification number for each customer that shall be used each time the customer enters into a payday loan transaction. A customer identification number may not be based on a customer's social security number. The database shall also assign a unique identifying transaction number for each payday loan transaction that is entered into the database by a payday loan provider under par. (b).

AB447-engrossed,12,14 (b) At the time a payday loan provider enters into a payday loan transaction with a customer, the payday loan provider shall submit to the database under par. (a), in the form and manner prescribed by the division, information relating to the payday loan, including all of the following:

AB447-engrossed,12,15 1. The customer's name and address.

AB447-engrossed,12,16 2. The customer's identification number that is assigned by the database.

AB447-engrossed,12,18 3. The principal amount, interest, and all other fees and charges for the payday loan.

AB447-engrossed,12,19 4. The date on which the payday loan agreement is signed.

AB447-engrossed,12,20 5. The date of maturity of the payday loan.

AB447-engrossed,12,21 6. The customer's pay period.

AB447-engrossed,12,24 7. Any other information required by the division by rule, except that the division may not require the submission of, and a payday loan provider may not submit, a customer's financial establishment account or routing numbers.

AB447-engrossed,13,3 (c) At any time a payday loan provider offers a customer the opportunity to agree to repay a payday loan under sub. (7) (a), the payday loan provider shall submit the date of the offer to the database under par. (a).

AB447-engrossed,13,7 (d) At the time the outstanding balance of a payday loan is repaid in full, the payday loan provider shall submit to the database under par. (a), in the form and manner prescribed by the division, information specifying that the payday loan has terminated, including the date and time that the payday loan terminated.

AB447-engrossed,13,10 (e) The division shall impose on a payday loan provider a fee in an amount specified by rule each time the payday loan provider submits data required under pars. (b), (c), and (d).

AB447-engrossed,13,13 (f) A payday loan provider may rely on the information contained in the database under par. (a) as accurate and is not subject to any penalty or liability due to its reliance on inaccurate information contained in the database.

AB447-engrossed,13,17 (g) Information maintained in the database under par. (a) is not subject to inspection or copying under s. 19.35 (1) and shall remain confidential except as needed by payday loan providers to satisfy the requirements of this section and by the division to enforce this section.

AB447-engrossed,13,21 (h) If the division contracts with a person for the development or administration of the database under par. (a), the division shall ensure that the contract requires the person to maintain the confidentiality of information contained in the database.

AB447-engrossed,13,24 (i) The division shall establish procedures monitoring use of the database by payday loan providers, including procedures for determining compliance with par. (b) 2.

AB447-engrossed,14,6 (9) Customer information. No payday loan provider or person with whom the division contracts for development or administration of the database under sub. (8) (a) may sell or provide to another person any information regarding a customer or a payday loan made to a customer, except that the prohibition on providing information does not apply to information that is provided to satisfy the requirements of this section or to enforce this section.

AB447-engrossed,14,13 (10) Private cause of action. If a payday loan provider makes a payday loan to a customer that violates this section, the customer may bring an action against the payday loan provider for an amount equal to twice the interest and all other fees and charges charged for the loan, or the actual damages, including any incidental and consequential damages, sustained by the customer by reason of the violation, whichever is greater, and, notwithstanding s. 814.04 (1), the costs of the action, including reasonable attorney fees.

AB447-engrossed,14,15 (11) Penalty. Whoever violates this section may be fined not less than $500 nor more than $1,000, imprisoned for not more than 6 months, or both.

AB447-engrossed,14,18 (12) Rules. The division shall promulgate rules necessary to implement, administer, and enforce this section, including prescribing the form and content of any report required under sub. (5) and the method of filing such a report.

AB447-engrossed, s. 7 Section 7. 138.15 of the statutes is created to read:

AB447-engrossed,14,20 138.15 Motor vehicle title loans. (1) Definitions. In this section:

AB447-engrossed,14,22 (a) "Borrower" means an individual who obtains or seeks to obtain a motor vehicle title loan for personal, family, or household purposes.

AB447-engrossed,14,25 (b) "Motor vehicle title loan" means a loan of $25,000 or less to a borrower that is, or is to be, secured by an interest, other than a purchase money security interest, in the borrower's motor vehicle.