LRB-2577/1
ARG&GMM:kjf&cjs:jf
2013 - 2014 LEGISLATURE
August 7, 2013 - Introduced by Representatives Craig, Hintz, Ballweg, Hutton,
Kahl, LeMahieu, Ohnstad, Sanfelippo, Sargent, Stroebel, Marklein,
Zepnick and Honadel, cosponsored by Senator Gudex. Referred to Committee
on Financial Institutions.
AB277,1,6
1An Act to amend 13.92 (4) (c), 13.92 (4) (d), 13.92 (4) (e), 13.92 (4) (f), 35.93 (2)
2(b) 4., 35.93 (2) (c) 1., 35.93 (3), 35.93 (3) (e) (intro.), 35.93 (3) (e) 1., 227.01 (13)
3(intro.), 227.11 (2) (intro.) and 227.27 (2); and
to create 13.92 (4) (bm) and
4227.265 of the statutes;
relating to: rule-making procedures and modifying
5and repealing various rules promulgated by the Department of Financial
6Institutions.
Analysis by the Legislative Reference Bureau
Statutory treatments
Rule-making procedures
Current law sets forth a procedure for the promulgation of administrative rules
(rules). Generally, that procedure consists of the following steps:
1. The agency planning to promulgate the rule prepares a statement of the
scope of the proposed rule, which the governor and the agency head must approve
before any state employee or official may perform any activity in connection with the
drafting of the proposed rule.
2. The agency drafts the proposed rule, together with an economic impact
analysis, plain language analysis, and fiscal estimate for the proposed rule, and
submits those materials to the Legislative Council Staff for review.
3. Subject to certain exceptions, a public hearing is held on the proposed rule.
4. The final draft of the proposed rule is submitted to the governor for approval.
5. The final draft of the proposed rule, together with an economic impact
analysis, plain language analysis, and fiscal estimate for the proposed rule, are
submitted to the legislature for review by one standing committee in each house and
by the Joint Committee for Review of Administrative Rules.
6. The proposed rule is filed with the Legislative Reference Bureau (LRB) for
publication in the Wisconsin Administrative Code (code) and the Wisconsin
Administrative Register (register), and, subject to certain exceptions, the rule
becomes effective on the first day of the first month beginning after publication.
Under this bill, if a bill that repeals or modifies a rule is enacted, the ordinary
rule-making procedures under current law do not apply. Instead, the LRB must
publish the repeal or modification, in the code and the register, and the repeal or
modification, subject to certain exceptions, takes effect on the first day of the first
month beginning after publication.
Treatments of administrative rules
This bill modifies and repeals various rules promulgated by the Department of
Financial Institutions (DFI), as described below.
Remote terminals accessing financial institution accounts
Under current statutes, a bank, savings and loan association, savings bank, or
credit union (collectively, financial institution) may acquire, place, and operate, or
participate in the acquisition, placement, and operation of, at locations away from
the financial institution, what is variously referred to as customer bank
communications terminals, remote terminals, or remote service units (collectively
remote terminals), in accordance with rules established by the Division of Banking
(division) in DFI or the Office of Credit Unions (OCU) in DFI. A remote terminal is
a terminal or other facility that is not located at a financial institution and through
which customers and financial institutions may engage in electronic transactions
that are incidental to the conduct of the business of financial institutions.
Under current rules of the division and OCU, when any sale of goods or services
is paid directly through a remote terminal and involves an aggregate transfer of
funds of $50 or more from an account of a financial institution customer to the
account of another person, the financial institution must reverse the transaction and
recredit the customer's account upon receipt of notice by the customer within three
business days after the date of the sale. This process is referred to as a chargeback.
This bill repeals this chargeback provision from the rules of the division and OCU.
Under current rules of the division and OCU, the liability of a customer of a
financial institution for the unauthorized use of a plastic card or other means
providing the customer access to a remote terminal (access card) may not exceed the
lesser of the following: 1) $50; or 2) the amount of any money, property, or services
obtained by its unauthorized use prior to the time the financial institution is notified,
or becomes aware, of circumstances that lead to the belief that unauthorized access
to the customer's account may be obtained.
This bill modifies this rule relating to limits on customer liability for the
unauthorized use of a remote terminal access card. Under the bill, if the customer
notifies the financial institution within two business days after learning of the
unauthorized use or of loss or theft of the access card, the customer's liability may
not exceed the lesser of $50 or the amount of unauthorized transfers that occur before
notice to the financial institution. If the customer fails to notify the financial
institution within two business days after learning of the unauthorized use or of loss
or theft of the access card, the customer's liability may not exceed the lesser of $500
or the sum of all of the following: 1) $50 or the amount of unauthorized transfers that
occur within the two business days, whichever is less; and 2) the amount of
unauthorized transfers that occur after two business days and before notice to the
financial institution, if the financial institution establishes that these transfers
would not have occurred had the customer notified the financial institution within
that two-day period. To avoid liability for subsequent transfers, a customer must
report an unauthorized transfer from the unauthorized use of a remote terminal
access card that appears on a periodic statement within 60 days of the financial
institution's transmittal of the statement. If the customer fails to do so, the
customer's liability may not exceed the amount of the unauthorized transfers that
occur after 60 days and before notice to the financial institution and that would not
have occurred if the customer had notified the financial institution within this
60-day period. The customer may also be liable for the amounts specified in the
paragraph directly above. If an agreement between the customer and the financial
institution imposes less liability than is provided by rule, the customer's liability
may not exceed the amount imposed under the agreement.
Under current rules of the division and OCU, every transfer of funds through
a remote terminal made by a customer of a financial institution must be evidenced
by a written document (receipt) that is made available to the customer at the time
of the transaction and that contains specified information, such as the customer's
account number, the amount transferred, and the date of the transaction. This bill
modifies these rules to create an exception so that a receipt is not required to be made
available if the amount of the transfer is $15 or less.
Collection agencies
Under current statutes, a person may not operate as a collection agency unless
the person is licensed as a collection agency by the division. A "collection agency" is,
with certain exceptions, a person engaged in the business of collecting or receiving
for payment for others of any account, bill, or other indebtedness.
Under current rules of the division, if a collection agency mentions its rates in
advertising or on its forms, the collection agency's full rate or rates must be stated
as a percentage or dollar amount. The collection agency also may not make,
advertise, or display any statement or representation with regard to its rates that
is false, misleading, or deceptive or that omits material information necessary to
make the statement or representation not false, misleading, or deceptive. This bill
repeals these provisions from the division's rules.
Under current rules of the division, with exceptions, a collection agency may not
charge the debtor any fee or cost incurred in the collection of an account. Under one
exception, a fee not exceeding the lesser of $25 or 3 percent of the payment amount
may be added to the debtor's account if the debtor makes payment using a credit card.
However, this fee may be imposed only if the fee is first disclosed to the debtor and
the debtor is not required to pay with a credit card.
This bill modifies these rules to allow, with the same restrictions, the same fee
to be imposed when the debtor uses a debit card.
Adjustment service companies
Under current statutes, an "adjustment service company" is, with an exception,
an individual or business entity engaged as principal in the business of prorating a
debtor's income to the debtor's creditors or of assuming a debtor's obligations to the
debtor's creditors in return for a service charge or other consideration. To engage in
business as an adjustment service company, the individual or business entity must
be licensed by the division. There are specified criteria for obtaining such a license
and the division has regulatory authority over licensees. The division may make
such rules and require such reports as the division deems necessary for the
enforcement of the statutory provisions relating to adjustment service companies.
Under current rules of the division, a copy of the contract between an
adjustment service company and the debtor must be given to the debtor at the time
it is executed and the contract must contain certain provisions, including a
statement that the debtor will be permitted to examine his or her accounts in the
adjustment service company's office during regular office hours.
This bill modifies the division's rules so that the contract must still include a
statement that the debtor will be permitted to examine his or her accounts but is not
required to specify that the examination will be in the adjustment service company's
office during regular office hours.
Under current rules of the division, all contracts and forms used by an
adjustment service company in conducting its business must be submitted in
duplicate to the division for prior approval before use. In addition, an adjustment
service company must maintain in its office a folder containing the file copy of all
approved forms in the order in which the forms were approved.
This bill modifies these rules so that an adjustment service company is not
required to submit duplicate copies of contracts and forms to the division and is not
required to maintain a folder of approved forms in its office.
Under current rules of the division, each adjustment service company must, on
September 15 of each year, submit a report as of July 1 to the division containing such
information as the division requires. This bill repeals this rule requiring each
adjustment service company to submit a report on September 15 of each year.
Mortgage bankers, mortgage brokers, and mortgage loan originators
Under the division's current rules, a licensed mortgage banker, mortgage
broker, or mortgage loan originator (licensee) may conduct business only under the
name or names listed on the license and, before using any trade name, must obtain
written approval from the division for the use of the trade name. A licensee may not
use more than five trade names. This bill modifies the division's rules so that
approval of a trade name by the division is not required to be in writing.
Sales finance companies
Under current statutes, a "sales finance company" is a person engaged in the
business of acquiring retail installment contracts from retail sellers and includes
motor vehicle dealers that sell motor vehicles under installment contracts or that
acquire retail installment contracts. A "retail installment contract" means a contract
to sell a motor vehicle at retail in which the price of the motor vehicle is payable in
at least one installment over a period of time and in which the seller has retained title
to, or taken a security interest in, the vehicle. A "retail seller" is a person that sells
motor vehicles under a retail installment contract to a buyer for the buyer's personal
use or consumption. Sales finance companies are licensed by the division. A retail
installment sale made after October 31, 1984, is not subject to any maximum finance
charge limit. Other credit transactions are also generally not subject to maximum
finance charge limits or interest rate limits.
Under current rules of the division, upon refinancing a retail installment
contract or consolidating retail installment contracts, the customer is entitled to a
rebate of unearned finance charges. The division's rules also specify that the rate of
finance charge upon refinancing or consolidation may not exceed the maximum rate
applicable by statute if the creditor is a licensed motor vehicle dealer or, if not, the
maximum rate at which the creditor could make a loan to the customer.
This bill modifies these rules to eliminate the provisions referencing a
maximum rate when a retail installment contract is refinanced or consolidated.
Review procedure
Under the division's current rules, any interested person aggrieved by any act,
order, or determination of the division related to banking may file with the division
an original and eight copies of a notice of appeal seeking review by the Banking
Review Board. This bill eliminates the requirement that eight copies of the notice
of appeal be filed.
Technical corrections
The bill makes other minor, clarifying, technical, or nonsubstantive changes to
the division's rules, including changes that conform the division's rules to current
statutory provisions.
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:
AB277,1
1Section
1. 13.92 (4) (bm) of the statutes is created to read:
AB277,6,62
13.92
(4) (bm) If 2 or more rules filed under s. 227.20 or modified under s.
3227.265 affect the same unit of the Wisconsin administrative code without taking
4cognizance of the effect thereon of the other rules and if the legislative reference
5bureau finds that there is no mutual inconsistency in the changes made by each such
1rule, the legislative reference bureau shall incorporate the changes made by each
2rule into the text of the unit and document the incorporation in a note to the unit.
3For each such incorporation, the legislative reference bureau shall include in a
4correction bill a provision formally validating the incorporation. Section 227.27 (2)
5is not affected by printing decisions made by the legislative reference bureau under
6this paragraph.
AB277,2
7Section
2. 13.92 (4) (c) of the statutes is amended to read:
AB277,6,98
13.92
(4) (c) The legislative reference bureau may insert in the Wisconsin
9administrative code a note explaining any change made under par. (b)
or (bm).
AB277,3
10Section
3. 13.92 (4) (d) of the statutes is amended to read:
AB277,6,1211
13.92
(4) (d) Sections 227.114, 227.116, 227.135
, and 227.14 to 227.24 do not
12apply to any change made by the legislative reference bureau under par. (b)
or (bm).
AB277,4
13Section
4. 13.92 (4) (e) of the statutes is amended to read:
AB277,6,1514
13.92
(4) (e) The legislative reference bureau shall prepare and keep on file a
15record of each change made under par. (b)
or (bm).
AB277,5
16Section
5. 13.92 (4) (f) of the statutes is amended to read:
AB277,6,1817
13.92
(4) (f) The legislative reference bureau shall notify the agency involved
18of each change made under par. (b)
or (bm).
AB277,6,2321
35.93
(2) (b) 4. Copies of all rules filed with the legislative reference bureau
22under s. 227.20 (1)
or modified under s. 227.265 since the compilation of the
23preceding register, including emergency rules filed under s. 227.24 (3).
AB277,7,3
135.93
(2) (c) 1. Each chapter of the Wisconsin administrative code that has been
2affected by rules filed with legislative reference bureau under s. 227.20 (1)
or
3modified under s. 227.265, in accordance with sub. (3) (e) 1.
AB277,8
4Section
8. 35.93 (3) of the statutes is amended to read:
AB277,7,185
35.93
(3) The legislative reference bureau shall compile and deliver to the
6department for printing copy for a register which shall contain all the rules filed
7under s. 227.20 or modified under s. 227.265 since the compilation of rules for the
8preceding issue of the register was made and those executive orders which are to be
9in effect for more than 90 days or an informative summary thereof. The complete
10register shall be compiled and published before the first day of each month and a
11notice section of the register shall be compiled and published before the 15th day of
12each month. Each issue of the register shall contain a title page with the name
13"Wisconsin administrative register", the number and date of the register, and a table
14of contents. Each page of the register shall also contain the date and number of the
15register of which it is a part in addition to the other necessary code titles and page
16numbers. The legislative reference bureau may include in the register such
17instructions or information as in the bureau's judgment will help the user to correctly
18make insertions and deletions in the code and to keep the code current.