With some limitations, the substitute amendment allows DFI to promulgate
rules necessary to administer and enforce the requirements of the substitute
amendment. Although DFI may by rule develop a model rental-purchase
agreement, DFI may not require its use, although use of the form creates a conclusive
presumption of compliance with certain provisions of the substitute amendment.
DFI's rules may not establish requirements for rental-purchase agreements beyond
those established in the substitute amendment and may not include provisions that
are more restrictive than those in the substitute amendment.
Under the substitute amendment, rental-purchase agreements entered into by
rental-purchase companies that have provided notice to DFI are not subject to the
consumer act or to the security interest provisions of UCC Article 9.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB637-SSA2,1
1Section 1
. 409.109 (4) (n) of the statutes is created to read:
SB637-SSA2,5,42
409.109
(4) (n) Rental-purchase agreements entered into by a rental-purchase
3company that has provided notice to the department of financial institutions under
4ch. 420.
SB637-SSA2,2
5Section 2
. Chapter 420 of the statutes is created to read:
SB637-SSA2,5,77
RENTAL-PURCHASE COMPANIES
SB637-SSA2,5,8
8420.01 Definitions. In this chapter:
SB637-SSA2,5,12
9(1) “Cash price" means the price at which a rental-purchase company would
10sell rental property to the lessee of the rental property if the lessee were to pay for
11the rental property in full on the date on which the rental-purchase agreement is
12executed.
SB637-SSA2,5,14
13(2) “Charge-back fee” means a charge or fee for a payment that is denied or
14dishonored by a credit card provider.
SB637-SSA2,5,15
15(3) “Department" means the department of financial institutions.
SB637-SSA2,5,18
16(4) “Displayed or offered primarily for rental-purchase,” with respect to rental
17property, means rental property displayed or offered at a physical location that
18derives 50 percent or more of its revenues from rental-purchase agreements.
SB637-SSA2,5,20
19(5) “Insufficient funds fee” means a charge or fee for the return of a check,
20electronic funds transfer, or other payment instrument that is denied or dishonored.
SB637-SSA2,6,2
1(6) “Rental property" means property rented under a rental-purchase
2agreement but does not include any motor vehicle, as defined in s. 340.01 (35).
SB637-SSA2,6,5
3(7) “Rental-purchase agreement" means an agreement between a
4rental-purchase company and a lessee for the use of rental property if all of the
5following apply:
SB637-SSA2,6,76
(a) The rental property is of the type typically used for personal, family, or
7household purposes.
SB637-SSA2,6,98
(b) The agreement has an initial term of 4 months or less and is renewable with
9each payment after the initial term.
SB637-SSA2,6,1110
(c) The agreement does not obligate or require the lessee to renew the
11agreement beyond the initial term.
SB637-SSA2,6,1312
(d) The agreement permits, but does not obligate, the lessee to acquire
13ownership of the rental property.
SB637-SSA2,6,18
14(8) “Rental-purchase company" means a person engaged in the business of
15entering into rental-purchase agreements in this state or acquiring rental-purchase
16agreements that are entered into in this state, but does not include a person only in
17the business of renting musical instruments that are intended to be used in whole
18or in part in an elementary school or high school.
SB637-SSA2,6,21
19420.02 General requirements of disclosure. (1) Form, location, size, and
20time of disclosure. The information that is required to be disclosed under s. 420.03
21shall satisfy all of the following:
SB637-SSA2,6,2222
(a) The information shall be clearly and conspicuously disclosed.
SB637-SSA2,6,2323
(b) The information shall be disclosed in writing.
SB637-SSA2,7,324
(c) Except as provided in par. (f), the information shall be disclosed in the
25rental-purchase agreement above the line for the lessee's signature. Multiple pages
1or backs of pages may be used as long as the final page of the rental-purchase
2agreement is signed by the lessee and other pages are signed or initialed by the
3lessee.
SB637-SSA2,7,54
(d) Except as provided in par. (f), the information shall be disclosed in not less
5than 8-point standard type.
SB637-SSA2,7,76
(e) The information shall be disclosed before the time that the lessee becomes
7legally obligated under the rental-purchase agreement.
SB637-SSA2,7,118
(f) The disclosures required by s. 420.03 (2), (3), (4), and (5) shall be printed in
9at least 10-point boldface type on the face of the rental-purchase agreement, and
10shall be grouped together in a box, in the form and order prescribed by the
11department.
SB637-SSA2,7,16
12(2) Accuracy of disclosure. The information required under s. 420.03 must
13be accurate as of the time that it is disclosed to the lessee. If any information
14subsequently becomes inaccurate as a result of any act, occurrence, or agreement by
15the lessee, the resulting inaccuracy is not a violation of any provision of this chapter
16relating to rental-purchase agreements.
SB637-SSA2,7,21
17(3) Copy of rental-purchase agreement. The rental-purchase company shall
18provide the lessee with a copy of the completed rental-purchase agreement signed
19by the lessee. If more than one lessee is legally obligated under the same
20rental-purchase agreement, delivery of a copy of the completed rental-purchase
21agreement to one of the lessees shall satisfy this subsection.
SB637-SSA2,7,24
22420.03 Required provisions of rental-purchase agreement. A
23rental-purchase company shall include all of the following information, to the extent
24applicable, in every rental-purchase agreement:
SB637-SSA2,8,5
1(1) Description. A brief description of the rental property, sufficient to identify
2the rental property to the lessee and the rental-purchase company, including any
3identification number, and a statement indicating whether the rental property is
4new or used. A statement that new rental property is used shall not be a violation
5of this chapter.
SB637-SSA2,8,6
6(2) Cash price. The cash price of the rental property.
SB637-SSA2,8,10
7(3) Rental payments to acquire ownership. The total number, total dollar
8amount, and timing of all rental payments necessary to acquire ownership of the
9rental property, excluding any applicable taxes, application or processing charge,
10delivery fee, liability damage waiver fee, and fees for optional services.
SB637-SSA2,8,17
11(4) Cost of rental services. The difference between the total dollar amount
12of payments necessary to acquire ownership of the rental property disclosed under
13sub. (3) and the cash price of the property disclosed under sub. (2). The
14rental-purchase company shall also include a statement substantially similar to the
15following: “The cost of rental services is the amount you will pay in addition to the
16cash price if you acquire ownership of the rented goods by making all payments
17necessary to acquire ownership."
SB637-SSA2,8,20
18(5) Periodic renewal payment. The rental payment necessary to renew the
19rental-purchase agreement, not including any applicable taxes and fees for optional
20services to which the lessee agrees.
SB637-SSA2,8,25
21(6) Initial payment. The total amount of the initial payment to be made by the
22lessee at the time that the rental-purchase agreement is executed or the rental
23property is delivered, including the initial rental payment, any application or
24processing charge, any delivery fee, and fees for other optional services to which the
25lessee agrees.
SB637-SSA2,9,6
1(7) Other charges. An itemized description of any other charges or fees that
2the rental-purchase company may charge upon the occurrence of a contingency
3specified in the rental-purchase agreement, such as a reinstatement fee or, subject
4to s. 420.07, a charge-back fee or insufficient funds fee, as well as any applicable
5taxes, fees for optional services, application or processing charges, and delivery fees
6that are not included in the initial payment under sub. (6).
SB637-SSA2,9,11
7(8) Summary of early-purchase option. A statement that the lessee has an
8early purchase option to purchase the property at any time during the period that
9the rental-purchase agreement is in effect. The statement must specify the price or
10the formula or other method for determining the price at which the property may be
11purchased.
SB637-SSA2,9,17
12(9) Responsibility for theft or damage. A statement that, unless otherwise
13agreed, in the event the rental property is stolen, damaged, or destroyed while in the
14possession of, or subject to the control of, the lessee, the lessee is responsible for an
15amount equal to the lesser of the amount required to exercise the early-purchase
16option as provided in sub. (8) or 55 percent of the scheduled remaining periodic
17payments, but in no event in an amount greater than the cash price.
SB637-SSA2,9,24
18(10) Service and warranty. A statement that, during the term of the rental-
19purchase agreement, the rental-purchase company is required to service the rental
20property and maintain it in good working condition, as long as no other person has
21serviced the rental property. In lieu of servicing the rental property, the
22rental-purchase company may, at its option, replace the rental property with
23substitute property of comparable quality and condition. The rental-purchase
24company's obligation to provide service is limited to defects in the property not
1caused by improper use or neglect by the lessee or harmful conditions outside the
2control of the rental-purchase company or manufacturer.
SB637-SSA2,10,5
3(11) Termination at option of lessee. A statement that the lessee may
4terminate the agreement at any time without penalty by voluntarily surrendering
5or returning the rental property in good repair.
SB637-SSA2,10,7
6(12) Right to reinstate. A brief explanation of the lessee's right to reinstate
7a rental-purchase agreement under s. 420.06.
SB637-SSA2,10,12
8(13) Rental, not purchase. A statement reading substantially as follows: “You
9are renting this property. You will not own the property until you make all payments
10necessary to acquire ownership or until you exercise your early-purchase option. If
11you do not make your payments as scheduled or exercise your early-purchase option,
12the rental-purchase company is entitled to immediate possession of the property."
SB637-SSA2,10,16
13(14) Information about rental-purchase company and lessee. The names of
14the rental-purchase company and the lessee, the rental-purchase company's
15business address and telephone number, the lessee's address, and the date on which
16the rental-purchase agreement is executed.
SB637-SSA2,10,23
17(15) Optional services. Space for a specific, separately signed or initialed,
18affirmative, written indication of the lessee's desire for any optional service for which
19a charge is assessed. The lessee's request must be obtained after a written disclosure
20of the cost of the optional service is made, and the disclosure of the cost and purpose
21of such service must be listed at or near the affirmation space. This requirement is
22satisfied by a separate written agreement for an optional service that meets the
23requirements of this subsection.
SB637-SSA2,10,25
24420.04 Prohibited provisions of rental-purchase agreements. A
25rental-purchase agreement may not contain any of the following:
SB637-SSA2,11,1
1(1) Confession. A confession of judgment.
SB637-SSA2,11,6
2(2) Repossession. A provision authorizing a rental-purchase company, or an
3agent of the rental-purchase company, to enter the lessee's residence without the
4lessee's permission, or to commit a breach of the peace in the repossession of rental
5property provided by the rental-purchase company under the rental-purchase
6agreement.
SB637-SSA2,11,10
7(3) Waiver. A waiver of a defense or counterclaim, a waiver of any right to
8assert any claim that the lessee may have against the rental-purchase company or
9an agent of the rental-purchase company, or a waiver of any provision of this chapter
10relating to rental-purchase agreements.
SB637-SSA2,11,13
11(4) Overpayment. A provision requiring rental payments totaling more than
12the total dollar amount of all rental payments necessary to acquire ownership, as
13disclosed in the rental-purchase agreement.
SB637-SSA2,11,15
14(5) Insurance. A provision requiring the lessee to purchase insurance from the
15rental-purchase company to insure the rental property.
SB637-SSA2,11,20
16420.05 Disclosures for certain rental-purchase agreements. (1) 17Disclosure for property not displayed or offered primarily for rental-purchase. 18When property that is not displayed or offered primarily for rental-purchase is
19offered for rental-purchase, all of the following shall be separately disclosed prior to
20displaying or presenting a rental-purchase agreement to a lessee for execution:
SB637-SSA2,11,2121
(a) The cash price of the property.
SB637-SSA2,11,2222
(b) The amount of the periodic renewal payment.
SB637-SSA2,11,2423
(c) The total dollar amount of all periodic rental payments necessary to acquire
24ownership if the lessee makes all scheduled payments.
SB637-SSA2,12,6
1(2) Additional disclosures for property not displayed or offered primarily
2for rental-purchase. In addition to the disclosures required by s. 420.03, if the
3property that is the subject of a rental-purchase agreement was not displayed or
4offered primarily for rental-purchase prior to the rental-purchase transaction, all
5of the following additional disclosures shall be made on a separate page titled
6“Acknowledgment of Rental-Purchase Transaction” and signed by the lessee:
SB637-SSA2,12,97
(a) The agreement is a rental-purchase agreement and the lessee does not own
8the property, but can obtain ownership by using ownership options provided in the
9agreement.
SB637-SSA2,12,1010
(b) The agreement is not a credit transaction.
SB637-SSA2,12,1311
(c) The lessee has the right to return the property to the lessor without
12additional charge or penalty at any time and will owe nothing further except unpaid
13rental charges and fees.
SB637-SSA2,12,1614
(d) If the lessee returns the property, the agreement offers reinstatement rights
15that allow the lessee to get the property back if the lessee has complied with the
16agreement and the law.
SB637-SSA2,12,1817
(e) The lessee has reviewed and understands the agreement, including the
18purchase option rights and the total cost if all scheduled payments are made.
SB637-SSA2,12,22
19420.06 Reinstatement of a rental-purchase agreement.
(1) 20Reinstatement generally. Subject to sub. (2), a lessee may reinstate a
21rental-purchase agreement that has ended without losing any rights or options
22previously acquired if all of the following apply:
SB637-SSA2,12,2423
(a) The lessee voluntarily returned or surrendered the rental property within
247 days after the expiration of the rental-purchase agreement.
SB637-SSA2,13,2
1(b) Not more than 365 days have passed after the date on which the
2rental-purchase agreement ended.
SB637-SSA2,13,7
3(2) Authorized conditions on reinstatement. As a condition of reinstatement
4under sub. (1), the rental-purchase company may require the payment of all
5past-due rental charges, the rental payment for the next term, and a reinstatement
6fee not to exceed $8 for agreements renewed on a monthly basis or $5 for agreements
7renewed more frequently than monthly.
SB637-SSA2,13,13
8(3) Effect of repossession on reinstatement. Subject to s. 420.04 (2), nothing
9in this section prohibits a rental-purchase company from repossessing or attempting
10to repossess rental property when a rental-purchase agreement is not renewed, but
11such efforts do not affect the lessee's right to reinstate as long as the rental property
12is voluntarily returned or surrendered within 7 days after the rental-purchase
13agreement expires.
SB637-SSA2,13,18
14(4) Property available upon reinstatement. Upon reinstatement, the
15rental-purchase company shall provide the lessee with the same rental property, if
16the property is available and is in the same condition as when it was returned to the
17rental-purchase company, or with substitute property of comparable quality and
18condition.
SB637-SSA2,13,23
19420.07 Certain fees prohibited. A rental-purchase company may not
20charge a lessee any late fee in connection with any past-due rental charges or
21reinstatement of a rental-purchase agreement and may not charge a lessee any
22charge-back fee or insufficient funds fee that exceeds $15 for each attempted
23payment that is denied or dishonored.
SB637-SSA2,14,3
1420.08 Receipts and statements. (1) Receipts. A rental-purchase company
2shall provide a written receipt to the lessee for any payment made by the lessee in
3cash or, upon the request of the lessee, for any other type of payment.
SB637-SSA2,14,12
4(2) Statement due to lessee. Subject to sub. (4), upon the request of a lessee,
5a rental-purchase company shall provide a written statement to the lessee showing
6the lessee's payment history on each rental-purchase agreement between the lessee
7and the rental-purchase company. A rental-purchase company is not required to
8provide a statement covering any rental-purchase agreement that ended more than
9one year prior to the date of the lessee's request. A rental-purchase company may
10provide a single statement covering all rental-purchase agreements or separate
11statements for each rental-purchase agreement, at the rental-purchase company's
12option.
SB637-SSA2,14,17
13(3) Statement due to other parties. Subject to sub. (4), upon the written
14request of a lessee, made during the term of or no later than one year after the
15rental-purchase agreement ended, a rental-purchase company shall provide a
16written statement to any person the lessee designates, showing the lessee's payment
17history under the rental-purchase agreement.
SB637-SSA2,14,22
18(4) Fee for statement. A lessee or, if appropriate, a lessee's designee, is entitled
19to receive one statement under subs. (2) and (3) without charge once every 12
20months. A rental-purchase company shall provide an additional statement if the
21lessee pays the rental-purchase company's reasonable costs of preparing and
22furnishing the statement.
SB637-SSA2,15,2
23420.09 Liability damage waiver. (1) Waiver permissible. A
24rental-purchase company and a lessee may contract for a liability damage waiver.
1A rental-purchase company may charge a periodic fee for a liability damage waiver
2in an amount not to exceed 10 percent of the periodic rental payment.
SB637-SSA2,15,4
3(2) Requirements for waiver. A rental-purchase company may not sell a
4liability damage waiver unless all of the following apply:
SB637-SSA2,15,75
(a) The contract containing the waiver is provided to the lessee in writing,
6either by incorporating it into the rental-purchase agreement or by providing it as
7a separate document.
SB637-SSA2,15,98
(b) The face of the writing under par. (a) clearly discloses that the lessee is not
9required to purchase the waiver.
SB637-SSA2,15,1110
(c) The contract clearly discloses the dollar amount of the fee to be paid with
11each rental payment.
SB637-SSA2,15,1212
(d) The lessee expressly agrees to the waiver in writing.
SB637-SSA2,15,17
13(3) Scope of waiver. The liability damage waiver may exclude only loss or
14damage to the property that is the subject of the rental-purchase agreement caused
15by moisture, scratches, mysterious disappearance, vandalism, abandonment of the
16property, or any other damage intentionally caused by the lessee or that results from
17the lessee's willful or wanton misconduct.
SB637-SSA2,15,19
18(4) Waiver cancellation. The lessee is entitled to cancel the waiver at the end
19of any rental term.
SB637-SSA2,15,20
20(5) Waiver is not insurance. A liability damage waiver is not insurance.
SB637-SSA2,15,24
21420.10 Advertising disclosure required. If an advertisement for a
22rental-purchase agreement states the amount of a payment for a specific item of
23property, the advertisement shall also clearly and conspicuously state all of the
24following:
SB637-SSA2,15,25
25(1) That the transaction advertised is a rental-purchase agreement.
SB637-SSA2,16,2
1(2) The total number and total dollar amount of all rental payments necessary
2to acquire ownership of the property.
SB637-SSA2,16,4
3(3) That the lessee does not acquire ownership of the property if the lessee fails
4to make all payments necessary to acquire ownership of the property.
SB637-SSA2,16,9
5420.11 Price cards displayed.
(1) Price cards generally. Except as
6provided in sub. (2), a card or tag that clearly and conspicuously states all of the
7following shall be displayed on or next to any property displayed or offered primarily
8for rental-purchase by a rental-purchase company for rent under a rental-purchase
9agreement:
SB637-SSA2,16,1010
(a) The cash price that a lessee would pay to purchase the property.