Amendment SSA2-SB486

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

SB486-SSA2, s. 1 Section 1. 220.02 (2) (b) of the statutes is amended to read:

SB486-SSA2,2,4 220.02 (2) (b) The lending of money under s. 138.09 or those relating to finance companies, motor vehicle dealers, adjustment service companies, community currency exchanges, rental-purchase companies registered under s. 426.201, and collection agencies under ch. 218.

SB486-SSA2, s. 2 Section 2. 220.02 (3) of the statutes, as affected by 2003 Wisconsin Act 33, is amended to read:

SB486-SSA2,2,15 220.02 (3) It is the intent of sub. (2) to give the division jurisdiction to enforce and carry out all laws relating to banks or banking in this state, including those relating to state banks, savings banks, savings and loan associations, and trust company banks, and also all laws relating to small loan companies or other loan companies or agencies, finance companies, motor vehicle dealers, adjustment service companies, community currency exchanges, rental-purchase companies registered under s. 426.201, and collection agencies and those relating to sellers of checks under ch. 217, whether doing business as corporations, individuals, or otherwise, but to exclude laws relating to credit unions.

SB486-SSA2, s. 3 Section 3. 409.109 (4) (n) of the statutes is created to read:

SB486-SSA2,2,18 409.109 (4) (n) The transfer of an interest under a rental-purchase agreement, as defined in s. 421.301 (37u).

SB486-SSA2, s. 4 Section 4. 421.201 (11) of the statutes is created to read:

SB486-SSA2,2,21 421.201 (11) (a) A rental-purchase agreement is entered into in this state if any of the following applies:

SB486-SSA2,2,24 1. A writing signed by a lessee and evidencing the obligation under the rental- purchase agreement or an offer of a lessee is received by a rental-purchase company in this state.

SB486-SSA2,3,3 2. The rental-purchase company induces a lessee who is a resident of this state to enter into the rental-purchase agreement by face-to-face solicitation or by mail or telephone solicitation directed to the particular lessee in this state.

SB486-SSA2,3,7 (b) If a rental-purchase agreement is made or modified in another state with a lessee who is a resident of this state at the time that the agreement or modification is made, the following apply as though the agreement or modification occurred in this state:

SB486-SSA2,3,10 1. A rental-purchase company, or an assignee of its rights, may collect through actions or other proceedings charges only to the extent permitted under chs. 421 to 427 relating to rental purchase agreements.

SB486-SSA2,3,12 2. A rental-purchase company may not enforce any right against a lessee if the enforcement of that right would violate s. 422.604.

SB486-SSA2,3,16 (c) Except as provided in pars. (a) and (b), a rental-purchase agreement made or modified in another state with an individual who was not a resident of this state at the time that the agreement or modification was made, is valid and enforceable under the laws of the state applicable to the transaction.

SB486-SSA2,3,21 (d) For purposes of rental-purchase agreements, the residence of a lessee is the address given by the lessee as his or her residence in any writing signed by the lessee in connection with a rental-purchase agreement. The given address is presumed to be unchanged until the rental-purchase company knows or has reason to know of a new or different address.

SB486-SSA2, s. 5 Section 5. 421.301 (7) (intro.) of the statutes is amended to read:

SB486-SSA2,3,25 421.301 (7) (intro.) "Cash price" means in chs. 421 to 427, other than subch. VI of ch. 422, the price at which property or services are offered, in the ordinary course of business, for sale for cash, and may include:

SB486-SSA2, s. 6 Section 6. 421.301 (9) of the statutes is amended to read:

SB486-SSA2,4,11 421.301 (9) "Consumer credit sale" means a sale of goods, services or an interest in land to a customer on credit where the debt is payable in installments or a finance charge is imposed and includes any agreement in the form of a bailment of goods or lease of goods or real property if the bailee or lessee pays or agrees to pay as compensation for use a sum substantially equivalent to or in excess of the aggregate value of the goods or real property involved and it is agreed that the bailee or lessee will become, or for no other or a nominal consideration has the option to become, the owner of the goods or real property upon full compliance with the terms of the agreement. "Consumer credit sale" does not include a rental-purchase agreement.

SB486-SSA2, s. 7 Section 7. 421.301 (10) of the statutes is amended to read:

SB486-SSA2,4,20 421.301 (10) "Consumer credit transaction" means a consumer transaction between a merchant and a customer in which real or personal property, services or money is acquired on credit and the customer's obligation is payable in installments or for which credit a finance charge is or may be imposed, whether such transaction is pursuant to an open-end credit plan or is a transaction involving other than open-end credit. The term includes consumer credit sales, consumer loans, consumer leases and transactions pursuant to open-end credit plans. "Consumer credit transaction" does not include a rental-purchase agreement.

SB486-SSA2, s. 8 Section 8. 421.301 (11) of the statutes is amended to read:

SB486-SSA2,4,24 421.301 (11) "Consumer lease" means a lease of goods which a merchant makes to a customer for a term exceeding 4 months, but does not include a rental-purchase agreement.

SB486-SSA2, s. 9 Section 9. 421.301 (12) of the statutes is amended to read:

SB486-SSA2,5,5 421.301 (12) "Consumer loan" means a loan made by a lender to a customer which is payable in installments or for which a finance charge is or may be imposed, and includes transactions pursuant to an open-end credit plan other than a seller credit card, but does not include a transaction relating to a rental-purchase agreement.

SB486-SSA2, s. 10 Section 10. 421.301 (13) of the statutes is amended to read:

SB486-SSA2,5,9 421.301 (13) "Consumer transaction" means a transaction in which one or more of the parties is a customer for purposes of that transaction , but does not include a transaction relating to a rental-purchase agreement.

SB486-SSA2, s. 11 Section 11. 421.301 (17) of the statutes is amended to read:

SB486-SSA2,5,17 421.301 (17) "Customer" means a person other than an organization (s. 421.301 (28)) who seeks or acquires real or personal property, services, money or credit for personal, family or household purposes or, for purposes of ch. 427 only, for agricultural purposes, but does not include a lessee to a rental-purchase agreement. A person other than a customer may agree to be governed by chs. 421 to 427 with respect to all aspects of a transaction and in such event such person shall be deemed a customer for all purposes of chs. 421 to 427 with respect to such transaction.

SB486-SSA2, s. 12 Section 12. 421.301 (20) (intro.) of the statutes is amended to read:

SB486-SSA2,6,2 421.301 (20) (intro.) "Finance charge" means the sum of all charges, payable directly or indirectly by the customer as an incident to or as a condition of the extension of credit, whether paid or payable by the customer, the creditor or any other person on behalf of the customer to the creditor or to a 3rd party unless the creditor had no notice or knowledge of the charges paid or payable to the 3rd party. The term does not include any charge with respect to a motor vehicle consumer lease or to a rental-purchase agreement. The term includes the following types of charges to the extent they are not permitted additional charges under s. 422.202, delinquency charges under s. 422.203 or deferral charges under s. 422.204:

SB486-SSA2, s. 13 Section 13. 421.301 (21) of the statutes is amended to read:

SB486-SSA2,6,7 421.301 (21) "Goods" has the meaning given in s. 409.102 (1) (ks) and includes goods not in existence at the time the transaction is entered into and goods which are or are to become fixtures, but does not include any goods under a rental-purchase agreement.

SB486-SSA2, s. 14 Section 14. 421.301 (25) of the statutes is amended to read:

SB486-SSA2,6,18 421.301 (25) "Merchant" means a person who regularly advertises, distributes, offers, supplies or deals in real or personal property, services, money or credit in a manner which directly or indirectly results in or is intended or designed to result in, lead to or induce a consumer transaction. The term includes but is not limited to a seller, lessor, manufacturer, creditor, arranger of credit and any assignee of or successor to such person. The term also includes a person who by his or her occupation holds himself or herself out as having knowledge or skill peculiar to such practices or to whom such knowledge or skill may be attributed by his or her employment as an agent, broker or other intermediary. "Merchant" does not include a rental-purchase company.

SB486-SSA2, s. 15 Section 15. 421.301 (34) of the statutes is amended to read:

SB486-SSA2,6,21 421.301 (34) "Personal property" includes but is not limited to goods, but does not include rental property.

SB486-SSA2, s. 16 Section 16. 421.301 (37t) of the statutes is created to read:

SB486-SSA2,6,24 421.301 (37t) "Rental property" means property rented under a rental-purchase agreement.

SB486-SSA2, s. 17 Section 17. 421.301 (37u) of the statutes is created to read:

SB486-SSA2,7,3 421.301 (37u) "Rental-purchase agreement" means an agreement between a rental-purchase company and a lessee for the use of rental property if all of the following apply:

SB486-SSA2,7,5 (a) The rental property is to be used primarily for personal, family, or household purposes.

SB486-SSA2,7,7 (b) The agreement has an initial term of 4 months or less and is automatically renewable with each payment after the initial term.

SB486-SSA2,7,9 (c) The agreement does not obligate or require the lessee to renew the agreement beyond the initial term.

SB486-SSA2,7,11 (d) The agreement permits, but does not obligate, the lessee to acquire ownership of the rental property.

SB486-SSA2, s. 18 Section 18. 421.301 (37v) of the statutes is created to read:

SB486-SSA2,7,15 421.301 (37v) "Rental-purchase company" means a person engaged in the business of entering into rental-purchase agreements in this state or acquiring or servicing rental-purchase agreements that are entered into in this state.

SB486-SSA2, s. 19 Section 19. 421.301 (39) of the statutes is amended to read:

SB486-SSA2,7,19 421.301 (39) "Sale of services" means furnishing or agreeing to furnish services and includes arranging to have services furnished by another, but does not include any services relating to a rental-purchase agreement.

SB486-SSA2, s. 20 Section 20. 421.301 (40) of the statutes is amended to read:

SB486-SSA2,7,25 421.301 (40) "Security interest" means a real property mortgage, deed of trust, seller's interest in real estate under a land contract, any interest in property which secures payment or performance of an obligation under ch. 409 or any other consensual or confessed lien whether or not recorded, but does not include an interest in any property relating to a rental-purchase agreement.

SB486-SSA2, s. 21 Section 21. 422.102 of the statutes is repealed and recreated to read:

SB486-SSA2,8,2 422.102 Scope. (1) Subchapters I to V apply to consumer credit transactions.

SB486-SSA2,8,3 (2) Subchapter VI applies to rental-purchase agreements.

SB486-SSA2, s. 22 Section 22. Subchapter VI of chapter 422 of the statutes [precedes 422.601] is created to read:

SB486-SSA2,8,6 CHAPTER 422

SB486-SSA2,8,7 consumer credit transactionS

SB486-SSA2,8,8 Subchapter VI

SB486-SSA2,8,9 rental-purchase agreements

SB486-SSA2,8,10 422.601 Scope. This subchapter applies only to rental-purchase agreements.

SB486-SSA2,8,13 422.602 General requirements of disclosure. (1) Form, location, size, and time of disclosure. The information that is required to be disclosed under s. 422.603 shall satisfy all of the following:

SB486-SSA2,8,14 (a) The information shall be clearly and conspicuously disclosed.

SB486-SSA2,8,15 (b) The information shall be disclosed in writing.

SB486-SSA2,8,17 (c) The information shall be disclosed on the face of the rental-purchase agreement above the line for the lessee's signature.

SB486-SSA2,8,18 (d) The information shall be disclosed in not less than 8-point standard type.

SB486-SSA2,8,20 (e) The information shall be disclosed before the time that the lessee becomes legally obligated under the rental-purchase agreement.

SB486-SSA2,8,24 (f) The disclosures required by s. 422.603 (2), (3), (4), and (5) shall be printed in at least 10-point boldface type, and shall be grouped together in a box, in the form and order prescribed by the division of banking in the department of financial institutions.

SB486-SSA2,9,5 (2) Accuracy of disclosure. The information required under s. 422.603 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 any provision of chs. 421 to 427 relating to rental-purchase agreements.

SB486-SSA2,9,10 (3) Copy of rental-purchase agreement. The rental-purchase company shall provide the lessee with a copy of the completed rental-purchase agreement signed by the lessee. If more than one lessee is legally obligated under the same rental-purchase agreement, delivery of a copy of the completed rental-purchase agreement to one of the lessees shall satisfy this subsection.

SB486-SSA2,9,14 (4) Single instrument. In a rental-purchase agreement, the lessee's rental payment obligations shall be evidenced by a single instrument, which shall include the signature of the rental-purchase company, the signature of the lessee, and the date on which the instrument is signed.

SB486-SSA2,9,17 422.603 Required provisions of rental-purchase agreement. A rental-purchase company shall include all of the following information, to the extent applicable, in every rental-purchase agreement:

SB486-SSA2,9,21 (1) Description. A brief description of the rental property, sufficient to identify the rental property to the lessee and the rental-purchase company, including any identification number, and a statement indicating whether the rental property is new or used.

SB486-SSA2,9,25 (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 rental-purchase 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.

SB486-SSA2,10,5 (3) Rental payments to acquire ownership. The total number, total dollar amount, and timing of all rental payments necessary to acquire ownership of the rental property.

SB486-SSA2,10,12 (4) Cost of rental services. The difference between the total dollar amount of payments necessary to acquire ownership of the rental property disclosed under sub. (3), and the cash price of the property disclosed under sub. (2). The rental-purchase company shall also include a statement substantially similar to the following: "The cost of rental services is the amount you will pay in addition to the cash price if you acquire ownership of the rented goods by making all payments necessary to acquire ownership."

SB486-SSA2,10,13 (5) Rental payment. The rental payment for the rental property.

SB486-SSA2,10,17 (6) Up-front payment. Any payment required of the lessee at the time that the agreement is executed or the rental property is delivered, including the initial rental payment, any application or processing charge, any delivery fee, and any charge for a liability damage waiver or for other optional services agreed to by the lessee.

SB486-SSA2,10,23 (7) Other charges and fees to acquire ownership. The dollar amount, both itemized and in total, of all taxes, liability damage waiver fees, fees for optional services, processing fees, application fees, and delivery charges that the lessee would incur if the lessee were to rent the rental property until the lessee acquires ownership, assuming that the lessee does not add or decline the liability damage waiver or optional services after signing the rental-purchase agreement.

SB486-SSA2,11,7 (8) Total payments to acquire ownership. The total of all charges to be paid by the lessee to acquire ownership of the rental property, which shall consist of the total dollar amount of all rental payments disclosed under sub. (3), and the total dollar amount of all other charges and fees disclosed under sub. (7), along with a statement that this is the amount a lessee will pay to acquire ownership of the rental property if the tax rates do not change and if the lessee does not add or decline the liability damage waiver or optional services after signing the rental-purchase agreement. The information required under this subsection shall be printed in at least 10-point boldface type.

SB486-SSA2,11,10 (9) Other charges. An itemized description of any other charges or fees that the rental-purchase company may charge the lessee that are not otherwise disclosed in the rental-purchase agreement.

SB486-SSA2,11,13 (10) Summary of early-purchase option. A statement summarizing the terms of the lessee's options to acquire ownership of the rental property as provided in s. 422.606 (2).

SB486-SSA2,11,20 (11) 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 under sub. (10), 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.

SB486-SSA2,12,3 (12) Service and warranty. A statement that during the term of the rental- purchase agreement, the rental-purchase company is required to service the rental property and maintain it in good working condition, as long as no other person has serviced the rental property. In lieu of servicing the rental property, the rental-purchase company may, at its option, replace the rental property. The rental-purchase company's obligation to provide service is limited to defects in the property not caused by improper use or neglect by the lessee or harmful conditions outside the control of the rental-purchase company or manufacturer.

SB486-SSA2,12,6 (13) 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.

SB486-SSA2,12,8 (14) Right to reinstate. A brief explanation of the lessee's right to reinstate a rental-purchase agreement under s. 422.615.

SB486-SSA2,12,16 (15) Rental, not purchase. A statement that the lessee will not own the rental property until the lessee has made all 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 payments necessary to acquire ownership or until you exercise your early-purchase option. If you do not make your payments as scheduled or exercise your early-purchase option, the rental-purchase company may repossess the property."

SB486-SSA2,12,20 (16) 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 rental-purchase agreement is executed.

SB486-SSA2,12,25 (17) Optional services. Space for a specific, separately signed, affirmative written indication of the lessee's desire for any optional service for which a charge is assessed. The lessee's request must be obtained after a written disclosure of the cost of the optional service is made, and the cost and term of such service must be listed at or near the signature space.