SB589: Bill Text

SB589, s. 50 Section 50. 421.201 (5) of the statutes is amended to read:

SB589,19,17 421.201 (5) Subchapters I and II of ch. 425, relating to creditors' remedies, including applicable penalties, apply to actions or other proceedings brought in this state to enforce rights arising from consumer transactions or extortionate extensions of credit, wherever made, but conduct, action or proceedings to recover collateral or goods subject to a motor vehicle consumer lease shall be governed by the law of the state where the collateral is or goods subject to a motor vehicle consumer lease are located at the time of its recovery unless the collateral is or goods subject to a motor vehicle consumer lease are owned by a Wisconsin resident, who has removed it the collateral or goods from this state only for purposes of transportation to or use in the resident's employment or for temporary periods which do not exceed 15 days.

SB589, s. 51 Section 51. 421.202 (6) of the statutes is amended to read:

SB589,19,22 421.202 (6) Consumer credit transactions in which the amount financed exceeds $25,000, motor vehicle consumer leases in which the total lease obligation exceeds $25,000 or other consumer transactions in which the cash price exceeds $25,000;

SB589, s. 52 Section 52. 421.202 (7) of the statutes is amended to read:

SB589,19,24 421.202 (7) Transactions subject to ch. 428; or

SB589, s. 53 Section 53. 421.202 (8) of the statutes is amended to read:

SB589,20,2 421.202 (8) Transactions in securities accounts or securities transactions by or with a broker-dealer, as defined in s. 551.02 (3), licensed under ch. 551.; or

SB589, s. 54 Section 54. 421.202 (9) of the statutes is created to read:

SB589,20,5 421.202 (9) Leases of motor vehicles that are not motor vehicle consumer leases under s. 421.301 (25m).

SB589, s. 55 Section 55. 421.301 (20) (intro.) of the statutes is amended to read:

SB589,20,15 421.301 (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. The term includes the following types of charges to the extent they are not permitted additional charges under s. 422.202 or, delinquency charges (under s. 422.203 ) or deferral charges (under s. 422.204):

SB589, s. 56 Section 56. 421.301 (25m) of the statutes is created to read:

SB589,20,18 421.301 (25m) "Motor vehicle consumer lease" has the meaning given for "consumer lease" in s. 429.104 (9).

SB589, s. 57 Section 57. 421.301 (35) of the statutes is amended to read:

SB589,20,23 421.301 (35) "Precomputed" with respect to a consumer credit transaction means a consumer credit transaction, other than a motor vehicle consumer lease, in which debt is expressed as a single sum comprised of the amount financed and the finance charge computed in advance.

SB589, s. 58 Section 58. 421.301 (43m) of the statutes is created to read:

SB589,21,2 421.301 (43m) "Total lease obligation" means the sum of the following with respect to a motor vehicle consumer lease:

SB589,21,3 (a) All scheduled periodic payments under the lease.

SB589,21,4 (b) Capitalized cost reduction, as defined in s. 429.104 (6).

SB589, s. 59 Section 59. 422.201 (4) of the statutes is repealed.

SB589, s. 60 Section 60. 422.201 (7) (intro.) and (a) of the statutes are amended to read:

SB589,21,10 422.201 (7) (intro.) Subject to classifications and differentiations the merchant may reasonably establish, the merchant may make the same finance charge on all amounts financed within a specified range. A finance charge so made does not violate sub. (2), or (3) or (4) as the case may be if:

SB589,21,12 (a) When applied to the median amount within each range, it does not exceed the maximum permitted by sub. (2), or (3) or (4) as the case may be; and

SB589, s. 61 Section 61. 422.201 (8), (9) and (12) of the statutes are amended to read:

SB589,21,20 422.201 (8) That portion of the finance charge consisting of an amount equal to a discount of 5% or less of the stated price which is offered to induce payment in full within a stated period of time in connection with a sale for agricultural purposes or a sale of particular goods and services for which credit is not otherwise available from the merchant shall not be included in the finance charge for the purpose of determining the maximum rate of finance charge under sub. (2), or (3) or (4) with respect to a customer who does not pay in full within such time.

SB589,21,24 (9) Notwithstanding sub. (2), or (3) or (4), a merchant may contract for and receive a minimum finance charge with respect to a transaction other than one pursuant to an open-end credit plan, of not more than $5 when the amount financed does not exceed $75, or $7.50 when the amount financed exceeds $75.

SB589,22,3 (12) Except as provided in sub. (4), this This section does not apply to a consumer credit transaction primarily for an agricultural purpose if the transaction occurs on or after April 6, 1980.

SB589, s. 62 Section 62. 422.201 (12m) of the statutes is renumbered 422.201 (12m) (intro.) and amended to read:

SB589,22,7 422.201 (12m) (intro.) This section does not apply to consumer any of the following:

SB589,22,10 (b) Consumer credit sales of or consumer loans secured by a first lien on or equivalent security interest in mobile homes as defined in s. 218.10 (2), if the sales or loans are made on or after November 1, 1981.

SB589, s. 63 Section 63. 422.201 (12m) (a) of the statutes is created to read:

SB589,22,12 422.201 (12m) (a) Motor vehicle consumer leases.

SB589, s. 64 Section 64. 422.202 (1) (e) of the statutes is created to read:

SB589,22,17 422.202 (1) (e) With respect to a motor vehicle consumer lease, any reasonable fee or charge that, if disclosed in writing to the prospective lessee before execution of the motor vehicle consumer lease, is agreed upon by the lessor and lessee and that is not prohibited by chs. 421 to 427 and 429.

SB589, s. 65 Section 65. 422.207 (1) of the statutes is amended to read:

SB589,23,6 422.207 (1) With respect to a consumer credit transaction the parties may, to the extent not prohibited by chs. 421 to 427 or 429, agree that the customer will perform certain duties with respect to preserving or insuring collateral or goods subject to a motor vehicle consumer lease, if such duties are reasonable in relation to the risk of loss of or damage to the collateral or goods. If the customer fails to so perform the creditor may, if authorized by the agreement, pay for the performance of such duties on behalf of the customer. The amount paid may be added to the unpaid balance of the customer's obligation, if, in the absence of performance, the merchant has made all expenditures on behalf of the customer in good faith and in a commercially reasonable manner and except in the case of a transaction for an agricultural purpose where the collateral is perishable and threatens to decline speedily in value, the merchant has given the customer written notice of the nonperformance and reasonable opportunity after such notice to so perform.

SB589, s. 66 Section 66. 422.207 (3) of the statutes is amended to read:

SB589,23,14 422.207 (3) A finance charge may be made for sums advanced pursuant to sub. (1) at a rate not exceeding the rate stated to the customer pursuant to the provisions on disclosure in subch. III, or if no disclosure is required then at the annual rate of finance charge assessed on that transaction. With respect to an open-end credit plan the amount of the advance may be added to the unpaid balance of the account and the merchant may make a finance charge not exceeding that permitted by s. 422.201. This subsection does not apply to a motor vehicle consumer lease.

SB589, s. 67 Section 67. 422.208 of the statutes is amended to read:

SB589,23,21 422.208 Right to prepay. Subject to s. 422.209 and, with respect to a motor vehicle consumer lease, s. 429.207, the customer may prepay in full or in any part, at any time without penalty, the unpaid balance of any consumer credit transaction other than a transaction secured by a first lien mortgage or equivalent security interest on real estate with an original term of 10 years or more and on which the annual percentage rate disclosed pursuant to subch. III is 10% or less.

SB589, s. 68 Section 68. 422.303 (3) (intro.) of the statutes is amended to read:

SB589,24,2 422.303 (3) (intro.) Except as provided in sub. subs. (3m) and (4), every writing evidencing the customer's obligation to pay under a consumer credit transaction, other than one pursuant to an open-end credit plan, shall contain immediately above or adjacent to the place for the signature of the customer, a clear, conspicuous, printed or typewritten notice in substantially the following language:

SB589, s. 69 Section 69. 422.303 (3m) of the statutes is created to read:

SB589,24,7 422.303 (3m) Except as provided in sub. (4), every writing evidencing the customer's obligation to pay under a motor vehicle consumer lease shall contain immediately above or adjacent to the place for the signature of the customer, a clear, conspicuous, printed or typewritten notice in substantially the following language:

SB589,24,8 NOTICE TO LESSEE

SB589,24,12 (a) THIS IS A MOTOR VEHICLE CONSUMER LEASE. YOU HAVE NO OWNERSHIP RIGHTS IN THE VEHICLE UNLESS THIS LEASE CONTAINS A PURCHASE OPTION AND YOU EXERCISE YOUR OPTION TO PURCHASE THE VEHICLE.

SB589,24,14 (b) DO NOT SIGN THIS LEASE BEFORE YOU READ IT, INCLUDING THE WRITING ON THE REVERSE SIDE.

SB589,24,15 (c) DO NOT SIGN THIS IF IT CONTAINS ANY BLANK SPACES.

SB589,24,17 (d) EARLY TERMINATION OF THIS LEASE MAY REQUIRE YOU TO PAY A SUBSTANTIAL AMOUNT.

SB589,24,19 (e) YOU ARE ENTITLED TO A COMPLETED COPY OF THIS LEASE WHEN YOU SIGN IT.

SB589, s. 70 Section 70. 422.413 (1) of the statutes is amended to read:

SB589,24,25 422.413 (1) Except as provided in subs. (2) and (2g), no term of a writing evidencing a consumer credit transaction may provide for any charges as a result of default by the customer other than reasonable expenses incurred in the disposition of collateral or goods subject to a motor vehicle consumer lease and such other charges as are specifically authorized by chs. 421 to 427 and 429.

SB589, s. 71 Section 71. 422.417 (2) of the statutes is amended to read:

SB589,25,7 422.417 (2) With respect to a consumer lease, except as otherwise provided in s. 429.205 with respect to a motor vehicle consumer lease, a lessor may not take a security interest in any property of owned or leased by the customer other than the leased goods to secure the lessor's obligations under the lease. This subsection does not prohibit a security interest in a cash security deposit for a consumer lease of motor vehicles or agricultural equipment.

SB589, s. 72 Section 72. 424.201 (1) and (2) of the statutes are amended to read:

SB589,25,11 424.201 (1) Insurance issued as an isolated transaction on the part of the insurer not related to an agreement or plan for insuring customers of the creditor; or

SB589,25,13 (2) Insurance indemnifying the creditor against loss due to the customer's default.; or

SB589, s. 73 Section 73. 424.201 (3) of the statutes is created to read:

SB589,25,17 424.201 (3) With respect to a motor vehicle consumer lease, a lessor's waiver of its contractual right to hold the lessee liable for any or all of the gap amount, as defined in s. 429.104 (12), if the waiver is granted without a separate charge.

SB589, s. 74 Section 74. 425.106 (1) (intro.) of the statutes is amended to read:

SB589,25,24 425.106 (1) (intro.) Except to the extent that the merchant has a valid security interest which is permitted by chs. 421 to 427 and 429 or has a lien under ch. 779 in such property, or where the transaction is for medical or legal services and there has been no finance charge actually imposed, the following property of the customer shall be exempt from levy, execution, sale, and other similar process in satisfaction of a judgment for an obligation arising from a consumer credit transaction:

SB589, s. 75 Section 75. 425.107 (4) of the statutes is amended to read:

SB589,26,4 425.107 (4) Any charge or practice expressly permitted by chs. 421 to 427 and 429 is not in itself unconscionable but even though a practice or charge is authorized by chs. 421 to 427 and 429, the totality of a creditor's conduct may show that such practice or charge is part of an unconscionable course of conduct.

SB589, s. 76 Section 76. Chapter 429 of the statutes is created to read:

SB589,26,8 Chapter 429 motor vehicle consumer leases

SB589,26,10 Subchapter i general provisions

SB589,26,12 429.101 Title. This chapter may be cited as the Wisconsin motor vehicle consumer lease act.

SB589,26,17 429.102 Applicable law. (1) Unless superseded by the particular provisions of this chapter, s. 218.01 and chs. 411 and 421 to 427 and the principles of law and equity, including the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, or other validating or invalidating cause supplement this chapter.

SB589,26,21 (2) Unless superseded by the particular provisions of this chapter, parties to a motor vehicle consumer lease have all of the obligations, duties, rights and remedies provided in s. 218.01 and chs. 411 and 421 to 427 that apply to the transaction.

SB589,26,25 429.103 Construction against implied repeal. This chapter being a general act intended as a unified coverage of its subject matter, no part of this chapter shall be construed to be impliedly repealed by subsequent legislation if such construction can reasonably be avoided.

SB589,27,1 429.104 Definitions. In this chapter:

SB589,27,3 (1) "Adjusted capitalized cost" means the amount computed by subtracting from capitalized cost any capitalized cost reduction.

SB589,27,6 (2) "Average periodic depreciation" means the adjusted capitalized cost, after first subtracting the residual value, divided by the number of lease-payment periods or, for a single-payment lease, the number of months in the term of the lease.

SB589,27,9 (3) "Average periodic lease charge" means the lease charge for the originally scheduled term of the consumer lease divided by the number of lease-payment periods or, for a single-payment lease, the number of months in the term of the lease.

SB589,27,10 (4) "Base lease payment" means an amount determined as follows:

SB589,27,13 (a) With respect to a single-payment lease, the product of the number of months in the term of the lease multiplied by the sum of the average periodic lease charge and the average periodic depreciation.

SB589,27,15 (b) With respect to a lease other than a single-payment lease, the sum of the average periodic lease charge and the average periodic depreciation.

SB589,28,4 (5) "Capitalized cost" means all costs capitalized in the consumer lease that, after subtracting the capitalized cost reduction, amortizes to the residual value of the depreciation portion of the periodic lease payments over the unexpired term of the lease or, for a single-payment lease, the single payment. These costs may include taxes; fees for registration, license, acquisition, administration and assignment; other fees; and charges for insurance, for a waiver of the contractual obligation to pay the gap amount, for accessories and their installation, for other services and benefits incidental to the consumer lease, and for delivering, servicing, repairing or improving the vehicle. With respect to a vehicle or other property traded in connection with a consumer lease, the term includes the outstanding unpaid balance of the amount financed under a consumer loan, as defined in s. 421.301 (12), or a retail instalment contract, as defined in s. 218.01 (1) (t), or the unpaid balance of any early termination costs under a lease or other obligation of the lessee. The term does not include any lease charge.

SB589,28,9 (6) "Capitalized cost reduction" means the sum, at the time of inception of the consumer lease, of any payments made by cash, check, rebates or the like that constitute a downpayment made by the lessee and the amount credited the lessor for any trade-in. The term does not include any base lease payments due at the inception of the consumer lease.

SB589,28,12 (7) "Conspicuous" means that the term or clause is so written as to be distinguished from other terms or clauses by type size or in some other manner. The term includes any writing in at least 10-point boldface type.

SB589,28,19 (9) "Consumer lease" or "lease" means a lease entered into in this state that transfers the right of possession and use by a natural person of a vehicle primarily for a personal, family, household or agricultural purpose, for a period of time exceeding 4 months, if the total lease obligation, excluding any option to purchase or otherwise become owner of the vehicle at the expiration of the consumer lease, does not exceed $25,000. The term does not include a credit sale, as defined under 12 CFR 226.2 (a) (16).

SB589,28,21 (10) "Early termination" means termination of a consumer lease before the termination date set forth in the consumer lease.

SB589,28,23 (11) "Federal consumer leasing act" means the federal consumer leasing act, 15 USC 1667 et seq., and regulations issued under that act.

SB589,29,8 (12) "Gap amount" means the difference between the amount specified in the consumer lease to be paid to the lessor by the lessee in the event of total loss or destruction of the leased vehicle prior to expiration of the lease by theft, physical damage, or other occurrence specified in the lease, and the actual cash value or portion thereof received by the lessor from insurance proceeds or from any other person on account of the total loss or destruction of the vehicle. The term does not include any deductible amount applicable to any insurance policy maintained by the lessee, any past-due payments owed by the lessee at the time of receipt by the lessor of the actual cash value or portion thereof from insurance proceeds or from any other person, or any other amount due under the lease resulting from default by the lessee.

SB589,29,11 (13) "Gap protection" means a provision in a consumer lease under which the lessor agrees, for a charge, to waive the gap amount or provide that another person shall be liable for the gap amount.

SB589,29,14 (14) "Group credit insurance" means group credit life insurance, group credit accident insurance, group credit accident and health insurance, group disability insurance or group credit unemployment insurance.

SB589,29,18 (15) "Holder" means, with respect to a consumer lease, the lessor and, upon assignment of the lease, the assignee for the period of assignment. The term does not include a pledgee under the consumer lease or the owner or beneficiary of an interest in a trust that owns consumer leases.

SB589,29,21 (16) "Lease charge" means the sum of all charges, calculated by a lessor on any basis, payable by the lessee for the privilege of making the scheduled lease payments under a consumer lease. The term does not include capitalized cost.