SB530: Bill Text

SB530,19,19 1. Ensure that the 3rd-party provider operates the database according to the provisions of this section.

SB530,19,21 2. In selecting a 3rd-party provider, consider the cost of providing the service and the 3rd-party provider's ability to meet all the requirements of this section.

SB530,19,23 3. In selecting a 3rd-party provider, give strong consideration to all of the following:

SB530,20,3 a. The 3rd-party provider's ability to prevent fraud, abuse, and other unlawful activity associated with consumer small loan transactions, and to provide additional tools for the administration and enforcement of this section.

SB530,20,5 b. Whether the provider is currently providing a similar service for another state.

SB530,20,6 (c) The database shall do all of the following:

SB530,20,11 1. Allow a licensee accessing the database to check a customer's social security number, or other unique identification number specified by the division, and report to the division or licensee if that social security number is invalid, was issued within a period of time specified by the division preceding the date of the inquiry, or is issued to a deceased individual.

SB530,20,13 2. Allow a licensee accessing the database to determine if making a new consumer small loan would cause a violation of this section.

SB530,20,16 3. Provide information necessary to aid a licensee in complying with any requirements imposed under federal law by the office of foreign assets control of U.S. department of the treasury.

SB530,20,18 4. Provide any other information that the division determines is necessary and requires by rule or contract with the database provider.

SB530,20,19 (d) The database provider shall do all the following:

SB530,20,22 1. Use the data collected under this section only as prescribed in this section and, in the case of a 3rd-party provider, as prescribed in the contract with the division, and for no other purpose.

SB530,20,25 2. Establish and maintain an alternate process for responding to transaction authorization requests necessary because of technical difficulties occurring with the database that prevent a licensee from accessing the database through the Internet.

SB530,21,3 3. Upon receiving notification that a consumer small loan is paid, designate the transaction as closed in the database no later than 11:59 p.m. on the day that such notification is received.

SB530,21,13 4. Automatically designate a consumer small loan as paid in the database 5 days after the maturity date of the loan unless a licensee reports to the database provider before that time that the loan remains open because of the customer's failure to make payment; that the loan is open because the customer's check or an electronic redeposit is in the process of clearing the banking system; that the loan remains open because the customer's check is being returned to the licensee for insufficient funds, a closed account, or a stop payment order; or that any other factors determined by the division are applicable. If a licensee makes such a report, the database provider shall designate the consumer small loan as an open transaction until the database provider is notified that the transaction is closed.

SB530,21,18 5. If a licensee stops making consumer small loans, designate all open transactions with that licensee as closed in the database 60 days after the date on which the licensee stops making consumer small loans, unless the licensee reports to the database provider before the expiration of the 60-day period which of its transactions remain open and the specific reason each transaction remains open.

SB530,21,23 6. In response to an inquiry from a licensee, state only that a person is eligible or ineligible for a new consumer small loan and describe the reason for that determination. Only the person seeking the loan may make a direct inquiry to the database provider to request a more detailed explanation of an ineligibility determination.

SB530,22,2 (e) If at any time the division determines that a licensee that has stopped making consumer small loans is not updating the database in accordance with a plan approved under par. (o), the division shall immediately close or instruct the database provider to immediately close all remaining open transactions of that licensee.

SB530,22,4 (f) The division may, without cost, access the database for the purposes of enforcing this section.

SB530,22,10 (g) The division shall, by order or rule, stipulate the period for which data is to be retained in the database only as required to ensure licensee compliance with this act or for enforcement or compliance purposes. The division may require that any identifying customer information be deleted from the database when data is archived. The division may maintain access to archived data for future legislative or policy review.

SB530,22,19 (h) The division shall, by order or rule, specify a database transaction fee that the database provider shall charge to licensees to cover the costs of developing and implementing the database, and accessing the database to verify that a customer does not have any consumer small loans with the licensee or others that in combination with a new transaction will create a violation of this section. The database fee is payable directly to the division in a manner prescribed by the division and, if the department has contracted with a 3rd-party provider to operate the database, the division shall remit the fee to the 3rd-party provider as specified in the contract.

SB530,22,21 (i) A licensee shall verify a customer's eligibility to enter into a consumer small loan by doing one of the following, as applicable:

SB530,23,2 1. If the database, as determined by the division, is not implemented or is not fully operational, verifying that the customer does not have an open consumer small loan with the licensee that in conjunction with a new consumer small loan would cause a violation of this section. The licensee shall maintain a database of all of the licensee's consumer small loans at all of its places of business and search that database to meet its obligation under this subdivision.

SB530,23,7 2. If the database, as determined by the division, is implemented and fully operational, accessing the database and verifying that the customer does not have an outstanding consumer small loan with the licensee and does not have open consumer small loans with other licensees that in conjunction with a new consumer small loan would cause a violation of this section.

SB530,23,12 (j) If the database, as determined by the division, is not fully operational, or the licensee is unable to access the database and, as determined under rules promulgated by the division, the alternate process established under par. (d) 2. is also unavailable, a licensee may rely upon the written verification of the borrower in a statement provided in substantially the following form in at least 12-point type:

SB530,23,16 "I DO NOT HAVE ANY OUTSTANDING CONSUMER SMALL LOANS WITH THIS LICENSEE AND I DO NOT HAVE MORE CONSUMER SMALL LOANS WITH ANY OTHER LICENSED CONSUMER SMALL LOAN PROVIDER IN THIS STATE."

SB530,23,19 (k) If, as determined by the division, a licensee is unable to access the database due to technical difficulties occurring with the database, the licensee shall utilize the alternate process established under par. (d) 2.

SB530,23,22 (L) A licensee may rely on the information contained in the database as accurate and is not subject to any administrative forfeiture as a result of relying on inaccurate information contained in the database.

SB530,24,3 (m) Before entering into a consumer small loan, a licensee shall submit to the database provider the customer's name; social security number or other unique identifier prescribed by the division; address; driver license number or other method of state identification; the amount of the transaction; the customer's check number; the date of the transaction; the maturity date of the loan; and any other information reasonably required by the division, in a format approved by the division.

SB530,24,11 (n) When a consumer small loan is closed, the licensee shall designate the transaction as closed and notify the database provider no later than 11:59 p.m. on the day on which the transaction is closed. The division shall assess an administrative forfeiture of $100 for each day that the licensee fails to notify the database provider that the consumer small loan has been closed. It is a defense to the assessment of an administrative forfeiture that notifying the database provider was not possible due to temporary technical problems with the database or to circumstances beyond the licensee's control.

SB530,24,17 (o) If the licensee stops making consumer small loans, the licensee shall provide to the division a plan acceptable to the division that outlines how the licensee will continue to update the database after it stops making consumer small loans. The division shall approve or disapprove the plan and within 5 business days notify the licensee of the decision. If a plan is disapproved, the licensee may submit a new or modified plan for the division to approve or disapprove.

SB530,24,20 (p) Any information in the database regarding any person's transactional history is confidential and is not subject to public copying or inspection under s. 19.35 (1).

SB530,24,23 (15) Penalties. (a) Any person, partnership, or corporation, or the officers or employees thereof, who violates this section is guilty of a misdemeanor and shall be fined not more than $500 or imprisoned for not more than 6 months or both.

SB530,25,4 (b) If a person who is not licensed under this section makes a consumer small loan to a borrower, the loan is void, the borrower is not obligated to pay any amounts owing on the loan, and the borrower may recover from the person all amounts the borrower has paid to the person. An action to recover such amounts shall be commenced within one year after the date of the last scheduled payment on the loan or shall be barred.

SB530,25,8 (16) Private cause of action. If a person makes a consumer small loan to a borrower in violation of this section, the borrower may bring an action against the person for damages of $250 or the amount of the consumer small loan, whichever is greater, plus costs, and, notwithstanding s. 814.04 (1), reasonable attorney fees.

SB530, s. 13 Section 13. 220.02 (2) (b) of the statutes is amended to read:

SB530,25,12 220.02 (2) (b) The lending of money under s. 138.09 or 138.14, or those relating to finance companies, motor vehicle dealers, adjustment service companies, community currency exchanges and collection agencies under ch. 218.

SB530, s. 14 Section 14. 220.04 (10) of the statutes is amended to read:

SB530,26,2 220.04 (10) If it appears to the division that a person has engaged or is about to engage in an act or practice constituting a violation of the laws of this state relating to banks and banking, including this chapter, chs. 217, 218 and 221 to 224 and ss. 138.09 and, 138.12, and 138.14, or a rule promulgated or order issued under those laws, the division may bring an action in the name of the state in the circuit court of the appropriate county to enjoin the acts or practices and to enforce compliance with the laws, rules or orders, or the division may refer the matter to the district attorney of the appropriate county or, if the alleged violation may be enforced by the attorney general under sub. (12) or s. 220.12, 221.1005 or 224.06 (7) or is statewide in nature, to the attorney general. Upon a proper showing, the court may grant a permanent or temporary injunction or restraining order, appoint a receiver for the defendant or the defendant's assets or order rescission of any acts determined to be unlawful. The court may not require the division to post a bond.

SB530, s. 15 Section 15. 220.285 (1) of the statutes, as affected by 2009 Wisconsin Act 2, is amended to read:

SB530,26,15 220.285 (1) Any state bank, trust company bank, licensee under ss. 138.09, 138.12, 138.14, 218.0101 to 218.0163, 218.02, 218.04, 218.05, 224.72, or 224.725 or ch. 217 may cause any or all records kept by such bank, licensee, or registered person to be recorded, copied or reproduced by any photostatic, photographic or miniature photographic process or by optical imaging if the process employed correctly, accurately and permanently copies, reproduces or forms a medium for copying, reproducing or recording the original record on a film or other durable material. A bank, licensee, or registered person may thereafter dispose of the original record after first obtaining the written consent of the division. This section, excepting that part of it which requires written consent of the division, is applicable to national banking associations insofar as it does not contravene federal law.

SB530, s. 16 Section 16. 321.60 (1) (a) 12. of the statutes, as affected by 2009 Wisconsin Act 2, is amended to read:

SB530,26,21 321.60 (1) (a) 12. A license or certificate of registration issued by the department of financial institutions, or a division of it, under ss. 138.09, 138.12, 138.14, 217.06, 218.0101 to 218.0163, 218.02, 218.04, 218.05, 224.72, 224.725, or 224.93 or subch. IV of ch. 551.

SB530, s. 17 Section 17. 403.414 (7) of the statutes is amended to read:

SB530,27,5 403.414 (7) A person who issues a check or other draft that is not honored upon presentment, because the drawer does not have an account with the drawee or because the drawer does not have sufficient funds in his or her account or sufficient credit with the drawee, is liable for all reasonable costs and expenses in connection with the collection of the amount for which the check or draft was written, except recovery is not permitted under this section if a person licensed under s. 138.09 or 138.14 or any other person collected or could have collected a charge for that check or other draft under s. 422.202 (1) (d) or (2m).

SB530, s. 18 Section 18. 422.201 (3) of the statutes is amended to read:

SB530,27,10 422.201 (3) For licensees under s. 138.09 and or 138.14 or under ss. 218.0101 to 218.0163, the finance charge, calculated according to those sections, may not exceed the maximums permitted in ss. 138.09, 138.14, and 218.0101 to 218.0163, respectively.

SB530, s. 19 Section 19. 425.301 (4) of the statutes is amended to read:

SB530,27,21 425.301 (4) The liability of a merchant under chs. 421 to 427 is in lieu of and not in addition to any liability under the federal consumer credit protection act and ss. 138.09, 138.14, or 218.0101 to 218.0163. An action by a person alleging a violation under chs. 421 to 427 may not be maintained if a final judgment has been rendered for or against that person with respect to the same violation under the federal consumer credit protection act or ss. 138.09, 138.14, or 218.0101 to 218.0163. If a final judgment is entered against any merchant under chs. 421 to 427 and the federal consumer credit protection act or ss. 138.09, 138.14, or 218.0101 to 218.0163 for the same violation, the merchant has a cause of action for appropriate relief to the extent necessary to avoid double liability.

SB530, s. 20 Section 20. Effective date.

SB530,27,24 (1) This act takes effect on the first day of the 13th month beginning after publication.

SB530,27,25 (End)