Analysis by the Legislative Reference Bureau
This bill creates requirements that specifically apply to rental-purchase
agreements, imposes requirements on rental-purchase companies, and exempts
rental-purchase companies and rental-purchase agreements from the Wisconsin
Consumer Act (consumer act).
Under current law, a consumer credit transaction that is entered into for
personal, family, or household purposes is generally subject to the consumer act. The
consumer act grants consumers certain rights and remedies and contains notice and
disclosure requirements and prohibitions relating to consumer credit transactions,
including credit sales and consumer leases that have a term of more than four
months. In addition, the consumer act applies to any other consumer lease, if the
lessee pays or agrees to pay at least an amount that is substantially equal to the value
of the leased property and if the lessee will become, or for not more than a nominal
additional payment has the option to become, the owner of the leased property.
This bill defines a “rental-purchase agreement" as an agreement between a
rental-purchase company and a lessee for the use of rental property if all of the
following apply: 1) the rental property is to be used primarily for personal, family,
or household purposes; 2) the agreement has an initial term of four months or less
and is renewable with each payment after the initial term; 3) the agreement does not

obligate or require the lessee to renew the agreement beyond the initial term; and
4) the agreement permits, but does not obligate, the lessee to acquire ownership of
the rental property. For purposes of a rental-purchase agreement, “rental property"
does not include motor vehicles or musical instruments used in schools. A
“rental-purchase company" is defined as a person engaged in the business of
entering into rental-purchase agreements in this state or acquiring rental-purchase
agreements that are entered into in this state.
Under the bill, every rental-purchase agreement must contain certain
provisions, including the following, to the extent applicable:
1. A description of the rental property.
2. The cash price of the rental property.
3. The total amount of the rental payments necessary to acquire ownership of
the property.
4. The difference between the amount described under item 3., above, and the
cash price of the rental property.
5. The total amount of the initial payment due when the rental-purchase
agreement is executed or the rental property is delivered.
6. The rental payment necessary to renew the rental-purchase agreement.
7. An itemized description of any other charges or fees the rental-purchase
company may charge upon the occurrence of a contingency specified in the
rental-purchase agreement, such as late fees.
8. A statement of, and information related to, the lessee's early-purchase
option.
9. A statement of the lessee's responsibility in the event of theft of or damage
to the rental property.
10. A statement that, with certain exceptions, the rental-purchase company
is required to service the rental property and maintain it in good working condition.
11. A statement that the lessee may terminate the rental-purchase agreement
at any time, without penalty, by surrendering the rental property in good repair.
12. An explanation of the lessee's right to reinstate the rental-purchase
agreement.
13. A statement that the lessee will not own the rental property until the lessee
exercises an early-purchase option or makes all payments necessary to acquire
ownership.
All required provisions of a rental-purchase agreement must be clearly and
conspicuously disclosed to the lessee in the rental-purchase agreement in at least
eight-point standard type, except for certain provisions that must be disclosed in at
least ten-point boldface type. The bill also requires the rental-purchase company
to provide the lessee, or one lessee if there are multiple lessees under the same
agreement, with a copy of the executed rental-purchase agreement. The bill also
includes certain disclosure requirements for property subject to a rental-purchase
agreement if the property is not displayed or offered at a physical location that
derives 50 percent or more of its revenues from rental-purchase agreements.
The bill also prohibits the inclusion of certain provisions in a rental-purchase
agreement. The prohibited provisions include the following: 1) a confession of

judgment; 2) a provision granting the rental-purchase company permission to enter
the lessee's residence or commit a breach of the peace in repossessing the rental
property; 3) a waiver of any defense or counterclaim or any provision of the bill's
requirements; 4) a provision requiring rental payments totaling more than the total
dollar amount of all rental payments necessary to acquire ownership; and 5) a
provision requiring the lessee to purchase insurance from the rental-purchase
company to insure the rental property.
The bill allows a rental-purchase company and lessee to contract for, and allows
the rental-purchase company to charge a fee for, a liability damage waiver, but the
fee may not exceed 10 percent of the periodic rental payment. The bill imposes
various requirements with respect to such a liability damage waiver and specifies
that the waiver is not insurance.
Under the bill, a lessee may reinstate a rental-purchase agreement that has
ended without losing any rights or options previously acquired if all of the following
apply: 1) the lessee voluntarily returned or surrendered the rental property within
seven days after the expiration of the rental-purchase agreement; and 2) not more
than 120 days have passed after the date on which the rental-purchase agreement
ended. As a condition of reinstatement, the rental-purchase company may require
the payment of all past-due rental charges, any applicable late fees, the rental
payment for the next term, and a reinstatement fee not to exceed $5 or $8, depending
on the circumstances. Upon reinstatement, the rental-purchase company must
provide the lessee with the same rental property or with substitute property of
comparable quality and condition.
Under the bill, a rental-purchase company must provide the lessee with a
receipt for any payment made by the lessee in cash, or upon request, for any other
type of payment. With certain exceptions, upon the request of a lessee, a
rental-purchase company must also provide the lessee or a person the lessee
designates with a copy of the lessee's payment history. The rental-purchase
company may charge a fee if a lessee or designated person requests more than one
copy in any 12-month period.
The bill creates requirements for advertising rental-purchase transactions.
With certain exceptions, the bill requires a rental-purchase company to display a
card or tag on or next to any property offered for rent, indicating whether the
property is new or used and indicating the cash price of the property, the amount and
timing of the rental payments, and the total number and total amount of all rental
payments necessary to acquire ownership of the property. In addition, a
rental-purchase company must ensure that an advertisement for a rental-purchase
agreement that refers to the amount of a payment for a specific item of property also
states that the advertisement is for a rental-purchase agreement and that the lessee
does not acquire ownership of the property if the lessee fails to make all payments
necessary to acquire ownership. The advertisement must also include the total
number and total dollar amount of all rental payments necessary to acquire
ownership of the property.
Under the bill, a rental-purchase company that violates any of the provisions
of the bill, or any applicable rule or order of the Department of Financial Institutions,

pertaining to a lessee is liable to the lessee in an amount equal to the greater of the
following: 1) the actual damages sustained by the lessee as a result of the violation;
2) if the action is not brought as a class action, 25 percent of the total payments
necessary for the lessee to acquire ownership of the rental property, but not less than
$100 nor more than $1,000; or 3) if the action is brought as a class action, the amount
the court determines to be appropriate. However, there are two limitations on such
an award of damages. First, a rental-purchase company is not liable for any
violation if the rental-purchase company shows by a preponderance of the evidence
that the violation was not intentional and resulted from a bona fide error, and the
rental-purchase company maintained procedures reasonably adapted to avoid such
an error. Second, in a class action or series of class actions, the total recovery by all
lessees arising out of the same violation may not be more than the lesser of $500,000
or 1 percent of the net worth of the rental-purchase company. If a court awards any
monetary amount of damages to a lessee, the rental-purchase company is also liable
to the lessee for the costs of the action and reasonable attorney fees. The bill also
allows DFI to promulgate rules to administer and enforce the requirements of the
bill.
Under the bill, rental-purchase agreements entered into in compliance with
the provisions of the bill are not subject to the consumer act or to the security interest
provisions of the Uniform Commercial Code.
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:
SB637,1 1Section 1. 409.109 (4) (n) of the statutes is created to read:
SB637,4,32 409.109 (4) (n) Rental-purchase agreements entered into by a rental-purchase
3company in compliance with ch. 420.
SB637,2 4Section 2. Chapter 420 of the statutes is created to read:
SB637,4,55 CHAPTER 420
SB637,4,66 RENTAL-PURCHASE COMPANIES
SB637,4,7 7420.01Definitions. In this chapter:
SB637,5,2 8(1) “Cash price" means the price at which a rental-purchase company would
9sell rental property to the lessee of the rental property if the lessee were to pay for

1the rental property in full on the date on which the rental-purchase agreement is
2executed.
SB637,5,3 3(2) “Department" means the department of financial institutions.
SB637,5,6 4(3) “Displayed or offered primarily for rental-purchase,” with respect to rental
5property, means rental property displayed or offered at a physical location that
6derives 50 percent or more of its revenues from rental-purchase agreements.
SB637,5,10 7(4) “Rental property" means property rented under a rental-purchase
8agreement but does not include any motor vehicle, as defined in s. 340.01 (35), or any
9musical instrument that is intended to be used in whole or in part in an elementary
10school or high school.
SB637,5,13 11(5) “Rental-purchase agreement" means an agreement between a
12rental-purchase company and a lessee for the use of rental property if all of the
13following apply:
SB637,5,1514 (a) The rental property is to be used primarily for personal, family, or household
15purposes.
SB637,5,1716 (b) The agreement has an initial term of 4 months or less and is renewable with
17each payment after the initial term.
SB637,5,1918 (c) The agreement does not obligate or require the lessee to renew the
19agreement beyond the initial term.
SB637,5,2120 (d) The agreement permits, but does not obligate, the lessee to acquire
21ownership of the rental property.
SB637,5,24 22(6) “Rental-purchase company" means a person engaged in the business of
23entering into rental-purchase agreements in this state or acquiring rental-purchase
24agreements that are entered into in this state.
SB637,6,3
1420.02 General requirements of disclosure. (1) Form, location, size, and
2time of disclosure.
The information that is required to be disclosed under s. 420.03
3shall satisfy all of the following:
SB637,6,44 (a) The information shall be clearly and conspicuously disclosed.
SB637,6,55 (b) The information shall be disclosed in writing.
SB637,6,106 (c) Except as provided in par. (f), the information shall be disclosed in the
7rental-purchase agreement above the line for the lessee's signature. Multiple pages
8or backs of pages may be used as long as the final page of the rental-purchase
9agreement is signed by the lessee and other pages are signed or initialed by the
10lessee.
SB637,6,1211 (d) Except as provided in par. (f), the information shall be disclosed in not less
12than 8-point standard type.
SB637,6,1413 (e) The information shall be disclosed before the time that the lessee becomes
14legally obligated under the rental-purchase agreement.
SB637,6,1815 (f) The disclosures required by s. 420.03 (2), (3), (4), and (5) shall be printed in
16at least 10-point boldface type on the face of the rental-purchase agreement, and
17shall be grouped together in a box, in the form and order prescribed by the
18department.
SB637,6,23 19(2) Accuracy of disclosure. The information required under s. 420.03 must
20be accurate as of the time that it is disclosed to the lessee. If any information
21subsequently becomes inaccurate as a result of any act, occurrence, or agreement by
22the lessee, the resulting inaccuracy is not a violation of any provision of this chapter
23relating to rental-purchase agreements.
SB637,7,3 24(3) Copy of rental-purchase agreement. The rental-purchase company shall
25provide the lessee with a copy of the completed rental-purchase agreement signed

1by the lessee. If more than one lessee is legally obligated under the same
2rental-purchase agreement, delivery of a copy of the completed rental-purchase
3agreement to one of the lessees shall satisfy this subsection.
SB637,7,6 4420.03 Required provisions of rental-purchase agreement. A
5rental-purchase company shall include all of the following information, to the extent
6applicable, in every rental-purchase agreement:
SB637,7,11 7(1) Description. A brief description of the rental property, sufficient to identify
8the rental property to the lessee and the rental-purchase company, including any
9identification number, and a statement indicating whether the rental property is
10new or used. A statement that new rental property is used shall not be a violation
11of this chapter.
SB637,7,12 12(2) Cash price. The cash price of the rental property.
SB637,7,16 13(3) Rental payments to acquire ownership. The total number, total dollar
14amount, and timing of all rental payments necessary to acquire ownership of the
15rental property, excluding any applicable taxes, application or processing charge,
16delivery fee, liability damage waiver fee, and fees for optional services.
SB637,7,23 17(4) Cost of rental services. The difference between the total dollar amount
18of payments necessary to acquire ownership of the rental property disclosed under
19sub. (3) and the cash price of the property disclosed under sub. (2). The
20rental-purchase company shall also include a statement substantially similar to the
21following: “The cost of rental services is the amount you will pay in addition to the
22cash price if you acquire ownership of the rented goods by making all payments
23necessary to acquire ownership."
SB637,8,3
1(5) Periodic renewal payment. The rental payment necessary to renew the
2rental-purchase agreement, not including any applicable taxes and fees for optional
3services to which the lessee agrees.
SB637,8,8 4(6) Initial payment. The total amount of the initial payment to be made by the
5lessee at the time that the rental-purchase agreement is executed or the rental
6property is delivered, including the initial rental payment, any application or
7processing charge, any delivery fee, and fees for other optional services to which the
8lessee agrees.
SB637,8,11 9(7) Other charges. An itemized description of any other charges or fees that
10the rental-purchase company may charge upon the occurrence of a contingency
11specified in the rental-purchase agreement, such as late fees.
SB637,8,16 12(8) Summary of early-purchase option. A statement that the lessee has an
13early purchase option to purchase the property at any time during the period that
14the rental-purchase agreement is in effect. The statement must specify the price or
15the formula or other method for determining the price at which the property may be
16purchased.
SB637,8,22 17(9) Responsibility for theft or damage. A statement that, unless otherwise
18agreed, in the event the rental property is stolen, damaged, or destroyed while in the
19possession of, or subject to the control of, the lessee, the lessee is responsible for an
20amount equal to the lesser of the amount required to exercise the early-purchase
21option as provided in sub. (8) or 55 percent of the scheduled remaining periodic
22payments, but in no event in an amount greater than the cash price.
SB637,9,6 23(10) Service and warranty. A statement that, during the term of the rental-
24purchase agreement, the rental-purchase company is required to service the rental
25property and maintain it in good working condition, as long as no other person has

1serviced the rental property. In lieu of servicing the rental property, the
2rental-purchase company may, at its option, replace the rental property with
3substitute property of comparable quality and condition. The rental-purchase
4company's obligation to provide service is limited to defects in the property not
5caused by improper use or neglect by the lessee or harmful conditions outside the
6control of the rental-purchase company or manufacturer.
SB637,9,9 7(11) Termination at option of lessee. A statement that the lessee may
8terminate the agreement at any time without penalty by voluntarily surrendering
9or returning the rental property in good repair.
SB637,9,11 10(12) Right to reinstate. A brief explanation of the lessee's right to reinstate
11a rental-purchase agreement under s. 420.06.
SB637,9,16 12(13) Rental, not purchase. A statement reading substantially as follows: “You
13are renting this property. You will not own the property until you make all payments
14necessary to acquire ownership or until you exercise your early-purchase option. If
15you do not make your payments as scheduled or exercise your early-purchase option,
16the rental-purchase company is entitled to immediate possession of the property."
SB637,9,20 17(14) Information about rental-purchase company and lessee. The names of
18the rental-purchase company and the lessee, the rental-purchase company's
19business address and telephone number, the lessee's address, and the date on which
20the rental-purchase agreement is executed.
SB637,9,25 21(15) Optional services. Space for a specific, separately signed or initialed,
22affirmative, written indication of the lessee's desire for any optional service for which
23a charge is assessed. The lessee's request must be obtained after a written disclosure
24of the cost of the optional service is made, and the disclosure of the cost and purpose
25of such service must be listed at or near the affirmation space. This requirement is

1satisfied by a separate written agreement for an optional service that meets the
2requirements of this subsection.
SB637,10,4 3420.04 Prohibited provisions of rental-purchase agreements. A
4rental-purchase agreement may not contain any of the following:
SB637,10,5 5(1) Confession. A confession of judgment.
SB637,10,10 6(2) Repossession. A provision authorizing a rental-purchase company, or an
7agent of the rental-purchase company, to enter the lessee's residence without the
8lessee's permission, or to commit a breach of the peace in the repossession of rental
9property provided by the rental-purchase company under the rental-purchase
10agreement.
SB637,10,14 11(3) Waiver. A waiver of a defense or counterclaim, a waiver of any right to
12assert any claim that the lessee may have against the rental-purchase company or
13an agent of the rental-purchase company, or a waiver of any provision of this chapter
14relating to rental-purchase agreements.
SB637,10,17 15(4) Overpayment. A provision requiring rental payments totaling more than
16the total dollar amount of all rental payments necessary to acquire ownership, as
17disclosed in the rental-purchase agreement.
SB637,10,19 18(5) Insurance. A provision requiring the lessee to purchase insurance from the
19rental-purchase company to insure the rental property.
SB637,10,24 20420.05 Disclosures for certain rental-purchase agreements. (1)
21Disclosure for property not displayed or offered primarily for rental-purchase.
22When property that is not displayed or offered primarily for rental-purchase is
23offered for rental-purchase, all of the following shall be separately disclosed prior to
24displaying or presenting a rental-purchase agreement to a lessee for execution:
SB637,10,2525 (a) The cash price of the property.
SB637,11,1
1(b) The amount of the periodic renewal payment.
SB637,11,32 (c) The total dollar amount of all periodic rental payments necessary to acquire
3ownership if the lessee makes all scheduled payments.
SB637,11,9 4(2) Additional disclosures for property not displayed or offered primarily
5for rental-purchase.
In addition to the disclosures required by s. 420.03, if the
6property that is the subject of a rental-purchase agreement was not displayed or
7offered primarily for rental-purchase prior to the rental-purchase transaction, all
8of the following additional disclosures shall be made on a separate page titled
9“Acknowledgment of Rental-Purchase Transaction” and signed by the lessee:
SB637,11,1210 (a) The agreement is a rental-purchase agreement and the lessee does not own
11the property, but can obtain ownership by using ownership options provided in the
12agreement.
SB637,11,1313 (b) The agreement is not a credit transaction.
SB637,11,1614 (c) The lessee has the right to return the property to the lessor without
15additional charge or penalty at any time and will owe nothing further except unpaid
16rental charges and fees.
SB637,11,1917 (d) If the lessee returns the property, the agreement offers reinstatement rights
18that allow the lessee to get the property back if the lessee has complied with the
19agreement and the law.
SB637,11,2120 (e) The lessee has reviewed and understands the agreement, including the
21purchase option rights and the total cost if all scheduled payments are made.
SB637,11,25 22420.06 Reinstatement of a rental-purchase agreement. (1)
23Reinstatement generally. Subject to sub. (2), a lessee may reinstate a
24rental-purchase agreement that has ended without losing any rights or options
25previously acquired if all of the following apply:
SB637,12,2
1(a) The lessee voluntarily returned or surrendered the rental property within
27 days after the expiration of the rental-purchase agreement.
SB637,12,43 (b) Not more than 120 days have passed after the date on which the
4rental-purchase agreement ended.
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