Chapter 421

421.106 Annotation The holding in Concepcion, 563 U.S. 333 (2011), is clear: the Federal Arbitration Act preempts any state law, including sub. (1) and s. 426.110 (1), that classifies an arbitration agreement as unconscionable, and therefore unenforceable, simply because the agreement prohibits an individual from proceeding as a member of a class. Accordingly, under Concepcion, the waiver of classwide proceedings in the borrower’s arbitration agreement with the payday lender did not render the agreement substantively unconscionable. Cottonwood Financial, LTD v. Estes, 2012 WI App 12, 339 Wis. 2d 472, 810 N.W.2d 852, 09-0760.

421.107 421.107 Effect of chapters 421 to 427 on powers of organizations.

421.107(1) (1) Except as specifically provided, chs. 421 to 427 prescribe maximum charges for all consumer credit transactions and displace existing limitations on the powers of creditors based on maximum charges.

421.107(2) (2) Except as specifically provided, with respect to sellers of goods or services, lessors of goods, small loan companies, licensed lenders, consumer and sales finance companies and commercial banks and trust companies, chs. 421 to 427 displace existing limitations on their powers based solely on amount or duration of credit.

421.107(3) (3) Except as provided in sub. (1), chs. 421 to 427 do not displace limitations on powers of credit unions, savings banks, savings and loan associations or other thrift institutions whether organized for the profit of shareholders or as mutual organizations.

421.107(4) (4) Except as provided in subs. (1) and (2), chs. 421 to 427 do not displace:

421.107(4)(a) (a) Limitations on powers of supervised financial organizations (s. 421.301 (43)), with respect to the amount of a loan to a single borrower, the ratio of a loan to the value of collateral, the duration of a loan secured by an interest in land or other similar restrictions designed to protect deposits; or

421.107(4)(b) (b) Limitations on powers an organization is authorized to exercise under the laws of this state or the United States.

421.107 History History: 1971 c. 239; 1979 c. 89.

421.108 421.108 Obligation of good faith. Every agreement or duty within chs. 421 to 427 imposes an obligation of good faith in its performance or enforcement. “Good faith” means honesty in fact in the conduct or transaction concerned and the observance of reasonable commercial standards of fair dealing.

421.108 History History: 1971 c. 239; 1979 c. 89.

421.108 Annotation Under this section, parties are obligated to act in good faith in the performance or enforcement of an agreement subject to the Wisconsin Consumer Act and to the performance or enforcement of a provision of the Act. Further, the honesty-in-fact requirement is violated when a party lacks an honest intention to abstain from taking unfair advantage of another by activities that render the transaction unfair, and the fair-dealing requirement is violated when a party does not observe reasonable commercial standards of fair dealing, which contemplates the application of an objective set of standards. CreditBox.com, LLC v. Weathers, 2023 WI App 37, 408 Wis. 2d 715, 993 N.W.2d 802, 22-0746.

subch. II of ch. 421 SUBCHAPTER II

SCOPE AND JURISDICTION

421.201 421.201 Territorial application.

421.201(1) (1) Except as otherwise provided in this section, chs. 421 to 427 apply to consumer transactions made in this state and to modifications including refinancings, consolidations and deferrals, made in this state, of consumer credit transactions wherever made.

421.201(2) (2) For the purposes of chs. 421 to 427, a consumer transaction or modification of a consumer transaction is made in this state if:

421.201(2)(a) (a) A writing signed by the customer and evidencing the obligation or an offer of the customer is received by the merchant in this state; or

421.201(2)(b) (b) The merchant induces the customer who is a resident of this state to enter into the transaction by face-to-face solicitation or by mail or telephone solicitation directed to the particular customer in this state.

421.201(3) (3) With respect to a transaction pursuant to an open-end credit plan, chs. 421 to 427 apply if the customer is a resident of this state and the open-end creditor or a merchant honoring a credit card issued by the open-end creditor, is a resident of this state or furnishes, mails or delivers the goods, services or credit to a resident of this state while the customer is within this state or receives a writing signed by the customer and evidencing the transaction in this state.

421.201(4) (4) Chapter 427 applies to any debt collection activity in this state, including debt collection by means of mail or telephone communications directed to customers in this state.

421.201(5) (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 or goods subject to a motor vehicle consumer lease are located at the time of recovery unless the collateral or goods subject to a motor vehicle consumer lease are owned by a Wisconsin resident, who has removed 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.

421.201(6) (6) If a consumer transaction, or modification thereof, is made in another state with a customer who is a resident of this state when the transaction or modification is made, the following provisions apply as though the transaction occurred in this state:

421.201(6)(a) (a) A creditor, or assignee of the creditor’s rights, may collect through actions or other proceedings charges only to the extent permitted by ch. 422; and

421.201(6)(b) (b) A merchant may not enforce rights against the customer to the extent that the provisions of the agreement violate subch. IV of ch. 422 or ch. 423.

421.201(7) (7) Except as provided in sub. (4) or (5), a consumer transaction or modification thereof, made in another state with a customer who was not a resident of this state when the consumer transaction or modification was made, is valid and enforceable in this state according to its terms to the extent that it is valid and enforceable under the laws of the state applicable to the transaction.

421.201(8) (8) For the purposes of chs. 421 to 427, the residence of a customer is the address given by the customer as his or her residence in any writing signed by the customer in connection with a consumer transaction. The given address is presumed to be unchanged until the merchant knows or has reason to know of a new or different address.

421.201(9) (9) Notwithstanding other provisions of this section:

421.201(9)(a) (a) Except as provided in sub. (4) or (5), chs. 421 to 427 do not apply if the customer is not a resident of this state at the time of a consumer transaction and the parties then agree that the law of his or her residence applies; and

421.201(9)(b) (b) Chapters 421 to 427 apply if the customer is a resident of this state at the time of a consumer transaction and the parties then agree that the law of this state applies.

421.201(10) (10) Except as provided in sub. (9), the following terms of a writing executed by a customer are invalid with respect to consumer transactions, or modifications thereof, to which chs. 421 to 427 apply:

421.201(10)(a) (a) That the law of another state shall apply;

421.201(10)(b) (b) That the customer consents to the jurisdiction of another state; and

421.201(10)(c) (c) That fixes venue.

421.201 History History: 1971 c. 239; 1975 c. 407, 421; 1979 c. 89; 1991 a. 316; 1995 a. 329.

421.201 Annotation Notwithstanding sub. (5), s. 425.206 governed repossession outside of the state when a contract provided for enforcement under the “internal law” of Wisconsin. First Wisconsin National Bank of Madison v. Nicolaou, 85 Wis. 2d 393, 270 N.W.2d 582 (Ct. App. 1978).

421.201 Annotation Sub. (10) (a) bars any provision mandating application of the law of another state with respect to a consumer transaction to which chs. 421 to 427 apply. All of chs. 421 to 427 need not be applicable for the choice-of-law prohibition to apply. As long as some portion of the Wisconsin Consumer Act is applicable, no choice-of-law provisions are effective. Credit Acceptance Corp. v. Kong, 2012 WI App 98, 344 Wis. 2d 259, 822 N.W.2d 506, 11-0476.

421.201 Annotation A corporation that repossessed the vehicle outside of the state was not subject to the Wisconsin police power. Patrin v. Chrysler Credit Corp., 530 F. Supp. 736 (1982).

421.201 Annotation The Wisconsin Consumer Act: Territorial Considerations. Anzivino. 96 MLR 833 (2013).

421.201 Annotation The Wisconsin Consumer Act: Consumer Credit Sales, Consumer Leases, Open-End Credit Plans, and Exclusions. Anzivino. 97 MLR 55 (2013).

421.202 421.202 Exclusions. Chapters 421 to 427 do not apply to any of the following:

421.202(1) (1) Extensions of credit to organizations (s. 421.301 (28)).

421.202(2) (2) Transactions in which all parties are organizations (s. 421.301 (28)).

421.202(3) (3) Charges for delayed payment and any discount allowed for early payment in transactions under public utility or common carrier tariffs if a subdivision or agency of this state or of the United States regulates such charges or discounts, or if such charges or discounts are made in connection with the furnishing of electric service by an electric cooperative organized and operating on a nonprofit basis under ch. 185.

421.202(4) (4) The ceilings on rates and charges of a licensed pawnbroker if these ceilings are established by statute or ordinance.

421.202(5) (5) The sale of insurance by an insurer, except as otherwise provided in ch. 424.

421.202(6) (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.

421.202(7) (7) Transactions secured by a first lien real estate mortgage or equivalent security interest.

421.202(8) (8) Transactions in securities accounts or securities transactions by or with a broker-dealer, as defined in s. 551.102 (4), registered under ch. 551.

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

421.202(10) (10) Transactions that are primarily for an agricultural purpose, except that this subsection does not exclude transactions that are primarily for an agricultural purpose from ch. 427 and except that this subsection does not exclude credit transactions that are primarily for an agricultural purpose from s. 422.210.

421.202 History History: 1971 c. 239; 1973 c. 18; 1975 c. 207; 1979 c. 89; 1995 a. 329; 1997 a. 302; 2005 a. 215; 2007 a. 196.

421.202 Annotation Consumer leases are subject to the exclusionary provision of sub. (6). “Amount financed” means the purchase price or cash price for property leased. American Industrial Leasing Co. v. Geiger, 118 Wis. 2d 140, 345 N.W.2d 527 (Ct. App. 1984).

421.203 421.203 Partial exclusion for governmentally insured or guaranteed transactions.

421.203(1) (1) Consumer credit transactions, not governed by ch. 428, which are made, insured or guaranteed by the federal government or any agency thereof, or by any federal instrumentality chartered under the federal farm credit act of 1971 (P.L. 92-181; 85 stats. 583; 12 USC 2001 et seq.), or by the department of veterans affairs shall be subject to only those provisions set forth in sub. (2).

421.203(2) (2) This chapter, ss. 422.203 (2), 422.305, 422.306, 422.404, 422.406 to 422.409, 422.411, 422.417 and 422.418, ch. 425 except ss. 425.103 to 425.105, and chs. 426 and 427.

421.203 History History: 1973 c. 18; 1979 c. 10; 1997 a. 302; 2005 a. 22.

subch. III of ch. 421 SUBCHAPTER III

DEFINITIONS

421.301 421.301 General definitions. In addition to definitions appearing in chs. 422 to 427, in chs. 421 to 427:

421.301(1) (1) “Actuarial method” means the method, defined by rules adopted by the administrator, of allocating payments made on a debt between amount financed and finance charge, pursuant to which a payment is applied first to the accumulated finance charge and the balance is applied to the unpaid amount financed.

421.301(2) (2) “Administrator” means the administrator designated in s. 426.103.

421.301(3) (3) “Agreement” means the bargain of the parties in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade or course of performance. Sections 402.202 and 411.202 and any other provisions on parol or extrinsic evidence shall be inoperative to exclude or limit the admissibility of evidence relating to agreements governed by chs. 421 to 427.

421.301(4) (4) “Agricultural purpose” means a purpose related to the production, harvest, exhibition, marketing, transportation, processing or manufacture of agricultural products by a person, other than an organization, which cultivates, plants, propagates or nurtures those agricultural products. “Agricultural products” includes agricultural, horticultural, viticultural and dairy products, livestock, wildlife, poultry, bees, forest products, fish and shellfish, and any products thereof, including processed and manufactured products, and any and all products raised or produced on farms and any processed or manufactured products thereof.

421.301(5) (5) “Amount financed” in a consumer credit transaction means the total of the following items from which any prepaid finance charge or required deposit balance has been excluded:

421.301(5)(a) (a) In a consumer credit sale, the cash price of the real or personal property or services, less the amount of any down payment whether made in cash or in property traded in, or, in a consumer loan, the amount paid to, receivable by or paid or payable to the customer or to another person in the customer’s behalf;

421.301(5)(b) (b) In a consumer credit sale, the amount actually paid or to be paid by the creditor pursuant to an agreement with the customer to discharge a security interest in or a lien on property traded in; and

421.301(5)(c) (c) To the extent not included in par. (a) or (b):

421.301(5)(c)1. 1. Any applicable sales, use, excise or documentary stamp taxes;

421.301(5)(c)2. 2. Amounts actually paid or to be paid by the creditor for registration, certificate of title or license fees; and

421.301(5)(c)3. 3. Additional charges permitted by s. 422.202.

421.301(6) (6) “Business day” means any calendar day except Saturday and Sunday, and except the following business holidays: New Year’s Day, Martin Luther King Jr.’s Birthday, Washington’s Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving and Christmas.

421.301(7) (7) “Cash price” means the price at which property or services are offered, in the ordinary course of business, for sale for cash, and may include:

421.301(7)(a) (a) The cash price of accessories or services related to the sale such as delivery, installation, alterations, modifications and improvements; and

421.301(7)(b) (b) Taxes, to the extent imposed on the cash sale.

421.301(8) (8) “Conspicuous” means that the term or clause is so written that a reasonable person against whom it is to operate ought to have noticed it. Whether a term or clause is conspicuous or not is for decision by the court.

421.301(9) (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.

421.301(10) (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.

421.301(11) (11) “Consumer lease” means a lease of goods which a merchant makes to a customer for a term exceeding 4 months.

421.301 Cross-reference Cross-reference: See also s. DFI-WCA 1.05, Wis. adm. code.

421.301(12) (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.

421.301(13) (13) “Consumer transaction” means a transaction in which one or more of the parties is a customer for purposes of that transaction.

421.301(14) (14) “Credit” means the right granted by a creditor to a customer to defer payment of debt, to incur debt and defer its payment or to purchase goods, services or interests in land on a time price basis.

421.301(15) (15) “Credit card” means any card, plate, merchandise certificate, letter of credit, coupon book or other like credit device existing for the purpose of obtaining money, property, labor or services on credit pursuant to an open-end credit plan.

421.301(16) (16) “Creditor” means a merchant who regularly engages in consumer credit transactions or in arranging for the extension of consumer credit by or procuring consumer credit from 3rd persons.

421.301(17) (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. 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.

421.301 Cross-reference Cross-reference: See also s. DFI-WCA 1.06, Wis. adm. code.

421.301(18) (18) “Earnings” means compensation paid or payable to an individual or for the individual’s account for personal services rendered or to be rendered by the individual, whether denominated as wages, salary, commission, bonus or otherwise, and includes periodic payments pursuant to a pension, retirement or disability program. “Earnings” does not include renewal commissions payable to a licensed insurance agent.

421.301(19) (19) “Federal consumer credit protection act” means the consumer credit protection act (P.L. 90-321; 82 Stat. 146), as amended, and includes regulations issued pursuant to that act.