Chapter 422

422.306 History History: 1971 c. 239; 1991 a. 316; 2013 a. 66.

422.306 Cross-reference Cross-reference: See also s. DFI-WCA 1.36, Wis. adm. code.

422.307 422.307 Estimates or approximations. If at the time disclosures must be made, an amount or other item of information required to be disclosed or needed to determine a required disclosure is unknown or not available to the creditor, and a reasonable effort has been made to ascertain it, the creditor may use an estimated amount or approximation of the information, if:

422.307(1) (1) The estimate or approximation is clearly identified as such, is reasonable and is based on the best information available to the creditor; and

422.307(2) (2) The estimate or approximation is not used for the purpose of circumventing or evading the disclosure requirements of this subchapter.

422.307 History History: 1971 c. 239.

422.308 422.308 Open-end credit disclosures.

422.308(1) (1) With regard to every open-end credit plan between a creditor, wherever located, and a customer who is a resident of this state and who is applying for the open-end credit plan from this state, every application for the open-end credit plan, including every application contained in an advertisement, shall be appropriately divided and captioned by its various sections and shall set forth all of the following:

422.308(1)(a) (a) The annual percentage rate or, if the rate may vary, a statement that it may do so and of the circumstances under which the rates may increase, any limitations on the increase and the effects of the increase.

422.308(1)(b) (b) The date or occasion upon which the finance charge begins to accrue on a transaction.

422.308(1)(c) (c) Whether any annual fee is charged and the amount of the fee.

422.308(1)(d) (d) Whether any other charges or fees may be charged, what they may be charged for and the amounts of the charges or fees.

422.308(2) (2) With regard to every open-end credit plan between a creditor, wherever located, and a customer who is a resident of this state and who is given the opportunity to enter into an open-end credit plan while present in any establishment located in this state but who is not required to complete an application under sub. (1), the customer shall be given a notice prior to entering into the open-end credit plan. The notice shall be appropriately divided and captioned by its various sections and shall set forth all of the information in sub. (1) (a) to (d).

422.308(3) (3) The administrator shall publish an annual creditors’ noncompliance report on November 1. The report shall set forth the names of creditors that the administrator knows, or reasonably believes, to have violated this section during the preceding 12 months, unless the administrator knows or reasonably believes that the violation or violations were the result of unintentional good faith error.

422.308(4) (4) A violation of this section is subject to s. 425.304 unless the violation was the result of an unintentional good faith error.

422.308(5) (5) If any part of this section is found unconstitutional with regard to a creditor solely or in any part because the creditor is located outside of this state, that part of this section shall not apply to any creditor located within this state.

422.308 History History: 1985 a. 244.

422.308 Annotation When a merchant first informed the customer of 24 percent interest to be charged on an open account in statements of the account provided after the account was opened, s. 422.302 and subs. (1) and (2) were violated and the merchant was only entitled to interest under s. 138.04. Severson Agri-Service, Inc. v. Lander, 172 Wis. 2d 269, 493 N.W.2d 230 (Ct. App. 1992).

422.310 422.310 Refund anticipation loans.

422.310(1) (1) In addition to any other requirements under this subchapter, a creditor shall disclose all of the following in writing to a customer on a form that is signed by the customer before the customer enters into a refund anticipation loan:

422.310(1)(a) (a) Any refund anticipation loan fees.

422.310(1)(b) (b) Any charge or fee for electronically filing an income tax return.

422.310(1)(c) (c) The total dollar amount of all charges and fees under pars. (a) and (b).

422.310(1)(d) (d) The anticipated length of time, within 2 business days, by which the customer will receive the refund anticipation loan proceeds.

422.310(1)(e) (e) That the customer may electronically file an income tax return without obtaining a refund anticipation loan.

422.310(1)(f) (f) The anticipated length of time within which the customer could reasonably expect to receive a tax refund if the income tax return is filed electronically and the customer does not request a refund anticipation loan.

422.310(1)(g) (g) That the customer is responsible for repayment of the refund anticipation loan and refund anticipation loan fees even if the income tax refund is not paid or is paid in a lower amount than was anticipated.

422.310(1)(h) (h) The estimated annual percentage rate, based on the size of the refund anticipation loan, the refund anticipation loan fees and the anticipated maturity date of the refund anticipation loan. The anticipated maturity date shall be the date disclosed under par. (f).

422.310(2) (2) A creditor may not impose a different fee or charge for electronically filing an income tax return on a customer who obtains a refund anticipation loan than the creditor imposes on a customer who does not obtain a refund anticipation loan.

422.310(3) (3) A violation of this section is subject to s. 425.304.

422.310 History History: 1993 a. 111.

subch. IV of ch. 422 SUBCHAPTER IV

LIMITATIONS ON AGREEMENTS AND PRACTICES

422.401 422.401 Scope. This subchapter applies to consumer credit transactions.

422.401 History History: 1971 c. 239.

422.403 422.403 Maximum periods of repayment.

422.403(1) (1) With respect to a consumer credit transaction other than one pursuant to an open-end credit plan or one pursuant to s. 138.09, no merchant shall initially schedule payments to be paid in full:

422.403(1)(a) (a) Over a period of more than 25 months if the total of payments is $700 or less;

422.403(1)(b) (b) Over a period of more than 37 months if the total of payments is more than $700, but does not exceed $1,400; or

422.403(1)(c) (c) Over a period of more than 49 months if the total of payments is more than $1,400, but does not exceed $2,000, unless the transaction is for the acquisition of or substantial improvement to real property in which case such period shall not exceed 61 months.

422.403(2) (2) With respect to a consumer credit transaction other than one pursuant to an open-end credit plan or one pursuant to s. 138.09, which is for the purpose of an improvement to real property and in which the annual percentage rate disclosed under subch. III is 15 percent or less, no merchant may initially schedule payments to be paid in full:

422.403(2)(a) (a) Over a period of more than 25 months if the total of payments is $300 or less;

422.403(2)(b) (b) Over a period of more than 48 months if the total of payments is more than $300, but does not exceed $1,000; or

422.403(2)(c) (c) Over a period of more than 60 months if the total of payments is more than $1,000, but does not exceed $2,000.

422.403(3) (3) The periods specified in subs. (1) and (2) shall commence with the date of first payment or when the finance charge begins to accrue, whichever is earlier.

422.403(4) (4) This section shall not apply to loans made, guaranteed or funded by federal or state agencies and loans made, guaranteed or funded by nonprofit educational institutions or foundations qualifying under section 501 (c) (3) of the internal revenue code, for purposes of post-high school education.

422.403(4m) (4m) This section does not apply to loans made by an administrative agency within the executive branch established under ch. 15.

422.403(5) (5) Taking or arranging for the customer to sign an instrument in violation of this section is subject to s. 425.304.

422.403 History History: 1971 c. 239; 1973 c. 3, 4, 243; 1981 c. 20, 391.

422.404 422.404 Assignment of earnings.

422.404(1) (1) No merchant shall take or arrange for an assignment of earnings of the customer for payment or as security for payment of an obligation arising out of a consumer transaction unless such assignment is revocable at will by the customer.

422.404(2) (2) A revocable assignment of earnings made as payment or as security for payment of an obligation arising out of a consumer credit transaction, which would otherwise expire under s. 241.09, shall be deemed to be renewed for a term not to exceed 6 months if:

422.404(2)(a) (a) The original authorization contained a conspicuous notice of the customer’s right to revoke;

422.404(2)(b) (b) Prior to expiration, the merchant mails a notice to the customer which conspicuously states that the assignment of earnings is revocable, and that it shall continue to run for not more than 6 additional months, unless the merchant receives notice of revocation; and

422.404(2)(c) (c) The customer does not revoke the assignment.

422.404(3) (3) A violation of this section is subject to s. 425.304.

422.404 History History: 1971 c. 239; 1973 c. 3.

422.405 422.405 Authorization to confess judgment prohibited.

422.405(1) (1) No merchant shall take or accept from the customer a warrant or power of attorney or other authorization for the creditor, or other person acting on the creditor’s behalf, to confess judgment.

422.405(2) (2) A violation of this section is subject to s. 425.305.

422.405 History History: 1971 c. 239; 1991 a. 316.

422.406 422.406 Negotiable instruments.

422.406(1) (1) In a consumer credit sale or lease transaction, no seller or lessor shall take a negotiable instrument (s. 403.104), other than a check, as evidence of the obligation of the customer.

422.406(2) (2) In a consumer loan transaction which constitutes an interlocking loan (s. 422.408), no creditor shall take a negotiable instrument (s. 403.104), other than a check, as evidence of the obligation of the customer.

422.406(3) (3) The holder to whom an instrument issued in violation of this section is negotiated, notwithstanding that the holder may otherwise be a holder in due course of such instrument, is subject to all claims and defenses of the customer against the payee, subject to sub. (4).

422.406(4) (4) Such holder’s liability under this section is limited to:

422.406(4)(a) (a) The amount owing to the holder on such instrument at the time the holder receives notice of a claim or defense of the customer against such payee; plus

422.406(4)(b) (b) If the customer has obtained a judgment against such payee and execution with bond is issued within one year after judgment and is returned unsatisfied, the amount paid by the customer to the holder before the holder received notice of the claim or defense of the customer, if such claim is made against the holder within 2 years after such judgment is returned unsatisfied. Any judgment against the payee, other than a default judgment, shall be binding on the holder.

422.406(5) (5) Taking or arranging for the customer to sign an instrument in violation of this section is subject to s. 425.304.

422.406 History History: 1971 c. 239; 1973 c. 2; 1991 a. 316.

422.407 422.407 Defenses assertable against an assignee.

422.407(1) (1) With respect to a consumer credit transaction other than a consumer loan which is not an interlocking consumer loan (s. 422.408), an assignee of the rights of a creditor is subject to all claims and defenses of the customer against the assignor arising out of the transaction notwithstanding an agreement to the contrary, subject to sub. (2).

422.407(2) (2) An agreement by the customer not to assert against an assignee a claim or defense arising from a consumer credit transaction is enforceable only by an assignee not related to the assignor who acquires the customer’s contract in good faith and for value, who gives the customer notice of the assignment as provided in s. 422.409 and who, within 12 months after the mailing of the notice of assignment, has not received notice of the customer’s claim or defense. In the event that such assignee further assigns the customer’s obligation to another party not related to the original assignor, in good faith and for value, such party may enforce an agreement by the customer not to assert claims or defenses, only to the extent that that party’s assignor could do so under this section, and any notice by the customer to the original or subsequent assignees is effective as to such party. Such good faith assignee’s liability under this section is limited to:

422.407(2)(a) (a) The amount owing to the assignee with respect to the consumer credit transaction at the time the assignee received notice of a claim or defense of the customer against the assignor; plus

422.407(2)(b) (b) If the customer has obtained a judgment against the assignor and execution with bond is issued within one year after judgment and is returned unsatisfied, the amount paid by the customer to the assignee before the assignee received notice of the claim or defense of the customer, if such claim is made against the assignee within 2 years after execution is returned unsatisfied. Any judgment against the assignor, other than a default judgment, shall be binding on the assignee.

422.407(2m) (2m) 

422.407(2m)(a) (a) In the event that an assignee, who is related to the assignor or who takes the assignment not in good faith or not for value, further assigns the customer’s obligation to a subsequent assignee not related to any prior assignor and who takes the assignment in good faith and for value, such subsequent assignee’s liability is limited to that provided for in sub. (2) if the subsequent assignee’s assignor at the time of the assignment to the subsequent assignee gives the notice required in s. 422.409 (2), subject to par. (b).

422.407(2m)(b) (b) The notice given under s. 422.409 (2) need not name the subsequent assignee. In such cases it shall state that payments may be made to the assignor, and shall otherwise comply with the requirements of s. 422.409 (2).

422.407(3) (3) Any assignee does not acquire a customer’s contract in good faith within the meaning of subs. (2) and (2m) if the assignee has knowledge, including knowledge from his or her course of dealing with other customers of the assignor or from the assignor or the assignee’s records, or written notice of violations of chs. 421 to 427, of conduct of the kind described in s. 426.108, or of substantial complaints by such other customers that such assignor fails or refuses to perform his or her contracts with such customers and fails to remedy their complaints.

422.407(4) (4) No term of an agreement may confer upon an assignee greater immunity from claims and defenses of the customer against the assignor than is permitted in this section. No term of an agreement purporting to waive defenses against an assignee is enforceable unless the agreement makes conspicuous reference to this section and to the customer’s right to assert such claim or defense against an assignee within 12 months after being furnished a notice of assignment.

422.407(5) (5) Except where execution with bond is returned unsatisfied under sub. (2) (b) or where the assignor is in bankruptcy, receivership or other insolvency proceedings or cannot be found within the state, any claims or defenses of the customer under this section can only be asserted as a matter of counterclaim, defense to or set-off against a claim by the assignee.

422.407(6) (6) Taking or arranging for the customer to sign an instrument in violation of this section is subject to s. 425.304.

422.407 History History: 1971 c. 239; 1973 c. 3; 1979 c. 89; 1991 a. 316.

422.407 Annotation Legislative Council Note, 1973: Sections 39, 40 and 41 revise s. 422.407 so that it accomplishes its intended purpose, which is to enable a good faith assignee of a customer’s contract, and his good faith assignees, to enforce an agreement by the customer not to raise claims and defenses against assignees of the contract, once 12 months have passed following the initial good faith assignment.

422.407 Annotation New s. 422.407 (2m), created by this act, accomplishes the same result in those cases where the first assignment is made to a related assignee, who further assigns the contract to an unrelated good faith assignee. This latter arrangement is not dealt with by present s. 422.407. New (2m) also recognizes existing business patterns in that it allows the related assignee to service an account, although the contract has been further assigned to an unrelated good faith assignee. In these cases the good faith assignee receives the protection of this section, provided the customer has been given the required notice of assignment. [Bill 432-A]

422.408 422.408 Interlocking loans.

422.408(1) (1) The lender in an interlocking consumer loan is subject to the claims and defenses the consumer may have against the seller or lessor in the consumer transaction for which the proceeds of the loan are used, subject to sub. (3).

422.408(2) (2) For purposes of this section, a consumer transaction pursuant to a seller credit card shall be deemed to be a consumer loan transaction if the transaction is other than a purchase or lease of goods or services from the issuer of the seller credit card, from a person related to such issuer or from others licensed or franchised to do business solely under the business or trade name or designation of such issuer.

422.408(3) (3) For purposes of this section, a consumer loan transaction is an “interlocking consumer loan” if the creditor knows or has reason to know that all or a meaningful part of the proceeds of the loan are used to pay all or part of the customer’s obligations to the seller or lessor under a consumer sale or lease, and if: