Chapter 425

425.107(2) (2) Specific practices forbidden by the administrator in rules promulgated pursuant to s. 426.108 shall be presumed to be unconscionable.

425.107(3) (3) Without limiting the scope of sub. (1), the court may consider, among other things, the following as pertinent to the issue of unconscionability:

425.107(3)(a) (a) That the practice unfairly takes advantage of the lack of knowledge, ability, experience or capacity of customers;

425.107(3)(b) (b) That those engaging in the practice know of the inability of customers to receive benefits properly anticipated from the goods or services involved;

425.107(3)(c) (c) That there exists a gross disparity between the price of goods or services and their value as measured by the price at which similar goods or services are readily obtainable by other customers, or by other tests of true value;

425.107(3)(d) (d) That the practice may enable merchants to take advantage of the inability of customers reasonably to protect their interests by reason of physical or mental infirmities, illiteracy or inability to understand the language of the agreement, ignorance or lack of education or similar factors;

425.107(3)(e) (e) That the terms of the transaction require customers to waive legal rights;

425.107(3)(f) (f) That the terms of the transaction require customers to unreasonably jeopardize money or property beyond the money or property immediately at issue in the transaction;

425.107(3)(g) (g) That the natural effect of the practice would reasonably cause or aid in causing customers to misunderstand the true nature of the transaction or their rights and duties thereunder;

425.107(3)(h) (h) That the writing purporting to evidence the obligation of the customer in the transaction contains terms or provisions or authorizes practices prohibited by law; and

425.107(3)(i) (i) Definitions of unconscionability in statutes, regulations, rulings and decisions of legislative, administrative or judicial bodies.

425.107(4) (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.

425.107(5) (5) In addition to the protections afforded in sub. (1), the customer shall be entitled upon a finding of unconscionability to recover from the creditor or the person responsible for the unconscionable conduct a remedy and penalty in accordance with s. 425.303.

425.107 History History: 1971 c. 239; 1979 c. 89; 1995 a. 329.

425.107 Annotation When a lender was promptly informed that a borrower had a valid disability insurance claim that would cover payments, it was an unconscionable practice to include an unpaid monthly charge that would be covered by the disability insurance in computing the unpaid balance for purposes of establishing default. Bank One Milwaukee, N.A. v. Harris, 209 Wis. 2d 412, 563 N.W.2d 543 (Ct. App. 1997), 96-0903.

425.107 Annotation The scope language of s. 425.102 bars a customer from bringing a claim of unconscionability under this section except in response to “actions or other proceedings brought by a creditor.” Discussing whether a nonjudicial repossession pursuant to s. 425.206 (1) (d) is such an action or other proceeding. Duncan v. Asset Recovery Specialists, Inc., 2022 WI 1, 400 Wis. 2d 1, 968 N.W.2d 661, 19-1365.

425.107 Annotation When a creditor files a lawsuit against a debtor to enforce a loan agreement, that triggers the potential for an unconscionability counterclaim. The fact that the creditor moves for voluntary dismissal of its claim before the debtor brings the unconscionability counterclaim does not prevent the debtor from pursuing it. Section 425.102 does not require dismissal of the counterclaim. CreditBox.com, LLC v. Weathers, 2023 WI App 37, 408 Wis. 2d 715, 993 N.W.2d 802, 22-0746.

425.107 Annotation This section provides a defense to an action brought by a creditor and does not constitute an affirmative claim for relief. Gable v. Universal Acceptance Corp. (WI), 338 F. Supp. 3d 943 (2018). But see CreditBox.com, LLC v. Weathers, 2023 WI App 37, 408 Wis. 2d 715, 993 N.W.2d 802, 22-0746.

425.108 425.108 Extortionate extensions of credit.

425.108(1) (1) If it is the understanding of the creditor and the customer during any time that an extension of credit is outstanding, that delay in making repayment could result in the use of violence to cause harm to the person or property of any person, the extension of credit shall be unenforceable in accordance with s. 425.305 and the customer shall additionally recover triple the penalty provided in s. 425.304 (1).

425.108(2) (2) If it is shown that an extension of credit was made at an annual rate exceeding that permitted by or referred to in s. 422.201 on maximum charges and that the creditor had a reputation for the use or threat of use of violence to cause harm to the person or property of any person to collect extensions of credit or to punish the nonrepayment thereof, it shall be presumed that the extension of credit was a violation under chs. 421 to 427 under sub. (1).

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

425.109 425.109 Pleadings.

425.109(1) (1) A complaint by a merchant to enforce any cause of action arising from a consumer credit transaction shall include all of the following:

425.109(1)(a) (a) An identification of the consumer credit transaction.

425.109(1)(b) (b) A description of the collateral or leased goods, if any, which the merchant seeks to recover or has recovered.

425.109(1)(c) (c) A specification of the facts constituting the alleged default by the customer.

425.109(1)(d) (d)

425.109(1)(d)1. 1. If the consumer credit transaction is pursuant to an open-end credit plan, the actual or estimated amount of U.S. dollars or of a named foreign currency that the merchant alleges he or she is entitled to recover and the figures necessary for computation of the amount alleged to be due to the merchant on a date certain after the customer’s default. Figures necessary for computation shall mean the amount reflected on a billing statement addressed to the customer and a breakdown of all charges, interest, and payments, including any amount received from the sale of any collateral, occurring after this date certain. This paragraph does not require a specific itemization, but the breakdown shall identify separately the amount due on a date certain, the total of all charges occurring after this date certain, the total of all interest occurring after this date certain, and the total of all payments occurring after this date certain.

425.109(1)(d)2. 2. If the consumer credit transaction is other than one pursuant to an open-end credit plan, the actual or estimated amount of U.S. dollars or of a named foreign currency alleged to be due to the merchant on a date certain after the customer’s default, and a breakdown of all charges, interest, and payments, including any amount received from the sale of any collateral, occurring after this date certain. This paragraph does not require a specific itemization, but the breakdown shall identify separately the amount due on a date certain, the total of all charges occurring after this date certain, the total of all interest occurring after this date certain, and the total of all payments occurring after this date certain.

425.109(1)(e) (e) Except in an action to recover goods subject to a consumer lease, a statement that the customer has the right to redeem any collateral as provided in s. 425.208 (1) (intro.) and the actual or estimated amount of U.S. dollars or of a named foreign currency required for redemption, itemized in accordance with s. 425.208 (1) (a) to (d).

425.109(1)(f) (f) Except in an action to recover goods subject to a consumer lease, the estimated amount of U.S. dollars or of a named foreign currency of any deficiency claim which may be available to the merchant following the disposition of any collateral recovered subject to the limitations of s. 425.209 or which the merchant seeks to recover and which the merchant intends to assert subject to the limitations of s. 425.210 if the customer fails to redeem the collateral.

425.109(1)(g) (g) If the customer still has the right to cure a default under s. 425.105 pursuant to a notice given under s. 425.104, the total payment or other performance necessary to cure the alleged default and the exact date by which it must be made.

425.109(1)(h) (h) Subject to sub. (2) and s. 425.205 (4), an accurate copy of the writings, if any, evidencing the transaction, except that with respect to claims arising under open-end credit plans, a statement that the merchant will submit accurate copies of the writings evidencing the customer’s obligation to the court and the customer upon receipt of the customer’s written request therefor on or before the return date or the date on which the customer’s answer is due.

425.109(2) (2) Upon the written request of the customer under sub. (1) (h), the merchant shall submit accurate copies to the court and the customer of writings evidencing the customer’s obligation pursuant to an open-end credit plan upon which the merchant’s claim is made and default judgment may not be entered for the merchant unless the merchant does so. The writings requirement under this subsection is satisfied if the merchant provides the customer with a copy of the billing statement referenced in sub. (1) (d) 1. addressed to the customer reflecting the total outstanding balance on the customer’s account at the time this billing statement was issued. If this billing statement is attached to the complaint, then the statement under sub. (1) (h) is not required to be included in the complaint.

425.109(3) (3) A default judgment may not be entered upon a complaint which fails to comply with this section.

425.109(4) (4) For purposes of subchs. III and IV, a complaint that fails to comply with this section does not constitute a violation of chs. 421 to 427, and shall not give rise to recovery of attorney fees under s. 425.308, unless the customer establishes by a preponderance of the evidence that the failure to comply was willful or intentional.

425.109 History History: 1971 c. 239; 1983 a. 389; 1991 a. 236; 2015 a. 155.

425.109 Annotation A stated amount owed as of a specific date with a per diem interest figure is not a sufficient statement of “the figures necessary for computation of the amount” as required by sub. (1) (d). A complaint is not sufficient under this section because it meets the general rules of notice pleading. Household Finance Corp. v. Kohl, 173 Wis. 2d 798, 496 N.W.2d 708 (Ct. App. 1993). See also Bank One v. Ofojebe, 2005 WI App 151, 284 Wis. 2d 510, 702 N.W.2d 456, 04-0902.

425.109 Annotation A company that purchased an overdue credit card account and brought an action to collect the amount due on it was not a “creditor” within the meaning of s. 421.301 (16) and not subject to the pleading requirements of sub. (1). Rsidue, LLC v. Michaud, 2006 WI App 164, 295 Wis. 2d 585, 721 N.W.2d 718, 05-1299.

425.109 Annotation Sub. (2) requires a creditor to document any transaction it wishes to collect upon. Estate of Newgard v. Bank of America, 2007 WI App 161, 303 Wis. 2d 466, 735 N.W.2d 578, 07-0082.

425.109 Annotation Even if there was a failure to comply with the pleading requirements of this section, such a failure cannot deprive a small claims court of subject matter jurisdiction and cannot render a default judgment void. Mercado v. GE Money Bank, 2009 WI App 73, 318 Wis. 2d 216, 768 N.W.2d 53, 08-1992.

425.110 425.110 No discharge from employment for garnishment.

425.110(1) (1) No employer shall discharge an employee because a merchant has subjected or attempted to subject unpaid earnings of the employee to garnishment or like proceedings directed to the employer for the purpose of paying a judgment arising from a consumer credit transaction.

425.110(2) (2) If an employer violates this section, an employee shall recover back wages and be reinstated, if the employee files an action for such relief within 90 days of the employee’s discharge.

425.110 History History: 1971 c. 239.

425.111 425.111 Levy before judgment.

425.111(1) (1) Prior to entry of judgment in an action subject to this subchapter, no process, other than a restraining order to protect collateral (s. 425.207), shall issue with respect to amounts that are owing or are claimed to be owing or may be owing to the customer by any 3rd person, whether by way of attachment, garnishment or other process.

425.111(2) (2) With respect to property of the customer other than that described in sub. (1), process may issue in accordance with ch. 811 to establish a lien, except that such process shall not be effective to take, or to divest the customer of possession of, the property until final judgment is entered.

425.111(3) (3) If the court finds that the creditor probably will recover on the action, and that the customer is acting, or is about to act, with respect to property of the customer upon which a lien has been established under sub. (2), in a manner which substantially impairs the creditor’s prospects for satisfying the judgment against such property (s. 811.03), the court may issue an order restraining the customer from so acting with respect to that property until final judgment is entered.

425.111 History History: 1971 c. 239; 1973 c. 2; Sup. Ct. Order, 67 Wis. 2d 585, 776 (1975).

425.111 Note Legislative Council Note, 1973: Clarifies applicability of this subsection. Section 425.111 (1) refers to property of the customer subject to garnishment, and prescribes limitations on creditors’ actions in relation to it. Sub. (2) refers to other property of the customer; however, the language struck by this amendment appears to make sub. (2) refer back to the same property dealt with by sub. (1), so it is deleted. [Bill 355-A]

425.112 425.112 Stay of execution. At the time of or at any time after the entry of a judgment in favor of a creditor against a customer in an action arising from a consumer transaction, the court, for cause and upon motion of a party or on its own motion, may stay enforcement of the judgment by order upon just and equitable conditions, and continue, modify or revoke the order as the interests of justice may require.

425.112 History History: 1971 c. 239.

425.113 425.113 Body attachments.

425.113(1) (1) No merchant shall cause or permit a warrant against the person of a customer to issue under ch. 816 with respect to a claim arising from a consumer credit transaction. Any process issued in violation of this section is void.

425.113(2) (2) A violation of this section is subject to s. 425.305.

425.113 History History: 1971 c. 239; Sup. Ct. Order, 67 Wis. 2d 585, 776 (1975).

425.113 Cross-reference Cross-reference: See also s. DFI-WCA 1.66, Wis. adm. code.

425.113 Annotation If this section were to be interpreted to remove a court’s power to issue a body attachment for one who chooses to ignore its orders, the interpretation would cause the statute to be unconstitutional as a violation of the principle of separation of powers. Smith v. Burns, 65 Wis. 2d 638, 223 N.W.2d 562 (1974).

subch. II of ch. 425 SUBCHAPTER II

ENFORCEMENT OF SECURITY INTERESTS IN COLLATERAL

425.201 425.201 Scope. This subchapter applies to the enforcement by a creditor of security interests in collateral.

425.201 History History: 1971 c. 239.

425.202 425.202 Definitions. For purposes of this chapter:

425.202(1) (1) “Collateral” means goods subject to a security interest in favor of a merchant which secures a customer’s obligations under a consumer credit transaction.

425.202(2) (2) “Motor vehicle” has the meaning given in s. 218.0101 (22).

425.202 History History: 1971 c. 239; 1975 c. 407; 2005 a. 255.

425.203 425.203 Enforcement of merchant’s rights in collateral and leased goods.

425.203(1) (1) At any time after default (s. 425.103) and the expiration of the period for cure of default (s. 425.105), if applicable, a merchant may commence an action to recover collateral or goods subject to a consumer lease pursuant to s. 425.205, or reduce the claim to a judgment by any available judicial procedure.

425.203(2) (2) In any action for a judgment under sub. (1) other than an action pursuant to s. 425.205, the judgment may provide for the right to possession of the collateral or leased goods by the merchant and for a deficiency, if the merchant would not be precluded from a deficiency judgment under s. 425.209 had the merchant initially proceeded against the collateral and if the judgment includes a finding that the merchant has the right to possession of any collateral securing the consumer credit transaction or goods subject to a consumer lease. Upon determining such judgment under this subsection the merchant shall have the right to:

425.203(2)(a) (a) Have execution issue to require the sheriff in the county where the collateral or leased goods may be to take the same from the defendant and deliver it to the plaintiff; or

425.203(2)(b) (b) Immediately exercise the right to nonjudicial recovery of the collateral or leased goods, subject to s. 425.206.

425.203(3) (3) Following recovery of collateral pursuant to a judgment under sub. (2), the merchant may either retain the collateral in full satisfaction of the customer’s obligation pursuant to ss. 409.620 to 409.624, in which event the merchant shall satisfy the judgment obtained pursuant to sub. (2); or shall dispose of the collateral pursuant to subch. VI of ch. 409, in which event:

425.203(3)(a) (a) The merchant shall apply to the court which entered the judgment pursuant to sub. (2) to confirm the sale or other disposition of the collateral upon 8 days’ notice to all parties named in such action, either personally or by certified or registered mail directed to the last-known address of the parties. Such notice shall state, in addition to any other matter required by law, the time and place of the hearing, the amount of the judgment, the proceeds received upon disposition of the collateral, the fair market value of the collateral claimed by the merchant if such standard is applicable under s. 425.210, the reasonable expenses incurred in disposition of collateral, the net amount proposed to be credited against the judgment, and any deficiency remaining. In addition, the notice directed to the customer shall conspicuously advise the customer of the right to appear at such hearing and to contest any matter set forth in the notice.

425.203(3)(b) (b) At such a hearing on confirmation, the court shall determine on the basis of the evidence presented by the parties, by affidavit or otherwise, the commercial reasonableness of the merchant’s disposition of the collateral, the reasonable expenses incurred by the merchant in disposition of the collateral, the compliance with s. 425.210 if applicable, the resulting amount to be credited against the judgment and the remaining deficiency. Following such hearing and determinations, the court shall enter an appropriate order to satisfy the judgment and provide such other relief as may be appropriate. Where the underlying transaction is a consumer credit sale of goods or services or a consumer loan in which the lender is subject to defenses arising from s. 422.408, this hearing shall be considered a proceeding for a deficiency judgment pursuant to s. 425.209 (1).

425.203(4) (4) Following recovery of goods subject to a consumer lease pursuant to a judgment under sub. (2), no deficiency shall be allowable unless the merchant disposes of the leased goods and applies the proceeds to the customer’s obligation, in which event:

425.203(4)(a) (a) The merchant shall apply to the court which entered the judgment pursuant to sub. (2) to confirm the sale or other disposition of the leased goods upon 8 days’ notice to all parties named in the action, either personally or by certified or registered mail directed to the last-known address of the parties. Such notice shall state, in addition to any other matter required by law, the time and place of the hearing, the amount of the judgment, the proceeds received upon disposition of the leased goods, the reasonable expenses incurred in disposition of the leased goods, the net amount proposed to be credited against the judgment, and any deficiency remaining. In addition, the notice directed to the customer shall conspicuously advise the customer of the right to appear at such hearing and to contest any matter set forth in the notice.

425.203(4)(b) (b) At such a hearing on confirmation, the court shall determine on the basis of evidence presented by the parties, by affidavit or otherwise, the commercial reasonableness of the merchant’s disposition of the leased goods, the reasonable expenses incurred by the merchant in disposition of the leased goods, and the resulting amount to be credited against the judgment entered pursuant to sub. (2). Following such hearing and determinations, the court shall enter an appropriate order to satisfy the judgment and provide such other relief as may be appropriate.

425.203 History History: 1971 c. 239; 1975 c. 407, 421; 2001 a. 10.

425.204 425.204 Voluntary surrender of collateral.

425.204(1) (1) Notwithstanding a waiver by the creditor of the security interest in collateral under s. 425.203 (2) or any other law, the customer shall have the right at any time to voluntarily surrender all of the customer’s rights and interests in the collateral to the merchant.

425.204(2) (2) The rights and obligations of the merchant and customer with respect to collateral voluntarily surrendered as defined in this section shall be governed by subch. VI of ch. 409, and are not subject to this subchapter.

425.204(3) (3) The surrender of collateral by a customer is not a voluntary surrender if it is made pursuant to a request or demand, other than a notice under s. 425.205 (1g) (a), by the merchant for the surrender of the collateral, or if it is made pursuant to a threat, statement, or notice, other than a notice under s. 425.205 (1g) (a), by the merchant that the merchant intends to take possession of the collateral.

425.204 History History: 1971 c. 239; 1991 a. 316; 2001 a. 10; 2005 a. 255.

425.204 Cross-reference Cross-reference: See also s. DFI-WCA 1.67, Wis. adm. code.

425.204 Annotation Under the facts of the case, the customer did not “voluntarily surrender” collateral under sub. (3). Wachal v. Ketterhagen Motor Sales, Inc., 81 Wis. 2d 605, 260 N.W.2d 770 (1978).

425.205 425.205 Action to recover collateral.

425.205(1) (1) Except as provided in s. 425.206, a creditor seeking to obtain possession of collateral or goods subject to a consumer lease shall commence an action for replevin of the collateral or leased goods. Those actions shall be conducted in accordance with ch. 799, notwithstanding s. 799.01 (1) (c) and the value of the collateral or leased goods sought to be recovered, except that: