Wisconsin Legislature: SB268,18

SB268,6 Section 6. 421.301 (9) of the statutes is amended to read:

421.301 (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. “Consumer credit sale" does not include a rental-purchase agreement.

SB268,7 Section 7. 421.301 (10) of the statutes is amended to read:

421.301 (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. “Consumer credit transaction" does not include a rental-purchase agreement.

SB268,8 Section 8. 421.301 (11) of the statutes is amended to read:

421.301 (11) “Consumer lease" means a lease of goods which a merchant makes to a customer for a term exceeding 4 months, but does not include a rental-purchase agreement.

SB268,9 Section 9. 421.301 (12) of the statutes is amended to read:

421.301 (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, but does not include a transaction relating to a rental-purchase agreement.

SB268,10 Section 10. 421.301 (20) (intro.) of the statutes is amended to read:

421.301 (20) (intro.) “Finance charge" means the sum of all charges, payable directly or indirectly by the customer as an incident to or as a condition of the extension of credit, whether paid or payable by the customer, the creditor or any other person on behalf of the customer to the creditor or to a 3rd party unless the creditor had no notice or knowledge of the charges paid or payable to the 3rd party. The term does not include any charge with respect to a motor vehicle consumer lease or to a rental-purchase agreement. The term includes the following types of charges to the extent they are not permitted additional charges under s. 422.202, delinquency charges under s. 422.203 or deferral charges under s. 422.204:

SB268,11 Section 11. 421.301 (21) of the statutes is amended to read:

421.301 (21) “Goods" has the meaning given in s. 409.102 (1) (ks) and includes goods not in existence at the time the transaction is entered into and goods which are or are to become fixtures, but does not include any goods under a rental-purchase agreement.

SB268,12 Section 12. 421.301 (34) of the statutes is amended to read:

421.301 (34) “Personal property" includes but is not limited to goods, and does not include rental property.

SB268,13 Section 13. 421.301 (37t) of the statutes is created to read:

421.301 (37t) “Rental property" means property rented under a rental-purchase agreement but does not include any motor vehicle, as defined in s. 340.01 (35).

SB268,14 Section 14. 421.301 (37u) of the statutes is created to read:

421.301 (37u) “Rental-purchase agreement" means an agreement between a rental-purchase company and a lessee for the use of rental property if all of the following apply:

(a) The rental property is to be used primarily for personal, family, or household purposes.

(b) The agreement has an initial term of 4 months or less and is automatically renewable with each payment after the initial term.

(d) The agreement permits, but does not obligate, the lessee to acquire ownership of the rental property.

SB268,15 Section 15. 421.301 (37v) of the statutes is created to read:

421.301 (37v) “Rental-purchase company" means a person engaged in the business of entering into rental-purchase agreements in this state or acquiring or servicing rental-purchase agreements that are entered into in this state.

SB268,16 Section 16. 421.301 (40) of the statutes is amended to read:

421.301 (40) “Security interest" means a real property mortgage, deed of trust, seller's interest in real estate under a land contract, any interest in property which secures payment or performance of an obligation under ch. 409 or any other consensual or confessed lien whether or not recorded, but does not include an interest in any property relating to a rental-purchase agreement.

SB268,17 Section 17. 422.102 of the statutes is repealed and recreated to read:

422.102 Scope. (1) Subchapters I to V apply to consumer credit transactions.

(2) Subchapter VI applies to rental-purchase agreements.

SB268,18 Section 18. Subchapter VI of chapter 422 [precedes 422.601] of the statutes is created to read:

CHAPTER 422

Subchapter VI

rental-purchase agreements

422.601 Scope. This subchapter applies only to rental-purchase agreements.

422.602 General requirements of disclosure. (1) Form, location, size, and time of disclosure. The information that is required to be disclosed under s. 422.603 shall satisfy all of the following:

(a) The information shall be clearly and conspicuously disclosed.

(b) The information shall be disclosed in writing.

(c) The information shall be disclosed on the face of the rental-purchase agreement above the line for the lessee's signature.

(d) Except as provided in par. (f), the information shall be disclosed in not less than 8-point standard type.

(e) The information shall be disclosed before the time that the lessee becomes legally obligated under the rental-purchase agreement.

(f) The disclosures required by s. 422.603 (2), (4), (7), and (8) shall be printed in at least 10-point boldface type, and shall be grouped together in a box, in the form and order prescribed by the administrator.

(2) Accuracy of disclosure. The information required under s. 422.603 must be accurate as of the time that it is disclosed to the lessee. If any information subsequently becomes inaccurate as a result of any act, occurrence, or agreement by the lessee, the resulting inaccuracy is not a violation of any provision of subch. XI of ch. 218 or chs. 421 to 427 relating to rental-purchase agreements.

(3) Copy of rental-purchase agreement. The rental-purchase company shall provide the lessee with a copy of the completed rental-purchase agreement signed by the lessee. If more than one lessee is legally obligated under the same rental-purchase agreement, delivery of a copy of the completed rental-purchase agreement to one of the lessees shall satisfy this subsection.

(4) Single instrument. In a rental-purchase agreement, the lessee's rental payment obligations shall be evidenced by a single instrument, which shall include the signature of the rental-purchase company, the signature of the lessee, and the date on which the instrument is signed.

422.603 Required provisions of rental-purchase agreement. A rental-purchase company shall include all of the following information, to the extent applicable, in every rental-purchase agreement:

(1) Description. A brief description of the rental property, sufficient to identify the rental property to the lessee and the rental-purchase company, including any identification number, and a statement indicating whether the rental property is new or used.

(2) Cash price. The price at which the rental-purchase company would sell the rental property to the lessee if the lessee were to pay for the rental property in full on the date on which the rental-purchase agreement is executed, along with a statement that, if the lessee intends to acquire ownership of the rental property and is able to pay for the property in full or is able to obtain credit to finance the purchase, the lessee may be able to purchase similar property from a retailer at a lower cost.

(3) Rental payments to acquire ownership. The total number, total dollar amount, and timing of all rental payments necessary to acquire ownership of the rental property, excluding any applicable taxes, application or processing charge, delivery fee, liability damage waiver fee, and fees for optional services.

(4) Cost of rental services. The difference between the total dollar amount of payments necessary to acquire ownership of the rental property disclosed under sub. (3) and the cash price of the property disclosed under sub. (2). The rental-purchase company shall also include a statement substantially similar to the following: “The cost of rental services is the amount you will pay in addition to the cash price if you acquire ownership of the rented goods by making all payments necessary to acquire ownership."

(5) Rental payment. The periodic rental payment for the rental property, including any applicable taxes, liability damage waiver fees, and fees for optional services.

(6) Up-front payment. Any payment required of the lessee at the time that the agreement is executed or the rental property is delivered, including the initial rental payment, any application or processing charge, any delivery fee, and any charge for a liability damage waiver or for other optional services to which the lessee agrees.

(7) Other charges and fees to acquire ownership. The dollar amount, both itemized and in total, of all taxes, liability damage waiver fees, fees for optional services, processing fees, application fees, and delivery charges that the lessee would incur if the lessee were to rent the rental property until the lessee acquires ownership, assuming that the lessee does not add or decline the liability damage waiver or optional services after signing the rental-purchase agreement.

(8) Total payments to acquire ownership. The total of all charges required to be paid by the lessee to acquire ownership of the rental property, which shall consist of the total dollar amount of all rental payments disclosed under sub. (3), and the total dollar amount of all other charges and fees disclosed under sub. (7), along with a statement that this is the amount a lessee will pay to acquire ownership of the rental property if the tax rates do not change and if the lessee does not add or decline the liability damage waiver or optional services after signing the rental-purchase agreement.

(9) Other charges. An itemized description of any other charges or fees that the rental-purchase company may charge the lessee that are not otherwise disclosed in the rental-purchase agreement.

(10) Summary of early-purchase option. A statement summarizing the terms of the lessee's options to acquire ownership of the rental property as provided in s. 422.607.

(11) Responsibility for theft or damage. A statement that, unless otherwise agreed, the lessee is responsible for the fair market value of the rental property, determined according to the early-purchase option formula under sub. (10), if the rental property is stolen, damaged, or destroyed while in the possession of or subject to the control of the lessee. The statement shall indicate that the fair market value will be determined as of the date on which the rental property is stolen, damaged, or destroyed.

(12) Service and warranty. A statement that during the term of the rental- purchase agreement, the rental-purchase company is required to service the rental property and maintain it in good working condition, as long as no other person has serviced the rental property. In lieu of servicing the rental property, the rental-purchase company may, at its option, replace the rental property. The rental-purchase company's obligation to provide service is limited to defects in the property not caused by improper use or neglect by the lessee or harmful conditions outside the control of the rental-purchase company or manufacturer.

(13) Termination at option of lessee. A statement that the lessee may terminate the agreement at any time without penalty by voluntarily surrendering or returning the rental property in good repair.

(14) Right to reinstate. A brief explanation of the lessee's right to reinstate a rental-purchase agreement under s. 422.614.

(15) Rental, not purchase. A statement that the lessee will not own the rental property until the lessee has made all payments necessary to acquire ownership or has exercised the lessee's early-purchase option. The rental-purchase company shall also include a notice reading substantially as follows: “You are renting this property. You will not own the property until you make all payments necessary to acquire ownership or until you exercise your early-purchase option. If you do not make your payments as scheduled or exercise your early-purchase option, the rental-purchase company may repossess the property."

(16) Information about rental-purchase company and lessee. The names of the rental-purchase company and the lessee, the rental-purchase company's business address and telephone number, the lessee's address, and the date on which the rental-purchase agreement is executed.

(17) Optional services. Space for a specific, separately signed, affirmative, written indication of the lessee's desire for any optional service for which a charge is assessed. The lessee's request must be obtained after a written disclosure of the cost of the optional service is made, and the cost and term of such service must be listed at or near the signature space.

422.604 Prohibited provisions of rental-purchase agreements. (1) A rental-purchase agreement may not contain any of the following:

(a) Confession. A confession of judgment.

(b) Security. A provision granting the rental-purchase company a security interest in any property, except rental property delivered by the rental-purchase company under the rental-purchase agreement.

(c) Repossession. A provision authorizing a rental-purchase company, or an agent of the rental-purchase company, to enter the lessee's premises without the lessee's contemporaneous permission, or to commit a breach of the peace in the repossession of rental property provided by the rental-purchase company under the rental-purchase agreement.

(d) Waiver. A waiver of a defense or counterclaim, a waiver of any right to assert any claim that the lessee may have against the rental-purchase company or an agent of the rental-purchase company, or a waiver of any provision of subch. XI of ch. 218 or chs. 421 to 427 relating to rental-purchase agreements.

(e) Overpayment. A provision requiring rental payments totaling more than the total dollar amount of all rental payments necessary to acquire ownership, as disclosed in the rental-purchase agreement.

(f) Insurance. A provision requiring the lessee to purchase insurance from the rental-purchase company to insure the rental property.

(g) Attorney fees. A provision requiring the lessee to pay any attorney fees.

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

422.605 Liability waiver. A rental-purchase company may offer a liability waiver to the lessee. The terms of the waiver must be provided to the lessee in writing, incorporated into the rental-purchase agreement or on a separate document. The face of the writing shall clearly disclose that the lessee is not required to purchase the waiver. The fee for the waiver may not exceed 10 percent of the rental payment due under the rental-purchase agreement. The lessee shall be entitled to cancel the waiver at the end of any rental term.

422.606 Price and cost limitations. (1) Limits on cash prices. The cash price for rental property may not exceed an amount equal to twice the actual purchase price of the rental property, including any applicable freight charges, paid by the rental-purchase company to a manufacturer or wholesaler.

(2) Limits on cost of rental services and other charges. The total amount charged by the rental-purchase company for the cost of rental services and all required charges or fees, excluding applicable taxes, in a rental-purchase transaction shall not exceed the cash price of the property.

(3) Unconscionability. A court may not find that a rental-purchase transaction that complies with this section is unconscionable under s. 425.107 (3) (c).

422.607 Acquisition of ownership. At any time after the initial rental period, a lessee may acquire ownership of the property that is the subject of the rental-purchase agreement by tendering an amount not to exceed an amount equal to the cash price of the rental property multiplied by a fraction that has as its numerator the number of periodic rental payments remaining under the rental-purchase agreement and that has as its denominator the total number of periodic rental payments. A rental-purchase company may also require the lessee to pay any accrued unpaid rental payments and fees.

422.608 Receipts and statements. (1) Receipts. A rental-purchase company shall provide a written receipt to the lessee for any payment made by the lessee in cash or, upon the request of the lessee, for any other type of payment.

(2) Statement due to lessee. Subject to sub. (4), upon the request of a lessee, a rental-purchase company shall provide a written statement to the lessee showing the lessee's payment history on each rental-purchase agreement between the lessee and the rental-purchase company. A rental-purchase company is not required to provide a statement covering any rental-purchase agreement that was terminated more than one year prior to the date of the lessee's request. A rental-purchase company may provide a single statement covering all rental-purchase agreements or separate statements for each rental-purchase agreement, at the rental-purchase company's option.

(3) Statement due to other parties. Subject to sub. (4), upon the written request of a lessee, made during the term of or no later than one year after the termination of a rental-purchase agreement, a rental-purchase company shall provide a written statement to any person the lessee designates, showing the lessee's payment history under the rental-purchase agreement.

(4) Fee for statement. A lessee or, if appropriate, a lessee's designee, is entitled to receive one statement under subs. (2) and (3) without charge once every 12 months. A rental-purchase company shall provide an additional statement if the lessee pays the rental-purchase company's reasonable costs of preparing and furnishing the statement.

422.609 Advertising disclosure required. If an advertisement for a rental-purchase agreement refers to or states the amount of a payment for a specific item of property, the advertisement shall also clearly and conspicuously state all of the following:

(1) That the transaction advertised is a rental-purchase agreement.

(2) The total number and total dollar amount of all rental payments necessary to acquire ownership of the property.

(3) That the lessee does not acquire ownership of the property if the lessee fails to make all rental payments or other payments necessary to acquire ownership of the property.

422.610 Price cards displayed. (1) Price cards generally. Except as provided in sub. (2), a card or tag that clearly and conspicuously states all of the following shall be displayed on or next to any property displayed or offered by a rental-purchase company for rent under a rental-purchase agreement:

(a) The cash price that a lessee would pay to purchase the property.

(b) The amount and timing of the rental payments.

(c) The total number and total amount of all rental payments necessary to acquire ownership of the property under a rental-purchase agreement.

(d) The cost of rental services under a rental-purchase agreement.