Amendment ASA1-AB745

LRBs0332/1

MDK:kjf:rs

2009 - 2010 LEGISLATURE

ASSEMBLY SUBSTITUTE AMENDMENT 1, TO 2009 ASSEMBLY BILL 745

March 25, 2010 - Offered by Representatives Smith and Hixson.

AB745-ASA1,1,7 An Act to create 36.11 (56), 38.04 (32), 38.12 (14), 165.25 (4) (aw) and 224.50 of the statutes; relating to: prohibiting institutions of higher education from engaging in certain activity regarding student credit cards, requiring such institutions to provide financial literacy information to students, creating requirements for credit cards issued to underage customers, providing an exemption from emergency rule procedures, granting rule-making authority, and providing a penalty.

Analysis by the Legislative Reference Bureau

This substitute amendment requires the Department of Financial Institutions (DFI) to promulgate rules prohibiting credit card issuers, other than federal or state credit unions, from doing the following: 1) offering a student at an institution of higher education (institution) any tangible item to induce the student to apply for a credit card or participate in an open-end credit plan offered by the issuer; or 2) engaging in marketing of a credit card involving the physical presence of a representative of the issuer on the campus of an institution, except for marketing that takes place solely within a branch office of a financial institution. Under the substitute amendment, "institution of higher education" has the same meaning as under a federal law dealing with similar issues as the substitute amendment, which includes public universities, private nonprofit universities, postsecondary proprietary schools, and postsecondary vocational schools.

The substitute amendment also requires DFI to promulgate rules prohibiting an institution of higher education, or department or other division of such an institution, from receiving any payment or compensation for credit card marketing activity on a campus of the institution that is directed at the institution's students. The substitute amendment defines "campus" as the buildings, facilities, and grounds under the control of an institution that are primarily related to the institution's operation and related services and activities. Before promulgating any of the foregoing rules, the substitute amendment requires DFI to consult with the Board of Regents of the University of Wisconsin (UW) System, the Technical College System Board, the Educational Approval Board, and the Wisconsin Association of Independent Colleges and Universities. The substitute amendment also prohibits the UW System and technical colleges from selling to or otherwise providing a credit card issuer the names, postal addresses, or electronic mail addresses of students, or engaging in any marketing on behalf of a credit card issuer that is directed at students. The substitute amendment defines "student" as an individual enrolled on a full-time or part-time basis. The substitute amendment also provides that it does not prohibit the UW System or technical colleges from engaging in marketing directed at alumni, nor does it prohibit the maintenance or operation of financial institution branch offices or automated teller machines on UW System or technical college campuses.

In addition, the substitute amendment requires each institution of higher education to provide information about financial literacy to its students on its Internet Web site and, if the institution offers an on-campus orientation program to new students, to provide the information to students during the orientation. Also, the substitute amendment requires an institution of higher education to require undergraduate students who are 21 or younger to complete once during the course of the their undergraduate studies a financial literacy tutorial established under rules promulgated by DFI. Before promulgating the rules, DFI must consult with same persons with which it must consult for the rules described above.

The substitute amendment also creates requirements for extending credit to individuals who are less than 21 years old. Under the substitute amendment, a credit card may not be issued to, or an open-end credit plan established by or on behalf of, such an individual unless one of the following options is satisfied: 1) the application for the card or plan is cosigned by a parent, legal guardian, spouse, or other individual, who is 21 or older, has the means to repay debts, and indicates that he or she is jointly liable for debts incurred before the applicant turns 21; or 2) the applicant submits financial information indicating an independent means to repay debts. The substitute amendment requires DFI to promulgate rules for satisfying the second option. The rules must be consistent with regulations that the Board of Governors of the Federal Reserve System is required to promulgate under federal law. Also, if a cosigner described in the first option is jointly liable for credit card debt incurred by an individual who is not 21 years old, the substitute amendment prohibits credit increases unless the cosigner approves of the increase in writing and assumes joint liability for the increase.

Finally, except for the prohibitions regarding student information and credit card marketing that apply to the UW System and the technical colleges, the substitute amendment provides that a person who violates the substitute amendment or a rule promulgated by DFI under the substitute amendment is subject to a civil forfeiture of up to $5,000.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB745-ASA1, s. 1 Section 1. 36.11 (56) of the statutes is created to read:

AB745-ASA1,3,2 36.11 (56) Student credit cards. (a) In this subsection:

AB745-ASA1,3,3 1. "Credit card issuer" has the meaning given in s. 224.50 (1) (c).

AB745-ASA1,3,5 2. "Student" means an individual who is enrolled on a full-time or part-time basis in the system.

AB745-ASA1,3,7 (b) The board may not do any of the following, and shall ensure that each institution and college campus does not do any of the following:

AB745-ASA1,3,9 1. Sell or otherwise provide to a credit card issuer the names, postal addresses, or electronic mail addresses of students.

AB745-ASA1,3,11 2. Engage in any marketing on behalf of a credit card issuer that is directed at students.

AB745-ASA1,3,14 (c) Notwithstanding s. 19.35 (1) (i), and only for the purpose of complying with with par. (b) 1., a person acting on behalf of the board may ascertain whether a person making a request under s. 19.35 (1) is a credit card issuer.

AB745-ASA1,3,16 (d) This subsection does not prohibit the board or an institution or college campus from doing any of the following:

AB745-ASA1,4,3 1. Allowing a financial institution, as defined in s. 710.05 (1) (c), to maintain or operate a branch office or automated teller machine on the campus of an institution or college campus.

AB745-ASA1,4,4 2. Engaging in marketing activity directed at alumni.

AB745-ASA1, s. 2 Section 2. 38.04 (32) of the statutes is created to read:

AB745-ASA1,4,6 38.04 (32) Student credit cards. (a) In this subsection:

AB745-ASA1,4,7 1. "Credit card issuer" has the meaning given in s. 224.50 (1) (c).

AB745-ASA1,4,9 2. "Student" means an individual who is enrolled on a full-time or part-time basis in a district.

AB745-ASA1,4,10 (b) The board may not do any of the following:

AB745-ASA1,4,12 1. Sell or otherwise provide to a credit card issuer the names, postal addresses, or electronic mail addresses of students.

AB745-ASA1,4,14 2. Engage in any marketing on behalf of a credit card issuer that is directed at students.

AB745-ASA1,4,17 (c) Notwithstanding s. 19.35 (1) (i), and only for the purpose of complying with with par. (b) 1., a person acting on behalf of the board may ascertain whether a person making a request under s. 19.35 (1) is a credit card issuer.

AB745-ASA1,4,18 (d) This subsection does not prohibit the board from doing any of the following:

AB745-ASA1,4,20 1. Allowing a financial institution, as defined in s. 710.05 (1) (c), to maintain or operate a branch office or automated teller machine on a college campus.

AB745-ASA1,4,21 2. Engaging in marketing activity directed at alumni.

AB745-ASA1, s. 3 Section 3. 38.12 (14) of the statutes is created to read:

AB745-ASA1,4,23 38.12 (14) Student credit cards. (a) In this subsection:

AB745-ASA1,4,24 1. "Credit card issuer" has the meaning given in s. 224.50 (1) (c).

AB745-ASA1,4,25 2. "Student" has the meaning given in s. 38.04 (32) (a) 2.

AB745-ASA1,4,26 (b) Each district board may not do any of the following:

AB745-ASA1,5,3 1. Sell or otherwise provide to a credit card issuer the names, postal addresses, or electronic mail addresses of students.

AB745-ASA1,5,5 2. Engage in any marketing on behalf of a credit card issuer that is directed at students.

AB745-ASA1,5,8 (c) Notwithstanding s. 19.35 (1) (i), and only for the purpose of complying with with par. (b) 1., a person acting on behalf of a district board may ascertain whether a person making a request under s. 19.35 (1) is a credit card issuer.

AB745-ASA1,5,10 (d) This subsection does not prohibit a district board from doing any of the following:

AB745-ASA1,5,12 1. Allowing a financial institution, as defined in s. 710.05 (1) (c), to maintain or operate a branch office or automated teller machine on a college campus.

AB745-ASA1,5,13 2. Engaging in marketing activity directed at alumni.

AB745-ASA1, s. 4 Section 4. 165.25 (4) (aw) of the statutes is created to read:

AB745-ASA1,5,18 165.25 (4) (aw) The department of justice shall furnish all legal services required by the department of financial institutions relating to the enforcement of s. 224.50, together with any other services as are necessarily connected to the legal services.

AB745-ASA1, s. 5 Section 5. 224.50 of the statutes is created to read: