SB530: Bill Text

SB530,12,18 a. A currency exchange under s. 218.05.

SB530,12,19 b. A seller of checks business under ch. 217.

SB530,12,20 c. A loan business under s. 138.09.

SB530,12,21 d. A sales finance company under ss. 218.0101 to 218.0163.

SB530,12,24 2. A licensee may not sell merchandise or conduct other business at the place of business specified in the license unless written authorization is granted to the licensee by the division.

SB530,13,5 (7) Records; reports. (a) Except as provided in par. (b), a licensee shall keep such books and records in the licensee's place of business that, in the opinion of the division, will enable the division to determine compliance with this section. A licensee shall preserve the records of final entry used in such business for a period of at least 2 years after the making of any loan recorded therein.

SB530,13,9 (b) A licensee may keep the books and records specified in par. (a) at a single location inside or outside of this state if the books and records are kept at a place of business licensed under this section. A licensee shall organize the books and records by the place of business where the records originated.

SB530,13,12 (c) A licensee shall keep the books and records affecting loans made pursuant to this section separate and distinct from the records of any other business of the licensee.

SB530,13,17 (d) A licensee shall make an annual report to the division for each calendar year on or before March 15 of the following year. The report shall include business transacted by the licensee under this section and shall give all reasonable and relevant information that the division may require. The reports shall be made in the form and manner prescribed by the division.

SB530,13,19 (8) Powers of the division. (a) The division may issue any general or special order in execution of or supplementary to this section.

SB530,13,22 (b) The division may promulgate such rules as it considers necessary for the administration of this section, including rules establishing database transaction fees and other fees considered reasonable and necessary by the division.

SB530,13,24 (c) The division shall have the same power to conduct hearings, take testimony, and secure evidence as is provided in ss. 217.17 and 217.18.

SB530,14,8 (d) The division for the purpose of discovering violations of this section may investigate the business of a licensee transacted under this section, and shall investigate convictions reported to the division by any district attorney for violation by a licensee of this section. The place of business, books of account, papers, records, safes, and vaults of a licensee shall be open to inspection and examination by the division for the purpose of such investigation and the division may examine under oath all persons whose testimony the division may require relative to such investigation.

SB530,14,13 (e) The cost of any investigation, examination, or hearing, including witness fees or any other expenses, conducted by the division under this section involving a licensee shall be paid by the licensee within 30 days after demand therefore by the division, and the state may maintain an action for the recovery of such costs and expenses.

SB530,14,15 (f) Actual costs incurred by the division to examine books and records maintained outside of this state shall be paid by the licensee.

SB530,14,17 (9) Revocation and suspension of licenses. (a) The division may suspend or revoke any license issued under this section if the division finds any of the following:

SB530,14,19 1. That the licensee has violated any provision of this section, any rule promulgated thereunder, or any lawful order of the division made thereunder.

SB530,14,20 2. That the licensee has violated any of the provisions of chs. 421 to 427.

SB530,14,23 3. That any fact or condition exists which, if it had existed at the time of the original application for such license, would have warranted the division in refusing to issue such license.

SB530,14,25 4. That the licensee made a material misstatement in an application for a license or in information furnished to the division.

SB530,15,2 5. That the licensee has failed to pay the annual license fee or to maintain in effect the bond required under sub. (4) (c).

SB530,15,14 (b) The division shall restrict or suspend a license issued under this section if the division finds that the licensee is an individual who fails to comply, after appropriate notice, with a subpoena or warrant issued by the department of workforce development or a county child support agency under s. 59.53 (5) and related to paternity or child support proceedings or who is delinquent in making court-ordered payments of child or family support, maintenance, birth expenses, medical expenses, or other expenses related to the support of a child or former spouse, as provided in a memorandum of understanding entered into under s. 49.857. A licensee whose license is restricted or suspended under this paragraph is entitled to a notice and hearing only as provided in a memorandum of understanding entered into under s. 49.857 and is not entitled to any other notice or hearing under this section.

SB530,15,20 (c) The division shall revoke a license issued under this section if the department of revenue certifies under s. 73.0301 that the licensee is liable for delinquent taxes. A licensee whose license is revoked under this paragraph for delinquent taxes is entitled to a notice under s. 73.0301 (2) (b) 1. b. and a hearing under s. 73.0301 (5) (a) but is not entitled to any other notice or hearing under this section.

SB530,16,2 (d) Except as provided in pars. (b) and (c), no license shall be revoked or suspended except after a hearing under this section. A complaint stating the grounds for suspension or revocation together with a notice of hearing shall be delivered to the licensee at least 5 days in advance of the hearing. In the event the licensee cannot be found, complaint and notice of hearing may be left at the place of business stated in the license,which shall be considered the equivalent of delivering the notice of hearing and complaint to the licensee.

SB530,16,5 (10) Interest and fees. (a) Interest. 1. This section imposes no limit on the interest that a licensee may charge before the maturity date of a consumer small loan.

SB530,16,16 2. If a consumer small loan is not paid in full on or before the maturity date, a licensee may charge, after the maturity date, interest at a rate not exceeding 2.75 percent per month, except that if a licensee makes a subsequent consumer small loan to the borrower under sub. (12) (a), and the borrower does not pay the subsequent loan in full on or before the maturity date of the subsequent loan, the licensee may charge, after the maturity date of the subsequent loan, interest at a rate not exceeding 2.75 percent per month on the subsequent loan and the licensee may not charge any interest under this subdivision on the prior loan. Interest earned under this subdivision shall be calculated at the rate of one-thirtieth of the monthly rate charged for each calendar day that the balance of the loan is outstanding. Interest cannot be assessed on any interest earned under this subdivision.

SB530,16,18 (b) Fees. 1. A licensee may not assess a borrower any fee or charge for database access or usage.

SB530,16,22 2. A licensee may charge a fee not to exceed $15 for each check presented for payment to the licensee which is returned unsatisfied because the drawer does not have an account with the drawee, does not have sufficient funds in his or her account, or does not have sufficient credit with the drawee.

SB530,16,24 (11) Prepayment. (a) A customer may pay a consumer small loan in whole or in part prior to the maturity date of the loan.

SB530,17,5 (b) Upon prepayment in full, a refund of the unearned portion of any interest assessed by the licensee must be allowed. The amount of such refund shall not be less than the difference between the interest charged and the interest earned at the agreed rate computed upon the unpaid principal balance of the loan from time to time outstanding prior to repayment in full.

SB530,17,14 (12) Prohibitions. (a) A borrower may repay a consumer small loan with the proceeds of a subsequent consumer small loan made by the same or another licensee or an affiliate of the same or another licensee, but if the borrower does so, the borrower may not repay the subsequent consumer small loan with the proceeds of another consumer small loan made by the same or another licensee or an affiliate of the same or another licensee. A repayment of a subsequent consumer small loan and the origination of a new consumer small loan from the same or another licensee or an affiliate of the same or another licensee within a 24-hour period shall be considered proof of violation of the prohibition under this paragraph.

SB530,17,17 (b) No licensee may make a consumer small loan to a borrower that results in the borrower having an outstanding aggregate liability of more than $900 to all licensees who have made consumer small loans to the borrower.

SB530,17,22 (c) No licensee may make a consumer small loan to a borrower if the licensee determines, knows, or should have known, that the social security number the borrower provided to the licensee is invalid, was issued within a period of time specified by the division preceding the date of the inquiry, or is issued to a deceased individual.

SB530,17,24 (d) No licensee may take a note, promise to pay, or any other instrument, in which blanks are left to be filled in after the consumer small loan has been made.

SB530,18,6 (e) No licensee may advertise, print, display, publish, distribute, or broadcast, or cause to be printed, displayed, published, distributed, or broadcast, in any manner, any statement with regard to the rates, terms, or conditions of a consumer small loan that is false or calculated to deceive. With respect to matters specifically governed by s. 423.301, compliance with such section satisfies the requirements of this paragraph.

SB530,18,12 (f) If a check held by a licensee as a result of a consumer small loan is returned to the licensee from a payor financial institution due to insufficient funds, a closed account, or a stop payment order, the licensee may bring an action to collect the amount of the check, but may not threaten or pursue criminal action against a debtor as a result of the debtor's check being returned unpaid or the debtor's consumer small loan not being paid.

SB530,18,15 (13) Other provisions. (a) All consumer small loans shall be governed by chs. 421 to 427, but to the extent that chs. 421 to 427 are inconsistent with this section, this section shall govern.

SB530,18,22 (b) A licensee shall deliver to the borrower, at the time a consumer small loan is made, a statement in the English and Spanish languages including all the disclosures required by the federal Consumer Credit Protection Act. The statement shall disclose that the borrower may prepay the borrower's loan in whole or in part and that if the loan is prepaid in full the borrower will receive a refund of interest as provided by this section. The statement shall also clearly and conspicuously indicate the percentage per year of interest charged for the consumer small loan.

SB530,18,25 (c) A licensee shall give to the borrower a plain and complete receipt for all cash payments made on account of any consumer small loan at the time such payments are made.

SB530,19,9 (d) No consumer small loan, wherever made, for which a greater rate or amount of interest than is allowed under sub. (10) (a) 2. has been contracted for or received, may be enforced in this state, and every person in any way participating therein in this state shall be subject to this section. If a licensee makes an excessive charge of such interest as the result of an unintentional mistake, but upon demand makes correction of such mistake, the loan shall be enforceable and treated as if no violation occurred at the agreed rate. Nothing in this paragraph shall limit any greater rights or remedies afforded in chs. 421 to 427 to a customer in a consumer credit transaction.

SB530,19,13 (14) Database. (a) The division or a database provider shall develop, implement, and maintain a single statewide database that has real-time access through an Internet connection, is accessible at all times to licensees and the division, and otherwise meets the requirements of this section.

SB530,19,17 (b) The division may operate the database or may contract with a single 3rd-party provider to operate the database. If the division contracts with a 3rd-party provider for the operation of the database, the division shall do all the following:

SB530,19,19 1. Ensure that the 3rd-party provider operates the database according to the provisions of this section.

SB530,19,21 2. In selecting a 3rd-party provider, consider the cost of providing the service and the 3rd-party provider's ability to meet all the requirements of this section.

SB530,19,23 3. In selecting a 3rd-party provider, give strong consideration to all of the following:

SB530,20,3 a. The 3rd-party provider's ability to prevent fraud, abuse, and other unlawful activity associated with consumer small loan transactions, and to provide additional tools for the administration and enforcement of this section.

SB530,20,5 b. Whether the provider is currently providing a similar service for another state.

SB530,20,6 (c) The database shall do all of the following:

SB530,20,11 1. Allow a licensee accessing the database to check a customer's social security number, or other unique identification number specified by the division, and report to the division or licensee if that social security number is invalid, was issued within a period of time specified by the division preceding the date of the inquiry, or is issued to a deceased individual.

SB530,20,13 2. Allow a licensee accessing the database to determine if making a new consumer small loan would cause a violation of this section.

SB530,20,16 3. Provide information necessary to aid a licensee in complying with any requirements imposed under federal law by the office of foreign assets control of U.S. department of the treasury.

SB530,20,18 4. Provide any other information that the division determines is necessary and requires by rule or contract with the database provider.

SB530,20,19 (d) The database provider shall do all the following:

SB530,20,22 1. Use the data collected under this section only as prescribed in this section and, in the case of a 3rd-party provider, as prescribed in the contract with the division, and for no other purpose.

SB530,20,25 2. Establish and maintain an alternate process for responding to transaction authorization requests necessary because of technical difficulties occurring with the database that prevent a licensee from accessing the database through the Internet.

SB530,21,3 3. Upon receiving notification that a consumer small loan is paid, designate the transaction as closed in the database no later than 11:59 p.m. on the day that such notification is received.

SB530,21,13 4. Automatically designate a consumer small loan as paid in the database 5 days after the maturity date of the loan unless a licensee reports to the database provider before that time that the loan remains open because of the customer's failure to make payment; that the loan is open because the customer's check or an electronic redeposit is in the process of clearing the banking system; that the loan remains open because the customer's check is being returned to the licensee for insufficient funds, a closed account, or a stop payment order; or that any other factors determined by the division are applicable. If a licensee makes such a report, the database provider shall designate the consumer small loan as an open transaction until the database provider is notified that the transaction is closed.

SB530,21,18 5. If a licensee stops making consumer small loans, designate all open transactions with that licensee as closed in the database 60 days after the date on which the licensee stops making consumer small loans, unless the licensee reports to the database provider before the expiration of the 60-day period which of its transactions remain open and the specific reason each transaction remains open.

SB530,21,23 6. In response to an inquiry from a licensee, state only that a person is eligible or ineligible for a new consumer small loan and describe the reason for that determination. Only the person seeking the loan may make a direct inquiry to the database provider to request a more detailed explanation of an ineligibility determination.

SB530,22,2 (e) If at any time the division determines that a licensee that has stopped making consumer small loans is not updating the database in accordance with a plan approved under par. (o), the division shall immediately close or instruct the database provider to immediately close all remaining open transactions of that licensee.

SB530,22,4 (f) The division may, without cost, access the database for the purposes of enforcing this section.

SB530,22,10 (g) The division shall, by order or rule, stipulate the period for which data is to be retained in the database only as required to ensure licensee compliance with this act or for enforcement or compliance purposes. The division may require that any identifying customer information be deleted from the database when data is archived. The division may maintain access to archived data for future legislative or policy review.

SB530,22,19 (h) The division shall, by order or rule, specify a database transaction fee that the database provider shall charge to licensees to cover the costs of developing and implementing the database, and accessing the database to verify that a customer does not have any consumer small loans with the licensee or others that in combination with a new transaction will create a violation of this section. The database fee is payable directly to the division in a manner prescribed by the division and, if the department has contracted with a 3rd-party provider to operate the database, the division shall remit the fee to the 3rd-party provider as specified in the contract.

SB530,22,21 (i) A licensee shall verify a customer's eligibility to enter into a consumer small loan by doing one of the following, as applicable:

SB530,23,2 1. If the database, as determined by the division, is not implemented or is not fully operational, verifying that the customer does not have an open consumer small loan with the licensee that in conjunction with a new consumer small loan would cause a violation of this section. The licensee shall maintain a database of all of the licensee's consumer small loans at all of its places of business and search that database to meet its obligation under this subdivision.

SB530,23,7 2. If the database, as determined by the division, is implemented and fully operational, accessing the database and verifying that the customer does not have an outstanding consumer small loan with the licensee and does not have open consumer small loans with other licensees that in conjunction with a new consumer small loan would cause a violation of this section.

SB530,23,12 (j) If the database, as determined by the division, is not fully operational, or the licensee is unable to access the database and, as determined under rules promulgated by the division, the alternate process established under par. (d) 2. is also unavailable, a licensee may rely upon the written verification of the borrower in a statement provided in substantially the following form in at least 12-point type:

SB530,23,16 "I DO NOT HAVE ANY OUTSTANDING CONSUMER SMALL LOANS WITH THIS LICENSEE AND I DO NOT HAVE MORE CONSUMER SMALL LOANS WITH ANY OTHER LICENSED CONSUMER SMALL LOAN PROVIDER IN THIS STATE."

SB530,23,19 (k) If, as determined by the division, a licensee is unable to access the database due to technical difficulties occurring with the database, the licensee shall utilize the alternate process established under par. (d) 2.

SB530,23,22 (L) A licensee may rely on the information contained in the database as accurate and is not subject to any administrative forfeiture as a result of relying on inaccurate information contained in the database.

SB530,24,3 (m) Before entering into a consumer small loan, a licensee shall submit to the database provider the customer's name; social security number or other unique identifier prescribed by the division; address; driver license number or other method of state identification; the amount of the transaction; the customer's check number; the date of the transaction; the maturity date of the loan; and any other information reasonably required by the division, in a format approved by the division.

SB530,24,11 (n) When a consumer small loan is closed, the licensee shall designate the transaction as closed and notify the database provider no later than 11:59 p.m. on the day on which the transaction is closed. The division shall assess an administrative forfeiture of $100 for each day that the licensee fails to notify the database provider that the consumer small loan has been closed. It is a defense to the assessment of an administrative forfeiture that notifying the database provider was not possible due to temporary technical problems with the database or to circumstances beyond the licensee's control.

SB530,24,17 (o) If the licensee stops making consumer small loans, the licensee shall provide to the division a plan acceptable to the division that outlines how the licensee will continue to update the database after it stops making consumer small loans. The division shall approve or disapprove the plan and within 5 business days notify the licensee of the decision. If a plan is disapproved, the licensee may submit a new or modified plan for the division to approve or disapprove.

SB530,24,20 (p) Any information in the database regarding any person's transactional history is confidential and is not subject to public copying or inspection under s. 19.35 (1).

SB530,24,23 (15) Penalties. (a) Any person, partnership, or corporation, or the officers or employees thereof, who violates this section is guilty of a misdemeanor and shall be fined not more than $500 or imprisoned for not more than 6 months or both.

SB530,25,4 (b) If a person who is not licensed under this section makes a consumer small loan to a borrower, the loan is void, the borrower is not obligated to pay any amounts owing on the loan, and the borrower may recover from the person all amounts the borrower has paid to the person. An action to recover such amounts shall be commenced within one year after the date of the last scheduled payment on the loan or shall be barred.

SB530,25,8 (16) Private cause of action. If a person makes a consumer small loan to a borrower in violation of this section, the borrower may bring an action against the person for damages of $250 or the amount of the consumer small loan, whichever is greater, plus costs, and, notwithstanding s. 814.04 (1), reasonable attorney fees.

SB530, s. 13 Section 13. 220.02 (2) (b) of the statutes is amended to read:

SB530,25,12 220.02 (2) (b) The lending of money under s. 138.09 or 138.14, or those relating to finance companies, motor vehicle dealers, adjustment service companies, community currency exchanges and collection agencies under ch. 218.

SB530, s. 14 Section 14. 220.04 (10) of the statutes is amended to read:

SB530,26,2 220.04 (10) If it appears to the division that a person has engaged or is about to engage in an act or practice constituting a violation of the laws of this state relating to banks and banking, including this chapter, chs. 217, 218 and 221 to 224 and ss. 138.09 and, 138.12, and 138.14, or a rule promulgated or order issued under those laws, the division may bring an action in the name of the state in the circuit court of the appropriate county to enjoin the acts or practices and to enforce compliance with the laws, rules or orders, or the division may refer the matter to the district attorney of the appropriate county or, if the alleged violation may be enforced by the attorney general under sub. (12) or s. 220.12, 221.1005 or 224.06 (7) or is statewide in nature, to the attorney general. Upon a proper showing, the court may grant a permanent or temporary injunction or restraining order, appoint a receiver for the defendant or the defendant's assets or order rescission of any acts determined to be unlawful. The court may not require the division to post a bond.

SB530, s. 15 Section 15. 220.285 (1) of the statutes, as affected by 2009 Wisconsin Act 2, is amended to read:

SB530,26,15 220.285 (1) Any state bank, trust company bank, licensee under ss. 138.09, 138.12, 138.14, 218.0101 to 218.0163, 218.02, 218.04, 218.05, 224.72, or 224.725 or ch. 217 may cause any or all records kept by such bank, licensee, or registered person to be recorded, copied or reproduced by any photostatic, photographic or miniature photographic process or by optical imaging if the process employed correctly, accurately and permanently copies, reproduces or forms a medium for copying, reproducing or recording the original record on a film or other durable material. A bank, licensee, or registered person may thereafter dispose of the original record after first obtaining the written consent of the division. This section, excepting that part of it which requires written consent of the division, is applicable to national banking associations insofar as it does not contravene federal law.

SB530, s. 16 Section 16. 321.60 (1) (a) 12. of the statutes, as affected by 2009 Wisconsin Act 2, is amended to read:

SB530,26,21 321.60 (1) (a) 12. A license or certificate of registration issued by the department of financial institutions, or a division of it, under ss. 138.09, 138.12, 138.14, 217.06, 218.0101 to 218.0163, 218.02, 218.04, 218.05, 224.72, 224.725, or 224.93 or subch. IV of ch. 551.

SB530, s. 17 Section 17. 403.414 (7) of the statutes is amended to read:

SB530,27,5 403.414 (7) A person who issues a check or other draft that is not honored upon presentment, because the drawer does not have an account with the drawee or because the drawer does not have sufficient funds in his or her account or sufficient credit with the drawee, is liable for all reasonable costs and expenses in connection with the collection of the amount for which the check or draft was written, except recovery is not permitted under this section if a person licensed under s. 138.09 or 138.14 or any other person collected or could have collected a charge for that check or other draft under s. 422.202 (1) (d) or (2m).

SB530, s. 18 Section 18. 422.201 (3) of the statutes is amended to read:

SB530,27,10 422.201 (3) For licensees under s. 138.09 and or 138.14 or under ss. 218.0101 to 218.0163, the finance charge, calculated according to those sections, may not exceed the maximums permitted in ss. 138.09, 138.14, and 218.0101 to 218.0163, respectively.