Before entering into a payday loan with an applicant that has not previously been a customer of the licensee, the licensee may request the applicant's consumer report from a consumer reporting agency as part of the licensee's underwriting process and the licensee may rely on the consumer report as a permissible method of income verification in making the payday loan. The licensee may also rely on the same consumer report in underwriting and making subsequent payday loans to the same customer.
The division shall develop written informational materials on payday loans and the payday loan industries. These informational materials shall be designed to educate individuals regarding the operation and potential costs of payday loans and of other options for borrowing funds that may be available.
The informational materials under par. (a)
shall include a clear and conspicuous notice that a payday loan is not intended to meet long-term financial needs and that a payday loan applicant should use a payday loan only to provide funds in a financial emergency.
The informational materials under par. (a)
shall include all of the following information, based upon aggregated information from reports submitted under sub. (7) (d)
for the most recent reporting period:
The percentage of customers originating payday loans who defaulted on the loan.
The percentage of customers originating payday loans whose payment method was dishonored or denied for insufficient funds.
The percentage of customers originating payday loans that resulted in repayment under sub. (11g) (a)
The informational materials under par. (a)
shall include a summary of all actions that the licensee may take against a payday loan customer if the customer defaults on the payday loan or if the customer's check or electronic fund transfer is dishonored or denied for insufficient funds.
The division shall annually update the informational materials under par. (a)
, based upon the division's analysis of reports received under sub. (7) (d)
The division shall make copies of the informational materials under par. (a)
available, upon request, to licensees and to the public, including making these informational materials available on the Internet site of the department of financial institutions. The division may charge licensees a reasonable fee for printed copies of informational materials supplied under this paragraph.
Except as provided in sub. (12) (b)
, this section imposes no limit on the interest that a licensee may charge before the maturity date of a payday loan.
If a payday 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 payday loan to the customer under sub. (12) (a)
, and the customer 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 may not be assessed on any interest earned under this subdivision.
Except as provided in par. (b) 2.
, no licensee may impose any penalty on a customer arising from the customer's prepayment of or default or late payment on a payday loan, including any payment under sub. (11g) (a)
A licensee may not assess a customer any fee or charge for database access or usage.
A licensee may present a customer's check for payment no more than once. For each customer authorization to initiate an electronic fund transfer from the customer's account, a licensee may initiate an electronic fund transfer no more than once. The only charge that a licensee may impose for dishonor of a customer's check or denial of the licensee's instruction to execute an electronic fund transfer is a service charge that does not exceed $15.
A customer may pay a payday loan in whole or in part prior to the maturity date of the loan.
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.
Except as provided in par. (b)
, if a customer fails to repay a payday loan in full at the end of the loan term, the licensee that made the loan shall offer the customer the opportunity to repay the outstanding balance of the loan in 4 equal installments with due dates coinciding with the customer's pay period schedule.
If a licensee offers a customer the opportunity to make repayment under par. (a)
, then, during the 12-month period following the offer, no licensee, including the licensee making the offer, is required to offer the customer another opportunity to repay a payday loan under par. (a)
A customer may rescind a payday loan, before the close of business on the next day of business after the loan is made, or, if the place of business where the loan is made is open 24 hours, before 5 p.m. on the next day of business after the loan is made, by returning to the licensee the proceeds of the payday loan. The licensee may not charge the customer any fee for rescinding the payday loan as provided in this subsection.
A customer may repay a payday loan with the proceeds of a subsequent payday loan made by the same or another licensee or an affiliate of the same or another licensee, but if the customer does so, the customer may not repay the subsequent payday loan with the proceeds of another payday loan made by the same or another licensee or an affiliate of the same or another licensee. A repayment of a subsequent payday loan and the origination of a new payday 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.
No licensee may make a payday loan to a customer that results in the customer having an outstanding aggregate liability in principal, interest, and all other fees and charges, to all licensees who have made payday loans to the customer of more than $1,500 or 35 percent of the customer's gross monthly income, whichever is less. As provided in sub. (9m)
, a licensee may rely on a consumer report to verify a customer's income for purposes of this paragraph.
No licensee may make a payday loan to a customer if the licensee determines, knows, or should have known, that the customer identification number of the customer is invalid.
No licensee may take a note, promise to pay, or any other instrument, in which blanks are left to be filled in after the payday loan has been made.
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 payday 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.
If a check held by a licensee as a result of a payday loan is dishonored, or an instruction to execute an electronic funds transfer authorized as the result of a payday loan is denied, the licensee may bring an action to collect the amount of the check or electronic funds transfer, but may not threaten or pursue criminal action against a debtor as a result of the debtor's dishonored check or denied electronic funds transfer or the debtor's payday loan not being paid.
All payday loans shall be governed by chs. 421
, but to the extent that chs. 421
are inconsistent with this section, this section shall govern. All payday loans shall be governed by ch. 427
A licensee shall deliver to the customer, at the time a payday 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 customer may prepay the customer's loan in whole or in part and that if the loan is prepaid in full the customer 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 payday loan.
A licensee shall give to the customer a plain and complete receipt for all cash payments made on account of any payday loan at the time such payments are made.
No payday 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 a customer in a consumer credit transaction.
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.
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:
Ensure that the 3rd-party provider operates the database according to the provisions of this section.
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.
In selecting a 3rd-party provider, give strong consideration to all of the following:
The 3rd-party provider's ability to prevent fraud, abuse, and other unlawful activity associated with payday loan transactions, and to provide additional tools for the administration and enforcement of this section.
Whether the provider is currently providing a similar service for another state.
Allow a licensee accessing the database to check a customer's unique identification number that is assigned to the customer in a manner specified by the division. A customer's unique identification number may not be based on the customer's social security number.
Allow a licensee accessing the database to determine if making a new payday loan would cause a violation of this section.
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.
Provide any other information that the division determines is necessary and requires by rule or contract with the database provider.
The database provider shall do all the following:
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.
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.
Upon receiving notification that a payday 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.
Automatically designate a payday 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 payday loan as an open transaction until the database provider is notified that the transaction is closed.
If a licensee stops making payday loans, designate all open transactions with that licensee as closed in the database 60 days after the date on which the licensee stops making payday 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.
In response to an inquiry from a licensee, state only that a person is eligible or ineligible for a new payday 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.
If at any time the division determines that a licensee that has stopped making payday 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.
The division may, without cost, access the database for the purposes of enforcing this section.
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 section 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.
The division shall, by order or rule, specify a database transaction fee of no more than $1 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 payday 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.
A licensee shall verify a customer's eligibility to enter into a payday loan by doing one of the following, as applicable:
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 payday loan with the licensee that in conjunction with a new payday loan would cause a violation of this section. The licensee shall maintain a database of all of the licensee's payday loans at all of its places of business and search that database to meet its obligation under this subdivision.
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 payday loan with the licensee and does not have open payday loans with other licensees that in conjunction with a new payday loan would cause a violation of this section.
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 customer in a statement provided in substantially the following form in at least 12-point type:
“I DO NOT HAVE ANY OUTSTANDING PAYDAY LOANS WITH THIS LICENSEE AND I DO NOT HAVE MORE PAYDAY LOANS WITH ANY OTHER LICENSED PAYDAY LOAN PROVIDER IN THIS STATE."
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.
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.
Before entering into a payday loan, a licensee shall submit to the database provider the customer's name; unique identification number that is assigned in a manner specified by the division; address; driver license number or other method of state identification; the amount of the transaction; the customer's check number, if applicable; 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.
When a payday 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 payday 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.
If the licensee stops making payday 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 payday 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.
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)
No licensee or person with whom the division contracts for operation of the database under sub. (14) (b)
may sell to another person any information regarding a customer or a payday loan made to a customer.
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.
If a person who is not licensed under this section makes a payday loan to a customer, the loan is void, the customer is not obligated to pay any amounts owed on the loan, and the customer may recover from the person all amounts the customer 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.
Private cause of action.
If a person makes a payday loan to a customer in violation of this section, the customer may bring an action against the person for damages of $250 or the amount of the payday loan, whichever is greater, plus costs, and, notwithstanding s. 814.04 (1)
, reasonable attorney fees.
“Division" means the division of banking attached to the department of financial institutions.
“Title loan" means a loan of $25,000 or less to a borrower, who obtains or seeks to obtain the loan for personal, family, or household purposes, that is, or is to be, secured by an interest, other than a purchase money security interest, in the borrower's motor vehicle, and that has an original term of not more than 6 months.
Before a licensed lender may make title loans under this section, the licensed lender shall first obtain from the division, for each licensed location at which any title loan is to be made, a certificate authorizing the licensed lender to make title loans from that location.
At the time of making an application for a certificate under par. (a)
, an applicant shall pay to the division an initial annual fee of $5,000. The valid period for the certificate shall be a calendar year and each certificate shall expire on the last day of the calendar year. To renew a certificate, the certificate holder shall, on or before December 10 of the year in which the certificate is to expire, pay to the division an annual renewal fee of $5,000 for the following calendar year.