Limitation on default charges. 422.413(1)(1)
Except as provided in sub. (2g)
, no term of a writing evidencing a consumer credit transaction may provide for any charges as a result of default by the customer other than reasonable expenses incurred in the disposition of collateral or goods subject to a motor vehicle consumer lease and such other charges as are specifically authorized by chs. 421
In any consumer credit transaction in which the collateral is a motor vehicle as defined in s. 340.01 (35)
, a trailer as defined in s. 340.01 (71)
, a snowmobile as defined in s. 340.01 (58a)
, a boat as defined in s. 30.50 (2)
, an aircraft as defined in s. 114.002 (3)
, or a mobile home or manufactured home as defined in s. 101.91
, a writing evidencing the transaction may provide for the creditor's recovery of all of the following expenses, if the expenses are reasonable and bona fide:
Expenses of taking and holding the collateral if paid to persons not related to the creditor.
Travel and transportation expenses of the creditor or the creditor's employees in taking possession of the collateral.
If the collateral is not redeemed by the customer under s. 425.208
, the greater of expenses determined under subd. 2.
or of all of the following expenses of preparing the collateral for sale if paid to persons not related to the creditor:
Expenses for cleaning and restoring the appearance of the collateral, not to exceed $100.
Expenses for repair of damage to the collateral if covered by insurance, not to exceed the lesser of any deductible amount or $250.
Expenses for mechanical repairs to the collateral, not to exceed $200.
Expenses for any repair to the collateral which increase the selling price of the collateral, not to exceed the amount by which the selling price is increased because of the repairs, if paid to persons not related to the creditor. The selling price of the collateral before repairs shall be established by any reasonable method, at no cost to the customer.
Notwithstanding s. 409.615 (1)
, the proceeds of any disposition of collateral referred to in sub. (2g)
shall be applied in the following order to:
The satisfaction of indebtedness secured by the security interest under which the disposition of the collateral is made.
The satisfaction of indebtedness secured by any subordinate security interest in the collateral, subject to the restrictions set forth in s. 409.615 (1) (c)
Use of multiple agreements. 422.414(1)(1)
No creditor shall divide or otherwise encourage the customer or customers to become obligated at the same time on more than one consumer loan, more than one consumer credit sale, or one or more interlocking consumer loans (s. 422.408
) and consumer credit sale for the purpose of obtaining a higher rate of finance charge than would otherwise be permitted under chs. 421
Multiple agreements which arise out of substantially the same transaction shall be presumed to be in violation of this section.
History: 1971 c. 239
; 1979 c. 89
Changes in open-end credit terms. 422.415(1)(1)
Except as provided in sub. (2)
, no creditor shall make any change in the terms of open-end credit plans that is adverse to the interests of the customer with respect to any outstanding balances or that imposes or alters a charge permitted under s. 422.202 (2m)
. For the purposes of this section, a change shall be presumed to be adverse if the result thereof is to increase the rate of the finance charge or the amount of the periodic payment due. Outstanding balances shall be determined on the assumption that all payments shall be credited first to any finance charges that may be due and then to the payment of debts in the order in which the entries to the account showing the debts were made.
A change that is adverse to the interests of the customer with respect to outstanding balances or that imposes or alters a charge permitted under s. 422.202 (2m)
may be made if any of the following conditions is met:
The change is required by legislation, regulations or administrative rules becoming effective after the date of the agreement with the customer and the creditor has mailed or delivered to the customer written notice disclosing such proposed change not less than 3 months prior to the effective date of such change or such lesser period of time as may be available before such change is required to be made.
The change is made within 3 months of March 1, 1973 or within 3 months after the repeal or expiration of any federal legislation, administrative order, rule, guideline or regulation, the purpose of which was to limit or freeze finance charges or other charges, in effect on March 1, 1973, whichever is later.
The creditor mails or otherwise delivers to the customer a written disclosure of the proposed change not less than 90 days prior to the effective date of such change.
No term of a writing executed by the customer shall constitute authorization for a creditor to unilaterally make changes in the terms of the credit plan, which are otherwise prohibited by this section.
Notice of termination of liability. 422.4155(1)(1)
In an open-end credit plan in which more than one person may be obligated for extensions of credit, any person may terminate his or her liability for future extensions of credit under the plan by giving written notice to the creditor of the person's termination of liability. The person's liability for future extensions of credit under the plan shall continue as to loans extended to, or purchases made by, any other person under the plan for 15 business days after the creditor's receipt of the termination notice. The terminating person's liability may not exceed the greater of the requested and contracted for credit limit under the plan or the balance outstanding under the plan on the receipt of the termination notice plus $500.
Notwithstanding sub. (1)
, a person remains liable for loans extended to, or purchases made by, the person after giving the termination notice.
History: 1981 c. 45
Referral transactions prohibited. 422.416(1)(1)
With respect to a consumer transaction no merchant shall give or offer to give a rebate or discount or otherwise pay or offer to pay value to the customer as an inducement for a consumer transaction in consideration of the customer's giving to the creditor the names of prospective customers, or otherwise aiding the creditor in entering into a transaction with another customer or, without being limited by any of the foregoing, performing any other act or the occurrence of any other event, if the earning of the rebate, discount or other value is contingent upon the occurrence of an event subsequent to the time the customer enters into the agreement.
History: 1971 c. 239
; 1991 a. 316
Restrictions on security interests. 422.417(1)(1)
With respect to a consumer credit sale a seller may take a security interest only in:
Goods upon which the property sold is installed or to which it is annexed, or goods upon which the services sold are performed, if the obligation secured is $500 or more;
Real property to which the property sold is affixed, or which is maintained, repaired or improved as a result of the sale of the property or services, if the obligation secured is $1,000 or more; and
Goods of the consumer which were the subject of a prior transaction with the seller which is consolidated (s. 422.206
) with the consumer credit sale, or if the consumer credit sale is made pursuant to an open-end credit plan, goods previously purchased by the consumer pursuant to the plan, subject however to s. 422.418
With respect to a consumer lease, except as otherwise provided in s. 429.205
with respect to a motor vehicle consumer lease, a lessor may not take a security interest in any property owned or leased by the customer other than the leased goods to secure the lessor's obligations under the lease. This subsection does not prohibit a security interest in a cash security deposit for a consumer lease of motor vehicles.
With respect to a consumer loan, in addition to the limitations on security interests required by 12 CFR 227.13
(d), 12 CFR 535.2
(a) (4) or 16 CFR 444.2
(a) 4, if any, a lender may not take a security interest, other than a purchase money security interest, in:
Clothing of the customer and the customer's dependents and the following, if they are not fixtures: dining table and chairs, refrigerator, heating stove, cooking stove, radio, beds and bedding, couch and chairs, cooking utensils and kitchenware; or
Real property if the obligation secured is less than $1,000.
Security interests: consolidations; open-end credit plans. 422.418(1)(1)
The parties may agree in a consolidation agreement under s. 422.206
that the creditor may secure the consolidated obligation by a security interest in property in which the creditor has an existing security interest as a result of the prior transaction which is one of those agreed to become consolidated.
For the purpose of determining the extent to which a consolidated obligation is secured after a consolidation of consumer sales, and after a consolidation of consumer loans in which one or more of the loans consolidated is secured by a purchase money security interest in property of the type described in s. 422.417 (3) (a)
, payments received by the creditor after a consolidation agreement are deemed to have been first applied to the payment of obligations arising from the transactions first made. To the extent that obligations are paid pursuant to this section, security interests in items of property terminate as the obligation originally incurred with respect to each item is paid.
Payments received by the creditor upon an open-end credit plan are deemed, for the purpose of determining the amount of the unpaid balance secured by the various security interests, to have been applied first to the payment of finance charges in the order of their entry to the account, and then to the payment of the respective amounts financed in the order in which the entries to the account were made.
If obligations consolidated or financed pursuant to an open-end credit plan arise from 2 or more transactions made on the same day, payments received by the creditor are deemed, for the purpose of determining the amount of the obligation secured by the various security interests, to have been applied first to the payment of the smallest obligation.
Waivers prohibited. 422.419(1)(1)
No contract evidencing a consumer credit transaction may contain any provision by which:
The merchant or other person acting on the merchant's behalf is given authority to enter the customer's dwelling or to commit any breach of the peace in the course of taking possession of collateral securing the transaction;
The customer waives any right of action against the merchant, or other person acting on the merchant's behalf, for any breach of the peace or other illegal act committed in the course of taking possession of such collateral; or
The customer executes a power of attorney or similar instrument appointing the merchant, or other person acting on the merchant's behalf, as the customer's agent in the taking of possession of such collateral.
History: 1971 c. 239
; 1991 a. 316
The Department of Financial Institutions has promulgated a definition of “dwelling" for purposes of sub. (1) (a) that includes any garage, shed, barn, or other building on the premises whether attached or unattached. There is no reason why “dwelling" should have a different meaning in s. 425.206 (2) (b). Duncan v. Asset Recovery Specialists, Inc., 2020 WI App 54
, 393 Wis. 2d 814
, 948 N.W.2d 419
No term of a writing signed by a cosigner and made pursuant to a consumer credit transaction may:
Provide for payment by the cosigner of any fees or charges which could not be imposed upon the customer as part of the transaction; or
Operate to remove from the cosigner any rights or protections given the customer under chs. 421
History: 1973 c. 3
Variable rate transaction. 422.421(1)(a)
“Approved index" means any relevant index approved by the administrator that is beyond the control of the creditor and is verifiable by the customer.
“Consummation" with respect to a variable rate transaction other than one pursuant to an open-end credit plan means the time at which a customer becomes contractually obligated on the variable rate transaction.
“Consummation" with respect to a variable rate transaction pursuant to an open-end credit plan means the time at which a creditor accepts a customer's application and authorizes the customer's participation in the plan or the time at which an amendment to an existing open-end credit plan is accepted by or becomes binding on the customer under sub. (11)
or s. 422.415
“Variable rate transaction" means any open-end credit plan and any consumer credit transaction other than one pursuant to an open-end credit plan, the terms of which permit the rate of finance charge to be adjusted from time to time during the term of the plan or transaction other than by an adjustment under s. 422.415
, but does not include any consumer credit transaction the terms of which permit only the rates of finance charge that are initially numerically specified in any document evidencing the plan or transaction.
(2) Variable rate transactions permitted.
Creditors may engage in variable rate transactions subject to the conditions and limitations of this section.
Adjustments in the rate of finance charge of a variable rate transaction that are based upon changes in an approved index shall be made in accordance with provisions set forth in the documents evidencing the variable rate transaction including provisions specifying all of the following:
The relationship between approved index values and the rates of finance charge.