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LRB-2074/2
ARG:kjf&cjs
2021 - 2022 LEGISLATURE
January 18, 2022 - Introduced by Representatives Tusler, McGuire, Allen,
Behnke, Born, Cabrera, Kitchens, Knodl, Penterman, Pope, Skowronski,
Steffen, Stubbs, Subeck, Thiesfeldt, Vruwink and James, cosponsored by
Senators Wimberger, Roys, Agard, Ringhand and Wanggaard. Referred to
Committee on Consumer Protection.
AB858,1,2 1An Act to amend 138.04; and to create 100.56 of the statutes; relating to:
2consumer lawsuit lending and providing a penalty.
Analysis by the Legislative Reference Bureau
This bill creates provisions governing consumer lawsuit lending transactions.
Under the bill, a “consumer" is an individual who is or may become a plaintiff or
claimant in a civil action or other proceeding (dispute). “Consumer lawsuit lending"
means 1) providing money to a consumer, for the consumer to use for any purpose
other than prosecuting the consumer's dispute, with repayment of the money
conditioned on and derived from the consumer's proceeds of the dispute; or 2)
purchasing from a consumer a contingent right to receive a share of the potential
proceeds of the consumer's dispute. In a consumer lawsuit lending transaction, all
of the following apply: 1) the lender may charge interest at a rate of no more than
18 percent per year; 2) the consumer may prepay the transaction at any time and,
upon prepayment in full, is entitled to a refund of unearned interest charged; 3) the
transaction term may not exceed 36 months; 4) the lender may not charge fees of
more than $360 per year; 5) the lender may not pay commissions or referral fees to
attorneys or health care providers; and 6) there must be a written agreement
between the lender and the consumer that contains specified information, including
the interest rate and the consumer's right to receive a refund of interest charged if
prepayment is made in full, as well as provisions that disclose all one-time fees
charged to the consumer, disclose the amount to be received by the consumer and the
amount the consumer assigns to the lender, state that the consumer has a right to
cancel the agreement within five days, state that the lender has no right to make

decisions or otherwise participate in the dispute, and state that the lender may be
paid only from the consumer's proceeds of the dispute and is not entitled to be repaid
if there are no such proceeds. A lender that violates any of these requirements or
restrictions is subject to a civil forfeiture of not less than $25 nor more than $5,000,
unless the lender establishes that the violation was the result of an unintentional
good faith error and the lender had in place policies or procedures designed to achieve
compliance. The Department of Trade, Agriculture and Consumer Protection has
enforcement authority over violations.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB858,1 1Section 1. 100.56 of the statutes is created to read:
AB858,2,2 2100.56 Consumer lawsuit lending. (1) In this section:
AB858,2,43 (a) “Consumer" means an individual who is or may become a plaintiff or
4claimant or demandant in any dispute.
AB858,2,65 (b) “Consumer lawsuit lender" means any person that engages in consumer
6lawsuit lending.
AB858,2,77 (c) “Consumer lawsuit lending" means any of the following:
AB858,2,118 1. Providing money to any consumer, for the consumer to use for any purpose
9other than prosecuting the consumer's dispute, with repayment of the money
10conditioned on and derived from the consumer's proceeds of the dispute, regardless
11of whether these proceeds result from a judgment, settlement, or other source.
AB858,2,1412 2. Purchasing from any consumer a contingent right to receive a share of the
13potential proceeds of the consumer's dispute, regardless of whether these proceeds
14result from a judgment, settlement, or other source.
AB858,2,1515 (d) “Dispute" means any of the following:
AB858,2,1616 1. Any civil action.
AB858,2,1717 2. Any alternative dispute resolution proceeding.
AB858,3,2
13. Any administrative proceeding before any agency or instrumentality of the
2state.
AB858,3,4 3(2) (a) A consumer lawsuit lender may charge or contract for interest in a
4consumer lawsuit lending transaction at a rate not exceeding 18 percent per year.
AB858,3,85 (b) A consumer lawsuit lending transaction may be prepaid by the consumer
6at any time in whole or in part. Upon prepayment of the consumer lawsuit lending
7transaction in full by cash, renewal, or refinancing, the consumer is entitled to a
8refund of unearned interest charged, which shall be determined as follows:
AB858,3,169 1. On a consumer lawsuit lending transaction that is repayable in substantially
10equal, successive installments at approximately equal intervals of time and the face
11amount of which includes predetermined interest charges, the amount of the refund
12shall be as great a proportion of the total interest charged as the sum of the balances
13scheduled to be outstanding during the full installment periods commencing with
14the installment date nearest the date of prepayment bears to the sum of the balances
15scheduled to be outstanding for all installment periods of the consumer lawsuit
16lending transaction.
AB858,3,2117 2. On any consumer lawsuit lending transaction other than one under subd.
181., the amount of the refund shall not be less than the difference between the interest
19charged and interest, at the rate contracted for, computed upon the unpaid principal
20balances of the consumer lawsuit lending transaction from time to time outstanding
21prior to prepayment in full.
AB858,3,23 22(3) (a) The term of a consumer lawsuit lending transaction may not exceed 36
23months.
AB858,4,3
1(b) The maximum total annual fee charged by a consumer lawsuit lender in a
2consumer lawsuit lending transaction, including any underwriting fee, organization
3fee, or other fee or charge, may not exceed $360 per year.
AB858,4,6 4(4) (a) A consumer lawsuit lender may not enter into a consumer lawsuit
5lending transaction unless there is a written agreement between the consumer
6lawsuit lender and the consumer that includes all of the following:
AB858,4,87 1. The rate of interest agreed upon in terms either of simple interest computed
8on the declining principal balance or of the actual interest cost in money.
AB858,4,119 2. A statement that the consumer lawsuit lending transaction may be prepaid
10in full or in part and that, if the consumer lawsuit lending transaction is prepaid in
11full, the consumer may receive a refund of interest charged.
AB858,4,1612 3. On the front page of the agreement, a disclosure of the amount of money to
13be provided to the consumer and the total amount of money to be assigned by the
14consumer to the consumer lawsuit lender, described in 6-month intervals for a total
15period of 36 months, along with an itemization of all one-time fees to be charged to
16the consumer.
AB858,4,2117 4. A provision that the consumer may cancel the agreement, without penalty
18or further obligation, within 5 business days after entering into the consumer
19lawsuit lending transaction if, during this period, the consumer returns to the
20consumer lawsuit lender either the lender's unnegotiated check or all money
21provided to the consumer as well as notice of cancellation.
AB858,4,2522 5. A provision that the consumer lawsuit lender has no right to, and will not,
23make any decisions with respect to the conduct of the dispute or any settlement or
24resolution of the dispute and that those decisions remain solely with the consumer
25and the consumer's attorney.
AB858,5,3
16. A provision that the consumer lawsuit lender has no right to participate in
2the prosecution of the dispute or to obtain documents or evidence connected with the
3dispute.
AB858,5,84 7. A provision that the consumer lawsuit lender accepts only an assignment of
5an amount of the potential proceeds from the dispute and does not accept an
6assignment of the consumer's legal claim. This provision shall also specify that the
7consumer lawsuit lender has no right to pursue the consumer's legal claim on behalf
8of or in lieu of the consumer.
AB858,5,169 8. A provision that the consumer lawsuit lender may be paid only from the
10consumer's proceeds of the dispute. This provision shall also specify that the
11consumer does not owe the consumer lawsuit lender anything if there is no recovery
12by the consumer in the dispute unless the consumer violates the terms of the
13agreement. This provision shall also specify that, if there are insufficient proceeds
14to pay the consumer lawsuit lender in full, the consumer lawsuit lender may be paid
15only to the extent that there are available proceeds from the dispute, unless the
16consumer violates the terms of the agreement.
AB858,5,1917 9. A provision that, if the consumer is represented by an attorney, any proceeds
18from the dispute paid to the consumer lawsuit lender may be paid only from the trust
19account of the consumer's attorney.
AB858,5,2220 (b) Each provision or disclosure required under this subsection shall be in
21boldface type and of a type size no smaller than 12-point, except that the provision
22under par. (a) 8. shall be of a type size no smaller than 15-point.
AB858,5,25 23(5) (a) In this subsection, “health care provider" has the meaning given in s.
24146.81 (1), but also includes any individual licensed or certified in another state for
25the same or equivalent profession.
AB858,6,4
1(b) A consumer lawsuit lender may not pay or offer to pay commissions or
2referral fees to any attorney or employee of a law firm, or to any health care provider
3or employee of a health care provider, for referring a consumer to the consumer
4lawsuit lender.
AB858,6,7 5(6) (a) Except as provided in par. (b), any consumer lawsuit lender that violates
6this section is subject to a forfeiture of not less than $25 nor more than $5,000 for each
7violation.
AB858,6,118 (b) It is a defense to a violation of this section if the consumer lawsuit lender
9establishes that the violation was the result of an unintentional good faith error and,
10at the time of the violation, the consumer lawsuit lender had in place policies or
11procedures designed to achieve compliance with this section.
AB858,2 12Section 2 . 138.04 of the statutes is amended to read:
AB858,6,18 13138.04 Legal rate. The rate of interest upon the loan or forbearance of any
14money, goods, or things in action shall be $5 upon the $100 for one year and according
15to that rate for a greater or less sum or for a longer or a shorter time; but parties may
16contract for the payment and receipt of a rate of interest not exceeding the rate
17allowed in ss. 100.56 (2) (a), 138.041 to 138.056, 138.09 to 138.14, 218.0101 to
18218.0163, or 422.201, in which case such rate shall be clearly expressed in writing.
AB858,3 19Section 3. Initial applicability.
AB858,6,2120 (1) Consumer lawsuit lending. This act first applies to consumer lawsuit
21lending transactions first entered into on the effective date of this subsection.
AB858,6,2222 (End)
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