Chapter 138

138.12(5m) (5m) Disciplinary orders.

138.12(5m)(a) (a) In this subsection:

138.12(5m)(a)1. 1. “General order” means an order of the division other than a special order.

138.12(5m)(a)2. 2. “Special order” means an order of the division to or affecting a person.

138.12(5m)(b) (b) The division may issue general orders or special orders necessary to prevent or correct actions by an insurance premium finance company that constitute cause under this section for revoking, suspending, or restricting a license.

138.12(5r) (5r) Reporting violations. The division may report any enforcement action, any violation of this section or of an administrative rule or order, or other relevant information to the nationwide multistate licensing system and registry. Except as provided in s. 224.35 (4) (b) and (c), these reports to the nationwide multistate licensing system and registry shall be confidential and are not subject to public copying or inspection under s. 19.35 (1).

138.12(6) (6) Records.

138.12(6)(a) (a) Every licensee shall maintain records of its premium finance transactions and the records shall be open to an examination and investigation by the division. The division may make an examination of the books, records and accounts of any licensee as the division deems necessary. The division shall determine the cost of an examination and that cost shall be assessed against and paid by the licensee so examined. The division may, at any time, require any licensee to bring such records as the division directs to the division for examination.

138.12(6)(b) (b) Every licensee shall preserve its records of such premium finance transactions, including cards used in a card system, for at least 3 years after making the final entry in respect to any premium finance agreement. The preservation of records in photographic form or other form authorized under s. 220.285 shall constitute compliance with this requirement.

138.12(7) (7) Rules and regulations. The division may make and enforce such reasonable rules as are necessary to carry out this section, but such rules shall not be contrary to nor inconsistent with this section.

138.12(8) (8) Premium finance agreements.

138.12(8)(a) (a) A premium finance agreement shall:

138.12(8)(a)1. 1. Be dated, signed by or on behalf of the insured, and the printed portion thereof shall be in at least 8-point type,

138.12(8)(a)2. 2. Contain the name and place of business of the insurance agent or insurance broker negotiating the related insurance contract, the name and residence or the place of business of the insured as specified by the insured, the name and place of business of the premium finance company to which installment or other payments are to be made, a description of the insurance contracts, including term and type of policy, the premiums for which are advanced or to be advanced under the agreement and the amount of the premiums therefor; and

138.12(8)(a)3. 3. Set forth the following items where applicable:

138.12(8)(a)3.a. a. The total amount of the premiums,

138.12(8)(a)3.b. b. The amount of the down payment,

138.12(8)(a)3.c. c. The principal balance (the difference between items a and b),

138.12(8)(a)3.d. d. The amount of the service charge,

138.12(8)(a)3.e. e. The balance payable by the insured (sum of items c and d),

138.12(8)(a)3.f. f. The number of installments required, the amount of each installment expressed in dollars, and the due date or period thereof.

138.12(8)(b) (b) The items set forth in par. (a) 3. need not be stated in the sequence or order in which they appear and additional items may be included to explain the computations made in determining the amount to be paid by the insured.

138.12(9) (9) Service charges. A premium finance company shall not charge, contract for, receive or collect a service charge other than as permitted by this subsection unless it is a licensed lender regulated under sub. (10).

138.12(9)(a) (a) The service charge shall be computed on the balance of the premiums due, after subtracting the down payment made by the insured in accordance with the premium finance agreement, from the effective date of the insurance coverage, for which the premiums are being advanced, to and including the date when the final installment of the premium finance agreement is payable.

138.12(9)(b) (b) The service charge may not exceed the interest rate authorized under s. 422.201 (2) (bm) per year plus an additional charge of $10 per premium finance agreement, but, if the principal balance is $50 or less there shall be no additional charge, and if the principal balance is more than $50 but not more than $100, the additional charge is $6.

138.12(9)(bm) (bm) Paragraph (b) applies only to a premium finance agreement in which the related insurance contract is for personal, family or household use entered into before November 1, 1984. The service charge for any other premium finance agreement shall be as agreed by the parties to the agreement.

138.12(9)(c) (c) The service charge shall be computed on the principal balance of a premium finance agreement payable in successive monthly installments substantially equal in amount for a period of one year. On a premium finance agreement providing for installments extending for a period less than or greater than one year, the service charge shall be computed proportionately.

138.12(9)(d) (d) Notwithstanding the provisions of any premium finance agreement, any insured may prepay the obligation in full at any time. In such event, the insured shall receive a refund credit. The amount of such refund credit shall represent at least as great a proportion of the service charge as the sum of the periodic balances after the month in which prepayment is made bears to the sum of all periodic balances under the schedule of installments in the agreement. Where the amount of the refund credit is less than $1, no refund need be made. If in addition to the service charge an additional charge was imposed, such additional charge need not be refunded nor taken into consideration in computing the refund credit.

138.12(10) (10) Charges by licensed lenders; rebates.

138.12(10)(a) (a) A lender licensed under s. 138.09 may charge interest as provided in that section for a loan involving a premium finance agreement.

138.12(10)(b) (b) The interest shall be computed on the balance of the premiums due, after subtracting the down payment made by the insured in accordance with the premium finance agreement, from the effective date of the insurance coverage, for which the premiums are being advanced, to and including the date when the final installment of the premium finance agreement is payable.

138.12(10)(c) (c) Notwithstanding the provisions of any premium finance agreement, any insured may prepay the obligation in full at any time. In such event the insured shall receive a rebate as provided under s. 138.09.

138.12(10)(d) (d) Except as provided in sub. (12) to the contrary, s. 138.09 applies to a loan involving a premium finance agreement made by a licensed lender.

138.12(11) (11) Delinquency or default charge.

138.12(11)(a) (a) A premium finance agreement may provide for the payment by the insured of a delinquency or default charge of $1 to a maximum of 5 percent of any delinquent installment which is in default for a period of 5 days or more. If the default results in the cancellation of any insurance contract listed in the agreement, the agreement may provide for the payment by the insured of a cancellation charge of $15. A premium finance agreement may also provide for the payment of statutory attorney fees and statutory court costs if the agreement is referred for collection to an attorney not a salaried employee of the insurance premium finance company.

138.12(11)(b) (b) This subsection does not apply to loans by licensed lenders regulated under s. 138.09.

138.12(12) (12) Cancellation. When a premium finance agreement contains a power of attorney or other authority enabling the insurance premium finance company to cancel any insurance contract listed in the agreement, the following applies:

138.12(12)(a) (a) Not less than 10 days’ written notice shall be mailed to the insured of the intent of the insurance premium finance company to cancel the insurance contract unless the default is cured prior to the date stated in the notice. The insurance agent or insurance broker indicated on the premium finance agreement shall also be mailed 10 days’ notice of such action.

138.12(12)(b) (b) Pursuant to the power of attorney or other authority referred to above, the insurance premium finance company may cancel on behalf of the insured by mailing to the insurer written notice stating when thereafter the cancellation shall be effective, and the insurance contract shall be canceled as if such notice of cancellation had been submitted by the insured himself or herself, but without requiring the return of the insurance contract. The insurance premium finance company shall also mail a notice of cancellation to the insured at the insured’s last-known address and to the insurance agent or insurance broker indicated on the premium finance agreement. Compliance by the premium finance company with the provisions of the premium finance agreement or par. (a), shall not be a condition of effective cancellation hereunder.

138.12(12)(c) (c) Where statutory, regulatory or contractual restrictions provide that the insurance contract may not be canceled unless notice is given to a governmental agency, mortgagee or other 3rd party, the insurer shall give the prescribed notice on behalf of itself or the insured to such governmental agency, mortgagee or other 3rd party within a reasonable time after the day it receives the notice of cancellation from the premium finance company. When the above restrictions require the continuation of insurance beyond the effective date of cancellation specified by the premium finance company such insurance shall be limited to the coverage to which such restrictions relate and to the persons they are designed to protect.

138.12(12)(d) (d) Whenever a financed insurance contract is canceled the insurer shall return whatever unearned premiums are due under the insurance contract to the insurance premium finance company for the account of the insured, and such action by the insurer shall be deemed to satisfy the insurer’s obligations under the insurance contract which relate to the return of unearned premiums. If the crediting of return premiums to the account of the insured results in a surplus over the amount due from the insured, the premium finance company shall refund such excess to the insured but no such refund shall be required if it amounts to less than $1.

138.12(13) (13) No filing necessary. No filing of the premium finance agreement or recording of a premium finance transaction shall be necessary to perfect the validity of such agreement as a secured transaction as against creditors, subsequent purchasers, pledgees, encumbrancers, successors or assigns.

138.12(15) (15) Applicability of chs. 421 to 427 to this section. All consumer loans as defined in chs. 421 to 427 made by licensees under this section shall be governed by this section to the extent that chs. 421 to 427 are inconsistent with this section.

138.12 History History: 1971 c. 40 s. 93; 1971 c. 125 s. 478; 1971 c. 239; Stats. 1971 s. 138.12; 1975 c. 371 s. 50; 1975 c. 372; 1977 c. 444 ss. 4 to 6, 11; 1981 c. 45; 1983 a. 189; 1985 a. 182 s. 57; 1987 a. 27; 1989 a. 336; 1991 a. 39, 221; 1993 a. 112, 482; 1995 a. 27; 1997 a. 191, 237; 1999 a. 9, 32, 83; 2005 a. 215, 253; 2007 a. 20; 2013 a. 36; 2023 a. 267.

138.14 138.14 Payday loans.

138.14(1) (1) Definitions. In this section:

138.14(1)(a) (a) “Affiliate” means, with respect to a person, another person who owns or controls, is owned or controlled by, or is under common ownership or control with, such person. In this paragraph “control” means any of the following:

138.14(1)(a)1. 1. For a corporation, direct or indirect ownership of, or the right to control, 10 percent or more of the voting shares of the corporation, or the ability of a person to elect a majority of the directors or otherwise effect a change in policy.

138.14(1)(a)2. 2. For any entity other than a corporation, the ability to change the active or passive principals of the organization.

138.14(1)(b) (b) “Check” has the meaning given in s. 403.104 (6).

138.14(1)(bd) (bd) “Consumer report” has the meaning given in 15 USC 1681a (d).

138.14(1)(be) (be) “Consumer reporting agency” has the meaning given in 15 USC 1681a (f).

138.14(1)(bm) (bm) “Customer” means an individual who enters into a payday loan with a licensee.

138.14(1)(br) (br) “Customer identification number” means a unique number assigned to a customer in a manner specified by the division, or by the database provider acting at the direction of the division.

138.14(1)(c) (c) “Database” means the statewide database described in sub. (14).

138.14(1)(d) (d) “Database provider” means a 3rd-party provider with whom the department contracts to operate the database or, if the division elects to operate the database, the division.

138.14(1)(e) (e) “Department” means the department of financial institutions.

138.14(1)(f) (f) “Division” means the division of banking.

138.14(1)(g) (g) “Financial establishment” means any organization that is authorized to do business under state or federal law and that holds a demand deposit, savings deposit, or other asset account belonging to an individual.

138.14(1)(h) (h) “General order” means an order that is not a special order.

138.14(1)(i) (i) “Licensee” means a person holding a license issued by the division under sub. (5).

138.14(1)(j) (j) “Maturity date” means the date specified when originating a payday loan on which the loan is required to be paid in full.

138.14(1)(jm) (jm) “Nationwide multistate licensing system and registry” has the meaning given in s. 224.35 (1g) (b).

138.14(1)(k) (k) “Payday loan” means any of the following:

138.14(1)(k)1. 1. A transaction between an individual with an account at a financial establishment and another person, including a person who is not physically located in this state, in which the person agrees to accept from the individual one or more checks, to hold the check or checks for a period of time before negotiating or presenting the check or checks for payment, and to loan to the individual, for a term of 90 days or less, before negotiating or presenting the check or checks for payment, an amount that is agreed to by the individual.

138.14(1)(k)2. 2. A transaction between an individual with an account at a financial establishment and another person, including a person who is not physically located in this state, in which the person agrees to accept the individual’s authorization to initiate one or more electronic fund transfers from the account, to wait a period of time before initiating the electronic fund transfer or transfers, and to loan to the individual, for a term of 90 days or less, before initiating the electronic fund transfer or transfers, an amount that is agreed to by the individual.

138.14(1)(L) (L) “Special order” means an order against a person.

138.14(1)(m) (m) “Unique identifier” has the meaning given in s. 224.35 (1g) (e).

138.14(2) (2) License required. A person may not originate or service a payday loan involving a Wisconsin resident without first having obtained from the division a license under sub. (5) for each place of business at which the person originates or services payday loans involving Wisconsin residents. Such a license is required for, and this section applies to, all payday loans made to a Wisconsin resident, regardless of whether the loan is made by face-to-face contact, mail, telephone, Internet, or any other means.

138.14(3) (3) Exemptions. This section does not apply to any of the following:

138.14(3)(a) (a) Banks, savings banks, savings and loan associations, trust companies, credit unions, or any of their affiliates.

138.14(3)(b) (b) Any transaction in which no finance charge, and no other fees or charges of any kind, are required or accepted, at any time, from the person receiving the loan. For the purposes of this paragraph, “finance charge” has the meaning given in 12 CFR 1026.4.

138.14(3)(c) (c) Providers of earned wage access services required to be licensed under s. 203.03 (1).

138.14(4) (4) Applications; fees; bond.

138.14(4)(a) (a)

138.14(4)(a)1. 1. Subject to subd. 1g., application for licenses under sub. (5) shall be made to the division in writing in the form and manner prescribed by the division and shall include all of the following:

138.14(4)(a)1.a. a. Except as provided in subd. 3., if the applicant is an individual, the applicant’s social security number.

138.14(4)(a)1.b. b. If the applicant is not an individual, the applicant’s federal employer identification number.

138.14(4)(a)1.c. c. A statement signed by or on behalf of the applicant that acknowledges that the applicant is subject to the debt collection requirements under ch. 427 with respect to payday loans.

138.14(4)(a)1g. 1g. The division shall utilize the nationwide multistate licensing system and registry, and the provisions of s. 224.35 shall apply, with respect to applicants and licensees under this section.

138.14(4)(a)1m. 1m. An applicant or licensee under this section shall register with, and maintain a valid unique identifier issued by, the nationwide multistate licensing system and registry.

138.14(4)(a)1r. 1r. Each licensee shall keep current and accurate all material information on file with the division and the nationwide multistate licensing system and registry as provided in s. 224.35 (6).

138.14(4)(a)2. 2. The division may not disclose any information received under subd. 1. a. or b. to any person except as follows:

138.14(4)(a)2.a. a. The division may disclose information under subd. 1. a. or b. to the department of revenue for the sole purpose of requesting certifications under s. 73.0301 and to the department of workforce development for the sole purpose of requesting certifications under s. 108.227.

138.14(4)(a)2.b. b. The division may disclose information under subd. 1. a. to the department of workforce development in accordance with a memorandum of understanding under s. 49.857.

138.14(4)(a)2.c. c. The division may disclose information to the nationwide multistate licensing system and registry as provided in s. 224.35.

138.14(4)(a)3. 3. If an applicant who is an individual does not have a social security number, the applicant, as a condition of applying for a license, shall submit a statement made or subscribed under oath or affirmation to the division that the applicant does not have a social security number. The form of the statement shall be prescribed by the department of workforce development. Any license issued in reliance upon a false statement submitted by an applicant is invalid.

138.14(4)(b) (b) At the time of making application, an applicant for a license shall pay to the division a nonrefundable $300 fee for investigating the application and a $500 annual license fee. If the cost of the investigation exceeds $300, the applicant shall upon demand of the division pay to the division the amount by which the cost of the investigation exceeds the nonrefundable fee.

138.14(4)(c) (c) The division shall require any applicant or licensee to file and maintain in force a bond in a sum not to exceed $5,000 for each place of business at which the applicant or licensee makes payday loans to a Wisconsin resident. The bond shall be in a form prescribed by and acceptable to the division.