Chapter 218

218.02(6)(a)3. 3. If any fact or condition exists which, if it had existed at the time of the original application for such license, clearly would have warranted the division in refusing to issue such license;

218.02(6)(a)4. 4. If the licensee has demonstrated untrustworthiness or incompetency to act in such business in a manner to safeguard the interests of the public.

218.02(6)(a)5. 5. If the licensee made a material misstatement, or knowingly omitted a material fact, in an application for a license or in information furnished to the division or the nationwide multistate licensing system and registry.

218.02(6)(b) (b) In accordance with a memorandum of understanding entered into under s. 49.857, the division shall restrict or suspend a license if the licensee is an individual who fails to comply, after appropriate notice, with a subpoena or warrant issued by the department of children and families 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.

218.02(6)(c) (c) In accordance with s. 73.0301, the division shall revoke a license if the department of revenue has certified under s. 73.0301 that the licensee is liable for delinquent taxes.

218.02(6)(d) (d) In accordance with s. 108.227, the division shall revoke a license if the department of workforce development has certified under s. 108.227 that the licensee is liable for delinquent unemployment insurance contributions.

218.02(7) (7) Powers of division. It shall be the duty of the division and the division shall have power, jurisdiction and authority to investigate the conditions and ascertain the facts with reference to such companies and upon the basis thereof:

218.02(7)(a) (a) To issue general or special orders in execution of or supplementary to this section, but not in conflict therewith, to protect debtors from oppressive or deceptive practices of licensees;

218.02(7)(b) (b) To regulate advertising and solicitation of business by licensees, and to prevent evasions of this section;

218.02(7)(c) (c) At any time and so often as the division may determine to investigate the business and examine the books, accounts, records and files used therein of every licensee. The cost of an examination shall be determined by the division and shall be paid to the division by every licensee so examined within 30 days after demand therefor by the division, and the state may maintain an action for the recovery of such costs in any court of competent jurisdiction;

218.02(7)(d) (d) To determine and fix by general order the maximum fees or charges that such companies may make.

218.02(8) (8) Statement to debtor. When any settlement or reduction of accounts has been made by such company, it shall furnish the debtor on demand a verified statement showing the amount due creditors by the terms of such settlement or reduction.

218.02(9) (9) Rules and reports; fees; enforcement; reporting violations.

218.02(9)(a) (a) A licensee shall make an annual report and submit financial statements as provided in s. 224.35 (8). The division may make such rules and require such further reports as the division deems necessary for the enforcement of this section. The licensee shall keep such books and records as will enable the division to determine whether licensees are in compliance with this section and any rules or orders issued thereunder. The powers granted under s. 217.11 apply to and are available for the purposes of this section. This paragraph does not apply to any of the following:

218.02(9)(a)1. 1. Applications for licenses that are denied, or licenses that are revoked, because the department of revenue has certified under s. 73.0301 that the applicant or licensee is liable for delinquent taxes.

218.02(9)(a)1m. 1m. Applications for licenses that are denied, or licenses that are revoked, because the department of workforce development has certified under s. 108.227 that the applicant or licensee is liable for delinquent unemployment insurance contributions.

218.02(9)(a)2. 2. Applications for licenses that are denied or licenses that are restricted or suspended because the applicant or licensee has failed to comply, after appropriate notice, with a subpoena or warrant issued by the department of children and families or a county child support agency under s. 59.53 (5) and related to paternity or child support proceedings or 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.

218.02(9)(b) (b) All fees and moneys received by the division under authority of this chapter shall be paid by the division into the state treasury within one week after the receipt thereof.

218.02(9)(c) (c) The division shall investigate, ascertain and determine whether this chapter or the lawful orders issued hereunder are being violated and for such purposes the division shall have all of the powers granted under s. 217.11. The division shall report all violations to the district attorney of the proper county for prosecution.

218.02(9)(d) (d) 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).

218.02(10) (10) Penalties. Any person violating any of the provisions of this section shall be punished by a fine of not more than $500 or by imprisonment in the county jail for not more than 90 days, or by both such fine and imprisonment.

218.02 History History: 1971 c. 125, 164, 215; 1973 c. 3; 1989 a. 336; 1991 a. 316; 1993 a. 112, 246; 1995 a. 27; 1997 a. 27, 191, 237; 1999 a. 9, 32; 2007 a. 20; 2013 a. 36; 2023 a. 267.

218.02 Cross-reference Cross-reference: See also ch. DFI-Bkg 73, Wis. adm. code.

218.02 Annotation JK Harris, 2006 WI App 107, expressly rejects a narrow definition of “prorating” in sub. (1) (a) as inconsistent with the goals of the statutory scheme. Prorating occurs when one negotiates a reduction or extended payment on behalf of the debtor for the debtor’s outstanding debt with that creditor. Morgan Drexen, Inc. v. DFI, 2015 WI App 27, 361 Wis. 2d 271, 862 N.W.2d 329, 14-1268.

218.02 Annotation A hearing examiner’s interpretation of “engaged as principal” in sub. (1) (a) as solely modifying the word “individual” was not unreasonable. Morgan Drexen, Inc. v. DFI, 2015 WI App 27, 361 Wis. 2d 271, 862 N.W.2d 329, 14-1268.

subch. III of ch. 218 SUBCHAPTER III

COLLECTION AGENCIES

218.04 218.04 Collection agencies.

218.04(1) (1) Definitions. The following terms, as used in this section, shall have the meaning stated, unless the context requires a different meaning:

218.04(1)(a) (a) “Collection agency” means any person engaging in the business of collecting or receiving for payment for others of any account, bill, or other indebtedness. “Collection agency” does not include attorneys at law authorized to practice in this state and resident herein, banks, credit unions, health care billing companies, state savings banks, state savings and loan associations, insurers and their agents, trust companies, mortgage bankers licensed and operating under subch. III of ch. 224, district attorneys acting under s. 971.41, persons contracting with district attorneys under s. 971.41 (5), real estate brokers, and real estate salespersons.

218.04(1)(b) (b) “Collector” or “solicitor” means any person who, on behalf of a collection agency licensed under this section, does any of the following:

218.04(1)(b)1. 1. Collects, or attempts to collect, for others any account, bill, or other indebtedness.

218.04(1)(b)2. 2. Receives payment for others of any account, bill, or other indebtedness.

218.04(1)(b)3. 3. Solicits any account, bill, or other indebtedness for collection by the collection agency.

218.04(1)(c) (c) “Division” means the division of banking.

218.04(1)(d) (d) “General order” means an order which is not a special order.

218.04(1)(e) (e) “Licensee” means a person licensed under this section.

218.04(1)(em) (em) “Nationwide multistate licensing system and registry” has the meaning given in s. 224.35 (1g) (b).

218.04(1)(f) (f) “Person” includes individuals, partnerships, associations, corporations and limited liability companies.

218.04(1)(g) (g) “Special order” means an order against a person.

218.04(1)(h) (h) “Unique identifier” has the meaning given in s. 224.35 (1g) (e).

218.04(2) (2) Licenses required.

218.04(2)(a) (a) Except as provided in par. (b), a person may not operate as a collection agency in this state without first having obtained a license as required by this section.

218.04(2)(b) (b) A nonresident of this state is not required to obtain a collection agency license if that person conducts collection agency activity with state residents solely by means of interstate telecommunications or interstate mail.

218.04(3) (3) Licenses; applications; fees; bond.

218.04(3)(a) (a)

218.04(3)(a)1. 1. Application for licenses under the provisions of this section shall be made to the division in writing, under oath, in a form and manner acceptable to the division. Except as provided in subd. 3., an application for a license under this section shall include the following:

218.04(3)(a)1.a. a. If the applicant is an individual, the applicant’s social security number.

218.04(3)(a)1.b. b. If the applicant is not an individual, the applicant’s federal employer identification number.

218.04(3)(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.

218.04(3)(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.

218.04(3)(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).

218.04(3)(a)2. 2. The division may not disclose any information received under subd. 1. to any person except as follows:

218.04(3)(a)2.a. a. The division may disclose information under subd. 1. 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.

218.04(3)(a)2.b. b. The division may disclose information under subd. 1. a. to the department of children and families in accordance with a memorandum of understanding under s. 49.857.

218.04(3)(a)2.c. c. The division may disclose information to the nationwide multistate licensing system and registry as provided in s. 224.35.

218.04(3)(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 or applying to renew a license under this section, 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 children and families. Any license issued or renewed in reliance upon a false statement submitted by an applicant under this subdivision is invalid.

218.04(3)(b) (b) At the time of making application, every applicant for a collection agency license shall pay a nonrefundable fee of $1,000 to the division for investigating the application, unless the applicant is already licensed under this section, and the sum of $200 as an annual license fee for each place of business that is required to be separately licensed under sub. (4) (a). If the cost of investigation exceeds $1,000, the applicant shall, upon demand of the division, pay the excess cost. No investigation fee is required on the renewal of a license.

218.04(3)(d) (d) The division may require any licensee to file and maintain in force a bond, in a form to be prescribed by and acceptable to the division, and in such sum as the division may deem reasonably necessary to safeguard the interests of the public.

218.04(4) (4) Issuance or denial of licenses.

218.04(4)(a) (a) Except as provided in par. (am), upon the filing of a license application and the payment of the applicable fees, the division shall make an investigation, and if the division finds that the character and general fitness and the financial responsibility of the applicant, and the members thereof if the applicant is a partnership, limited liability company or association, and the officers and directors thereof if the applicant is a corporation, warrant the belief that the business will be operated in compliance with this section the division shall thereupon issue a license to the applicant. A license is not assignable and, except as provided in par. (ap), shall permit operation under it only at or from the location specified in the license. Except as provided in par. (ap), a separate license is required for each place of business maintained by the licensee from which the licensee or its collectors or solicitors engage in the business of collecting or receiving payments for others of any account, bill, or other indebtedness of a person located in this state.

218.04(4)(am) (am) The division may not issue or renew a license under this section if any of the following applies:

218.04(4)(am)1. 1. The applicant fails to provide any application information required by the division.

218.04(4)(am)2. 2. The department of revenue certifies under s. 73.0301 that the applicant is liable for delinquent taxes. An applicant for whom a license is not issued or renewed under this subdivision for delinquent taxes is entitled to a notice under s. 73.0301 (2) (b) 1. b. and hearing under s. 73.0301 (5) (a) but is not entitled to any other notice or hearing under this section.

218.04(4)(am)2m. 2m. The department of workforce development certifies under s. 108.227 that the applicant is liable for delinquent unemployment insurance contributions. An applicant for whom a license is not issued or renewed under this subdivision for delinquent unemployment insurance contributions is entitled to a notice under s. 108.227 (2) (b) 1. b. and hearing under s. 108.227 (5) (a) but is not entitled to any other notice or hearing under this section.

218.04(4)(am)3. 3. The applicant fails to comply, after appropriate notice, with a subpoena or warrant issued by the department of children and families or a county child support agency under s. 59.53 (5) and related to paternity or child support proceedings or 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. An applicant whose application is denied under this subdivision for delinquent payments is entitled to a notice and hearing under s. 49.857 but is not entitled to any other notice or hearing under this section.

218.04(4)(ap) (ap) An employee of a licensed collection agency may work from the employee’s residence. An employee’s resident address may not be presented to the public as a location or office of the collection agency, through advertising or other means of communication. No physical records of the collection agency may be maintained at an employee’s residence. A separate license under par. (a) is not required for a residence that meets the requirements of this paragraph.

218.04(4)(b) (b) No licensee shall conduct a collection agency business within any office, room or place of business in which any other business is solicited or engaged in, or in association or conjunction therewith, except as may be authorized in writing by the division upon finding that the character of such other business is such that the granting of such authority would not facilitate evasion of this section or the lawful orders issued thereunder.

218.04(4)(c) (c) If an applicant fails to complete the application for an initial license within 60 days after the division provides written notice of the incomplete application, the application is considered abandoned and the investigation fee shall not be refunded. An applicant whose application is abandoned under this paragraph may reapply to obtain a new license.

218.04(5) (5) Revocation; suspension; reinstatement of licenses.

218.04(5)(a) (a) The division may suspend or revoke any license issued under this section if the division finds that any of the following applies:

218.04(5)(a)1. 1. The licensee has violated any of the provisions of this section, rules promulgated under this section, or any lawful order of the division made under this section.

218.04(5)(a)2. 2. Any fact or condition exists which, if it had existed at the time of the original application for the license, would have warranted the division in refusing to issue the license.

218.04(5)(a)3. 3. The licensee has failed to maintain in effect the bond required under sub. (3) (d).

218.04(5)(a)4. 4. The licensee has failed to remit money due to any and all claimants or forwarders on or before the last day of the month following the close of the month during which the collection was effected.

218.04(5)(a)5. 5. The licensee or any officer or employee of it has violated chs. 421 to 427 and 429.

218.04(5)(a)6. 6. The licensee has made a material misstatement, or knowingly omitted a material fact, in an application for a license or in information furnished to the division or the nationwide multistate licensing system and registry.

218.04(5)(am) (am) 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 children and families 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.

218.04(5)(ar) (ar) 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.

218.04(5)(at) (at) The division shall revoke a license issued under this section if the department of workforce development certifies under s. 108.227 that the licensee is liable for delinquent unemployment insurance contributions. A licensee whose license is revoked under this paragraph for delinquent unemployment insurance contributions is entitled to a notice under s. 108.227 (2) (b) 1. b. and a hearing under s. 108.227 (5) (a) but is not entitled to any other notice or hearing under this section.

218.04(5)(b) (b) Except as provided in pars. (am) to (at), 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 and this shall be deemed the equivalent of delivering the notice of hearing and complaint to the licensee.

218.04(5)(c) (c) In the event of the death of a licensee who is a sole proprietor, the license shall terminate as of the date of death of the licensee, except the division may reinstate a license if the estate of the former licensee signifies to the division within 45 days its intention to continue the business of the agency.

218.04(6) (6) Licenses; posting; renewal; discontinued operations.

218.04(6)(a) (a) If a licensee intends to change the address of its place of business to another location, the licensee shall give written notice of the change, in a form and manner prescribed by the division, at least 30 days prior to the relocation.

218.04(6)(b) (b) Every licensee applying for a renewal of a license shall pay in advance to the division the annual license fee. A license may be renewed or reinstated as provided in s. 224.35 (7). A license that is not renewed or reinstated by the end of the reinstatement period provided in s. 224.35 (7) shall be deemed to have expired on December 31 of the year immediately preceding the reinstatement period, unless the initial license date is between November 1 and December 31, in which instance the initial license term shall run through December 31 of the following year.

218.04(6)(c) (c) Before discontinuing operating as a collection agency under the provisions of this section, every licensee shall furnish the division with proof in a form to be determined by the division that all of the following are satisfied:

218.04(6)(c)1. 1. Proper remittance has been made to all claimants or forwarders on money collected.

218.04(6)(c)2. 2. All Wisconsin client accounts have been returned to the claimants or forwarders.

218.04(6)(c)3. 3. All valuable papers given to the licensee by the claimant or forwarder in connection with claims have been returned to the claimants or forwarders.