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422.308(4) (4)A violation of this section is subject to s. 425.304 unless the violation was the result of an unintentional good faith error.
422.308(5) (5)If any part of this section is found unconstitutional with regard to a creditor solely or in any part because the creditor is located outside of this state, that part of this section shall not apply to any creditor located within this state.
422.308 History History: 1985 a. 244.
422.308 Annotation When a merchant first informed the customer of 24 percent interest to be charged on an open account in statements of the account provided after the account was opened, s. 422.302 and subs. (1) and (2) were violated and the merchant was only entitled to interest under s. 138.04. Severson Agri-Service, Inc. v. Lander, 172 Wis. 2d 269, 493 N.W.2d 230 (Ct. App. 1992).
422.310 422.310 Refund anticipation loans.
422.310(1)(1)In addition to any other requirements under this subchapter, a creditor shall disclose all of the following in writing to a customer on a form that is signed by the customer before the customer enters into a refund anticipation loan:
422.310(1)(a) (a) Any refund anticipation loan fees.
422.310(1)(b) (b) Any charge or fee for electronically filing an income tax return.
422.310(1)(c) (c) The total dollar amount of all charges and fees under pars. (a) and (b).
422.310(1)(d) (d) The anticipated length of time, within 2 business days, by which the customer will receive the refund anticipation loan proceeds.
422.310(1)(e) (e) That the customer may electronically file an income tax return without obtaining a refund anticipation loan.
422.310(1)(f) (f) The anticipated length of time within which the customer could reasonably expect to receive a tax refund if the income tax return is filed electronically and the customer does not request a refund anticipation loan.
422.310(1)(g) (g) That the customer is responsible for repayment of the refund anticipation loan and refund anticipation loan fees even if the income tax refund is not paid or is paid in a lower amount than was anticipated.
422.310(1)(h) (h) The estimated annual percentage rate, based on the size of the refund anticipation loan, the refund anticipation loan fees and the anticipated maturity date of the refund anticipation loan. The anticipated maturity date shall be the date disclosed under par. (f).
422.310(2) (2)A creditor may not impose a different fee or charge for electronically filing an income tax return on a customer who obtains a refund anticipation loan than the creditor imposes on a customer who does not obtain a refund anticipation loan.
422.310(3) (3)A violation of this section is subject to s. 425.304.
422.310 History History: 1993 a. 111.
subch. IV of ch. 422 SUBCHAPTER IV
LIMITATIONS ON AGREEMENTS AND PRACTICES
422.401 422.401 Scope. This subchapter applies to consumer credit transactions.
422.401 History History: 1971 c. 239.
422.402 422.402 Balloon payments prohibited.
422.402(1)(1)Except as provided in sub. (1m), no merchant shall enter into an agreement which requires a schedule of payments under which any one payment is not equal or substantially equal to all other payments, or under which the intervals between any consecutive payments differ substantially except as permitted in sub. (2) or (3) with respect to a consumer credit transaction other than a transaction which is one of the following:
422.402(1)(a) (a) Pursuant to an open-end credit plan.
422.402(1)(b) (b) Not precomputed and on which the annual percentage rate disclosed under subch. III is less than 16.5 percent for a consumer credit sale in which the seller retains a security interest in real estate which is the subject of the sale or any consumer loan, either of which is entered into on or after April 6, 1980, and prior to November 1, 1981, or 12 percent for any other consumer credit transaction.
422.402(1m) (1m)No merchant shall enter into an agreement which requires a schedule of payments under which any one payment is not equal or substantially equal to all other payments, or under which the intervals between any consecutive payments differ substantially except as permitted in sub. (2) or (3) with respect to a consumer credit transaction other than a transaction which is one of the following:  
422.402(1m)(a) (a) Pursuant to an open-end credit plan.
422.402(1m)(b) (b) Not precomputed and on which the annual percentage rate disclosed under subch. III is not more than 18 percent for a consumer credit sale in which the seller retains a security interest in real estate which is the subject of the sale or any consumer loan, either of which is entered into on or after November 1, 1981, and before November 1, 1984.
422.402(2) (2)The parties may agree to payments that are not substantially equal to other payments or are paid at unequal intervals if:
422.402(2)(a) (a) The customer's livelihood is dependent upon income that is seasonal or otherwise not regular, such payments are in accordance with the needs of the customer and a notice in substantially the following language is set forth immediately below the customer's signature in 12-point boldface type, or its equivalent as prescribed by the administrator:
WARNING
The amounts of payments or the dates on which they are payable under this agreement are not equal. Do not sign this paper unless you are certain that this payment schedule meets your needs.
422.402(2)(b) (b) The unequal or irregular payment is part of an agreed down payment received by the creditor contemporaneously with or prior to the consummation of the transaction;
422.402(2)(c) (c) The unequal or irregular payment is part of an agreed down payment that does not exceed 20 percent of the cash price, has a due date not later than the due date of the 2nd installment of the transaction and is excluded from the amount financed upon which the finance charge is computed, and if it is the mutual understanding of the customer and the creditor that such a partial payment will be separately financed the customer has the right to rescind the transaction without penalty if the customer cannot obtain such separate financing;
422.402(2)(d) (d) The unequal or irregular payment is the final scheduled payment and is less than, or not more than 10 percent greater than, the average amount of the other scheduled payments, if such other payments are substantially equal; or
422.402(2)(e) (e) The unequal or irregular payment is the first scheduled payment and results from the inclusion of interest charged for a first installment period of not more than 45 days or less than 15 days as permitted under s. 138.09 (7) (c) 2.
422.402(3) (3)In the event that sub. (2) (a) applies, the customer shall have the right at any time to refinance the unequal or irregular installment pursuant to s. 422.205 for refinancing, except that the rate shall not exceed the rate disclosed in the original transaction pursuant to subch. III of ch. 422.
422.402(4) (4)Taking or arranging for the customer to sign an instrument in violation of this section shall be subject to s. 425.304.
422.402(5) (5)This section does not apply to a manufactured home transaction as defined in s. 138.056 (1) (bg) made on or after November 1, 1981, and before November 1, 1984, if:
422.402(5)(a) (a) The transaction complies with s. 138.056; or
422.402(5)(b) (b) The unequal or irregular payment is the final scheduled payment of the transaction, and the merchant agrees to refinance the final scheduled payment at a rate of interest not in excess of the rate disclosed pursuant to subch. III of ch. 422 by more than one percent multiplied by the number of 6-month periods in the term of the immediately prior manufactured home transaction.
422.402(6) (6)This section does not apply to consumer credit transactions entered into on or after November 1, 1984.
422.403 422.403 Maximum periods of repayment.
422.403(1)(1)With respect to a consumer credit transaction other than one pursuant to an open-end credit plan or one pursuant to s. 138.09, no merchant shall initially schedule payments to be paid in full:
422.403(1)(a) (a) Over a period of more than 25 months if the total of payments is $700 or less;
422.403(1)(b) (b) Over a period of more than 37 months if the total of payments is more than $700, but does not exceed $1,400; or
422.403(1)(c) (c) Over a period of more than 49 months if the total of payments is more than $1,400, but does not exceed $2,000, unless the transaction is for the acquisition of or substantial improvement to real property in which case such period shall not exceed 61 months.
422.403(2) (2)With respect to a consumer credit transaction other than one pursuant to an open-end credit plan or one pursuant to s. 138.09, which is for the purpose of an improvement to real property and in which the annual percentage rate disclosed under subch. III is 15 percent or less, no merchant may initially schedule payments to be paid in full:
422.403(2)(a) (a) Over a period of more than 25 months if the total of payments is $300 or less;
422.403(2)(b) (b) Over a period of more than 48 months if the total of payments is more than $300, but does not exceed $1,000; or
422.403(2)(c) (c) Over a period of more than 60 months if the total of payments is more than $1,000, but does not exceed $2,000.
422.403(3) (3)The periods specified in subs. (1) and (2) shall commence with the date of first payment or when the finance charge begins to accrue, whichever is earlier.
422.403(4) (4)This section shall not apply to loans made, guaranteed or funded by federal or state agencies and loans made, guaranteed or funded by nonprofit educational institutions or foundations qualifying under section 501 (c) (3) of the internal revenue code, for purposes of post-high school education.
422.403(4m) (4m)This section does not apply to loans made by an administrative agency within the executive branch established under ch. 15.
422.403(5) (5)Taking or arranging for the customer to sign an instrument in violation of this section is subject to s. 425.304.
422.403 History History: 1971 c. 239; 1973 c. 3, 4, 243; 1981 c. 20, 391.
422.404 422.404 Assignment of earnings.
422.404(1)(1)No merchant shall take or arrange for an assignment of earnings of the customer for payment or as security for payment of an obligation arising out of a consumer transaction unless such assignment is revocable at will by the customer.
422.404(2) (2)A revocable assignment of earnings made as payment or as security for payment of an obligation arising out of a consumer credit transaction, which would otherwise expire under s. 241.09, shall be deemed to be renewed for a term not to exceed 6 months if:
422.404(2)(a) (a) The original authorization contained a conspicuous notice of the customer's right to revoke;
422.404(2)(b) (b) Prior to expiration, the merchant mails a notice to the customer which conspicuously states that the assignment of earnings is revocable, and that it shall continue to run for not more than 6 additional months, unless the merchant receives notice of revocation; and
422.404(2)(c) (c) The customer does not revoke the assignment.
422.404(3) (3)A violation of this section is subject to s. 425.304.
422.404 History History: 1971 c. 239; 1973 c. 3.
422.405 422.405 Authorization to confess judgment prohibited.
422.405(1)(1)No merchant shall take or accept from the customer a warrant or power of attorney or other authorization for the creditor, or other person acting on the creditor's behalf, to confess judgment.
422.405(2) (2)A violation of this section is subject to s. 425.305.
422.405 History History: 1971 c. 239; 1991 a. 316.
422.406 422.406 Negotiable instruments.
422.406(1)(1)In a consumer credit sale or lease transaction, no seller or lessor shall take a negotiable instrument (s. 403.104), other than a check, as evidence of the obligation of the customer.
422.406(2) (2)In a consumer loan transaction which constitutes an interlocking loan (s. 422.408), no creditor shall take a negotiable instrument (s. 403.104), other than a check, as evidence of the obligation of the customer.
422.406(3) (3)The holder to whom an instrument issued in violation of this section is negotiated, notwithstanding that the holder may otherwise be a holder in due course of such instrument, is subject to all claims and defenses of the customer against the payee, subject to sub. (4).
422.406(4) (4)Such holder's liability under this section is limited to:
422.406(4)(a) (a) The amount owing to the holder on such instrument at the time the holder receives notice of a claim or defense of the customer against such payee; plus
422.406(4)(b) (b) If the customer has obtained a judgment against such payee and execution with bond is issued within one year after judgment and is returned unsatisfied, the amount paid by the customer to the holder before the holder received notice of the claim or defense of the customer, if such claim is made against the holder within 2 years after such judgment is returned unsatisfied. Any judgment against the payee, other than a default judgment, shall be binding on the holder.
422.406(5) (5)Taking or arranging for the customer to sign an instrument in violation of this section is subject to s. 425.304.
422.406 History History: 1971 c. 239; 1973 c. 2; 1991 a. 316.
422.407 422.407 Defenses assertable against an assignee.
422.407(1)(1)With respect to a consumer credit transaction other than a consumer loan which is not an interlocking consumer loan (s. 422.408), an assignee of the rights of a creditor is subject to all claims and defenses of the customer against the assignor arising out of the transaction notwithstanding an agreement to the contrary, subject to sub. (2).
422.407(2) (2)An agreement by the customer not to assert against an assignee a claim or defense arising from a consumer credit transaction is enforceable only by an assignee not related to the assignor who acquires the customer's contract in good faith and for value, who gives the customer notice of the assignment as provided in s. 422.409 and who, within 12 months after the mailing of the notice of assignment, has not received notice of the customer's claim or defense. In the event that such assignee further assigns the customer's obligation to another party not related to the original assignor, in good faith and for value, such party may enforce an agreement by the customer not to assert claims or defenses, only to the extent that that party's assignor could do so under this section, and any notice by the customer to the original or subsequent assignees is effective as to such party. Such good faith assignee's liability under this section is limited to:
422.407(2)(a) (a) The amount owing to the assignee with respect to the consumer credit transaction at the time the assignee received notice of a claim or defense of the customer against the assignor; plus
422.407(2)(b) (b) If the customer has obtained a judgment against the assignor and execution with bond is issued within one year after judgment and is returned unsatisfied, the amount paid by the customer to the assignee before the assignee received notice of the claim or defense of the customer, if such claim is made against the assignee within 2 years after execution is returned unsatisfied. Any judgment against the assignor, other than a default judgment, shall be binding on the assignee.
422.407(2m) (2m)
422.407(2m)(a)(a) In the event that an assignee, who is related to the assignor or who takes the assignment not in good faith or not for value, further assigns the customer's obligation to a subsequent assignee not related to any prior assignor and who takes the assignment in good faith and for value, such subsequent assignee's liability is limited to that provided for in sub. (2) if the subsequent assignee's assignor at the time of the assignment to the subsequent assignee gives the notice required in s. 422.409 (2), subject to par. (b).
422.407(2m)(b) (b) The notice given under s. 422.409 (2) need not name the subsequent assignee. In such cases it shall state that payments may be made to the assignor, and shall otherwise comply with the requirements of s. 422.409 (2).
422.407(3) (3)Any assignee does not acquire a customer's contract in good faith within the meaning of subs. (2) and (2m) if the assignee has knowledge, including knowledge from his or her course of dealing with other customers of the assignor or from the assignor or the assignee's records, or written notice of violations of chs. 421 to 427, of conduct of the kind described in s. 426.108, or of substantial complaints by such other customers that such assignor fails or refuses to perform his or her contracts with such customers and fails to remedy their complaints.
422.407(4) (4)No term of an agreement may confer upon an assignee greater immunity from claims and defenses of the customer against the assignor than is permitted in this section. No term of an agreement purporting to waive defenses against an assignee is enforceable unless the agreement makes conspicuous reference to this section and to the customer's right to assert such claim or defense against an assignee within 12 months after being furnished a notice of assignment.
422.407(5) (5)Except where execution with bond is returned unsatisfied under sub. (2) (b) or where the assignor is in bankruptcy, receivership or other insolvency proceedings or cannot be found within the state, any claims or defenses of the customer under this section can only be asserted as a matter of counterclaim, defense to or set-off against a claim by the assignee.
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