Chapter 425

425.206(2)(b) (b) Enter a dwelling used by the customer as a residence except at the voluntary request of a customer.

425.206(3) (3) A violation of this section is subject to s. 425.305.

425.206 History History: 1971 c. 239; 1975 c. 94 s. 3; 1975 c. 407; 1979 c. 10; 1995 a. 225; 1997 a. 302; 2005 a. 255.

425.206 Annotation Under the facts of the case, the customer did not voluntarily surrender collateral under sub. (1) (a). Wachal v. Ketterhagen Motor Sales, Inc., 81 Wis. 2d 605, 260 N.W.2d 770 (1978).

425.206 Annotation Notwithstanding s. 421.201 (5), this section governed repossessions outside the state when the contract provided for enforcement under the “internal law” of Wisconsin. First Wisconsin National Bank of Madison v. Nicolaou, 85 Wis. 2d 393, 270 N.W.2d 582 (Ct. App. 1978).

425.206 Annotation A “breach of the peace” under sub. (2) has the same meaning as in s. 409.503. Repossession in disregard of the debtor’s oral protest is a breach of the peace. Punitive damages may be appropriate as the result of the breach of the peace. Hollibush v. Ford Motor Co., 179 Wis. 2d 799, 508 N.W.2d 449 (Ct. App. 1993).

425.206 Annotation Repossession under an invalid judgment violates this section. Kett v. Community Credit Plan, Inc., 228 Wis. 2d 1, 596 N.W.2d 786 (1999), 97-3620.

425.206 Annotation The definition of “dwelling used by the customer as a residence” in sub. (2) (b) does not depend on whether the customer has the right to exclude others from a particular area or whether the customer has a reasonable expectation of privacy in a particular area under the 4th amendment. Dwelling generally refers to an entire building in which people live and includes a garage attached to the residential building in which the customer lives. Nothing in the language “dwelling used by the customer as a residence” suggests that the protections in sub. (2) (b) are limited to only the integral parts of a residence or the areas with indicia of residential use. Duncan v. Asset Recovery Specialists, Inc., 2022 WI 1, 400 Wis. 2d 1, 968 N.W.2d 661, 19-1365.

425.206 Annotation The modifier “used by the customer as a residence” is best understood as imposing a limitation on which dwelling sub. (2) (b) protects—the dwelling this customer uses as a residence—not what parts of the dwelling it protects. The phrase distinguishes the customer’s dwelling from all other dwellings. Duncan v. Asset Recovery Specialists, Inc., 2022 WI 1, 400 Wis. 2d 1, 968 N.W.2d 661, 19-1365.

425.206 Annotation A lender, not its repossessors, falls within the definition of “merchant” under s. 421.301 (25) and is therefore covered by sub. (2) (a). In this case, it was the lender’s authority to repossess the debtor’s car that the repossession company was exercising. That the lender chose to authorize the repossession company to exercise the lender’s right under Wisconsin law to take possession of its collateral extra-judicially does not mean the lender can avoid liability for actions taken on its behalf and at its request. Gable v. Universal Acceptance Corp. (WI), 338 F. Supp. 3d 943 (2018).

425.206 Annotation The Abolition of Self-Help Repossession: The Poor Pay Even More. White. 1973 WLR 503.

425.206 Annotation The Impact of Denying Self-Help Repossession of Automobiles: A Case Study of the Wisconsin Consumer Act. Whitford & Laufer. 1975 WLR 607.

425.206 Annotation Wisconsin’s New Automobile Repossession Law: Creditors in the Driver’s Seat. Anderson & Meili. Wis. Law. Feb. 2007.

425.2065 425.2065 Notice to law enforcement.

425.2065(1) (1) In this section, “law enforcement agency” means the police department, combined protective services department under s. 60.553, 61.66, or 62.13 (2e), or sheriff, that has primary responsibility for providing police protection services in the city, village, or town in which a repossession is expected to occur.

425.2065(2) (2) A merchant who repossesses motor vehicle collateral or goods subject to a motor vehicle consumer lease under s. 425.206 (1) (d), or a person who repossess such collateral or goods on behalf of the merchant, shall notify, verbally or in writing, the law enforcement agency about the repossession. The notification shall include the names of the customer, merchant, and, if applicable, the person who repossesses the collateral or goods on behalf of the merchant. The notification shall also include a description of the collateral or goods. Notification under this subsection shall be made before the repossession occurs.

425.2065(3) (3) Failure to comply with this subsection does not constitute a failure to comply with s. 425.206 (1) (d).

425.2065 History History: 2005 a. 255; 2011 a. 32.

425.207 425.207 Restraining order to protect collateral or leased goods; abandoned property.

425.207(1) (1) If the court finds that the merchant probably will recover possession of the collateral or goods subject to a consumer lease, and the customer is acting, or is about to act, with respect to the collateral or leased goods in a manner which substantially impairs the merchant’s prospect for realization of the merchant’s security interest or the merchant’s interest in the leased goods, the court may issue an order pursuant to s. 813.02 restraining the customer from so acting with respect to the collateral or leased goods, and need not require a bond by the merchant, notwithstanding s. 813.06.

425.207(2) (2) A merchant who reasonably believes that a customer has abandoned collateral or goods subject to a consumer lease may take possession of such collateral or leased goods and preserve it. However, the customer may recover such collateral or leased goods upon request unless at the time of request the merchant has perfected the right to possession under s. 425.206 (1) (a), (b), or (d). A merchant taking possession of collateral or leased goods pursuant to this section shall promptly send notification to the customer’s last-known address of such action and of the customer’s right to recover such collateral or leased goods under this section. If the collateral or leased goods are recovered by the customer pursuant to this section, it shall be returned to the customer at the location where the merchant took possession of such collateral or leased goods pursuant to this section or, at the option of the merchant, at such other location designated by the customer; and any expense incurred by the merchant in taking possession of, holding and returning the collateral or leased goods to the customer shall be borne by the merchant. If after taking possession of collateral or leased goods pursuant to this subsection, the merchant perfects the right to possession under s. 425.206 (1) (a), (b), or (d), the customer is liable for the expenses set forth in s. 409.615 (1). In determining such expenses, leased goods shall be considered collateral under s. 409.615 (1). However, a customer is not liable for expenses of holding the collateral or leased goods from the time the merchant takes possession until the merchant perfects the right to possession in the manner provided in this subsection.

425.207 History History: 1971 c. 239; Sup. Ct. Order, 67 Wis. 2d 585, 776 (1975); 1975 c. 407, 421, 422; 1979 c. 10; 1981 c. 314 s. 146; 1997 a. 302; 2001 a. 10; 2005 a. 255.

425.208 425.208 Customer’s right to redeem.

425.208(1) (1) For a period of 15 days following exercise by the creditor of nonjudicial enforcement rights (s. 425.206) or issuance of process (s. 425.205) with regard to the collateral, the customer shall be entitled to redeem the goods by tendering:

425.208(1)(a) (a) The total of all unpaid amounts, including any unpaid delinquency or deferral charges due at the time of tender, without acceleration; plus

425.208(1)(b) (b) Performance necessary to cure any default other than nonpayment of amounts due; plus

425.208(1)(c) (c) Any court costs, filing and service fees, and bond premium charges incurred by the creditor; plus

425.208(1)(cm) (cm) If a writing evidencing the consumer credit transaction so provides, expenses the creditor is entitled to recover under s. 422.413 (2g) (a) and (b); plus

425.208(1)(d) (d) Whichever of the following is less:

425.208(1)(d)1. 1. A performance deposit, in the amount of 3 scheduled installments, or minimum payments in the case of an open-end credit plan.

425.208(1)(d)2. 2. One-third of the total obligation remaining unpaid with respect to the consumer credit transaction.

425.208(2) (2) Tender of the payment and performance pursuant to sub. (1) restores to the customer the customer’s rights under the agreement as though all payments and performance had been made as scheduled.

425.208(3) (3) Upon such redemption, any process under which the collateral has been held shall be vacated, any pending action shall be dismissed, and the collateral shall be returned to the customer.

425.208(4) (4) The performance deposit shall be held by the merchant to secure, and may be applied at any time to, the remaining obligations of the customer under the consumer transaction.

425.208(5) (5) The existence of the deposit does not cure any subsequent default of the customer, and the deposit need not be credited to the customer’s account until the remaining unpaid balance of the transaction becomes equal to the deposit. In the event of a subsequent default, prepayment, or other occurrence (except deferral) which requires the computation under chs. 421 to 427 of the outstanding obligation of the customer, the deposit shall be credited to the amount paid for the purposes of such computation.

425.208(6) (6) The creditor shall not dispose of the collateral or enter into a contract for the disposition of the collateral, until the expiration of the period for redemption provided in this section, unless the collateral is perishable or threatens to decline speedily in value. Upon the expiration of such period any disposition of the collateral shall be subject to subch. VI of ch. 409, except that the customer may be liable for a deficiency only to the extent provided in ss. 425.209 and 425.210.

425.208 History History: 1971 c. 239; 1979 c. 10, 89; 1983 a. 389; 1991 a. 316; 1997 a. 302; 1999 a. 85; 2001 a. 10.

425.209 425.209 Restrictions on deficiency judgments.

425.209(1) (1) This section applies to a deficiency on a consumer credit sale of goods or services and on a consumer loan in which the lender is subject to defenses arising from sales (s. 422.408); a customer is not liable for a deficiency unless the merchant has disposed of the goods in good faith and in a commercially reasonable manner.

425.209(2) (2) If the merchant repossesses or accepts voluntary surrender of goods which were the subject of the sale and in which the merchant has a security interest, the customer is not personally liable to the merchant for the unpaid balance of the debt arising from the sale of a commercial unit of the goods of which the amount owing at the time of default was $1,000 or less, and the merchant is not obligated to resell the collateral unless the customer has paid 60 percent or more of the cash price and has not signed after default a statement renouncing the customer’s rights in the collateral.

425.209(3) (3) If the merchant repossesses or accepts voluntary surrender of goods which were not the subject of the sale but in which the merchant has a security interest to secure a debt arising from a sale of goods or services or a combined sale of goods and services and the amount owing at the time of default was $1,000 or less, the customer is not personally liable to the merchant for the unpaid balance of the debt arising from the sale, and the merchant’s duty to dispose of the collateral is governed by the provisions on disposition of collateral under chs. 401 to 411.

425.209(4) (4) If the lender takes possession or accepts voluntary surrender of goods in which the lender has a security interest to secure a debt arising from a consumer loan in which the lender is subject to defenses arising from sales (s. 422.408) and the amount owing at the time of default of the loan paid to or for the benefit of the customer were $1,000 or less, the customer is not personally liable to the lender for the unpaid balance of the debt arising from the loan and the lender’s duty to dispose of the collateral is governed by the provisions on disposition of collateral under chs. 401 to 411.

425.209(5) (5) The customer may be liable in damages to the merchant if the customer has wrongfully damaged the collateral or if, after judgment for the creditor has been entered in a proceeding for recovery of collateral under s. 425.205, the customer has wrongfully failed to make the collateral available to the merchant.

425.209(6) (6) If the merchant elects to bring an action against the customer for a debt arising from a consumer credit sale of goods or services or from a consumer loan in which the lender is subject to defenses arising from sales (s. 422.408), when under this section the merchant would not be entitled to a deficiency judgment if the merchant took possession of the collateral, and obtains judgment:

425.209(6)(a) (a) The merchant may not take possession of the collateral; and

425.209(6)(b) (b) The collateral is not subject to levy or sale on execution or similar proceedings pursuant to the judgment.

425.209 History History: 1971 c. 239; 1973 c. 2, 3; 1991 a. 148, 304, 315, 316.

425.209 Cross-reference Cross-reference: See also ss. DFI-WCA 1.70 and 1.71, Wis. adm. code.

425.209 Annotation Proof of disposal of goods in accordance with sub. (1) must be made by a merchant to obtain a deficiency judgment. Failure to do so need not be asserted as an affirmative defense. Shoeder’s Auto Center, Inc. v. Teschner, 166 Wis. 2d 198, 479 N.W.2d 203 (Ct. App. 1991).

425.209 Annotation Consistent with Shoeder’s Auto Center, 166 Wis. 2d 198 (Ct. App. 1991), in order to make a prima facie case for summary judgment for a deficiency judgment, the merchant is required to present evidence demonstrating that the collateral was disposed of in a commercially reasonable manner. Gemini Capital Group, LLC v. Jones, 2017 WI App 77, 378 Wis. 2d 614, 904 N.W.2d 131, 16-2123.

425.210 425.210 Computation of deficiency. If the creditor is entitled to a deficiency judgment pursuant to s. 425.209 (1), the creditor shall be entitled to recover from the customer the deficiency, if any, remaining after deducting the fair market value of the collateral from the unpaid balance.

425.210 History History: 1971 c. 239.

subch. III of ch. 425 SUBCHAPTER III

CUSTOMER’S REMEDIES

425.301 425.301 Remedies to be liberally administered.

425.301(1) (1) The remedies provided by this subchapter shall be liberally administered to the end that the customer as the aggrieved party shall be put in at least as good a position as if the creditor had fully complied with chs. 421 to 427. Recoveries under chs. 421 to 427 shall not in themselves preclude the award of punitive damages in appropriate cases.

425.301(2) (2) Any right or obligation declared by chs. 421 to 427 is enforceable by action unless the provision declaring it specifies a different and limited effect.

425.301(3) (3) Notwithstanding any other section of chs. 421 to 427, a customer shall not be entitled to recover specific penalties provided in s. 425.302 (1) (a), 425.303 (1), 425.304 (1) or 425.305 (1) if the person violating chs. 421 to 427 shows by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.

425.301(4) (4) The liability of a merchant under chs. 421 to 427 is in lieu of and not in addition to any liability under the federal consumer credit protection act and ss. 138.09, 138.14, or 218.0101 to 218.0163. An action by a person alleging a violation under chs. 421 to 427 may not be maintained if a final judgment has been rendered for or against that person with respect to the same violation under the federal consumer credit protection act or ss. 138.09, 138.14, or 218.0101 to 218.0163. If a final judgment is entered against any merchant under chs. 421 to 427 and the federal consumer credit protection act or ss. 138.09, 138.14, or 218.0101 to 218.0163 for the same violation, the merchant has a cause of action for appropriate relief to the extent necessary to avoid double liability.

425.301(5) (5) If there are multiple obligors in the same consumer credit transaction or consumer lease, there may be no more than one recovery of civil penalties for each violation of chs. 421 to 427.

425.301 History History: 1971 c. 239; 1975 c. 407; 1979 c. 89; 1985 a. 256; 1999 a. 31; 2009 a. 405.

425.301 Annotation An error of law is not a bona fide error under sub. (3). First Wisconsin National Bank v. Nicolaou, 113 Wis. 2d 524, 335 N.W.2d 390 (1983).

425.301 Annotation Sub. (2)’s right to enforcement “by action” does not specify any right to trial. In this case, the arbitration agreement merely shifted the proceedings to a less formal, less expensive, and more expedient form. Therefore, the borrower’s general attack on agreements to arbitrate, rather than litigate, failed. Cottonwood Financial, LTD v. Estes, 2012 WI App 12, 339 Wis. 2d 472, 810 N.W.2d 852, 09-0760.

425.302 425.302 Remedy and penalty for certain violations.

425.302(1) (1) A person who commits a violation to which this section applies is liable to the customer in an amount equal to:

425.302(1)(a) (a) Twenty-five dollars; and

425.302(1)(b) (b) The actual damages, including any incidental and consequential damages, sustained by the customer by reason of the violation.

425.302(2) (2) This section also applies to all violations for which no other remedy is specifically provided.

425.302 History History: 1971 c. 239.

425.303 425.303 Remedy and penalty for certain violations. A person who commits a violation to which this section applies is liable to the customer in an amount equal to:

425.303(1) (1) One hundred dollars; and

425.303(2) (2) The actual damages, including any incidental and consequential damages, sustained by the customer by reason of the violation.

425.303 History History: 1971 c. 239.

425.304 425.304 Remedy and penalty for certain violations. A person who commits a violation to which this section applies is liable to the customer in an amount equal to the greater of:

425.304(1) (1) Twice the amount of the finance charge in connection with the transaction, except that the liability under this subsection shall not be less than $100 nor greater than $1,000; or

425.304(2) (2) The actual damages, including any incidental and consequential damages, sustained by the customer by reason of the violation.

425.304 History History: 1971 c. 239.

425.304 Annotation The word “or” in this section makes it clear that the recovering party is not entitled to both statutory and actual damages. Kirk v. Credit Acceptance Corp., 2013 WI App 32, 346 Wis. 2d 635, 829 N.W.2d 522, 10-2573.

425.305 425.305 Transactions which are void.

425.305(1) (1) In a transaction to which this section applies, the customer shall be entitled to retain the goods, services or money received pursuant to the transaction without obligation to pay any amount.

425.305(2) (2) In addition, the customer shall be entitled to recover any sums paid to the merchant pursuant to the transaction.

425.305 History History: 1971 c. 239; 1973 c. 2.

425.306 425.306 Unenforceable obligations.

425.306(1) (1) Any charge, practice, term, clause, provision, security interest or other action or conduct in violation of chs. 421 to 427, to the extent that the same is in violation of chs. 421 to 427, shall confer no rights or obligations enforceable by action.

425.306(2) (2) This section shall not affect the enforcement of any provision that is not prohibited by chs. 421 to 427.

425.306 History History: 1971 c. 239; 1979 c. 89.

425.307 425.307 Limitation of action.

425.307(1) (1) Any action brought by a customer to enforce rights pursuant to chs. 421 to 427 shall be commenced within one year after the date of the last violation of chs. 421 to 427, 2 years after consummation of the agreement or one year after last payment, whichever is later, except with respect to transactions pursuant to open-end credit plans which shall be commenced within 2 years after the date of the last violation; but no action may be commenced more than 6 years after the date of the last violation.

425.307(2) (2) Rights under chs. 421 to 427 may be asserted as a defense, setoff or counterclaim to an action against the customer without regard to this time limitation.