Chapter 426

426.102 426.102 Applicability. This chapter applies to persons who do any of the following in this state:

426.102(1) (1) Make or solicit consumer approval transactions (s. 423.201) or consumer credit transactions or modifications thereof.

426.102(2) (2) Directly collect payments from or enforce rights against customers arising from consumer approval transactions or consumer credit transactions, wherever made.

426.102(3) (3) Act as a credit services organization, as defined in s. 422.501 (2).

426.102 History History: 1971 c. 239; 1991 a. 244.

426.103 426.103 Administrator. “Administrator” means the secretary of financial institutions.

426.103 History History: 1971 c. 239; 1995 a. 27, 216.

426.104 426.104 Powers of administrator; duty to report.

426.104(1) (1) In addition to other powers granted by chs. 421 to 427 and 429, the administrator within the limitations provided by law shall:

426.104(1)(a) (a) Receive and act on complaints, take action designed to obtain voluntary compliance with chs. 421 to 427 and 429, commence administrative proceedings on his or her own initiative and commence civil actions solely through the department of justice;

426.104(1)(b) (b) Counsel persons and groups on their rights and duties under chs. 421 to 427 and 429;

426.104(1)(c) (c) Make studies appropriate to effectuate the purposes and policies of chs. 421 to 427 and 429 and make the results available to the public;

426.104(1)(d) (d) Hold such public or private hearings as the administrator deems necessary or proper to effectuate the purposes and policies of chs. 421 to 427 and 429;

426.104(1)(e) (e) Adopt, amend and repeal rules to carry out the purposes and policies of chs. 421 to 427 and 429, to prevent circumvention or evasion thereof, or to facilitate compliance therewith.

426.104(2) (2) The administrator shall report annually on practices in consumer transactions, on the use of consumer credit in the state, on problems attending the collection of debts, on the problems of persons of limited means in consumer transactions, and on the operation of chs. 421 to 427 and 429. For the purpose of making the report, the administrator may conduct research and make appropriate studies. The report shall be given to the division of banking for inclusion in the report of the division of banking under s. 220.14 and shall include:

426.104(2)(a) (a) A description of the examination and investigation procedures and policies of the administrator’s office;

426.104(2)(b) (b) A statement of policies followed in deciding whether to investigate or examine the offices of persons subject to chs. 421 to 427 and 429;

426.104(2)(c) (c) A statement of policies followed in deciding whether to bring any action authorized under chs. 421 to 427 and 429;

426.104(2)(d) (d) Such recommendations for modifications or additions to chs. 421 to 427 and 429 as in the experience and judgment of the administrator are necessary; and

426.104(2)(e) (e) Such other statements as are necessary or proper to achieve the purposes or policies of this section or to effectuate the purposes or policies of chs. 421 to 427 and 429.

426.104(3) (3) The administrator shall make available upon request a list of all persons against whom complaints have been filed and the results of all investigations completed or not being actively pursued along with a brief description of the facts of each case and the action taken in each.

426.104(4) (4) 

426.104(4)(a) (a) No provision of chs. 421 to 427 and 429 or of any statute to which chs. 421 to 427 and 429 refer which imposes any penalty shall apply to any act done or omitted to be done in conformity with any rule or order of the administrator or any written opinion, interpretation or statement of the administrator, notwithstanding that such rule, order, opinion, interpretation or statement may, after such act or omission, be amended or rescinded or be determined by judicial or other authority to be invalid for any reason.

426.104(4)(ab) (ab)

426.104(4)(ab)1. 1. Upon the request of any person, the administrator shall review any act, practice, procedure or form that has been submitted to the administrator in writing to determine whether the act, practice, procedure or form is consistent with chs. 421 to 427 and 429.

426.104(4)(ab)2. 2. The administrator may charge the person making a request under subd. 1. for necessary expenses incurred in conducting the review, except the administrator may not charge any of the following persons:

426.104(4)(ab)2.a. a. A person registered under s. 426.201.

426.104(4)(ab)2.b. b. A trade organization, if a majority of the members of the trade organization are registered under s. 426.201.

426.104(4)(ab)3. 3. Any charge assessed under subd. 2. shall be paid within 30 days after the date on which the administrator assesses the charge.

426.104(4)(b) (b) Any act, practice or procedure which has been submitted to the administrator in writing and either approved in writing by the administrator or not disapproved by the administrator within 60 days after its submission to the administrator shall not be deemed to be a violation of chs. 421 to 427 and 429 or any other statute to which chs. 421 to 427 and 429 refer notwithstanding that the approval of the administrator or nondisapproval by the administrator may be subsequently amended or rescinded or be determined by judicial or other authority to be invalid for any reason.

426.104 History History: 1971 c. 239; 1977 c. 196 s. 131; 1979 c. 89; 1983 a. 524; 1985 a. 256; 1991 a. 316; 1995 a. 27, 216, 329; 1997 a. 35.

426.104 Annotation Sub. (4) (b) creates a safe harbor for people who act in ways approved by the Administrator of the Department of Financial Institutions (DFI) — and treats the absence of a response within 60 days of a request as equivalent to approval. The debt collectors in this case sent the administrator a letter asking if they are entitled to add five percent interest to debts created by the provision of medical services under s. 138.04, the administrator requested further information, which the debt collectors provided, and DFI did not reply. Thus, when the defendants sent letters demanding payment, they were entitled to demand payment of both the principal amounts and interest under s. 138.04. Aker v. Americollect, Inc., 854 F.3d 397 (2017).

426.104 Annotation Sub. (4) (b) is not about deference. It is a safe harbor, providing that the practices presented to the administrator for opinion “shall not be deemed to be a violation” of other state laws, unless the administrator later announces a different view or a court holds the administrator’s position to be invalid. Aker v. Americollect, Inc., 854 F.3d 397 (2017).

426.104 Annotation Though the text of sub. (4) (b) does not explicitly state that safe harbor approvals under sub. (4) (b) are individualized determinations, the case law suggests that the approvals are discrete permissions rather than broadly applicable decisions that carry the force of precedent. Defendants cannot simply rely on another law firm’s request for the safe harbor to protect their actions retroactively. Boerner v. LVNV Funding LLC, 358 F. Supp. 3d 767 (2019).

426.104 Annotation Power and Duties of Administrator Under the WCA. Mildenberg. WBB Feb. 1973.

426.105 426.105 Administrative powers with respect to supervised financial organizations.

426.105(1) (1) All powers and duties of the administrator under chs. 421 to 427 and 429 shall be exercised by the administrator with respect to a supervised financial organization.

426.105(2) (2) If the administrator receives a complaint or other information concerning noncompliance with chs. 421 to 427 and 429 by a supervised financial organization, the administrator shall inform the official or agency having supervisory authority over the organization concerned. The administrator may request information about supervised financial organizations from the officials or agencies supervising them.

426.105(3) (3) The administrator and any official or agency of this state having supervisory authority over a supervised financial organization shall consult and assist one another in maintaining compliance with chs. 421 to 427 and 429. They may jointly pursue investigations, prosecute suits and take other official action, as they deem appropriate, if either of them otherwise is empowered to take the action.

426.105 History History: 1971 c. 239; 1979 c. 89; 1995 a. 329.

426.106 426.106 Investigatory powers.

426.106(1) (1) At any time that the administrator has reason to believe that a person has engaged in or is about to engage in an act which is subject to action by the administrator, the administrator may make an investigation and, with respect thereto, may administer oaths or affirmations, and, upon the administrator’s own motion or upon request of any party, may subpoena witnesses, compel their attendance, adduce evidence, and require the production of any matter, including the existence, description, nature, custody, condition and location of any books, documents or other tangible things, and the identity and location of persons having knowledge of relevant facts, or any other matter reasonably calculated to lead to the discovery of admissible evidence, and the administrator shall have the right of access to and of examination of such books, documents or other tangible things. In any civil action brought on behalf of the administrator following such an investigation, the administrator may recover the administrator’s costs of making the investigation if the administrator prevails in the action.

426.106(2) (2) If 5 or more persons file a verified complaint with the administrator alleging that a person has engaged in an act which is subject to action by the administrator, the administrator shall immediately commence an investigation pursuant to sub. (1).

426.106(3) (3) If the person’s records are located outside this state, the person at the person’s option shall either make them available to the administrator at a convenient location within this state or pay the reasonable and necessary expenses for the administrator or the administrator’s representative to examine them at the place where they are maintained. The administrator may designate representatives, including comparable officials of the state in which the records are located, to inspect them on the administrator’s behalf.

426.106(4) (4) Upon failure without lawful excuse to obey a subpoena or to give testimony and upon reasonable notice to all persons affected thereby, the administrator may apply to any court of record for an order compelling compliance.

426.106 History History: 1971 c. 239; 1991 a. 316.

426.106 Cross-reference Cross-reference: See also ss. DFI-WCA 1.80 and 1.82, Wis. adm. code.

426.107 426.107 Application of chapter 227. Except as otherwise provided, ch. 227 applies to and governs all administrative action taken by the administrator pursuant to chs. 421 to 427 and 429. Notwithstanding s. 227.52, the decisions of the administrator are subject to judicial review as provided in ch. 227.

426.107 History History: 1971 c. 239; 1979 c. 89; 1985 a. 182 s. 57; 1995 a. 329.

426.108 426.108 Unconscionable conduct. The administrator shall promulgate rules declaring specific conduct in consumer credit transactions and the collection of debts arising from consumer credit transactions to be unconscionable and prohibiting the use of those unconscionable acts. In promulgating rules under this section, the administrator shall consider, among other things, all of the following:

426.108(1) (1) That the practice unfairly takes advantage of the lack of knowledge, ability, experience, or capacity of customers.

426.108(2) (2) That those engaging in the practice know of the inability of customers to receive benefits properly anticipated from the goods or services involved.

426.108(3) (3) That there exists a gross disparity between the price of goods or services and their value as measured by the price at which similar goods or services are readily obtainable by other customers, or by other tests of true value.

426.108(4) (4) That the practice may enable merchants to take advantage of the inability of customers reasonably to protect their interests by reason of physical or mental infirmities, illiteracy or inability to understand the language of the agreement, ignorance or lack of education or similar factors.

426.108(5) (5) That the terms of the transaction require customers to waive legal rights.

426.108(6) (6) That the terms of the transaction require customers to unreasonably jeopardize money or property beyond the money or property immediately at issue in the transaction.

426.108(7) (7) That the natural effect of the practice is to cause or aid in causing customers to misunderstand the true nature of the transaction or their rights and duties under the transaction.

426.108(8) (8) That the writing purporting to evidence the obligation of the customers in the transaction contains terms or provisions or authorizes practices prohibited by law.

426.108(9) (9) Definitions of unconscionability in statutes, rules, rulings and decisions of legislative, administrative or judicial bodies.

426.108 History History: 1971 c. 239; 1999 a. 85.

426.108 Cross-reference Cross-reference: See also ss. DFI-WCA 1.85, 1.86, 1.87, and 1.88, Wis. adm. code.

426.109 426.109 Temporary relief; injunctions.

426.109(1) (1) The administrator or any customer may bring a civil action to restrain by temporary or permanent injunction a person from violating chs. 421 to 427 and 429 or the rules promulgated pursuant thereto, or to so restrain a merchant or a person acting on behalf of a merchant from engaging in false, misleading, deceptive, or unconscionable conduct in consumer credit transactions. It shall not be a defense to an action brought under this section that there exists an adequate remedy at law.

426.109(2) (2) The administrator or customer may seek a temporary restraining order without written or oral notice to the adverse party or his or her attorney. If the court finds that there is reasonable cause to believe that the respondent is engaged in the conduct sought to be restrained and that such conduct violates chs. 421 to 427 and 429 or rules promulgated under chs. 421 to 427 and 429, it may grant a temporary restraining order or any temporary relief it deems appropriate. A temporary restraining order granted without notice shall expire by its terms within a stated time after entry, not to exceed 30 days, as the court fixes, unless within this time it is extended by the court, or unless the party against whom the order is directed consents that it may be extended for a longer period. When a temporary restraining order is granted without notice, the motion for a preliminary injunction shall be set down for a hearing at the earliest possible time. Upon notice to the party who obtained the temporary restraining order without notice, the adverse party may appear and move its dissolution or modification, and in this event the court shall proceed to hear and determine such motion as expeditiously as the ends of justice require.

426.109 History History: 1971 c. 239; 1979 c. 89; 1995 a. 329.

426.110 426.110 Class actions; injunctions; declaratory relief.

426.110(1) (1) Either the administrator, or any customer affected by a violation of chs. 421 to 427 and 429 or of the rules promulgated pursuant thereto or by a violation of the federal consumer credit protection act, or by conduct of a kind described in sub. (2), may bring a civil action on behalf of himself or herself and all persons similarly situated, for actual damages by reason of such conduct or violation, together with penalties as provided in sub. (14), reasonable attorney fees and other relief to which such persons are entitled under chs. 421 to 427 and 429. The customer filing the action must give prompt notice thereof to the administrator, who shall be permitted, upon application within 30 days, to join as a party plaintiff. For purposes of apportionment of cost, the administrator need not be a party to the action.

426.110(2) (2) Actions may be maintained under this section against any person who in making, soliciting or enforcing consumer credit transactions engages in any of the following kinds of conduct:

426.110(2)(a) (a) Making or enforcing unconscionable terms or provisions of consumer credit transactions;

426.110(2)(b) (b) False, misleading, deceptive, or unconscionable conduct in inducing customers to enter into consumer credit transactions; or

426.110(2)(c) (c) False, misleading, deceptive, or unconscionable conduct in enforcing debts or security interests arising from consumer credit transactions.

426.110(3) (3) Notwithstanding this chapter, no class action may be maintained for conduct proscribed in sub. (2) or for a violation of s. 423.301, 424.501, 425.107, 426.108 or 427.104 (1) (h) unless the conduct has been found to constitute a violation of chs. 421 to 427 and 429 at least 30 days prior to the occurrence of the conduct involved in the class action by an appellate court of this state or by a rule promulgated by the administrator as provided in ss. 426.104 (1) (e) and 426.108 specifying with particularity the act or practice in question.

426.110(4) (4) 

426.110(4)(a) (a) At least 30 days or more prior to the commencement of a class action for damages pursuant to the provisions of this section, any party must:

426.110(4)(a)1. 1. Notify the person against whom an alleged cause of action is asserted of the particular alleged claim or violation; and

426.110(4)(a)2. 2. Demand that such person correct, or otherwise remedy the basis for the alleged claim.

426.110(4)(b) (b) Such notice shall be in writing and shall be sent by certified or registered mail, return receipt requested, to such person at the place where the transaction occurred, such person’s principal place of business within this state, or, if neither will effect actual notice, the department of financial institutions.

426.110(4)(c) (c) Except as provided in par. (e), no action for damages may be maintained under this section if an appropriate remedy, which shall include actual damages and may include penalties, is given, or agreed to be given within a reasonable time, to such party within 30 days after receipt of such notice.

426.110(4)(d) (d) Except as provided in par. (e), no action for damages may be maintained under this section upon a showing by a person against whom the alleged claim or violation is asserted that all of the following exist:

426.110(4)(d)1. 1. All customers similarly situated have been identified, or a reasonable effort to identify such other consumers has been made;

426.110(4)(d)2. 2. All customers so identified have been notified that upon their request such person shall make the appropriate remedy;

426.110(4)(d)3. 3. The remedy requested by such customers has been or in a reasonable time will be given; and

426.110(4)(d)4. 4. Such person has ceased from engaging, or if immediate cessation is impossible under the circumstances, such person will, within a reasonable time, cease to engage in any acts on which the alleged claim is based.

426.110(4)(e) (e) An action for injunctive relief may be commenced without compliance with par. (a). Not less than 30 days after the commencement of an action for injunctive relief, and after compliance with par. (a) the customer may amend his or her complaint without leave of court to include a request for damages. The appropriate provisions of par. (c) or (d) shall be applicable if the complaint for injunctive relief is amended to request damages.

426.110(4m) (4m) Actions commenced under this section shall be conducted under the procedures set forth in s. 803.08.

426.110(14) (14) A merchant shall not be liable in a class action for specific penalties under s. 425.302 (1) (a), 425.303 (1), 425.304 (1), 425.305 (1) or 429.301 (1) for which it would be liable in individual actions by reason of violations of chs. 421 to 427 and 429 or of conduct prescribed in sub. (2) unless it is shown by a preponderance of the evidence that the violation was a willful and knowing violation of chs. 421 to 427 and 429.No recovery in an action under this subsection may exceed $100,000.

426.110(15) (15) A plaintiff who prevails shall be awarded a reasonable attorney’s fee. Notwithstanding s. 425.308 (2), reasonable attorney’s fees in a class action shall be determined by the value of the time reasonably expended by the attorney rather than by the amount of the recovery on behalf of the class. A legal aid society or legal services program which represents a class shall be awarded a reasonable service fee in lieu of reasonable attorney’s fees, equal in amount to the amount of the attorney’s fees as measured by this subsection.

426.110(16) (16) The administrator, whether or not a party to an action, shall bear the costs of notice except that the administrator may recover such costs from the defendant.

426.110 History History: 1971 c. 239; 1975 c. 407; 1979 c. 89; 1985 a. 256; 1991 a. 316; 1995 a. 27, 225, 329; 1999 a. 85; Sup. Ct. Order No. 17-03, 2017 WI 108, 378 Wis. 2d xxi.