The functions of disclosure regulation in consumer transactions. Whitford, 1973 WLR 400.
General requirements and provisions. 422.302(1)(1)
The information required by this subchapter to be disclosed by the creditor to the customer to whom credit is extended:
Except as provided in s. 422.303
and in rules adopted by the administrator, need not be contained in a single writing or made in the order set forth in chs. 421
May be supplemented by additional information or explanations supplied by the creditor, but none shall be stated, utilized or placed so as to mislead or confuse the customer or contradict, obscure or detract attention from the information required by this subchapter to be disclosed; and so long as the additional information or explanations do not have the effect of circumventing, evading or unduly complicating the information required to be disclosed by this subchapter; and
Need be made only to the extent applicable and only as to those items for which the creditor makes a separate charge to the customer.
The creditor shall disclose all information required by this subchapter before the transaction is consummated; such disclosures may be made on the face of the writing evidencing the transaction.
Before any payment is due, the creditor shall furnish the customer with an exact copy of each instrument, document, agreement and contract which is signed by the customer and which evidences the customer's obligation. If there is more than one customer, delivery of copies of the documents to one of them constitutes compliance with this subsection.
Anything to the contrary in chs. 421
notwithstanding, the sale of insurance under ch. 424
shall not be considered a sale requiring separate disclosure other than as provided in s. 422.202 (1)
History: 1971 c. 239
; 1979 c. 10
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, sub. (2) and s. 422.308 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).
Form requirements other than open-end or discount. 422.303(1)(1)
In a consumer credit sale other than one pursuant to an open-end credit plan or a credit sale in which the only finance charge is a prompt payment discount as described in s. 422.201 (8)
, the customer's obligation to pay the total of payments shall be evidenced by a single instrument, which shall include, in addition to the other disclosures required by this subchapter, the signature of the seller, the signature of the customer, the date on which it was signed and a description of any property the customer transfers to the seller as a trade-in.
The terms of such instrument evidencing a consumer credit sale shall be set forth in not less than 8-point standard type, or such similar type as is prescribed in rules adopted by the administrator, to the extent that larger type is not specifically required by chs. 421
Except as provided in sub. (4)
, every writing evidencing the customer's obligation to pay under a consumer credit transaction other than one pursuant to an open-end credit plan or a motor vehicle consumer lease, shall contain immediately above or adjacent to the place for the signature of the customer, a clear, conspicuous, printed or typewritten notice in substantially the following language:
NOTICE TO CUSTOMER
(a) DO NOT SIGN THIS BEFORE YOU READ THE WRITING ON THE REVERSE SIDE, EVEN IF OTHERWISE ADVISED.
(b) DO NOT SIGN THIS IF IT CONTAINS ANY BLANK SPACES.
(c) YOU ARE ENTITLED TO AN EXACT COPY OF ANY AGREEMENT YOU SIGN.
(d) YOU HAVE THE RIGHT AT ANY TIME TO PAY IN ADVANCE THE UNPAID BALANCE DUE UNDER THIS AGREEMENT AND YOU MAY BE ENTITLED TO A PARTIAL REFUND OF THE FINANCE CHARGE.
The notice described in sub. (3) (a)
is not required when no terms appear on the reverse side of the writing. The notice described in sub. (3) (d)
is not required with respect to a consumer credit transaction secured by a first lien mortgage or equivalent security interest on real property, the original term of which is 10 years or more.
The creditor shall retain a copy of such writing evidencing a consumer credit transaction, other than one pursuant to an open-end credit plan, and of any proposal for a consumer credit transaction which the merchant has required or requested the customer to sign and which the customer has signed during contract negotiations, for a period of one year after the last payment scheduled under the transaction, or one year after the transaction has been repaid in full, whichever is sooner. The creditor shall supply the customer with copies of such documents upon any demand of the customer made within such period; one copy shall be furnished at no charge; and subsequent copies shall be furnished on the condition that the customer pay the creditor's reasonable costs of preparing and forwarding the copy. Copies supplied under this subsection are in addition to those copies required by s. 422.302
Legislative Council Note, 1973: Makes clear that this section refers to copies of documents given subsequently to documents furnished in the original transaction. Section 422.302 (3) requires that a copy of each document signed by the customer and evidencing his obligation be given to the customer before the first payment is due. This section is intended to refer to additional copies of such documents, furnished to the customer during the course of repaying the obligation. The added language inserted in sub. (5) further clarifies this intent. [Bill 432-A]
Prohibition of blank writings. 422.304(1)(1)
Every writing evidencing a consumer credit transaction shall be completed as to all essential provisions prior to the signing thereof by the parties, and no creditor shall induce, encourage or otherwise permit the customer to sign a writing containing blank spaces which are to be filled in after it is signed except for a space provided for the identifying numbers of goods if not available at the time of the transaction. Blanks relating to price, charges or terms of payment which are inapplicable to a transaction must be filled in a manner which reveals their inapplicability unless their inapplicability is clearly and conspicuously indicated.
History: 1971 c. 239
See also s. DFI-WCA 1.34
, Wis. adm. code.
Notice to obligors. 422.305(1)(1)
No natural person is obligated to assume personal liability for payment of an obligation arising out of a consumer credit transaction unless the person, in addition to signing the writing evidencing the consumer credit transaction, or a separate guaranty or similar instrument, also either receives a copy of each instrument, document, agreement and contract which is signed by the customer and which evidences the customer's obligation to pay, or signs and receives at the time of signing a separate instrument in substantially the following language:
(a) You have agreed to pay the total of payments under a consumer credit transaction between .... (name of customer) and .... (name of merchant) made on .... (date of transaction) for .... (description of purpose of credit, i.e. sale or loan) in the amount of $.....
(b) You will be liable and fully responsible for payment of the above amount even though you may not be entitled to any of the goods, services or loan furnished thereunder.
(c) You may be sued in court for the payment of the amount due under this consumer credit transaction even though the customer named above may be working or have funds to pay the amount due.
(d) This explanation is not the agreement under which you are obligated, and the guaranty or agreement you have executed must be consulted for the exact terms of your obligations.
(e) You are entitled now, or at any time, to one free copy of any document you sign evidencing this transaction.
(f) The undersigned acknowledges receipt of an exact copy of this notice.
The notice must be printed, typed or otherwise reproduced in a size and style equal to at least 10-point boldface type or such similar type as prescribed by the administrator, and shall contain only the matter above set forth and the address of the merchant.
This notice shall not be required to be given to a merchant who endorses or is otherwise liable for payment to an assignee or holder of the customer's obligation.
The notice required by this section shall not act to increase or decrease the liability of a cosigner.
Taking or arranging for a person to sign an instrument in violation of this section is a violation subject to s. 425.304
History: 1971 c. 239
; 1973 c. 3
; 1979 c. 10
See also s. DFI-WCA 1.351
, Wis. adm. code.
Receipts; accounting; evidence of payment. 422.306(1)(1)
The creditor shall furnish the customer, without request, a written receipt for each payment made in cash, or any other time the method of payment does not itself provide evidence of payment.
At any time after consummation of a consumer credit transaction other than one pursuant to an open-end credit plan, the creditor, upon written request by the customer, shall furnish to the customer a written statement of the amounts and specifying the dates of payments received and charges imposed, together with the unpaid balance at the time of the statement. With respect to transactions secured by a first lien mortgage, or equivalent security interest, on real property such statement need specify only the dates and amounts of payments received and charges imposed during the previous 12 months, and the unpaid balance remaining at the time of the statement. The customer shall be entitled to one such statement free of charge once every 12 months. Additional statements shall be furnished if the customer pays the creditor's reasonable costs of preparing and furnishing the statement.
With respect to an open-end credit plan, the creditor shall at any time upon written request by the customer, furnish to the customer a written statement, which may consist of copies of the periodic statements furnished to the customer under the plan, specifying the dates and amounts of purchases or loan credit extended and payments received during the previous 12 months, and the unpaid balance remaining at the time of the statement. The customer shall be entitled to one such statement at a charge not in excess of $1 once every 12 months. Additional statements shall be furnished if the customer pays the creditor's reasonable costs of preparing and furnishing the statement.
Except as provided in s. 708.15
, within 45 days after payment by the customer of all sums for which the customer is obligated under a consumer credit transaction other than one pursuant to an open-end credit plan, the creditor shall give or forward to the customer instruments which acknowledge payment in full, and release of any security interest when there is no outstanding secured obligation, and furnish to the customer or the customer's designee evidence of the release or assignment to such designee of any recorded lien on real estate and termination of any filed financing statement which perfected such security interest.
See also s. DFI-WCA 1.36
, Wis. adm. code.
Estimates or approximations.
If at the time disclosures must be made, an amount or other item of information required to be disclosed or needed to determine a required disclosure is unknown or not available to the creditor, and a reasonable effort has been made to ascertain it, the creditor may use an estimated amount or approximation of the information, if:
The estimate or approximation is clearly identified as such, is reasonable and is based on the best information available to the creditor; and
The estimate or approximation is not used for the purpose of circumventing or evading the disclosure requirements of this subchapter.
History: 1971 c. 239
Open-end credit disclosures. 422.308(1)(1)
With regard to every open-end credit plan between a creditor, wherever located, and a customer who is a resident of this state and who is applying for the open-end credit plan from this state, every application for the open-end credit plan, including every application contained in an advertisement, shall be appropriately divided and captioned by its various sections and shall set forth all of the following:
The annual percentage rate or, if the rate may vary, a statement that it may do so and of the circumstances under which the rates may increase, any limitations on the increase and the effects of the increase.
The date or occasion upon which the finance charge begins to accrue on a transaction.
Whether any annual fee is charged and the amount of the fee.
Whether any other charges or fees may be charged, what they may be charged for and the amounts of the charges or fees.
With regard to every open-end credit plan between a creditor, wherever located, and a customer who is a resident of this state and who is given the opportunity to enter into an open-end credit plan while present in any establishment located in this state but who is not required to complete an application under sub. (1)
, the customer shall be given a notice prior to entering into the open-end credit plan. The notice shall be appropriately divided and captioned by its various sections and shall set forth all of the information in sub. (1) (a)
The administrator shall publish an annual creditors' noncompliance report on November 1. The report shall set forth the names of creditors that the administrator knows, or reasonably believes, to have violated this section during the preceding 12 months, unless the administrator knows or reasonably believes that the violation or violations were the result of unintentional good faith error.
A violation of this section is subject to s. 425.304
unless the violation was the result of an unintentional good faith error.
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.
History: 1985 a. 244
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).
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:
Any charge or fee for electronically filing an income tax return.
The anticipated length of time, within 2 business days, by which the customer will receive the refund anticipation loan proceeds.
That the customer may electronically file an income tax return without obtaining a refund anticipation loan.
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.
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.
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)
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.
History: 1993 a. 111
LIMITATIONS ON AGREEMENTS AND PRACTICES
This subchapter applies to consumer credit transactions.
History: 1971 c. 239