Yesterday in Wisconsin, Republican governor Scott Walker signed AB 117, modifying the Wisconsin Consumer Act (WCA). The ARM industry says the bill provides clarity and uniformity. Specifically, it modifies the pleading requirements as follows:

  1. Changes terminology from “creditor” to “merchant.” (A merchant is defined to include, among others, a creditor or a seller of property on credit and expressly includes such a creditor’s or seller’s assignee or successor.)
  2. The merchant must identify the actual or estimated amount alleged to be due to the merchant on a date certain after the customer’s default, and include a breakdown of all charges, interest, and payments occurring after this date. In the case of an open-end credit plan, the amount must be reflected in a billing statement addressed to the customer.
  3. Clarifies that for a claim arising under an open-end credit plan, the merchant’s obligation to provide evidence of the debt can be satisfied if he has provided the billing statement reflecting the total outstanding balance. The bill strikes the requirement to provide evidence of transactions.
  4. Clarifies that the merchant’s failure to comply with these requirements related to pleading and providing copies precludes entry of default judgment, rather than judgment, for the merchant.
  5. Adds that a complaint which fails to comply with the new pleading requirements is not a violation that gives rise to a penalty, civil liability, or an award of attorney fees unless the consumer proves that the failure was willful or intentional.

The act is effective on the first day of the 4th month after publication.

Also signed yesterday was SB 466, which gives libraries the authority to engage collection agencies to collect fines for overdue books. In the case of fines over $50, they can now turn those over to law enforcement.

insideARM Perspective

It’s notable that business-friendly debt collection legislation would pass amidst an environment of increasingly active unfriendly regulation at the state level.  Last summer, Illinois enacted Public Act 227, which – among other things – swept commercial collectors into the fold with consumer collectors (this was recently corrected). In November 2014, New York’s Department of Financial Services enacted new rules for debt collectors and debt buyers which seemed to raise more questions than they answered. Industry groups are still seeking clarification on many details.

Industry sources have told insideARM that from a collection agency licensing perspective, Wisconsin is one of the more challenging states; they typically adopt the strictest possible interpretation of the laws. So it’s interesting that the legislature has adopted a business-friendly policy, especially in the case of AB 117.

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