Wisconsin 2023-2024 Regular Session

Wisconsin Assembly Bill AB464 Compare Versions

Only one version of the bill is available at this time.

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3	3	2023 - 2024 LEGISLATURE
4	4	2023 ASSEMBLY BILL 464
5	5	September 28, 2023 - Introduced by Representatives TUSLER, O'CONNOR, BORN,
6	6	ALLEN, STEFFEN, KITCHENS and CALLAHAN, cosponsored by Senators
7	7	WIMBERGER and BALLWEG. Referred to Committee on Consumer Protection.
8	8	*AUTHORS SUBJECT TO CHANGE*
9	9	AN ACT to amend 138.04; and to create 100.56 of the statutes; relating to:
10	10	nonrecourse civil litigation advances and providing a penalty.
11	11	Analysis by the Legislative Reference Bureau
12	12	This bill creates provisions governing nonrecourse civil litigation advance
13	13	transactions. Under the bill, a “consumer" is an individual who is or may become a
14	14	plaintiff or claimant in a civil action or other proceeding (dispute), and a “company”
15	15	is a person that enters into a nonrecourse civil litigation advance transaction with
16	16	a consumer. A “nonrecourse civil litigation advance" (advance) is a transaction in
17	17	which a company makes a cash payment to or on behalf of a consumer who has a
18	18	pending dispute in exchange for the right to receive an amount out of the proceeds
19	19	of any realized settlement, judgment, or award the consumer may receive in the
20	20	dispute. In a nonrecourse civil litigation advance transaction, all of the following
21	21	apply: 1) there must be a written contract between the company and the consumer
22	22	governing the transaction; 2) the company may not contract for, or otherwise require,
23	23	repayment in an amount that would result in a finance charge greater than the prime
24	24	interest rate plus 10 percent; 3) the consumer may prepay the advance at any time
25	25	and, upon a prepayment, is entitled to a pro rata reduction in the finance charge
26	26	imposed; 4) the contract may not provide for repayment of the advance later than 36
27	27	months after the contract is entered into; 5) the company may not pay commissions
28	28	or referral fees to attorneys or health care providers; and 6) the contract must contain
29	29	specified information, including the annual percentage rate of the finance charge
30	30	imposed and the consumer's right to receive a reduction in the finance charge
31	31	imposed if prepayment is made, as well as provisions that disclose all one-time fees
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36	36	charged to the consumer, disclose the amount to be received by the consumer and the
37	37	amount the consumer assigns to the company, state that the consumer has a right
38	38	to cancel the contract within five days, state that the company has no right to make
39	39	decisions or otherwise participate in the dispute, and state that, except for the
40	40	consumer's prepayments, the company may be paid only from the consumer's
41	41	proceeds of the dispute and is not entitled to be repaid if there are no such proceeds.
42	42	A company that violates any of these requirements or restrictions is subject to a civil
43	43	forfeiture of not less than $25 nor more than $5,000, unless the company establishes
44	44	that the violation was the result of an unintentional good faith error and the
45	45	company had in place policies or procedures designed to achieve compliance. The
46	46	Department of Trade, Agriculture and Consumer Protection has enforcement
47	47	authority over violations.
48	48	The people of the state of Wisconsin, represented in senate and assembly, do
49	49	enact as follows:
50	50	SECTION 1. 100.56 of the statutes is created to read:
51	51	100.56 Nonrecourse civil litigation advances. (1) In this section:
52	52	(a) “Company” means a person that enters into a nonrecourse civil litigation
53	53	advance transaction with a consumer.
54	54	(b) “Consumer" means an individual who is or may become a plaintiff or
55	55	claimant or demandant in any dispute.
56	56	(c) “Dispute" means any of the following:
57	57	1. Any civil claim or action.
58	58	2. Any alternative dispute resolution proceeding.
59	59	3. Any administrative proceeding before any agency or instrumentality of the
60	60	state.
61	61	(d) “Finance charge" means the sum of all charges, including interest, fees, and
62	62	assigned proceeds from a dispute, payable directly or indirectly by the consumer to
63	63	the company as an incident to or as a condition of the company's cash payment
64	64	described in par. (e).
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84	84	(e) “Nonrecourse civil litigation advance" means a transaction in which a
85	85	company makes a cash payment to or on behalf of a consumer who has a pending
86	86	dispute in exchange for the right to receive an amount out of the proceeds of any
87	87	realized settlement, judgment, award, or verdict the consumer may receive in the
88	88	dispute.
89	89	(2) (a) A company may not enter into a nonrecourse civil litigation advance
90	90	transaction unless there is a written contract between the company and the
91	91	consumer governing the transaction.
92	92	(b) A company may not contract for, or otherwise require, repayment of a
93	93	nonrecourse civil litigation advance in an amount that would result in the finance
94	94	charge imposed by the company exceeding the weekly prime interest rate for the
95	95	week prior to the date on which the contract was entered into, as reported by the
96	96	federal reserve board in federal reserve statistical release H.15, plus 10 percent.
97	97	(c) A nonrecourse civil litigation advance may be prepaid by the consumer at
98	98	any time in whole or in part. Upon a prepayment of the nonrecourse civil litigation
99	99	advance, the consumer is entitled to a pro rata reduction in any finance charge
100	100	imposed as part of the nonrecourse civil litigation advance transaction.
101	101	(3) A contract under sub. (2) (a) may not provide for repayment of the
102	102	nonrecourse civil litigation advance later than 36 months after the contract is
103	103	entered into.
104	104	(4) (a) A contract under sub. (2) (a) shall include all of the following:
105	105	1. The annual percentage rate of the finance charge imposed under the
106	106	contract, determined consistently with the provisions of section 107 of the federal
107	107	Truth in Lending Act, 15 USC 1606, and federal Regulation Z adopted under that act,
108	108	12 CFR 226.
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136	136	2. A statement that the nonrecourse civil litigation advance may be prepaid in
137	137	full or in part and that, if the nonrecourse civil litigation advance is prepaid, the
138	138	consumer may receive a pro rata reduction in any finance charge imposed as part of
139	139	the nonrecourse civil litigation advance transaction.
140	140	3. On the front page of the contract, a disclosure of the total amount of money
141	141	to be provided to the consumer and the total amount of money to be assigned by the
142	142	consumer to the company, described in 6-month intervals for a total period not
143	143	exceeding 36 months, along with an itemization of all one-time fees to be charged to
144	144	the consumer.
145	145	4. A provision that the consumer may cancel the contract, without penalty or
146	146	further obligation, within 5 business days after entering into the contract if, during
147	147	this period, the consumer returns to the company the cash payment described in sub.
148	148	(1) (e) with a notice of cancellation.
149	149	5. A provision that the company has no right to, and will not, make any
150	150	decisions with respect to the conduct of the dispute or any settlement or resolution
151	151	of the dispute and that those decisions remain solely with the consumer and the
152	152	consumer's attorney.
153	153	6. A provision that the company has no right to participate in the prosecution
154	154	of the dispute or to obtain documents or evidence connected with the dispute.
155	155	7. A provision that the company accepts only an assignment of an amount of
156	156	the potential proceeds from the dispute and does not accept an assignment of the
157	157	consumer's legal claim. This provision shall also specify that the company has no
158	158	right to pursue the consumer's legal claim on behalf of or in lieu of the consumer.
159	159	8. A provision that, except for any amount prepaid by the consumer, the
160	160	company may be paid only from the consumer's proceeds of the dispute. This
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188	188	SECTION 1
189	189	ASSEMBLY BILL 464
190	190	provision shall also specify that the consumer does not owe the company anything
191	191	if there is no recovery by the consumer in the dispute unless the consumer violates
192	192	the terms of the contract. This provision shall also specify that, if there are
193	193	insufficient proceeds to pay the company in full, the company may be paid only to the
194	194	extent that there are available proceeds from the dispute, unless the consumer
195	195	violates the terms of the contract.
196	196	9. A provision that, if the consumer is represented by an attorney, any proceeds
197	197	from the dispute paid to the company may be paid only from the trust account of the
198	198	consumer's attorney.
199	199	(b) Each provision or disclosure required under this subsection shall be in
200	200	boldface type and of a type size no smaller than 12-point, except that the provision
201	201	under par. (a) 8. shall be of a type size no smaller than 15-point.
202	202	(5) (a) In this subsection, “health care provider" has the meaning given in s.
203	203	146.81 (1), but also includes any individual licensed or certified in another state for
204	204	the same or equivalent profession.
205	205	(b) A company may not pay or offer to pay commissions or referral fees to any
206	206	attorney or employee of a law firm, or to any health care provider or employee of a
207	207	health care provider, for referring a consumer to the company.
208	208	(6) (a) Except as provided in par. (b), any company that violates this section is
209	209	subject to a forfeiture of not less than $25 nor more than $5,000 for each violation.
210	210	(b) It is a defense to a violation of this section if the company establishes that
211	211	the violation was the result of an unintentional good faith error and, at the time of
212	212	the violation, the company had in place policies or procedures designed to achieve
213	213	compliance with this section.
214	214	SECTION 2. 138.04 of the statutes is amended to read:
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241	241	SECTION 2 ASSEMBLY BILL 464
242	242	138.04 Legal rate. The rate of interest upon the loan or forbearance of any
243	243	money, goods, or things in action shall be $5 upon the $100 for one year and according
244	244	to that rate for a greater or less sum or for a longer or a shorter time; but parties may
245	245	contract for the payment and receipt of a rate of interest not exceeding the rate
246	246	allowed in ss. 100.56 (2) (b), 138.041 to 138.056, 138.09 to 138.14, 218.0101 to
247	247	218.0163, or 422.201, in which case such rate shall be clearly expressed in writing.
248	248	SECTION 3.0Initial applicability.
249	249	(1) NONRECOURSE CIVIL LITIGATION ADVANCE TRANSACTIONS. This act first applies
250	250	to nonrecourse civil litigation advance transactions entered into on the effective date
251	251	of this subsection.
252	252	(END)
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