Wisconsin 2023-2024 Regular Session

Wisconsin Assembly Bill AB883 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 883
5	5	January 2, 2024 - Introduced by Representatives A LLEN, DRAKE, MURSAU,
6	6	ORTIZ-VELEZ, PALMERI, RETTINGER, ROZAR and CONLEY, cosponsored by Senator
7	7	CABRAL-GUEVARA. Referred to Committee on Financial Institutions.
8	8	*AUTHORS SUBJECT TO CHANGE*
9	9	AN ACT to repeal 138.14 (1) (g); to renumber 138.14 (9m); to amend 138.14 (9g)
10	10	(a) 3., 138.14 (10) (b) 2., 138.14 (12) (b), 138.14 (12) (f) and 138.14 (14) (m); to
11	11	repeal and recreate 138.14 (1) (k); and to create 138.14 (9g) (a) 7., 138.14
12	12	(9m) (a), 138.14 (9r) (g), 138.14 (12) (g) and 138.14 (13) (e) of the statutes;
13	13	relating to: payday loans.
14	14	Analysis by the Legislative Reference Bureau
15	15	This bill redefines a payday loan and makes other changes related to the
16	16	regulation of payday loans.
17	17	Under current law, a person other than a financial institution or its affiliate
18	18	must be licensed by the Division of Banking (division) in the Department of Financial
19	19	Institutions to originate or service a payday loan involving a Wisconsin resident. A
20	20	“payday loan" is defined as a transaction between an individual with an account at
21	21	a financial establishment and another person (payday lender) in which the payday
22	22	lender agrees to accept a check or electronic fund transfer (EFT) authorization from
23	23	the individual, to delay negotiating the check or initiating the EFT for a period of
24	24	time, and to extend a loan to the individual for a term of 90 days or less. Current law
25	25	imposes various requirements and restrictions on payday loans and licensed payday
26	26	lenders. For example, a payday lender may not make a payday loan that results in
27	27	the customer having an outstanding liability in principal, interest, and fees on all
28	28	payday loans held at the same time by the customer of more than $1,500 or 35 percent
29	29	of the customer's gross monthly income, whichever is less. A payday lender must also
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36	36	ASSEMBLY BILL 883
37	37	provide to an applicant certain information before entering into a payday loan,
38	38	including disclosing fees and costs and the loan's annual percentage rate and
39	39	providing written materials prepared by the division.
40	40	This bill eliminates the foregoing definition of a payday loan and instead
41	41	defines a payday loan as a loan to which all of the following apply: 1) the loan's
42	42	maturity date is not more than six months after the loan's origination date; 2) the
43	43	loan agreement requires the loan to be repaid in equal periodic payments over the
44	44	course of the loan; and 3) the loan is not secured by real property or other collateral.
45	45	The bill prohibits a payday lender from making or offering to make a payday loan
46	46	having a maturity date less than 90 days after the loan's origination date.
47	47	The bill also imposes the following requirements on payday loans in addition
48	48	to current law requirements:
49	49	1. Under the loan agreement, a portion of each periodic payment by the
50	50	customer must be applied to loan principal and the percentage of the payment
51	51	applied to principal must be the same for all periodic payments made by the customer
52	52	on the payday loan.
53	53	2. Before entering into a payday loan, a payday lender must undertake a
54	54	reasonable underwriting process to verify the applicant's ability to repay the payday
55	55	loan. The payday lender may not make a payday loan in an amount that exceeds the
56	56	amount the applicant is capable of repaying, as determined by the payday lender's
57	57	underwriting process, or the maximum amount established under current law (as
58	58	described above), whichever is less.
59	59	3. Before entering into a payday loan, a payday lender must disclose to the
60	60	applicant, in a clear and conspicuous manner, the payment plan and the amount of
61	61	interest that will be paid over the course of the loan. The payday lender must also
62	62	disclose to the applicant the availability of a financial literacy course of no more than
63	63	three hours' duration that the bill requires the division to develop or make available
64	64	to the public.
65	65	For further information see the state fiscal estimate, which will be printed as
66	66	an appendix to this bill.
67	67	The people of the state of Wisconsin, represented in senate and assembly, do
68	68	enact as follows:
69	69	SECTION 1. 138.14 (1) (g) of the statutes is repealed.
70	70	SECTION 2. 138.14 (1) (k) of the statutes is repealed and recreated to read:
71	71	138.14 (1) (k) “Payday loan" means a loan to which all of the following apply:
72	72	1. The loan's maturity date is not more than 6 months after the loan's
73	73	origination date.
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83	83	2. The loan agreement requires the loan to be repaid in equal periodic payments
84	84	over the course of the loan.
85	85	3. The loan is not secured by real property or other collateral.
86	86	SECTION 3. 138.14 (9g) (a) 3. of the statutes is amended to read:
87	87	138.14 (9g) (a) 3. Provide to the applicant a copy of the written informational
88	88	materials specified in sub. (9r) (a) to (f) and disclose to the applicant the availability
89	89	of the financial literacy course under sub. (9r) (g).
90	90	SECTION 4. 138.14 (9g) (a) 7. of the statutes is created to read:
91	91	138.14 (9g) (a) 7. Disclose to the applicant, in a clear and conspicuous manner,
92	92	the payment plan and the amount of interest that will be paid over the course of the
93	93	loan.
94	94	SECTION 5. 138.14 (9m) of the statutes is renumbered 138.14 (9m) (b).
95	95	SECTION 6. 138.14 (9m) (a) of the statutes is created to read:
96	96	138.14 (9m) (a) Before entering into a payday loan with an applicant, the
97	97	licensee shall undertake a reasonable underwriting process to verify the applicant's
98	98	ability to repay the payday loan. The licensee may not make a payday loan in an
99	99	amount that exceeds the amount the applicant is capable of repaying, including
100	100	principal and interest, as determined by the licensee's underwriting process, or the
101	101	amount established as provided in sub. (12) (b), whichever is less.
102	102	SECTION 7. 138.14 (9r) (g) of the statutes is created to read:
103	103	138.14 (9r) (g) The division shall develop or make available to the public a
104	104	financial literacy course that includes material related to payday loans. The course's
105	105	duration shall be no more than 3 hours.
106	106	SECTION 8. 138.14 (10) (b) 2. of the statutes is amended to read:
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132	132	SECTION 8 ASSEMBLY BILL 883
133	133	138.14 (10) (b) 2. A licensee may present a customer's check for a periodic
134	134	payment no more than once. For each customer authorization to initiate an
135	135	electronic fund transfer from the customer's account, a licensee may initiate an
136	136	electronic fund transfer for a periodic payment no more than once. The only charge
137	137	that a licensee may impose for dishonor of a customer's check or denial of the
138	138	licensee's instruction to execute an electronic fund transfer is a service charge that
139	139	does not exceed $15.
140	140	SECTION 9. 138.14 (12) (b) of the statutes is amended to read:
141	141	138.14 (12) (b) No licensee may make a payday loan to a customer that results
142	142	in the customer having an outstanding aggregate liability in principal, interest, and
143	143	all other fees and charges, to all licensees who have made payday loans to the
144	144	customer of more than $1,500 or 35 percent of the customer's gross monthly income,
145	145	whichever is less. As provided in sub. (9m) (b), a licensee may rely on a consumer
146	146	report to verify a customer's income for purposes of this paragraph.
147	147	SECTION 10. 138.14 (12) (f) of the statutes is amended to read:
148	148	138.14 (12) (f) If a check held received by a licensee as a result of payment on
149	149	a payday loan is dishonored, or an instruction to execute an electronic funds transfer
150	150	authorized as the result of payment on a payday loan is denied, the licensee may
151	151	bring an action to collect the amount of the check or electronic funds transfer, but
152	152	may not threaten or pursue criminal action against a debtor as a result of the debtor's
153	153	dishonored check or denied electronic funds transfer or the debtor's payday loan not
154	154	being paid.
155	155	SECTION 11. 138.14 (12) (g) of the statutes is created to read:
156	156	138.14 (12) (g) No licensee may make or offer to make a payday loan for which
157	157	the maturity date is less than 90 days after the loan's origination date.
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185	185	SECTION 12
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187	187	SECTION 12. 138.14 (13) (e) of the statutes is created to read:
188	188	138.14 (13) (e) The loan agreement for a payday loan shall provide that a
189	189	portion of each periodic payment by the customer be applied to loan principal and
190	190	that the percentage of the payment applied to principal be the same for all periodic
191	191	payments made by the customer on the payday loan.
192	192	SECTION 13. 138.14 (14) (m) of the statutes is amended to read:
193	193	138.14 (14) (m) Before entering into a payday loan, a licensee shall submit to
194	194	the database provider the customer's name; unique identification number that is
195	195	assigned in a manner specified by the division; address; driver license number or
196	196	other method of state identification; the amount of the transaction; the customer's
197	197	check number, if applicable; the date of the transaction; the maturity date of the loan;
198	198	and any other information reasonably required by the division, in a format approved
199	199	by the division.
200	200	SECTION 14.0Nonstatutory provisions.
201	201	(1) This act first applies to loans made, refinanced, or consolidated on the
202	202	effective date of this subsection.
203	203	SECTION 15.0Effective date.
204	204	(1) This act takes effect on the first day of the 7th month beginning after
205	205	publication.
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