Wisconsin 2023-2024 Regular Session

Wisconsin Senate Bill SB464 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 SENATE BILL 464
5	5	September 29, 2023 - Introduced by Senators WIMBERGER, BALLWEG and ROYS,
6	6	cosponsored by Representatives TUSLER, ALLEN, BORN, CALLAHAN, KITCHENS,
7	7	O'CONNOR and STEFFEN. Referred to Committee on Shared Revenue, Elections
8	8	and Consumer Protection.
9	9	*AUTHORS SUBJECT TO CHANGE*
10	10	AN ACT to amend 138.04; and to create 100.56 of the statutes; relating to:
11	11	nonrecourse civil litigation advances and providing a penalty.
12	12	Analysis by the Legislative Reference Bureau
13	13	This bill creates provisions governing nonrecourse civil litigation advance
14	14	transactions. Under the bill, a “consumer" is an individual who is or may become a
15	15	plaintiff or claimant in a civil action or other proceeding (dispute), and a “company”
16	16	is a person that enters into a nonrecourse civil litigation advance transaction with
17	17	a consumer. A “nonrecourse civil litigation advance" (advance) is a transaction in
18	18	which a company makes a cash payment to or on behalf of a consumer who has a
19	19	pending dispute in exchange for the right to receive an amount out of the proceeds
20	20	of any realized settlement, judgment, or award the consumer may receive in the
21	21	dispute. In a nonrecourse civil litigation advance transaction, all of the following
22	22	apply: 1) there must be a written contract between the company and the consumer
23	23	governing the transaction; 2) the company may not contract for, or otherwise require,
24	24	repayment in an amount that would result in a finance charge greater than the prime
25	25	interest rate plus 10 percent; 3) the consumer may prepay the advance at any time
26	26	and, upon a prepayment, is entitled to a pro rata reduction in the finance charge
27	27	imposed; 4) the contract may not provide for repayment of the advance later than 36
28	28	months after the contract is entered into; 5) the company may not pay commissions
29	29	or referral fees to attorneys or health care providers; and 6) the contract must contain
30	30	specified information, including the annual percentage rate of the finance charge
31	31	imposed and the consumer's right to receive a reduction in the finance charge
32	32	imposed if prepayment is made, as well as provisions that disclose all one-time fees
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36	36	SENATE BILL 464
37	37	charged to the consumer, disclose the amount to be received by the consumer and the
38	38	amount the consumer assigns to the company, state that the consumer has a right
39	39	to cancel the contract within five days, state that the company has no right to make
40	40	decisions or otherwise participate in the dispute, and state that, except for the
41	41	consumer's prepayments, the company may be paid only from the consumer's
42	42	proceeds of the dispute and is not entitled to be repaid if there are no such proceeds.
43	43	A company that violates any of these requirements or restrictions is subject to a civil
44	44	forfeiture of not less than $25 nor more than $5,000, unless the company establishes
45	45	that the violation was the result of an unintentional good faith error and the
46	46	company had in place policies or procedures designed to achieve compliance. The
47	47	Department of Trade, Agriculture and Consumer Protection has enforcement
48	48	authority over violations.
49	49	The people of the state of Wisconsin, represented in senate and assembly, do
50	50	enact as follows:
51	51	SECTION 1. 100.56 of the statutes is created to read:
52	52	100.56 Nonrecourse civil litigation advances. (1) In this section:
53	53	(a) “Company” means a person that enters into a nonrecourse civil litigation
54	54	advance transaction with a consumer.
55	55	(b) “Consumer" means an individual who is or may become a plaintiff or
56	56	claimant or demandant in any dispute.
57	57	(c) “Dispute" means any of the following:
58	58	1. Any civil claim or action.
59	59	2. Any alternative dispute resolution proceeding.
60	60	3. Any administrative proceeding before any agency or instrumentality of the
61	61	state.
62	62	(d) “Finance charge" means the sum of all charges, including interest, fees, and
63	63	assigned proceeds from a dispute, payable directly or indirectly by the consumer to
64	64	the company as an incident to or as a condition of the company's cash payment
65	65	described in par. (e).
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85	85	(e) “Nonrecourse civil litigation advance" means a transaction in which a
86	86	company makes a cash payment to or on behalf of a consumer who has a pending
87	87	dispute in exchange for the right to receive an amount out of the proceeds of any
88	88	realized settlement, judgment, award, or verdict the consumer may receive in the
89	89	dispute.
90	90	(2) (a) A company may not enter into a nonrecourse civil litigation advance
91	91	transaction unless there is a written contract between the company and the
92	92	consumer governing the transaction.
93	93	(b) A company may not contract for, or otherwise require, repayment of a
94	94	nonrecourse civil litigation advance in an amount that would result in the finance
95	95	charge imposed by the company exceeding the weekly prime interest rate for the
96	96	week prior to the date on which the contract was entered into, as reported by the
97	97	federal reserve board in federal reserve statistical release H.15, plus 10 percent.
98	98	(c) A nonrecourse civil litigation advance may be prepaid by the consumer at
99	99	any time in whole or in part. Upon a prepayment of the nonrecourse civil litigation
100	100	advance, the consumer is entitled to a pro rata reduction in any finance charge
101	101	imposed as part of the nonrecourse civil litigation advance transaction.
102	102	(3) A contract under sub. (2) (a) may not provide for repayment of the
103	103	nonrecourse civil litigation advance later than 36 months after the contract is
104	104	entered into.
105	105	(4) (a) A contract under sub. (2) (a) shall include all of the following:
106	106	1. The annual percentage rate of the finance charge imposed under the
107	107	contract, determined consistently with the provisions of section 107 of the federal
108	108	Truth in Lending Act, 15 USC 1606, and federal Regulation Z adopted under that act,
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136	136	SECTION 1 SENATE BILL 464
137	137	2. A statement that the nonrecourse civil litigation advance may be prepaid in
138	138	full or in part and that, if the nonrecourse civil litigation advance is prepaid, the
139	139	consumer may receive a pro rata reduction in any finance charge imposed as part of
140	140	the nonrecourse civil litigation advance transaction.
141	141	3. On the front page of the contract, a disclosure of the total amount of money
142	142	to be provided to the consumer and the total amount of money to be assigned by the
143	143	consumer to the company, described in 6-month intervals for a total period not
144	144	exceeding 36 months, along with an itemization of all one-time fees to be charged to
145	145	the consumer.
146	146	4. A provision that the consumer may cancel the contract, without penalty or
147	147	further obligation, within 5 business days after entering into the contract if, during
148	148	this period, the consumer returns to the company the cash payment described in sub.
149	149	(1) (e) with a notice of cancellation.
150	150	5. A provision that the company has no right to, and will not, make any
151	151	decisions with respect to the conduct of the dispute or any settlement or resolution
152	152	of the dispute and that those decisions remain solely with the consumer and the
153	153	consumer's attorney.
154	154	6. A provision that the company has no right to participate in the prosecution
155	155	of the dispute or to obtain documents or evidence connected with the dispute.
156	156	7. A provision that the company accepts only an assignment of an amount of
157	157	the potential proceeds from the dispute and does not accept an assignment of the
158	158	consumer's legal claim. This provision shall also specify that the company has no
159	159	right to pursue the consumer's legal claim on behalf of or in lieu of the consumer.
160	160	8. A provision that, except for any amount prepaid by the consumer, the
161	161	company may be paid only from the consumer's proceeds of the dispute. This
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189	189	SECTION 1
190	190	SENATE BILL 464
191	191	provision shall also specify that the consumer does not owe the company anything
192	192	if there is no recovery by the consumer in the dispute unless the consumer violates
193	193	the terms of the contract. This provision shall also specify that, if there are
194	194	insufficient proceeds to pay the company in full, the company may be paid only to the
195	195	extent that there are available proceeds from the dispute, unless the consumer
196	196	violates the terms of the contract.
197	197	9. A provision that, if the consumer is represented by an attorney, any proceeds
198	198	from the dispute paid to the company may be paid only from the trust account of the
199	199	consumer's attorney.
200	200	(b) Each provision or disclosure required under this subsection shall be in
201	201	boldface type and of a type size no smaller than 12-point, except that the provision
202	202	under par. (a) 8. shall be of a type size no smaller than 15-point.
203	203	(5) (a) In this subsection, “health care provider" has the meaning given in s.
204	204	146.81 (1), but also includes any individual licensed or certified in another state for
205	205	the same or equivalent profession.
206	206	(b) A company may not pay or offer to pay commissions or referral fees to any
207	207	attorney or employee of a law firm, or to any health care provider or employee of a
208	208	health care provider, for referring a consumer to the company.
209	209	(6) (a) Except as provided in par. (b), any company that violates this section is
210	210	subject to a forfeiture of not less than $25 nor more than $5,000 for each violation.
211	211	(b) It is a defense to a violation of this section if the company establishes that
212	212	the violation was the result of an unintentional good faith error and, at the time of
213	213	the violation, the company had in place policies or procedures designed to achieve
214	214	compliance with this section.
215	215	SECTION 2. 138.04 of the statutes is amended to read:
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242	242	SECTION 2 SENATE BILL 464
243	243	138.04 Legal rate. The rate of interest upon the loan or forbearance of any
244	244	money, goods, or things in action shall be $5 upon the $100 for one year and according
245	245	to that rate for a greater or less sum or for a longer or a shorter time; but parties may
246	246	contract for the payment and receipt of a rate of interest not exceeding the rate
247	247	allowed in ss. 100.56 (2) (b), 138.041 to 138.056, 138.09 to 138.14, 218.0101 to
248	248	218.0163, or 422.201, in which case such rate shall be clearly expressed in writing.
249	249	SECTION 3.0Initial applicability.
250	250	(1) NONRECOURSE CIVIL LITIGATION ADVANCE TRANSACTIONS. This act first applies
251	251	to nonrecourse civil litigation advance transactions entered into on the effective date
252	252	of this subsection.
253	253	(END)
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