Wisconsin 2023-2024 Regular Session

Wisconsin Senate Bill SB832 Compare Versions

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

Old	New	Differences
1	1	LRB-5164/2
2	2	ARG:emw
3	3	2023 - 2024 LEGISLATURE
4	4	2023 SENATE BILL 832
5	5	December 19, 2023 - Introduced by Senator CABRAL-GUEVARA, cosponsored by
6	6	Representatives ALLEN, DRAKE, ORTIZ-VELEZ, MURSAU, PALMERI, RETTINGER,
7	7	ROZAR and CONLEY. Referred to Committee on Financial Institutions and
8	8	Sporting Heritage.
9	9	*AUTHORS SUBJECT TO CHANGE*
10	10	AN ACT to repeal 138.14 (1) (g); to renumber 138.14 (9m); to amend 138.14 (9g)
11	11	(a) 3., 138.14 (10) (b) 2., 138.14 (12) (b), 138.14 (12) (f) and 138.14 (14) (m); to
12	12	repeal and recreate 138.14 (1) (k); and to create 138.14 (9g) (a) 7., 138.14
13	13	(9m) (a), 138.14 (9r) (g), 138.14 (12) (g) and 138.14 (13) (e) of the statutes;
14	14	relating to: payday loans.
15	15	Analysis by the Legislative Reference Bureau
16	16	This bill redefines a payday loan and makes other changes related to the
17	17	regulation of payday loans.
18	18	Under current law, a person other than a financial institution or its affiliate
19	19	must be licensed by the Division of Banking (division) in the Department of Financial
20	20	Institutions to originate or service a payday loan involving a Wisconsin resident. A
21	21	“payday loan" is defined as a transaction between an individual with an account at
22	22	a financial establishment and another person (payday lender) in which the payday
23	23	lender agrees to accept a check or electronic fund transfer (EFT) authorization from
24	24	the individual, to delay negotiating the check or initiating the EFT for a period of
25	25	time, and to extend a loan to the individual for a term of 90 days or less. Current law
26	26	imposes various requirements and restrictions on payday loans and licensed payday
27	27	lenders. For example, a payday lender may not make a payday loan that results in
28	28	the customer having an outstanding liability in principal, interest, and fees on all
29	29	payday loans held at the same time by the customer of more than $1,500 or 35 percent
30	30	of the customer's gross monthly income, whichever is less. A payday lender must also
31	31	1
32	32	2
33	33	3
34	34	4
35	35	5 - 2 -2023 - 2024 Legislature LRB-5164/2
36	36	ARG:emw
37	37	SENATE BILL 832
38	38	provide to an applicant certain information before entering into a payday loan,
39	39	including disclosing fees and costs and the loan's annual percentage rate and
40	40	providing written materials prepared by the division.
41	41	This bill eliminates the foregoing definition of a payday loan and instead
42	42	defines a payday loan as a loan to which all of the following apply: 1) the loan's
43	43	maturity date is not more than six months after the loan's origination date; 2) the
44	44	loan agreement requires the loan to be repaid in equal periodic payments over the
45	45	course of the loan; and 3) the loan is not secured by real property or other collateral.
46	46	The bill prohibits a payday lender from making or offering to make a payday loan
47	47	having a maturity date less than 90 days after the loan's origination date.
48	48	The bill also imposes the following requirements on payday loans in addition
49	49	to current law requirements:
50	50	1. Under the loan agreement, a portion of each periodic payment by the
51	51	customer must be applied to loan principal and the percentage of the payment
52	52	applied to principal must be the same for all periodic payments made by the customer
53	53	on the payday loan.
54	54	2. Before entering into a payday loan, a payday lender must undertake a
55	55	reasonable underwriting process to verify the applicant's ability to repay the payday
56	56	loan. The payday lender may not make a payday loan in an amount that exceeds the
57	57	amount the applicant is capable of repaying, as determined by the payday lender's
58	58	underwriting process, or the maximum amount established under current law (as
59	59	described above), whichever is less.
60	60	3. Before entering into a payday loan, a payday lender must disclose to the
61	61	applicant, in a clear and conspicuous manner, the payment plan and the amount of
62	62	interest that will be paid over the course of the loan. The payday lender must also
63	63	disclose to the applicant the availability of a financial literacy course of no more than
64	64	three hours' duration that the bill requires the division to develop or make available
65	65	to the public.
66	66	For further information see the state fiscal estimate, which will be printed as
67	67	an appendix to this bill.
68	68	The people of the state of Wisconsin, represented in senate and assembly, do
69	69	enact as follows:
70	70	SECTION 1. 138.14 (1) (g) of the statutes is repealed.
71	71	SECTION 2. 138.14 (1) (k) of the statutes is repealed and recreated to read:
72	72	138.14 (1) (k) “Payday loan" means a loan to which all of the following apply:
73	73	1. The loan's maturity date is not more than 6 months after the loan's
74	74	origination date.
75	75	1
76	76	2
77	77	3
78	78	4
79	79	5 - 3 -2023 - 2024 Legislature
80	80	LRB-5164/2
81	81	ARG:emw
82	82	SECTION 2
83	83	SENATE BILL 832
84	84	2. The loan agreement requires the loan to be repaid in equal periodic payments
85	85	over the course of the loan.
86	86	3. The loan is not secured by real property or other collateral.
87	87	SECTION 3. 138.14 (9g) (a) 3. of the statutes is amended to read:
88	88	138.14 (9g) (a) 3. Provide to the applicant a copy of the written informational
89	89	materials specified in sub. (9r) (a) to (f) and disclose to the applicant the availability
90	90	of the financial literacy course under sub. (9r) (g).
91	91	SECTION 4. 138.14 (9g) (a) 7. of the statutes is created to read:
92	92	138.14 (9g) (a) 7. Disclose to the applicant, in a clear and conspicuous manner,
93	93	the payment plan and the amount of interest that will be paid over the course of the
94	94	loan.
95	95	SECTION 5. 138.14 (9m) of the statutes is renumbered 138.14 (9m) (b).
96	96	SECTION 6. 138.14 (9m) (a) of the statutes is created to read:
97	97	138.14 (9m) (a) Before entering into a payday loan with an applicant, the
98	98	licensee shall undertake a reasonable underwriting process to verify the applicant's
99	99	ability to repay the payday loan. The licensee may not make a payday loan in an
100	100	amount that exceeds the amount the applicant is capable of repaying, including
101	101	principal and interest, as determined by the licensee's underwriting process, or the
102	102	amount established as provided in sub. (12) (b), whichever is less.
103	103	SECTION 7. 138.14 (9r) (g) of the statutes is created to read:
104	104	138.14 (9r) (g) The division shall develop or make available to the public a
105	105	financial literacy course that includes material related to payday loans. The course's
106	106	duration shall be no more than 3 hours.
107	107	SECTION 8. 138.14 (10) (b) 2. of the statutes is amended to read:
108	108	1
109	109	2
110	110	3
111	111	4
112	112	5
113	113	6
114	114	7
115	115	8
116	116	9
117	117	10
118	118	11
119	119	12
120	120	13
121	121	14
122	122	15
123	123	16
124	124	17
125	125	18
126	126	19
127	127	20
128	128	21
129	129	22
130	130	23
131	131	24 - 4 -2023 - 2024 Legislature LRB-5164/2
132	132	ARG:emw
133	133	SECTION 8 SENATE BILL 832
134	134	138.14 (10) (b) 2. A licensee may present a customer's check for a periodic
135	135	payment no more than once. For each customer authorization to initiate an
136	136	electronic fund transfer from the customer's account, a licensee may initiate an
137	137	electronic fund transfer for a periodic payment no more than once. The only charge
138	138	that a licensee may impose for dishonor of a customer's check or denial of the
139	139	licensee's instruction to execute an electronic fund transfer is a service charge that
140	140	does not exceed $15.
141	141	SECTION 9. 138.14 (12) (b) of the statutes is amended to read:
142	142	138.14 (12) (b) No licensee may make a payday loan to a customer that results
143	143	in the customer having an outstanding aggregate liability in principal, interest, and
144	144	all other fees and charges, to all licensees who have made payday loans to the
145	145	customer of more than $1,500 or 35 percent of the customer's gross monthly income,
146	146	whichever is less. As provided in sub. (9m) (b), a licensee may rely on a consumer
147	147	report to verify a customer's income for purposes of this paragraph.
148	148	SECTION 10. 138.14 (12) (f) of the statutes is amended to read:
149	149	138.14 (12) (f) If a check held received by a licensee as a result of payment on
150	150	a payday loan is dishonored, or an instruction to execute an electronic funds transfer
151	151	authorized as the result of payment on a payday loan is denied, the licensee may
152	152	bring an action to collect the amount of the check or electronic funds transfer, but
153	153	may not threaten or pursue criminal action against a debtor as a result of the debtor's
154	154	dishonored check or denied electronic funds transfer or the debtor's payday loan not
155	155	being paid.
156	156	SECTION 11. 138.14 (12) (g) of the statutes is created to read:
157	157	138.14 (12) (g) No licensee may make or offer to make a payday loan for which
158	158	the maturity date is less than 90 days after the loan's origination date.
159	159	1
160	160	2
161	161	3
162	162	4
163	163	5
164	164	6
165	165	7
166	166	8
167	167	9
168	168	10
169	169	11
170	170	12
171	171	13
172	172	14
173	173	15
174	174	16
175	175	17
176	176	18
177	177	19
178	178	20
179	179	21
180	180	22
181	181	23
182	182	24
183	183	25 - 5 -2023 - 2024 Legislature
184	184	LRB-5164/2
185	185	ARG:emw
186	186	SECTION 12
187	187	SENATE BILL 832
188	188	SECTION 12. 138.14 (13) (e) of the statutes is created to read:
189	189	138.14 (13) (e) The loan agreement for a payday loan shall provide that a
190	190	portion of each periodic payment by the customer be applied to loan principal and
191	191	that the percentage of the payment applied to principal be the same for all periodic
192	192	payments made by the customer on the payday loan.
193	193	SECTION 13. 138.14 (14) (m) of the statutes is amended to read:
194	194	138.14 (14) (m) Before entering into a payday loan, a licensee shall submit to
195	195	the database provider the customer's name; unique identification number that is
196	196	assigned in a manner specified by the division; address; driver license number or
197	197	other method of state identification; the amount of the transaction; the customer's
198	198	check number, if applicable; the date of the transaction; the maturity date of the loan;
199	199	and any other information reasonably required by the division, in a format approved
200	200	by the division.
201	201	SECTION 14.0Nonstatutory provisions.
202	202	(1) This act first applies to loans made, refinanced, or consolidated on the
203	203	effective date of this subsection.
204	204	SECTION 15.0Effective date.
205	205	(1) This act takes effect on the first day of the 7th month beginning after
206	206	publication.
207	207	(END)
208	208	1
209	209	2
210	210	3
211	211	4
212	212	5
213	213	6
214	214	7
215	215	8
216	216	9
217	217	10
218	218	11
219	219	12
220	220	13
221	221	14
222	222	15
223	223	16
224	224	17
225	225	18
226	226	19
227	227	20