LRB-2362/3
RJM:jlg:km
1999 - 2000 LEGISLATURE
May 20, 1999 - Introduced by Senator Burke, cosponsored by Representative
Musser. Referred to Committee on Judiciary and Consumer Affairs.
SB169,1,4
1An Act to renumber 423.301;
to amend 100.26 (4) and 423.302; and
to create
2100.18 (10v), 423.301 (1) (title), 423.301 (2) and 423.301 (3) of the statutes;
3relating to: deceptive preapproval of open-end credit plans and providing a
4penalty.
Analysis by the Legislative Reference Bureau
Under current law, no person may distribute an untrue statement in an
advertisement with the intent to induce the public to enter into any contract with the
person. In addition to this general prohibition on deceptive advertising, no merchant
may advertise any statement or representation with regard to the extension of
consumer credit that is false, misleading or deceptive. The department of
agriculture, trade and consumer protection (DATCP) may prosecute a person who
distributes deceptive advertising. With certain exceptions, a person who distributes
deceptive advertising may be fined not less than $50 nor more than $200. In
addition, a person injured by deceptive advertising may sue and generally may
recover any pecuniary loss together with reasonable attorney fees. Furthermore, a
consumer who enters into a transaction resulting from a misleading statement with
regard to the extension of credit may sue to void the transaction, recover amounts
paid pursuant to the transaction and recover reasonable attorney fees.
This bill specifies that certain representations regarding an open-end credit
plan (typically, a credit card) are both deceptive advertising and false, misleading or
deceptive statements regarding consumer credit. Under this bill, a merchant may
not indicate to a consumer that the merchant has preapproved an extension of credit
to the consumer under an open-end credit plan and then extend credit to the
consumer under terms that are less financially favorable to the consumer than those
indicated. In addition, this bill prohibits a merchant from refusing to extend credit
after indicating preapproval of an extension of credit under an open-end credit plan.
It is not a defense to a violation of this bill for the merchant to indicate that its
preapproval of an extension of credit is subject to the merchant's investigation of the
consumer's financial information. However, under this bill it is not a violation for the
merchant to extend credit on different terms or refuse to extend credit due to an
adverse change in the financial circumstances of the consumer.
A violation of this bill would be subject to a forfeiture of not less than $50 nor
more than $200. In addition, this bill retains the private cause of action and the
authority of DATCP to prosecute violations in current law.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB169, s. 1
1Section
1. 100.18 (10v) of the statutes is created to read:
SB169,2,32
100.18
(10v) Deceptive advertising of preapproved open-end credit plans. 3(a)
Definitions. In this subsection:
SB169,2,54
1. "Customer" means a person other than an organization who seeks or
5acquires credit for personal, family or household purposes.
SB169,2,76
2. "Directly" means in person, by mail or electronic mail addressed to the
7receiver or by telephone.
SB169,2,88
3. "Merchant" has the meaning given in s. 421.301 (25).
SB169,2,99
4. "Open-end credit plan" has the meaning given in s. 421.301 (27).
SB169,2,1010
5. "Organization" has the meaning given in s. 421.301 (28).
SB169,3,311
(b)
Deceptive preapproved rates, terms or conditions. 1. It is deceptive
12advertising for a merchant to directly communicate to a customer or cause to be
13directly communicated to a customer that the merchant has preapproved an
14extension of credit to the customer under an open-end credit plan and then,
1pursuant to the customer's response to the communication, to make an extension of
2credit to the customer under an open-end credit plan with rates, terms or conditions
3that are less financially favorable to the customer than those communicated.
SB169,3,74
2. Except as provided under subd. 3., it is not a defense to a violation of subd.
51. that the merchant's preapproval of an extension of credit to the customer is made
6subject to the merchant's review of the customer's financial information, credit
7worthiness, credit standing or credit capacity.
SB169,3,138
3. Subdivision 1. does not apply to an extension of credit under an open-end
9credit plan with different rates, terms or conditions than those communicated to the
10customer, if the difference in rates, terms or conditions resulted from an adverse
11change in the financial circumstances of the customer between the date on which the
12merchant communicates preapproval and the date on which the merchant makes the
13extension of credit.
SB169,3,1814
(c)
Deceptive preapproval. 1. It is deceptive advertising for a merchant to refuse
15to extend credit to a customer under an open-end credit plan if the customer requests
16the extension of credit in response to a direct communication from the merchant or
17a direct communication caused by the merchant, indicating that the merchant has
18preapproved the extension of credit to the customer under an open-end credit plan.
SB169,3,2219
2. Except as provided under subd. 3., it is not a defense to a violation of subd.
201. that the merchant's pre-approval of an extension of credit to the customer is made
21subject to the merchant's review of the customer's financial information, credit
22worthiness, credit standing or credit capacity.
SB169,4,223
3. Subdivision 1. does not apply to a refusal to extend credit under an open-end
24credit plan, if the refusal resulted from an adverse change in the financial
25circumstances of the customer between the date on which the merchant
1communicates preapproval and the date on which the merchant refuses to extend
2credit.
SB169, s. 2
3Section
2. 100.26 (4) of the statutes is amended to read:
SB169,4,64
100.26
(4) Any person who violates s. 100.18 (1) to (8)
or, (10)
or (10v) or 100.182
5is subject to a civil forfeiture of not less than $50 nor more than $200 for each
6violation.
SB169, s. 3
7Section
3. 423.301 of the statutes is renumbered 423.301 (1).
SB169, s. 4
8Section
4. 423.301 (1) (title) of the statutes is created to read:
SB169,4,99
423.301
(1) (title)
General prohibition.
SB169, s. 5
10Section
5. 423.301 (2) of the statutes is created to read:
SB169,4,1711
423.301
(2) Deceptive preapproved rates, terms or conditions of open-end
12credit plans. (a) No merchant shall directly communicate to a customer or cause
13to be directly communicated to a customer that the merchant has preapproved an
14extension of credit to the customer under an open-end credit plan and then,
15pursuant to the customer's response to the communication, to make an extension of
16credit to the customer under an open-end credit plan with rates, terms or conditions
17that are less financially favorable to the customer than those communicated.
SB169,4,2118
(b) Except as provided under par. (c), it is not a defense to a violation of par. (a)
19that the merchant's approval of an extension of credit to the customer is made subject
20to the merchant's review of the customer's financial information, credit worthiness,
21credit standing or credit capacity.
SB169,5,322
(c) Paragraph (a) does not apply to an extension of credit under an open-end
23credit plan with different rates, terms or conditions than those communicated to a
24customer, if the difference in rates, terms or conditions than those communicated to
25a customer, if the difference in rates, terms or conditions resulted from an adverse
1change in the financial circumstances of the customer between the date on which the
2merchant communicates preapproval and the date on which the merchant makes the
3extension of credit.
SB169, s. 6
4Section
6. 423.301 (3) of the statutes is created to read:
SB169,5,105
423.301
(3) Deceptive preapproval of open-end credit plans. (a) No merchant
6shall refuse to extend credit to a customer under an open-end credit plan if the
7customer requests the extension of credit in response to a direct communication from
8the merchant or a direct communication caused by the merchant, indicating that the
9merchant has preapproved the extension of credit to the customer under an
10open-end credit plan.
SB169,5,1411
(b) Except as provided under par. (c), it is not a defense to a violation of par. (a)
12that the merchant's approval of an extension of credit to the customer is made subject
13to the merchant's review of the customer's financial information, credit worthiness,
14credit standing or credit capacity.
SB169,5,1915
(c) Paragraph (a) does not apply to a refusal to extend credit under an open-end
16credit plan, if the refusal resulted from an adverse change in the financial
17circumstances of the customer between the date on which the merchant
18communicates preapproval and the date on which the merchant refuses to extend
19credit.
SB169, s. 7
20Section
7. 423.302 of the statutes is amended to read:
SB169,5,24
21423.302 Remedies and penalty. In addition to any other remedy provided
22by law, a customer who has been induced to consummate a consumer credit
23transaction as a result of
an advertising
or communication in violation of s. 423.301
24shall be entitled to a recovery from the merchant in accordance with s. 425.305.
SB169,6,3
1(1)
This act first applies an extension of credit or refusal to extend credit that
2takes place pursuant to a direct communication of preapproval made on the effective
3date of this subsection.
