February 9, 2010 - Introduced by Senators Vinehout, Lehman, Lassa, Taylor and
Wirch, cosponsored by Representatives Smith, Hixson, Vruwink, Pasch,
Pocan, Grigsby, Fields, Benedict, Richards, Turner, Sinicki, Young, Hebl,
Berceau
and A. Williams. Referred to Committee on Veterans and Military
Affairs, Biotechnology, and Financial Institutions.
SB525,1,6 1An Act to create 36.11 (56), 38.04 (32), 38.12 (14), 165.25 (4) (aw) and 224.50 of
2the statutes; relating to: prohibiting institutions of higher education from
3engaging in certain activity regarding student credit cards, requiring such
4institutions to provide financial literacy information to students, creating
5requirements for credit cards issued to underage customers, granting
6rule-making authority, and providing a penalty.
Analysis by the Legislative Reference Bureau
This bill requires the Department of Financial Institutions (DFI) to promulgate
rules prohibiting credit card issuers from doing the following: 1) offering a student
at an institution of higher education (institution) any tangible item to induce the
student to apply for a credit card or participate in an open-end credit plan offered
by the issuer; or 2) engaging in any marketing of a credit card involving the physical
presence of a representative of the issuer on the campus of an institution. Under the
bill, "institution" has the same meaning as under a federal law dealing with similar
issues as the bill, which includes public universities, private nonprofit universities,
postsecondary proprietary schools, and postsecondary vocational schools.
The bill also requires DFI to promulgate rules prohibiting an institution, or
department or other division of an institution, from receiving any payment or
compensation for credit card marketing activity on a campus of the institution that
is directed at the institution's students. The bill defines "campus" as the buildings,

facilities, and grounds under the control of an institution that are primarily related
to the institution's operation and related services and activities. Before
promulgating any of the foregoing rules, the bill requires DFI to consult with the
Board of Regents of the University of Wisconsin (UW) System, the Technical College
System Board, the Educational Approval Board, and representatives of private
institutions. The bill also prohibits the UW System and technical colleges from
selling to or otherwise providing a credit card issuer the names, postal addresses, or
electronic mail addresses of students, or engaging in any marketing on behalf of a
credit card issuer that is directed at students. The bill defines "student" as an
individual enrolled on a full-time or part-time basis. As a result, the bill's
requirements do not apply to former students.
In addition, the bill requires each institution to provide information about
financial literacy to its students on its Internet Web site and, if the institution offers
an on-campus orientation program to new students, to provide the information to
students during the orientation. Also, the bill requires an institution's students to
complete an online tutorial on financial literacy. The bill does so by prohibiting an
institution from allowing an enrolled student from enrolling in a subsequent
semester, quarter, or term unless the student completes the tutorial.
The bill also creates requirements for extending credit to individuals who are
less than 21 years old. Under the bill, a credit card may not be issued to, or an
open-end credit plan established by or on behalf of, such an individual unless one
of the following options is satisfied: 1) the application for the card or plan is cosigned
by a parent, legal guardian, spouse, or other individual, who is 21 or older, has the
means to repay debts, and indicates that he or she is jointly liable for debts incurred
before the applicant turns 21; or 2) the applicant submits financial information
indicating an independent means to repay debts. The bill requires DFI to
promulgate rules for satisfying the second option. The rules must be consistent with
regulations that the Board of Governors of the Federal Reserve System is required
to promulgate under federal law. Also, if a cosigner described in the first option is
jointly liable for credit card debt incurred by an individual who is not 21 years old,
the bill prohibits credit increases unless the cosigner approves of the increase in
writing and assumes joint liability for the increase.
Finally, except for the prohibitions regarding student information and credit
card marketing that apply to the UW System and the technical colleges, the bill
provides that a person who violates the bill or a rule promulgated by DFI under the
bill is subject to a civil forfeiture of up to $5,000.
For further information see the state and local 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:
SB525, s. 1 1Section 1. 36.11 (56) of the statutes is created to read:
SB525,3,1
136.11 (56) Student credit cards. (a) In this subsection:
SB525,3,22 1. "Credit card issuer" has the meaning give in s. 224.50 (1) (d).
SB525,3,43 2. "Student" means an individual who is enrolled on a full-time or part-time
4basis in the system.
SB525,3,65 (b) The board may not do any of the following, and shall ensure that each
6institution and college campus does not do any of the following:
SB525,3,87 1. Sell or otherwise provide to a credit card issuer the names, postal addresses,
8or electronic mail addresses of students.
SB525,3,109 2. Engage in any marketing on behalf of a credit card issuer that is directed at
10students.
SB525, s. 2 11Section 2. 38.04 (32) of the statutes is created to read:
SB525,3,1212 38.04 (32) Student credit cards. (a) In this subsection:
SB525,3,1313 1. "Credit card issuer" has the meaning give in s. 224.50 (1) (d).
SB525,3,1514 2. "Student" means an individual who is enrolled on a full-time or part-time
15basis in a district.
SB525,3,1616 (b) The board may not do any of the following:
SB525,3,1817 1. Sell or otherwise provide to a credit card issuer the names, postal addresses,
18or electronic mail addresses of students.
SB525,3,2019 2. Engage in any marketing on behalf of a credit card issuer that is directed at
20students.
SB525, s. 3 21Section 3. 38.12 (14) of the statutes is created to read:
SB525,3,2222 38.12 (14) Student credit cards. (a) In this subsection:
SB525,3,2323 1. "Credit card issuer" has the meaning give in s. 224.50 (1) (d).
SB525,3,2424 2. "Student" has the meaning given in s. 38.04 (32) (a) 2.
SB525,3,2525 (b) Each district board may not do any of the following:
SB525,4,2
11. Sell or otherwise provide to a credit card issuer the names, postal addresses,
2or electronic mail addresses of students.
SB525,4,43 2. Engage in any marketing on behalf of a credit card issuer that is directed at
4students.
SB525, s. 4 5Section 4. 165.25 (4) (aw) of the statutes is created to read:
SB525,4,96 165.25 (4) (aw) The department of justice shall furnish all legal services
7required by the department of financial institutions relating to the enforcement of
8s. 224.50, together with any other services as are necessarily connected to the legal
9services.
SB525, s. 5 10Section 5. 224.50 of the statutes is created to read:
SB525,4,12 11224.50 Credit card protections for young customers. (1) Definitions.
12In this section:
SB525,4,1513 (a) "Campus" means buildings, facilities, and grounds under the control of an
14institution of higher education that are primarily related to the operation of the
15institution and its related services and activities.
SB525,4,1616 (b) "Customer" has the meaning given in s. 421.301 (17).
SB525,4,1717 (c) "Credit card" has the meaning given in s. 421.301 (15).
SB525,4,1918 (d) "Credit card issuer" means any person who issues a credit card, or the agent
19of such a person with respect to such card.
SB525,4,2220 (e) "Institution of higher education" means an institution of higher education,
21as defined in 15 USC 1650 (3) (a), but not including an institution that is not located
22in this state.
SB525,4,2323 (f) "Open-end credit plan" has the meaning given in s. 421.301 (27) (a).
SB525,4,2524 (g) "Student" means an individual who is enrolled on a full-time or part-time
25basis in an institution of higher education.
SB525,5,4
1(2) Extensions of credit to underage customers. (a) No credit card may be
2issued to, or open-end credit plan established by or on behalf of, a customer who has
3not attained the age of 21, unless the customer has submitted a written application
4to the credit card issuer that meets the requirements of par. (b).
SB525,5,75 (b) An application to open a credit card account by a customer who has not
6attained the age of 21 as of the date of submission of the application shall require one
7of the following:
SB525,5,128 1. The signature of a cosigner, including the parent, legal guardian, spouse, or
9any other individual, who has attained the age of 21 having a means to repay debts
10incurred by the customer in connection with the account, indicating joint liability for
11debts incurred by the customer in connection with the account before the customer
12has attained the age of 21.
SB525,5,1513 2. Submission by the customer of financial information, including through an
14application, indicating an independent means of repaying any obligation arising
15from the proposed extension of credit in connection with the account.
SB525,5,1916 (c) The department shall promulgate rules providing standards that, if met,
17would satisfy the requirements of par. (b) 2. The rules shall be consistent with the
18regulations of the Board of Governors of the Federal Reserve System under 15 USC
191637
(c) (8) (C).
SB525,5,2520 (d) No increase may be made in the amount of credit authorized to be extended
21under a credit card account for which a parent, legal guardian, or spouse of the
22customer, or any other individual has assumed joint liability for debts incurred by
23the customer in connection with the account before the customer attains the age of
2421, unless that parent, guardian, or spouse approves in writing, and assumes joint
25liability for, such increase.
SB525,6,3
1(3) Certain marketing and compensation prohibited. (a) The department
2shall promulgate rules prohibiting a credit card issuer from doing any of the
3following:
SB525,6,64 1. Offering to a student at an institution of higher education any tangible item
5to induce the student to apply for or participate in an open-end credit plan offered
6by the credit card issuer.
SB525,6,97 2. Engaging in any marketing of a credit card that involves the physical
8presence of an individual representing the credit card issuer on the campus of an
9institution of higher education.
SB525,6,1410 (b) The department shall promulgate rules that prohibit an institution of
11higher education or a department or other division of such an institution from
12receiving any direct or indirect payment or compensation, monetary or otherwise, for
13credit card marketing activity on a campus of the institution that is directed at the
14institution's students.
SB525,6,1915 (c) Before promulgating rules under pars. (a) and (b), the department shall
16consult with the Board of Regents of the University of Wisconsin System, the
17technical college system board, the educational approval board, and persons whom
18the department determines represent the interests of private institutions of higher
19education.
SB525,6,24 20(4) Financial literacy. (a) Each institution of higher education shall provide
21to students on its Internet Web site information about financial literacy. If an
22institution of higher education offers an on-campus orientation program to new
23students, the institution shall also provide the information to students during the
24course of the orientation.
SB525,7,4
1(b) No institution of higher education may allow a student enrolled at the
2institution to enroll in a subsequent semester, quarter, or term, unless the student
3completes an online tutorial on financial literacy that the institution makes
4available on an Internet Web site of the institution.
SB525,7,6 5(5) Penalty. Any person who violates this section or a rule promulgated under
6this section shall be required to forfeit not more than $5,000.
SB525, s. 6 7Section 6. Nonstatutory provisions.
SB525,7,148 (1) Effect on certain contracts. If any of the following is subject to a contract
9that is in effect on the effective date of this subsection, and that contains provisions
10that are inconsistent with sections 36.11 (56) (b), 38.04 (32), or 38.12 (14) (b) of the
11statutes, as created by this act, then, notwithstanding sections 36.11 (56) (b), 38.04
12(32), or 38.12 (14) (b) of the statutes, as created by this act, the following may perform
13its obligations, and exercise its rights, under that contract until the contract expires,
14is extended, modified, or renewed, whichever occurs first:
SB525,7,1515 (a) The Board of Regents of the University of Wisconsin System.
SB525,7,1616 (b) The technical college system board.
SB525,7,1717 (c) A district board, as defined in section 38.01 (6) of the statutes.
SB525,8,218 (2) Emergency rules. Using the procedure under section 227.24 of the statutes,
19the department of financial institutions may promulgate the rules required under
20section 224.50 (2) (c) of the statutes, as created by this act, for the period before the
21permanent rules become effective, but not to exceed the period authorized under
22section 227.24 (1) (c) and (2) of the statutes. Notwithstanding section 227.24 (1) (a),
23(2) (b), and (3) of the statutes, the department is not required to provide evidence that
24promulgating a rule under this subsection as an emergency rule is necessary for the

1preservation of the public peace, health, safety, or welfare and is not required to
2provide a finding of emergency for the rules promulgated under this subsection.
SB525, s. 7 3Section 7. Initial applicability.
SB525,8,64 (1) The treatment of section 224.50 (2) of the statutes first applies to credit
5cards issued and open-end credit plans established on the effective date of this
6subsection.
SB525,8,97 (2) The treatment of section 224.50 (4) (b) of the statutes first applies to
8students enrolled at an institution of higher education in the semester, quarter, or
9term beginning after the effective date of this subsection.
SB525, s. 8 10Section 8. Effective date.
SB525,8,1211 (1) This act takes effect on the first day of the 4th month beginning after
12publication.
SB525,8,1313 (End)
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