AB 582

Under current law, a consumer credit transaction that is entered into for

personal, family, or household purposes is generally subject to the Wisconsin

Consumer Act (consumer act). The consumer act grants consumers certain rights

and remedies and contains notice and disclosure requirements and prohibitions

relating to consumer credit transactions. Currently, a consumer lease that has a

term of more than four months is among the consumer credit transactions that are

subject to the consumer act. In addition, the consumer act applies to any other

consumer lease, if the lessee pays or agrees to pay at least an amount that is

substantially equal to the value of the leased property and if the lessee will become,

or for not more than a nominal additional payment has the option to become, the

owner of the leased property.

This bill creates requirements that specifically apply to rental-purchase

agreements, imposes requirements on rental-purchase companies, and exempts

rental-purchase companies and rental-purchase agreements from the scope of the

consumer act and from provisions of the Uniform Commercial Code relating to

security interests. The bill defines a "rental-purchase agreement" as an agreement

between a rental-purchase company and a lessee for the use of rental property if all

of the following apply: 1) the rental property is to be used primarily for personal,

family, or household purposes; 2) the agreement has an initial term of four months

or less and is renewable with each payment after the initial term; 3) the agreement

does not obligate or require the lessee to renew the agreement beyond the initial

term; and 4) the agreement permits, but does not obligate, the lessee to acquire

ownership of the rental property. A "rental-purchase company" is defined as a

person engaged in the business of entering into rental-purchase agreements in this

state or acquiring rental-purchase agreements that are entered into in this state.

The bill requires a rental-purchase company to file notice with the Department

of Financial Institutions (DFI) within 30 days after commencing business in this

state. A separate notice is required for each place of business maintained by the

rental-purchase company. In addition, the rental-purchase company must pay to

DFI an annual fee of $1,000 for each location for which a notice is filed.

Under the bill, the total amount charged by a rental-purchase company for all

required charges or fees, excluding applicable taxes and any late fees or

reinstatement fees, in a rental-purchase transaction may not exceed twice the

maximum cash price of the rental property. The maximum cash price of rental

property may not exceed the greater of the following: 1) an amount equal to twice

the actual purchase price of the rental property, including any applicable freight

charges, paid by the rental-purchase company; or 2) the price at which property of

like type and quality is offered, in the ordinary course of business, for sale for cash

in the market area of the rental-purchase store where the property is offered for

rental purchase. The bill also limits the maximum amount that a lessee must pay