Litigation procedure, and debt collection, under the Wisconsin Consumer Act

Among the information that must be included in such a complaint, the creditor must:

identify the consumer credit transaction; describe any collateral sought to be recovered; specify the facts constituting the customer's alleged default; identify the actual or estimated amount of money that the creditor is entitled to recover and the figures necessary for computation of this amount; and include an accurate copy of the writings evidencing the transaction except that, for a claim arising under an open-end credit plan, the creditor may substitute a statement that the creditor will, upon request, provide copies of the writings evidencing the customer's obligation.

A judgment may not be entered on a complaint that fails to comply with these pleading requirements.

In Rsidue, L.L.C. v. Michaud , 2006 WI App 164, 295 Wis. 2d 585, 721 N.W. 2d 718, the Wisconsin Court of Appeals held that, because the WCA does not refer to an assignee of a creditor, these pleading requirements do not apply to an assignee.

This bill amends the WCA to specify that these pleading requirements do apply to an assignee of a creditor. The bill also provides that an aggrieved party is entitled to request a jury trial in any action to enforce a right or obligation under the WCA.

Under current law, provisions of the WCA also regulate debt collectors and debt collection practices in connection with the collection of obligations arising from consumer transactions. A consumer transaction is a transaction in which one or more of the parties is a customer for purposes of that transaction. A debt collector is defined as any person engaging, directly or indirectly, in debt collection. Debt collection is defined as any action, conduct, or practice of soliciting claims for collection or collecting claims alleged to be owed or due a merchant by a customer.

A claim is defined as any obligation or alleged obligation arising from a consumer transaction.

Under current law, the WCA prohibits certain practices in connection with debt collection. In attempting to collect an alleged debt arising from a consumer credit transaction or other consumer transaction where there is an agreement to defer payment, a debt collector may not, among other things: 1) use or threaten force or violence; 2) threaten criminal prosecution; 3) disclose or threaten to disclose false information about the customer's credit worthiness; 4) with exceptions, communicate with the customer's employer; 5) disclose or threaten to disclose information affecting the customer's reputation, except to a person who has a legitimate business need for it; 6) engage in threatening or harassing conduct, which may include communications with such frequency or at such unusual hours at to be expected to threaten or harass the customer; 7) use obscene or threatening language;

or 8) use a communication which simulates legal or judicial process or which gives the appearance of being authorized by a government agency. A person who is injured by a violation of any of these prohibitions may recover actual damages, including for emotional distress or mental anguish, and a penalty ranging from $100 to $1,000.

This bill adds to this list of prohibited practices by a debt collector and also imposes certain requirements on a debt collector. Under the bill, a debt collector may not communicate with a customer through a postcard or, in written communications to the customer, place information on the exterior of an envelope except the customer's name, address, and telephone number, the debt collector's address, and, if the debt collector's business name does not indicate that it is in the debt collection business, its business name. In addition, a debt collector may not attempt to collect the debt without obtaining reasonable verification that the customer owes the debt in the amount claimed. Under the bill, reasonable verification must include obtaining certain business records or business records that contain certain information. These business records must include complete, authenticated documentation that the debt collector, or person on whose behalf the debt collector is acting, is the owner of the specific debt instrument or account at issue. These business records must also contain the date that the debt was incurred, the date and amount of the last payment by the customer, and an itemized accounting of the amount claimed to be owed, including, if the debt arises from a credit card, copies of the last 24 periodic statements on the account. Upon request by the customer, a debt collector must provide to the customer, within 30 days of the request, copies of all of these business records that the debt collector is required to obtain. The bill also requires any person who sells or assigns a debt or claim to provide to the buyer or assignee, at the time of the sale or assignment, specified documentation and a statement disclosing specified information.

Under the bill, a person who is injured by a violation of any of the prohibitions related to debt collection may recover, in addition to actual damages, a penalty of $5,590, which amount is adjusted for inflation every two years.