Overview of Wisconsin Consumer Protection Law

1. Overview of Wisconsin Consumer Protection Law By David Dudley Consumer Protection Law Office

2. Bio, Contact Info • David Dudley • 1914 Monroe Street • 608-661-8855 • David.D.Dudley@gmail.com • Previously • Federal Trade Commission • Wisconsin DOJ, University of Wisconsin

3. Outline • What is Consumer Law? • Importance of Consumer Law • Consumer Self-Defense • Abusive Debt Collection • Payday Loans • Auto Title Loans

4. Outline (cont.) • Rights Under the WCA • Federal Telephone Consumer Protection Act • Automobile Repossession • General Consumer Fraud • Auto Fraud • Lemon Law

5. Outline (cont.) • Auto Repair • Identity Theft • Home Improvement • Landlord-Tenant • Arbitration Clauses • Other Resources • Conclusion

6. What is Consumer Protection Law? • Laws that seek to address unequal bargaining power in the marketplace. • Frequently include fee-shift provisions and/or damage multipliers. • Enforced at the federal and state level, as well as through private consumer protection lawyers.

7. Importance of Consumer Law • Allows people of limited means to pursue claims against predatory businesses. • Creates a more transparent marketplace. • E.g., Truth-in-lending disclosures, conflict of interest disclosures

8. Consumer Self-Defense • Save your documents. • Keep a journal. • Bring a witness.

9. Consumer Self Defense (cont.) • Ask questions. • Don’t believe everything your hear. • Wait and consider; seek a second opinion.

10. Informal (non-legal) negotiations • Reach someone with decision making authority • Expand the transaction • Accentuate the positive • Make an ally on the inside

11. Abusive Debt Collection • Debt collection industry had the highest number of consumer complaints in 2010. • But many complaints are not violations of the debt collection law: • E.g., calling 2-3 time per day, every day; • Not accepting partial payment on same terms as original creditor.

12. Prohibited Debt Collection Practices • Calling with extreme frequency or at unusual times (before 8 am or after 9 pm) • Threats of force or violence, or harm to property • Threats of criminal prosecution

13. Prohibited Debt Collection Practices (cont.) • Disclose or threaten to disclose false information harming consumer’s reputation for credit worthiness • Communicating with consumer’s employer prior to final judgment (except to verify employment status or earnings); • Disclosing disputed debt without indicating that consumer has disputed it;

14. Prohibited Debt Collection Practices (cont.) • Communicate with consumer at unreasonable times or with unreasonable frequency; • Engage in other conduct that can reasonably be expected to threaten or harass the consumer or person related to consumer;

15. Prohibited Debt Collection Practices (cont.) • Use obscene or threatening language; • Attempt to enforce a right with reason to know it does not exist; (esp. useful for counterclaims) • Simulating legal process;

16. Prohibited Debt Collection Practices (cont.) • Threaten action that is not taken in the regular course of business • Attempting to collect a larger amount than allowed by law (e.g., adding collection or attorney fees) • Failing to identify self as debt collector

17. Prohibited Debt Collection Practices (cont.) • Failing to send required notice that includes: • Amount of the debt • Name of original creditor • Statement that, if consumer disputes debt in writing, debt collector will obtain verification of the debt and mail it to consumer.

18. Potential letter from consumer to debt collector • Send certified mail, return receipt; • Dispute owing the debt; • Demand validation and verification of the debt; and • Do not contact the consumer except pursuant to formal legal process.

19. Abusive Debt Collection: Remedies (state law) • Actual damages, including emotional distress and mental anguish. • Twice the finance charge, with a minimum of $100, and capped at $1,000. • Return of any improperly seized collateral. • Costs, and actual, reasonable attorney fees.

20. Payday Loan Law • Took effect Jan. 1, 2011. • Limited to one rollover. • Caps payday loans at $1,500. • Cannot leave blanks in loan application.

21. Payday Loan Law (cont.) • False, deceptive, or misleading advertising prohibited. • Payday lenders cannot threaten or pursue criminal charges for bounced checks or dishonored EFT agreements.

22. Payday Loan Law (cont.) • Remedies: • Statutory damages = the amount of the payday loan (minimum of $250). • Costs and reasonable attorney fees.

23. Auto Title Loans • Completely banned (if APR exceeds 18%). • Statute does not provide its own remedy, so need to rely on Wisconsin Consumer Act.

24. Some important Consumer Rights under the WCA • Right to prepay without penalty. • Balloon payments prohibited. • The fine print: • does not apply to seasonal workers, under certain conditions. • does not apply to mobile home contracts, under certain conditions.

25. Important Consumer Rights Under the WCA (cont.) • Atty fee provisions prohibited. • Defenses assertable against assignees.

26. Consumer Notifications • Notice of assignment. • Notice that original creditor has assigned rights to debt collector • Must be in writing & include information about the original agreement • Consumer has right to pay original creditor until receipt of notice of assignment

27. Consumer Notifications (cont.) • Notice of Customer’s Right to Cure Default. • Must contain: (1) the name, address, and telephone number of creditor; (2) statement of nature of alleged default, and (3) information necessary to cure the alleged default. • A creditor or debt collector who sues without having first sent the notice lacks standing to sue the consumer.

28. 3-Day Right to Rescind • Consumer has 3 days to back out of transaction from door-to-door solicitation. • E.g., Kirby vacuum sales; home security systems • Notice sent by mail. (best practice is to send certified mail, return receipt requested, though not required unless custom made goods). • Merchant must give consumer written notice of right to cancel.

29. Federal Telephone Consumer Protection Act • Prohibits prerecorded or autodialed calls to a consumer’s cell phone. • Also prohibits robocalls to a consumer’s landline, unless the consumer has a “preexising business relationship” with the company. • Damages of $500 to $1,500 per call.

30. Automobile Repossession • Rule modified in 2005. Now, a consumer must demand to be sued, or finance company can repossess vehicle without judicial process. Consumer pays attorney fees if loses in court. • Improper repossession entitles consumer to the “jackpot remedy”--return of the vehicle, forgiveness of remaining amount of the loan, and return of all amounts previously paid. (only for vehicles where amount financed was less than $25,000)

31. General Consumer Fraud • Wisconsin law prohibits “untrue, deceptive or misleading” sales representations. • Distinguish from “puffery.” • Made to the public • Can be one person • But does not include post-sale statements

32. Auto Fraud • Typical Scams include: • Misrepresenting prior ownership • Misrepresenting accident/repair history • Misrepresenting vehicle’s current condition • Check Wisconsin Buyer’s Guide • Car Fax or other used vehicle history report can be useful.

33. Auto Fraud (cont.) • Some car lots will use “bushing” to help low-income customers qualify for financing. • E.g., overstate the value of a trade-in or amount of down payment, but net against a larger sales price • Customer pays more in sales tax

34. Lemon Law • New vehicles only • Car is out of service for 30 days within the first year of ownership, or out of service four or more times for the same problem during the first year • “Substantial impairment to the use, value, or safety of vehicle.”

35. Lemon Law (cont.) • Mandatory non-binding arbitration • Consumer who successfully sues can obtain twice the vehicle’s purchase price, plus costs and attorney fees • Keeping track of repair orders, documenting days out of service are keys to building case

36. Auto Repair • Written repair order required for any repairs exceeding $50. • Customer chooses: • Waive estimate. • Authorize repairs up to set amount, but call and obtain authorization if greater. • Require written estimate.

37. Auto Repair (cont.) • If mechanic accepts prepayment of $250 or more, must provide estimated completion date. • Mechanic must obtain authorization if repairs: • Include work in addition to previously authorized; or • Expense of repairs exceeds estimate.

38. Auto Repair (cont.) • Repair invoice • Shop’s name & address; • Customer’s name & address; • Date on which repairs are completed; • Vehicle’s make, model, and VIN number; • Incoming odometer reading; • Price for repairs; • Itemized description of parts & labor; • Description of warranty, if any; • Disclosure of any rebuilt, recycled, or reconditioned parts used; • Name of each individual who worked on the vehicle; and • Statement informing consumer that work is regulated by Wis. Admin. Code Ch. 132

39. Identity Theft • Difficult to sue perpetrators. • Few assets, often out of state • Prevention • Caution when using public internet hotspots • You call us, we don’t call you • Phishing scams

40. Identity Theft (cont.) • Check credit report once per year • Free annual credit reports through FTC • https://www.annualcreditreport.com • NOT freecreditreport.com • Wisconsin office of privacy protection • Can help consumers repair damage from identity theft • Credit freeze

41. Home Improvement • Underbidding, followed by • Cutting corners on actual work/materials, or • Charging more than original bid.

42. Home Improvement (cont.) • If buyer prepays for all or part of the work, then: • Contract must be in writing; • Must describe work to be done, and products and materials used; • Total price; and • Dates or time period for completion.

43. Home Improvement (cont.) • Wisconsin Supreme Court has interpreted the Home Improvement law liberally, in favor of consumers--does not require a strict but/for relationship of cause and effect between bad conduct and damages.

44. Home Improvement (cont.) • Notice of Contractor’s right to cure • Five step process • 90-day cooling off period • Wisconsin Dept. of Commerce brochure: http://www.commerce.state.wi.us/sb/docs/SB-UdcRightCureBrochureV4.pdf

45. Landlord-Tenant • Landlord must not misrepresent anything about the apartment, including using a model that is substantially different from the actual unit rented.

46. Security Deposits • Landlord must provide check-in & check-out sheets. • Landlord must either refund the entire security deposit, or send a statement of claims within 21 days after tenant vacates. • Can only withhold for damage exceeding ordinary wear and tear.

47. Security Deposits (cont.) • Violation entitles tenant to double damages, plus costs and attorney fees. • Landlord will often counterclaim for damages beyond amounts withheld. • Some landlords try to charge for ordinary cleaning, replacing fully depreciated assets, or even remodeling.

48. Wrongful Eviction • Self-help eviction is not allowed in Wisconsin. • A landlord must serve either a 5-day pay or quit, or 14-day no right to cure notice on tenant, then go through formal eviction process in small claims.

49. Rent Abatement • Withholding rent for serious problems with apartment. • Best practice is to contact building inspector, and have problems written up as violations. • Madison has formal rent abatement procedure; most other jurisdictions are more informal.

50. Arbitration Clauses • Contained in most form contracts. • Customer can cross out, or in certain instances, customer can send notice to opt-out. • Statistics have shown that arbitration tends to favor the company, and may make it more difficult for consumer to obtain full relief.