Overview of Wisconsin
Consumer Protection Law
By David Dudley
Consumer Protection
Law Office
Bio, Contact Info
• David Dudley
– 1914 Monroe Street
– 608-661-8855
– [email protected]
• Previously
– Federal Trade Commission
– Wisconsin DOJ, University of Wisconsin
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Outline
1.
2.
3.
4.
5.
6.
What is Consumer Law?
Importance of Consumer Law
Consumer Self-Defense
Abusive Debt Collection
Payday Loans
Auto Title Loans
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Outline (cont.)
7.
8.
Rights Under the WCA
Federal Telephone Consumer Protection
Act
9. Automobile Repossession
10. General Consumer Fraud
11. Auto Fraud
12. Lemon Law
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Outline (cont.)
13.
14.
15.
16.
17.
18.
19.
Auto Repair
Identity Theft
Home Improvement
Landlord-Tenant
Arbitration Clauses
Other Resources
Conclusion
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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.
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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
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Consumer Self-Defense
• Save your documents.
• Keep a journal.
• Bring a witness.
8
Consumer Self Defense
(cont.)
• Ask questions.
• Don’t believe everything your hear.
• Wait and consider; seek a second opinion.
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Informal (non-legal)
negotiations
• Reach someone with decision making
authority
• Expand the transaction
• Accentuate the positive
• Make an ally on the inside
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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.
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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
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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;
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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;
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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;
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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
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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.
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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.
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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.
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Payday Loan Law
• Took effect Jan. 1, 2011.
• Limited to one rollover.
• Caps payday loans at $1,500.
• Cannot leave blanks in loan application.
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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.
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Payday Loan Law (cont.)
• Remedies:
– Statutory damages = the amount of the
payday loan (minimum of $250).
– Costs and reasonable attorney fees.
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Auto Title Loans
• Completely banned (if APR exceeds 18%).
• Statute does not provide its own remedy, so
need to rely on Wisconsin Consumer Act.
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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.
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Important Consumer Rights
Under the WCA (cont.)
• Atty fee provisions prohibited.
• Defenses assertable against assignees.
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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
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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.
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3-Day Right to Rescind
• Consumer has 3 days to back out of transaction from doorto-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.
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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.
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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)
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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
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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.
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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
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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.”
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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
35
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.
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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.
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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
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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
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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
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Home Improvement
• Underbidding, followed by
– Cutting corners on actual work/materials,
or
– Charging more than original bid.
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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.
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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.
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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
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Landlord-Tenant
• Landlord must not misrepresent
anything about the apartment, including
using a model that is substantially
different from the actual unit rented.
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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.
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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.
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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.
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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.
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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.
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Other Resources
• Federal Trade Commission:
http://ftc.gov
• Wisconsin Department of Agriculture,
Trade, and Consumer Protection:
http://datcp.wi.gov
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Other resources (cont.)
• Wisconsin Department of Financial
Institutions: http://wdfi.org
• National Association of Consumer
Advocates: http://naca.net
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Conclusion
• Please contact me with any questions:
– David Dudley
– 608-661-8855
– [email protected]
– http://wisc-consumer.com
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Basics of Consumer Protection Law