Compliance Journal April 2025
Special Focus Notice of Right to Cure Default – When Notice Need Be Provided The Wisconsin Court of Appeals recently concluded that the notice of right to cure default procedures under the Wisconsin Consumer Act are not preempted by the National Bank Act. Given that conclusion, WBA Legal thought it was good time for a refresher of those sections of Wisconsin law. For more information about the recent Wisconsin Court of Appeals case, see last month’s edition of the WBA Compliance Journal. The following is a summary of the scope of the Wisconsin Consumer Act (WCA or the Act), what is considered “default” under the Act due to nonpayment or nonperformance, what information need be included in a notice of right to cure default form, and steps involving a customer’s right to cure a default. Wisconsin Consumer Act – Scope First enacted in 1973 and amended in 1984, 1996, 1997, and 2006, the WCA is an area of law meant to provide consumer safeguards by placing limitations on charges and requires certain disclosures, including disclosures about the right to cure default. The following statute chapters make up the Act: • • • • • • •
Chapter 421: Consumer Transactions, General Provisions and Definitions Chapter 422: Consumer Credit Transactions Chapter 423: Consumer Approval Transaction and Other Consumer Rights Chapter 424: Consumer Transactions, Insurance Chapter 425: Consumer Transactions, Remedies and Penalties Chapter 426: Consumer Transactions, Administration Chapter 427, Consumer Transactions, Debt Collection
In addition, the Wisconsin Department of Financial Institutions (DFI) has Administrative Code Chapter DFI-WCA which provides further interpretations of the WCA. The WCA governs consumer loans and credit sales to individuals primarily for personal, family, or household purposes; where the amount financed is $25,000 or less; and the loan is not secured by a first lien real estate mortgage or equivalent security interest. The Act does not apply to business purpose loans, loans to organizations, consumer credit where the amount financed exceeds $25,000, loans secured by a first lien real estate mortgage or equivalent security interest, or to certain government loans (e.g., VA loans). In 1997, the WCA was amended to generally exclude agricultural purpose loans from the Act with the exception of one provision which still applies. Pursuant to Wis. Stat. s. 422.210, a creditor is prohibited from charging a finance charge or fee for an agricultural credit transaction, unless the charge or fee is clearly disclosed in writing and agreed upon by the creditor and the customer. The term “agricultural purpose” means a purpose related to the production, harvest, exhibition, marketing, transportation, processing or manufacture of agricultural products by a person, other than an organization, which cultivates, plants, propagates or nurtures those agricultural products. The term includes agricultural, horticultural, viticultural and dairy products, livestock, wildlife, poultry, bees, forest products, fish and shellfish, and any products thereof, including processed and manufactured products, and any and all products raised or produced on farms and any processed or manufactured products thereof. See Wis. Stat. s. 421.301(4).