March 2016

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By Joseph R. Johnson
Non-Equity Partner
Supervising Attorney-Consumer Litigation 

            As of July 1, 2016 litigants in Wisconsin will have clarity on what is required to pursue claims arising from consumer credit transactions. This clarity is the result of a recent law, Wisconsin Assembly Bill 117, being passed. This new law amends Wis. Stat. § 425.109 which governs the pleading requirements on consumer credit transaction cases.

            The new law provides for clarification in three major ways. First, it clarifies who is subject to the requirements contained in Wis. Stat. § 425.109. Under the current law, Wis. Stat.  § 425.109 only applies to “creditors,” which as defined, does not include assignees or third party debt purchasers. This created a logical inconsistency in the statute. Creditor A was subject to the pleading requirements of Wis. Stat.  § 425.109.  However if Creditor A transferred the debt to Assignee B, those requirements no longer applied and Assignee B was allowed to proceed on the exact same claim outside of the statute. The amended statute will now apply to “merchants,” which as defined, expressly includes an assignee of or successor to a creditor. This change eliminates the logical inconsistency within the statute and essentially makes all litigants wishing to pursue a claim arising from a consumer credit transaction follow the same requirements.

            Second, the amended law clarifies the manner in which a merchant must plead the amount owed by a customer. Under the current statute, a complaint must include “the figures necessary for computation of the amount” owed. However “figures necessary” was not defined in the statute and ambiguous on its face. This resulted in litigants arguing on a case-by-case basis what “figures” were necessary to comply with the statute. Additionally, courts interpreted “figures necessary” differently, resulting in varying, if not conflicting, rulings. For instance, one court may have ruled that the credit application is a part of the “figures necessary” while a second court may expressly rule it was not.

            The amended law removes the ambiguous “figures necessary” requirement and expressly states that if the consumer credit transaction is pursuant to an open-end credit plan, the complaint shall supply the customer with the account balance due on a certain date as reflected on a billing statement addressed to the customer, and a breakdown of all charges, interest and payments occurring after the date certain.

            Lastly, the amended law expressly defines “writings evidencing.”  Under the current statute, a creditor, upon request, must provide “writings evidencing” the debt to the customer.  Similar to the “figures necessary” requirement, the term “writings evidencing” is ambiguous and courts have interpreted it very differently. Under the amended law, “writings evidencing” is expressly defined as a copy of the billing statement addressed to the customer reflecting the total outstanding balance on the customer’s account at the time the billing statement was issued.

            Overall the amended law provides long needed clarity on the pleading requirements to pursue a claim arising out of a consumer credit transaction. This should eliminate inconsistencies on how the law is applied by courts and therefore allow litigants to more efficiently assess and resolve their claims.

Posted: 3/10/2016 1:22:39 PM by Tom Connor | with 0 comments