Skip to main content

Search

Consumer Credit Regulation: 12.2.4.51 Wisconsin

Auto title lending is authorized in Wisconsin.203 While the law does not impose any restrictions on the interest rate that lenders may charge to borrowers prior to the maturity date of the loan,204 lenders are limited to charging 2.75% per month or (33% a year) on loans that are not paid in full by the maturity date.205 The law does not allow a lender to repossess a vehicle without sending the borrower notice twenty days prior to taking possession

Consumer Credit Regulation: 12.3.2 Auto Title Lenders Claiming to Be Credit Services Organizations

In at least Texas, explicit legislation allows auto title lenders to evade the state’s regulation of auto title lenders by claiming to be loan brokers who receive a fee for arranging a third-party auto title loan for the consumer.220 In other states, it is a matter of court interpretation whether the lender is truly a broker arranging a third-party loan or whether it is really arranging a loan for itself.

Consumer Credit Regulation: 12.3.3 Lease-Back and Buy-Back Schemes

Auto title lenders may seek to avoid auto title loan or small loan legislation by claiming that the transaction is not a loan at all, but instead that the consumer has sold the vehicle to the auto title company and that the company is leasing the car back to the consumer.227 Evidence that this is a fictitious evasion is apparent where the auto title lender in fact advertises that you pawn your title but keep your car or somewhat more ambiguously “quick cash 4 your car/keep to drive.”

Consumer Credit Regulation: 12.4.1 CFPB Rule Regulating Auto Title Lenders

The Consumer Financial Protection Bureau (CFPB) enacted a final rule covering auto title, payday, and similar loans. The rule required lenders to engage in an ability-to-repay analysis and also limited the use of preauthorized payments.248 While the rule was enacted, the CFPB later rescinded most of the rule before it went into effect.

Consumer Credit Regulation: 12.4.3 Truth in Lending Act

The Truth in Lending Act applies to auto title lending and requires disclosure of the annual percentage rate (APR) and finance charge. Rules are established as to when a fee must be included in the finance charge and APR. Violations lead to statutory and actual damages and attorney fees. The Truth in Lending Act is discussed in Chapter 2, supra and in far more detail in NCLC’s Truth in Lending.

Consumer Credit Regulation: 1.1.2 Topics Covered and Relation to Other NCLC Treatises

This treatise examines federal and state restrictions on consumer credit transactions, and federal preemption of the state restrictions. It focuses on interest rates, fees, third-party charges, rebates of unearned interest, late charges and other credit terms for non-mortgage credit. Other NCLC treatises detail limits on creditor remedies where a consumer defaults on a credit obligation—debt collection, collection lawsuits, repossessions, credit reporting, and garnishment. This treatise focuses on the origination of non-mortgage credit obligations and their terms.

Consumer Credit Regulation: 1.1.3 Why This Treatise

There is a widespread belief that regulation of consumer credit is minimal—that federal law offers few protections, that state limits have been deregulated, and that those state limits that do exist can be avoided through federal preemption, rate exportation, or other means. The true picture today is far more complex.

Consumer Credit Regulation: 1.1.5 Pleadings, Primary Sources, and Practice Tools

The digital version of the treatise also includes pleadings and discovery, practice tools, and primary sources, that can easily be downloaded, emailed, and cut and pasted into documents. They are listed at the bottom of the table of contents found in the left pane and are fully searchable. Search filters allow users to search only for pleadings, only for primary sources, or only for practice tools. Searching for pleadings is recommended using the Advanced Pleadings Search tool, found above the Search box.

Consumer Credit Regulation: 8.6.8.2 Minimum Payment Repayment Disclosures

In response to the problem of low minimum payments, the Credit CARD Act added a requirement that lenders disclose the actual number of months that it will take to pay off the balance on an account if the consumer makes only the minimum payment.482 Lenders are required to provide the following warning in periodic statements using the exact language below:483

Consumer Credit Regulation: 8.7.1 Deceptive Marketing

Some credit card lenders have engaged in questionable marketing practices when soliciting consumers. “Bait and switch” tactics had been common before the Credit CARD Act. For example, some credit card lenders marketed “no annual fee” credit cards, then imposed an annual fee six months later using a change-in-terms notice.492 They heavily advertised low “fixed” rates, but subsequently raised rates through change-in-terms notices and penalty pricing.493

Consumer Credit Regulation: 8.7.2.1 Background

During the past few decades, there has been a massive increase in credit card debt, as described in § 8.1.2.3, supra. The credit card industry bears a significant portion of the responsibility for this phenomenon. Credit card lenders aggressively solicited consumers at the beginning of this century.

Consumer Credit Regulation: 8.12.1 Introduction

Even with the scope of federal preemption, there is still room to bring state law claims against credit card lenders. If an abusive practice is outside of the scope of the Credit CARD Act or violates a provision without a private remedy, practitioners may want to consider claims for breach of contract or the duty of good faith and fair dealing, or under state laws prohibiting unfair or deceptive acts or practices (UDAP statutes).

Consumer Credit Regulation: 8.12.2 Breach of Contract

A breach-of-contract claim is probably one of the first theories that comes to mind when analyzing an abusive credit card practice for legal violations.729 Obtaining and understanding the underlying contract, however, may not be as easy as it sounds—and not just because the contractual language is obscure. Many consumers do not keep their credit card contracts.

Consumer Credit Regulation: 8.12.3 State UDAP Statutes

Consumers may have claims against credit card lenders under their state’s unfair and deceptive acts and practices (UDAP) statute.738 Private class actions have asserted UDAP claims against credit card lenders for deceptive and unfair practices.739