Wisconsin Gov. Scott Walker has signed a Wisconsin Consumer Act amendment that eases rules for debt collectors and clarifies requirements for creditors to collect debts.

Assembly Bill 117 cuts the amount of information needed for a debt collector to file a lawsuit to only a final billing statement presumed to be an accurate reflection of the amount owed. It also makes it more difficult for a consumer to recover lawyers’ fees.

Rep. Mark Born, R-Beaver Dam, the bill’s main sponsor, said the changes are needed to fix ambiguities in the requirements that merchants must meet to file a lawsuit. It modifies pleading requirements so that they apply to merchants rather than creditors. The bill passed in the Assembly with a 61-37 vote in November. Its companion legislation, authored by State Sen. Paul Farrow, R-Pewaukee, passed by a 19-13 vote in February before Walker signed it.

Consumer protection lawyers in Wisconsin have predicted an invasion of "junk debt" buyers, misdirected judgments and clogged courts. 

Vicky Selkowe of Legal Action Wisconsin said, if signed, the law would create a statewide standard tied to the business model of third-party debt buyers. While nationally there is a crackdown on debt buyers, Wisconsin is making it easier for them to operate, she added.

Born said the bill will help keep credit affordable and accessible.

"For our economy to work, we need to have a well-functioning consumer credit market and a well-functioning legal system to properly enforce contracts," Born said. "AB 117 clarifies ambiguities in the law governing consumer credit debt collection lawsuits and closes a loophole that has been exploited by bad actors to avoid paying debts."

The bill changes the way debt buyers validate consumer debts. 

The Legislative Reference Bureau states that "for a claim arising under an open-end credit plan in which the merchant has not attached to the complaint copies of the writings evidencing the customer’s obligation and the customer has requested these copies, the merchant’s obligation to provide these copies is satisfied if the merchant provides the customer and court with a copy of this billing statement reflecting the total outstanding balance on the customer’s account."


Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.