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Financial Services Law Insights and Observations

Wisconsin Enacts Payday Lending Reform; Prohibits Motor Vehicle Title Loans

State Issues

On May 18, Wisconsin Governor Jim Doyle signed SB 530, a bill that increases the regulation of payday loans and bans motor vehicle title loans. The law tightens existing payday loan restrictions by (i) capping maximum loan amounts, (ii) limiting rollover loans at one-per-customer, (iii) prohibiting the accrual of interest after the maturity date, (iv) establishing a customer rescission period, (v) prohibiting wage garnishments, and (vi) placing a ceiling on the number of lenders permitted in any given area. The law also bans all motor vehicle title loans; in this regard, Governor Doyle exercised a partial veto by striking a provision that would have permitted such loans in limited circumstances. The bill becomes law on January 1, 2011.