422.408 Interlocking loans.

307 words·~1 min read·/wi/chapter-422/422-408

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

(1)The lender in an interlocking consumer loan is subject to the claims and defenses the consumer may have against the seller or lessor in the consumer transaction for which the proceeds of the loan are used, subject to sub.

(3).

(2)For purposes of this section, a consumer transaction pursuant to a seller credit card shall be deemed to be a consumer loan transaction if the transaction is other than a purchase or lease of goods or services from the issuer of the seller credit card, from a person related to such issuer or from others licensed or franchised to do business solely under the business or trade name or designation of such issuer.

(3)For purposes of this section, a consumer loan transaction is an “interlocking consumer loan” if the creditor knows or has reason to know that all or a meaningful part of the proceeds of the loan are used to pay all or part of the customer’s obligations to the seller or lessor under a consumer sale or lease, and if:

(a)The lender is a person related to the seller or lessor;

(b)The lender supplies to the seller or lessor, or the seller or lessor prepares, documents used to evidence the loan, other than sales slips or drafts used to evidence purchases pursuant to an open-end credit plan;

(c)The lender directly or indirectly pays to the seller or lessor any commission, finder’s fee or other similar consideration based upon or measured by the consumer loan;

(d)The lender has recourse to the seller or lessor for nonpayment of the consumer loan transaction through a guaranty, maintenance of a reserve account or otherwise, but this paragraph shall not apply to transactions pursuant to a credit card issued by a lender not related to the seller or lessor;