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    Navigating Wisconsin’s Consumer Protection System

    Navigating the maze of consumer protection laws and responsibilities among Wisconsin agencies can be tricky. Here’s where to turn if you or a client or family member needs assistance with a purchase or transaction gone wrong.

    John S. Greene

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    Humans by nature are transactional creatures. We incessantly buy, sell, rent, lend, and borrow. Consumer law supplies the legal principles to govern the myriad of individual human financial transactions that occur millions of times per day, from purchasing a good or service, to making a charitable donation, to merely being exposed to advertisements or solicitations to spend money on virtually anything.

    The sheer scope and complexity of consumer law can be daunting for consumers and lawyers alike, few of whom specialize in this area of the law. Not only are consumer protection provisions scattered among many different statutes and administrative code chapters, but the responsibility for enforcing and implementing consumer laws is allocated among a number of administrative agencies, often with overlapping jurisdiction. The fragmentation of consumer laws requires lawyers and consumers to exercise care and thoroughness in locating applicable statutes and rules, which can vary greatly in such important components as the statute of limitation, available remedies, and the existence of a private right of action. This article provides a brief overview of Wisconsin consumer protection laws and the regulatory agencies most responsible for implementing those laws.

    The Origins and Evolution of Consumer Protection Law in Wisconsin

    Fraud is likely as old as commerce itself. Long before Wisconsin existed, the common law had birthed a number of causes of action to remedy various sorts of business-related fraud.1 While these common-law claims carried over into Wisconsin’s legal system, they were inadequate to address the myriad of issues stemming from the development of mass marketing and from increasingly complex financial dealings.

    John S. Greenecom jgreene staffordlaw John S. Greene, U.W. 1984, practices environmental law at Stafford Rosenbaum LLP, Madison. He previously directed the Consumer Protection Unit of the Wisconsin Department of Justice.

    Early legislative enactments to protect consumers focused on food safety, hardly surprising since selling tainted food products is as tangible and compelling as consumer problems come. In 1889, the Wisconsin Legislature created perhaps the first governmental entity designed to protect consumers, the office of the Dairy and Food Commissioner. The commissioner was tasked with enforcing laws regulating the purity and safety of dairy products, food, and drugs.2 This marked the modest beginning of the modern consumer protection legal system in Wisconsin.

    Since its initial foray into food safety, the legislature has enacted a plethora of laws that have gradually expanded consumer protections, as well as the role of state agencies and officers in implementing those laws. Some laws are quite general, such as prohibitions on false advertising or unfair trade practices. Others narrowly target a specific type of transaction, such as timeshare purchases or fitness club memberships. And while many laws directly proscribe dishonest conduct, many others impose requirements and restrictions designed to prevent unfairness, rooted in the recognition that consumers often lack equal bargaining power with sellers.3 The common denominator of all of these laws is the shared purpose of ensuring that transactions are fair to the consumer and the recognition that an unregulated marketplace will not adequately protect consumers from unfair practices.

    Key Consumer Protection Statutes

    There are many consumer-related statutes, but the twin statutory pillars of Wisconsin’s consumer protection law undoubtedly are Wis. Stat. sections 100.18 and 100.20. Not only are they broad in scope, but because they authorize private rights of action, as well as governmental enforcement, they play a role in the vast majority of reported consumer law decisions.

    Section 100.18. Section 100.18(1) of the Wisconsin Statutes broadly bars “untrue, deceptive or misleading” statements made in the course of selling goods or services, whether in the form of advertisements or other types of representations, either written or oral. First enacted in 1913, Wis. Stat. section 100.18, also known as the Deceptive Trade Practices Act (DTPA), has been gradually expanded, and the courts have liberally construed it to protect consumers from misleading statements made to induce sales of products or services.4

    To succeed on a claim under the statute, a consumer must establish that there was an untrue, deceptive, or misleading representation made to induce a financial transaction and that the representation resulted in a financial loss.5 The representation must be made to “the public,” but the courts have interpreted this to include a single prospective buyer, in a one-on-one sales pitch.6

    Section 100.18 has maintained its central importance in consumer protection for more than a century since its enactment. The state, individual consumers, and business consumers regularly invoke Wis. Stat. section 100.18 to pursue claims of deceptive representations. In a recent case, State v. Going Places Travel Corp.,7 the state obtained a favorable jury verdict. The jury found, among other things, that in the course of selling memberships to consumers a travel club had made misleading representations, including exaggerations of the discounts club members would receive. The verdict resulted in a $4.6 million judgment, including $3.8 million in consumer restitution and $800,000 in forfeitures.8

    In another notable case, State v. Abbott Laboratories, the state successfully sued a pharmaceutical manufacturer, claiming among other things that by reporting artificially inflated wholesale drug prices, the manufacturer had caused the state to overpay for certain drugs.9 After a jury trial, the state obtained a judgment that included $2 million in damages for its section 100.18 claim.10

    Section 100.20. The other mainstay of consumer protection litigation, Wis. Stat. section 100.20, reaches beyond misleading advertising to prohibit “unfair trade practices.”11 This standard is less sweeping than it might initially appear, however, because to be actionable, conduct must violate either a special or a general order issued by the Department of Agriculture, Trade and Consumer Protection (DATCP) specifically deeming the conduct at issue to be an unfair trade practice.12

    A “general order” in practice is one of the nearly 20 rule chapters DATCP has promulgated that address specific types of business activity, including:

    • Landlord-tenant relations (ch. ATCP 134);

    • Direct marketing (ch. ATCP 127);

    • Home improvement (ch. ATCP 110);

    • Motor vehicle repair (ch. ATCP 132);

    • Work recruitment schemes (ch. ATCP 116); and

    • Weights and measures (ch. ATCP 92).

    These administrative rules have spawned a substantial body of litigation under section 100.20.13

    Wisconsin and Federal Consumer Protection Agencies

    This table identifies the state and federal governmental agencies that oversee consumer protection, summarizes their areas of responsibility, and lists their websites.

    Agency

    Areas of Responsibility

    Website

    Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP)

    Fraud, sales, marketing, telecommunications,
    do-not-call lists, identity theft, home improvement, motor vehicle repair, landlord-tenant, product safety, fitness clubs, weights
    and measures, and many others

    www.datcp.wi.gov

    Wisconsin Department of Financial Institutions (DFI)

    Credit-related matters, debt collection, debt settlement, charitable solicitations

    www.wdfi.org

    Wisconsin Department of Justice (DOJ)

    General consumer matters

    www.doj.state.wi.us

    Wisconsin Department of Transportation (DOT)

    Motor vehicle dealer issues

    www.wisconsindot.gov

    Office of the Commissioner of Insurance (OCI)

    Insurance-related issues

    https://oci.wi.gov

    Wisconsin Department of Safety and Professional Services (DSPS)

    Issues involving state-licensed professionals

    www.dsps.wi.gov

    Wisconsin Public Service Commission (PSC)

    Utility-related issues

    www.psc.wi.gov

    Federal Trade Commission (FTC)

    Marketing and sales practices, fraud

    www.ftc.gov

    Consumer Financial Protection Bureau (CFPB)

    Financial services, including mortgages, student loans, payday loans, debt collection, and credit reports

    www.consumerfinance.gov

    The Consumer Act and Other Consumer Laws

    Close behind Wis. Stat. sections 100.18 and 100.20 in prominence is the Wisconsin Consumer Act, which governs consumer transactions involving credit.14 The Consumer Act prohibits specific unfair practices in the arena of credit transactions, incorporating the requirements of the federal Truth-in-Lending Act while imposing numerous requirements and restrictions beyond the federal law.15 One notable provision broadly prohibits unconscionable practices.16 The Consumer Act also governs debt collection practices.17

    But there are many other consumer protection laws on the books, residing in the chapters associated with the agency responsible for the statute’s implementation. For example, provisions within the purview of DATCP (and thus in Wis. Stat. chapter 100) target such matters as telecommunications services,18 telephone solicitations (do-not-call lists),19 mail order sales,20 prize offers,21 and fitness clubs.22

    The Department of Financial Institutions (DFI) oversees implementation of the Consumer Act and other consumer protection statutes as well, including those regulating charitable solicitations,23 the promotion and sale of securities,24 and motor vehicle leases.25 DFI also licenses and regulates various types of businesses related to consumer credit, including payday lenders,26 adjustment service companies,27 and check-cashing services.28

    There are significant consumer protection statutes assigned to other agencies as well. These include misleading or unfair conduct in the marketing or sale of insurance (Office of the Commissioner of Insurance),29 misconduct by automobile dealers (Division of Motor Vehicles at the Department of Transportation),30 and misconduct by licensed professionals (Department of Safety and Professional Services).31 The accompanying sidebar summarizes the areas of responsibility and website information for key consumer protection agencies.

    Remedies

    Befitting the irregular topography of consumer laws, the statutes provide for a wide array of remedies for violations of those laws. Many statutes subject violators to potential criminal prosecution, although civil enforcement is far more likely.32

    The range of civil forfeitures to which violators are exposed varies greatly from statute to statute. The maximum forfeiture for a violation of Wis. Stat. section 100.18, for example, is $200, whereas Wis. Stat. section 100.20 carries a maximum $10,000 forfeiture.33 Victimizing elderly consumers or consumers with disabilities subjects violators of certain statutes to an additional forfeiture of up to $10,000.34

    Courts are also authorized to award restitution in civil enforcement actions brought by the state.35 And courts can impose appropriate injunctive relief against violators.36

    In addition to promulgating rules, or general orders, DATCP can issue a special order directed at a specific individual or business that essentially enjoins further activities deemed to be unfair trade practices.37 Violation of a special order subjects the target of the order to civil or criminal enforcement.38 Either DATCP can initiate a special order on its own, or the Department of Justice (DOJ) can seek a special order.39

    Although only the state can obtain forfeitures and restitution, individual consumers can bring damages actions for violations of some, but not all, consumer protection laws. Some statutes allow consumers to recover more than their actual damages. For example, Wis. Stat. section 100.20(5) authorizes double damages for violations of DATCP rules or orders, and violations of some provisions of the Consumer Act also subject violators to penalties exceeding the actual loss.40 Consumer statutes also typically authorize the recovery of attorney fees by successful consumer claimants.41

    The Wisconsin Supreme Court has acknowledged the importance of the enhanced remedies afforded consumers, concluding that they encourage attorneys to take cases otherwise too small to justify, amplify the state’s enforcement capacity by enlisting “private attorneys general,” and deter illegal conduct.42

    Implementation of Consumer Protection Functions

    Wisconsin’s allocation of consumer protection responsibilities among agencies is unusual. In most states, the attorney general not only conducts enforcement litigation, but also receives and handles consumer complaints and conducts investigations. In Wisconsin, before 1996, both DATCP and the DOJ possessed broad authority to administer and enforce consumer protection laws. But in 1996, the legislature transferred most of the DOJ’s consumer protection authority to DATCP, leaving the DOJ with, primarily, the litigation function.43 Particularly during periods when the attorney general and the governor belong to different political parties, the separation between those who investigate and refer cases and those who litigate the cases can pose challenges.

    DATCP. Although many agencies have consumer protection responsibilities, by far the agency with the largest consumer protection portfolio is DATCP. Among other things, DATCP operates a statewide consumer complaint hotline, mediates and investigates complaints, administers Wisconsin’s do-not-call law, engages in consumer education efforts, and promulgates consumer-related administrative rules. DATCP has approximately 30 employees staffing these functions.44

    Under current law, DATCP has broad authority to investigate potential law violations. This includes the power to require information from businesses, issue subpoenas, and hold hearings.45 DATCP can also issue civil investigative demands to persons with information potentially relevant to an investigation.46

    DATCP’s complaint-handling system enables it to spot trends and identify problem actors. For 2016, the top 10 complaint categories, from most to fewest, were the following:

    • Telemarketing (do-not-call lists),

    • Landlord-tenant,

    • Telecommunications,

    • Identity theft,

    • Home improvement,

    • Gas pump accuracy,

    • Motor vehicle repair,

    • Motor vehicle sales,

    • Computers and related equipment, and

    • Warranties.47

    DOJ. While DATCP investigates consumer complaints and makes referrals, it does not litigate consumer issues in court. That is the function of the DOJ and district attorneys, which are authorized to bring civil or criminal consumer enforcement actions. In practice, district attorneys stick to criminal prosecutions, with the DOJ handling the civil enforcement cases as well as criminal prosecutions upon referral from a district attorney. In general, the DOJ is more likely to handle complex cases or those involving multicounty conduct. Usually, but not always, a referral from DATCP is required.48 On the other hand, DATCP is likely to refer to the district attorney a localized criminal matter occurring within a single county.

    In recent years DOJ has brought civil enforcement actions against debt settlement companies, membership travel clubs, landlords, home-alarm companies, locksmiths, a propane provider, and a retailer selling synthetic cannabinoids, among many others. Some actions involve referrals from more than one agency, based on the statutes within their purview. A recent example is a lawsuit against a debt settlement company, arising from joint referrals by DATCP and DFI, in which the state asserted violations of direct mail laws (DATCP) as well as the licensed debt adjustment service company statute (DFI).49 The case settled, resulting in a judgment of $1 million in favor of the state.50

    DFI also plays a critical role in enforcing the statutes in its domain. As an example, based on a DFI investigation and referral, the DOJ sued the Wisconsin Funeral Directors Association in 2012 regarding a $21 million shortfall in a fund comprised of consumers’ prepaid funeral expenses. The state accused the association of misrepresenting to consumers that their prepaid funeral funds would be placed in trust and conservatively invested, when instead they were used for high-risk investments that resulted in huge losses, jeopardizing the fund’s ability to cover the promised funerals. The suit resulted in the appointment of a receiver and an eventual settlement holding the consumers harmless.51

    Multistate Actions

    State attorneys general frequently form partnerships to investigate and prosecute consumer protection cases on a regional or nationwide basis, through multistate actions. The largest, and most publicized, multistate action to date was the national mortgage settlement arising from the mortgage crisis. The 2012 settlement, between 49 states and five of the largest mortgage servicing companies, ultimately obtained more than $50 billion in consumer relief and payments to the states and the federal government; Wisconsin’s share was $140 million.52

    More recently, Wisconsin participated in a multistate investigation against Volkswagen for fraudulent emissions claims and manipulation of emissions testing, resulting in a $570 million settlement, including $11 million to Wisconsin.53 Historically, multistate investigations involving the practices of pharmaceutical companies have resulted in large consumer-related payments to the state.54

    Federal Consumer Protection Laws and Agencies

    The constraints of this article do not permit in-depth treatment of the Wisconsin consumer protection landscape, much less its much larger federal counterpart. As complex as Wisconsin’s consumer protection regime is, it pales in comparison to the myriad of federal laws and agencies. Suffice it to say that there are federal statutes and regulations addressing many of the types of transactions Wisconsin law reaches, and many more.

    Of the host of federal agencies with consumer protection responsibilities, the lead federal consumer protection agency is the Federal Trade Commission (FTC), which has been joined in recent years by the Consumer Financial Protection Bureau (CFPB). Fortunately there is an abundance of information available online and from the agencies themselves. A helpful entry point into the federal consumer protection system is through the FTC and CFPB websites, both of which contain abundant information and links related to consumer protection issues.55

    Conclusion

    Consumer law is destined to remain a moving target. Lawmakers and regulators must continually adapt the law in response to the constantly evolving nature of the consumer marketplace, accelerated by the explosion of the internet and other technological advances. While this makes it challenging to stay current on the law, fortunately there is a wealth of information readily available, including online. A basic understanding of the consumer protection system as a whole, coupled with a little persistence, should help you to identify potential consumer violations and claims and point you toward the responsible regulatory agencies.

    Meet Our Contributors

    What is the best or worst travel experience you’ve ever had?

    John S. Greene

    As college students in 1980, my future wife Lauren and I spent a school year abroad in Pune, India. During our stay, eight members of our group took a memorable three-week trip circling through northern India. Along the way, we saw many wonders: the Taj Mahal, the Golden Temple, the Vale of Kashmir.

    It wasn’t all roses. Late one night on a train, a soldier’s hand dipped into the shirt pocket of our sleeping companion and emerged with a well-worn, tired-looking baggie. With great fanfare, the soldier claimed to have discovered an illegal substance of some sort, and he and his cohorts made many threats, the gist of which was quite clear despite our ignorance of the language. With visions of our friend (and possibly ourselves) being hauled off to jail or worse, we quickly passed the hat and discovered, thankfully, that this was one legal problem that money could readily resolve.

    On a subsequent harrowing bus ride into Kashmir, some members of our party were relieved of their belongings, and on arrival in Srinagar in the pouring rain, we were enticed to rent a “nice houseboat with a flush toilet” on beautiful Dal Lake. The numerous bedbugs appeared to enjoy the shabby boat far more than did its guests, and the toilet was literally a hole in the deck with a rusty can beside it.

    We then took a multi-day trek into the mountains, only to lose all of our cooking fuel on the first day, leading to hallucinations of hot food. Perhaps mercifully, an August snowfall turned us back early.

    Worst trip ever? Hardly. It was the best.

    com jgreene staffordlaw John S. Greene, Stafford Rosenbaum LLP, Madison.

    Become a contributor! Are you working on an interesting case? Have a practice tip to share? There are several ways to contribute to Wisconsin Lawyer. To discuss a topic idea, contact Managing Editor Karlé Lester at (800) 444-9404, ext. 6127, or email org klester wisbar wisbar klester org. Check out our writing and submission guidelines.

    Endnotes

    1 See Village Food & Liquor Mart v. H & S Petroleum Inc., 2002 WI 92, ¶ 26, 254 Wis. 2d 478, 647 N.W.2d 177.

    2 1889 Wis. Act ch. 452.

    3 See Baierl v. McTaggart, 2001 WI 107, ¶ 25, 245 Wis. 2d 632, 629 N.W.2d 277.

    4 The statute is not all-encompassing, however. For example, it applies to real estate transactions, see, e.g., Novell v. Migliaccio, 2008 WI 44, 309 Wis. 2d 132, 749 N.W.2d 544, but not to the insurance business. Wis. Stat. § 100.18(12)(a).

    5 K& S Tool & Die Corp. v. Perfection Mach. Sales Inc., 2007 WI 70, ¶ 19, 301 Wis. 2d 109, 732 N.W.2d 792. When the state brings an enforcement action, it need not establish financial injury. State v. American TV & Appliance of Madison Inc., 146 Wis. 2d 292, 300, 430 N.W.2d 709 (1988).

    6 State v. Automatic Merchs. of Am. Inc., 64 Wis. 2d 659, 663, 221 N.W.2d 683 (1974).

    7 State v. Going Places Trav. Corp., 2015 WI App 42, 263 Wis. 2d 414, 864 N.W.2d 885.

    8 Id. ¶ 1.

    9 State v. Abbott Labs.,2012 WI 62, ¶ 8, 341 Wis. 2d 510, 816 N.W.2d 145.

    10 Id. ¶ 23. The judgment also awarded the state $11.5 million in damages and forfeitures for violations of the Medicaid fraud
    statute.

    11 Wis. Stat. § 100.20(1). This statute is the state counterpart of section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45(a)(1), which Congress enacted in 1914.

    12 Wis. Stat. § 100.20(5), (6). The scope of the statute is also limited by the definition of “business” under Wis. Stat. section 93.01(1m), which excludes certain financial institutions and insurance companies.

    13 See, e.g., Stuart v. Weisflog’s Showroom Gallery Inc., 2008 WI 22, 308 Wis. 2d 103, 746 N.W.2d 762 (home improvement practices); Shands v. Castrovinci, 115 Wis. 2d 352, 340 N.W.2d 506 (1983) (landlord-tenant relations).

    14 Wis. Stat. chs. 421-427.

    15 Wis. Stat. § 422.301; ch. 422 generally.

    16 Wis. Stat. § 425.107.

    17 Wis. Stat. ch. 427.

    18 Wis. Stat. § 100.207.

    19 Wis. Stat. § 100.52.

    20 Wis. Stat. § 100.174.

    21 Wis. Stat. § 100.171.

    22 Wis. Stat. § 100.177.

    23 Wis. Stat. ch. 202.

    24 Wis. Stat. § 551.501.

    25 Wis. Stat. ch. 429.

    26 Wis. Stat. § 138.14.

    27 Wis. Stat. § 218.02.

    28 Wis. Stat. § 218.05.

    29 Wis. Stat. § 601.64.

    30 Wis. Stat. § 218.0152(1).

    31 Wis. Stat. chs. 440-40.

    32 See, e.g., Wis. Stat. § 100.26(1), (2), (3), (5), (7). Criminal prosecution of orders under Wis. Stat. section 100.20 does not require proof of intent. See State v. Stepniewski 105 Wis. 2d 261, 314 N.W.2d 98 (1982).

    33 Wis. Stat. § 100.26(4), (6). Violation of an injunction issued under Wis. Stat. section 100.18 also carries a maximum forfeiture of $10,000. Wis. Stat. § 100.26(6).

    34 Wis. Stat. § 100.264.

    35 See, e.g., Wis. Stat. §§ 100.18(11)(d), 100.20(6).

    36 See, e.g., Wis. Stat. §§ 100.18(11)(a), 100.20(6).

    37 Wis. Stat. § 100.20(3).

    38 Wis. Stat. § 100.26(3), (6).

    39 Wis. Stat. § 100.20(3), (4).

    40 Wis. Stat. §§ 425.302-.305. Violations of injunctions entered under Wis. Stat. section 100.18 also result in double damages. Wis. Stat. § 100.18(11)(b)2.

    41 See Wis. Stat. §§ 100.18(11)(b)2., 100.20(5), 425.308.

    42 Shands, 115 Wis. 2d at 358-59.

    43 Id. at 1.

    44 Wis. Legislative Fiscal Bureau, Consumer Protection Programs, Informational Paper 84, Jan. 2017.

    45 Wis. Stat. §§ 93.14, 93.15.

    46 Wis. Stat. § 100.18(11)(c)1.

    47 See https://datcp.wi.gov/Pages/Publications/TopTenConsumerComplaints.aspx (last visited Aug. 1, 2017).

    48 See, e.g., Wis. Stat. §§ 100.18(11)(d).

    49 Statev. Legal Helpers Debt Resolution LLC, No. 2013-CX-11 (Dane Cty. Cir. Ct.).

    50 Consumer Protection Programs, Informational Paper 84, supra note 44, at p. 55.

    51 See Cary Spivak, Funeral Homes Agree to Settlement Over Botched Burial Trust, Milw. J. Sentinel, July 6, 2013.

    52 Paul Gores, Wisconsin Mortgage Loan Relief Tops $140 Million Estimate, Milw. J. Sentinel, Feb. 27, 2013.

    53 Wis. DOJ, Attorney General Brad Schimel Announces Compensation for Wisconsin Consumers Under Settlements with Volkswagen Over Emissions Fraud, June 28, 2016.

    54 Summaries of both multistate judgments and other judgments are contained in the biennial reports prepared by the Legislative Fiscal Bureau (last visited Aug. 1, 2017).

    55 See www.ftc.gov; www.consumerfinance.gov.