Court: Bank of America violated Wisconsin Consumer Act

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Bank of America, N.A. violated the Wisconsin Consumer Act when it closed a man’s two credit card accounts without proper notification, according to a decision released Feb. 18 by the Wisconsin Court of Appeals District II.

Jean-Pierre C. Riffard of Milwaukee applied for two credit cards from Bank of America. After failing to pay $24,352.91 in charges, Bank of America closed the accounts. Bank of America argued the National Banking Act (NBA) preempts the Wisconsin Consumer Act procedural notice requirements, which is why the notice was not sent.

While a circuit court decided in Bank of America’s favor, the Court of Appeals ruled the NBA did not preempt Wisconsin Consumer Act’s procedural notice requirements. The Court also ruled Bank of America failed to comply with WCA’s Notice of Right to Cure Default requirement and remanded the matter to the circuit court with direction to dismiss.

According to court documents, Bank of America filed a small claims action in Milwaukee County Circuit Court in August 2021 for a total of $24,352.91 from the two cards, saying “any notices to cure default” were sent.

In response, Riffard filed a defense alleging Bank of America failed to state a claim “upon which relief may be granted” and its allegation that it sent the required Notice of Right to Cure Default was false because the bank did not do so. He also said the bank’s failure to send a Notice of Right to Cure Default violated the WCA.

Riffard filed an affidavit saying he did not receive any of the written noticed required by the WCA or a statutorily compliant Notice of Right to Cure Default as required by state statute before a creditor may file a collection action.

In response, Bank of America argued it stated a claim and the WCA provision was preempted by the NBA. The bank said WCA’s requirement of the Notice of Right to Cure Default in conflict with the NBA’s preemption over state law limitations concerning the terms of credit.

The circuit court ruled Bank of America performed all conditions precedent to filing the action and the bank was entitled to judgments in the amount of $24,352.91 plus costs and interest from the date of judgments. The Court of Appeals ruled the circuit court was incorrect in its ruling.

“The creditor may not bring an action unless it gives a Notice of Right to Cure Default, and then only upon the expiration of 15 days of giving the notice,” the Court of Appeals wrote about the WCA in its ruling.

If the creditor does not comply with the WCA’s procedural requirements, “the creditor may not bring an action against the customer.”

As to the NBA, the Appeals Court looked at several other court rulings in deciding whether it preempted the WCA before concluding “the WCA and the NBA preemption and savings clause provisions laws do not impose directly conflicting duties on a national bank.”

The WCA’s Notice of Right to Cure Default is an application of the state’s police powers to protect consumers and does not affect the credit card lending operations or terms of credit of a national bank. The WCA’s notice requirement at most “incidentally affects a national’s bank’s federally authorized powers,” the Court wrote.

The Court of Appeals reversed the judgments against Riffard and dismissed the Bank of America’s actions against him.