CONTRACT MINIMUM ANNUAL PAYMENT 

SENATE         :           Senate SB 212 applies to contracts that have annual
                                    payments of less than $250,000.   

MOULTON    :           The Moulton Assembly substitute applies to contracts that
                                    have annual payments of only less than $12,000 and
                                    exempts any contract exceeding $12,000.

Moulton eliminates any contract with an average monthly payment of $1,000 or more.  WIB corporate counsel Gary Antoniewicz says, “This is really the heart of the bill.  I have seen software and computer contracts with payments in excess of $10,000 per month.  WIB members don’t complain about $100 per month contracts.  The complaints I have received involve well in excess of $1,000 per month and I know of no reason to make such an arbitrary cutoff.” 

Moulton’s language exempts Big Business and the big costs while repudiating the concerns of Wisconsin small business owners.  Compare Senate SB 212 page 2; line 13 & Moulton Assembly substitute page 1; line 11.  The Assembly Small Business Committee ultimately overrode Moulton’s $12,000 and set the exemption limit at $60,000, still vastly lower than the Senate’s $250,000. 

TELECOMMUNICATIONS & CELL PHONES 

SENATE         :           SB 212 Senate amendment 5 exempts the lease or purchase
                                   of telecommunications service including commercial mobile
                                   service (cell phones) “if the contract permits the lessee or
                                   purchaser to terminate the contract after an automatic
                                   renewal by giving written notice, permits the termination
                                   without liability for fees or penalties other than a payment for
                                   services or equipment used during the period before the
                                   termination takes effect…..”. 

MOULTON    :           The Moulton Assembly substitute exempts “A contract for
                                     the lease or purchase of telecommunications service….
                                     including commercial mobile service.” 

The Senate language, negotiated with representatives of the telecommunications industry, provides specific protections to small businesses if the telecommunications giant wants its contracts to be exempt.  The Moulton language bluntly exempts the Big Business telecommunications industry and provides no protections for Wisconsin small businesses.  Compare Senate SB 212 amendment 5 & Moulton Assembly substitute page 2; lines 14 & 15. 

DEFINITION OF SELLER 

SENATE         :           Senate SB 212 says “’Seller’ means the provider of a
                                    business service or the lessor of business equipment under
                                    a business contract.”

MOULTON    :           The Moulton Assembly substitute exempts many businesses
                                     doing their work in other states.  It reads “’Seller’ means
                                     the provider of a business service or the lessor of business
                                     equipment under a business contract to be performed in this
                                     state.” 

The Moulton language, requiring work “to be performed in this state” exempts most credit card and other data processing firms from the bill because their work is NOT performed in Wisconsin.  Attorney Gary Antoniewicz says, “There is no apparent reason other than to gut the bill.  If a Wisconsin company signs a contract for credit card processing, the company might well be located in another state such as Texas.  Further, the processing may be performed in Texas, another state or even other countries such as Mexico or India.  Many times the Wisconsin business may have no idea where services are actually ‘performed’ nor should this matter.” 

Credit card processing is one of the most egregious service industries using hidden automatic renewal contract clauses to trap small businesses in almost perpetual contracts.  Unless the credit card company does its processing in Wisconsin it is exempt under the Moulton amendment.  Moulton gives every break to out-of-state Big Business while ignoring the concerns of Wisconsin small businesses and farmers. 

Compare Senate SB 212 page 3; lines 5 & 6 and Moulton Assembly substitute page 3; lines 3 & 4. 

DISCLOSURE REQUIRED TO SMALL BUSINESS CUSTOMER 

SENATE         :           Senate SB 212 says that a business contract with automatic
                                    renewal must contain “a statement that the contract will be
                                    renewed or extended unless the customer declines renewal
                                    or extension; a statement indicating the duration of the
                                    additional contract period that would result from an
                                    automatic renewal or extension period; a statement indicating
                                    whether an increase in charges to the customer will apply
                                    upon an automatic renewal or extension; a description of
                                    action the customer must take to decline renewal or
                                    extension; the date of the deadline for the customer to decline
                                    renewal or extension. 

MOULTON    :           The Moulton Assembly substitute says the contract is
                                     unenforceable unless the seller or lessor “obtains at the time
                                     the customer enters into the business contract, written or
                                     electronic acknowledgement that the customer is aware of
                                     the terms of the automatic renewal or extension provision.” 

The Senate version details specific steps the Big Business seller must take to inform the small business customer.  The vague Moulton approach could be as simple as a buyer signature on a contract which may be no disclosure at all. 

Compare SB 212 page 3; lines 7-25 and Moulton Assembly substitute page 3; lines11-13.

NOTICE OF AUTOMATIC RENEWAL 

SENATE         :           Senate SB 212 says the seller must provide notice to the
                                    customer 15-45 days before the deadline for the customer
                                    to accept or reject the automatic renewal.  The notice must
                                    state the contract will be renewed unless the customer rejects
                                    renewal, give the customer a deadline for notification,
                                    provide a description of any rate increase and describe what
                                    the customer must do to refuse renewal.  Senate SB 212
                                    says the notice may be given by registered or certified mail,
                                    by personally handing the notice to owner, officer or
                                    managing agent of the customer’s business or by including the
                                    notice prominently displayed on the first page of a monthly
                                    invoice. 

MOULTON    :           The Moulton Assembly substitute says the customer must be
                                     told in writing or e-mail 15-180 days before the “period in
                                     which the customer must decline renewal or extension.” 
                                     There is no certified or registered mail requirement or any
                                     other requirement of proof.   

Compare SB 212 page 4; lines 1-24 and Moulton Assembly substitute page 3, lines 14-17.  

SB 212 was created as a response to calls to the WIB member HOT LINE.  Many small Wisconsin businesses are being trapped by hidden automatic renewal clauses buried in tiny print in a multiple page contract from a big out-of-state business.  The Senate bill language provides solid protection for small businesses that could be trapped by hidden clauses in 5 or 10 year contracts.  The Moulton substitute deletes all of that protection. 

REMEDIES & PENALTIES 

SENATE         :           Senate SB 212 says that if the seller attempts to enforce the
                                    automatic renewal without complying with the notification
                                    requirements “the provision is not enforceable and the
                                    contract will terminate at the end of the current contract
                                    term.”  If the seller attempts to enforce the automatic renewal
                                    clause the customer may file or counterclaim for twice the
                                    amount of damages or “an amount that equals twice the
                                    amount of the periodic payment specified in the contract or
                                    $1000, whichever is less.”  The seller is not liable in an action
                                    or counterclaim if the seller has written procedures, the
                                     failure to comply was not willful or malicious and the seller
                                     has refunded money paid by the customer after the date of
                                     the improper renewal.  The law provides awarding of
                                     reasonable attorney fees and other costs to the customer. 

MOULTON    :           The Moulton Assembly substitute has NO remedy or penalty
                                     provisions aside from making it “unenforceable” if the
                                     business services are provided in the State of Wisconsin.
                                    Contracts for credit card and other data processing
                                     performed outside the state would not be affected.

                                    Attorney Gary Antoniewicz notes, “The customer would
                                    face its own legal costs, etc. and there would be little risk
                                    to a seller completely ignoring the law.”

Compare SB 212 page 4 lines 1-15 & page 5, lines 1-21 and the entire Moulton Assembly substitute.  Under the Moulton substitute Big Business can ignore the law with impunity. 

INITIAL APPLICABILITY 

SENATE         :           Senate SB 212 says “This act first applies to contracts for
                                    the lease of business equipment or for providing business
                                    services that are entered into, modified or renewed on the
                                    effective date of this subsection.” 

MOULTON    :           The Moulton Assembly substitute says “This act first applies
                                     to contracts for the lease of business equipment or for
                                     providing business services that are entered into on the
                                     effective date of this subsection.” 

The Senate bill says any new, renewed or modified contract is covered by this bill at the time it begins, is renewed or modified.  The Moulton Assembly substitute says the gutted bill would apply ONLY to new contracts signed after the Moulton Assembly substitute go into effect as law.  Moulton removes small business protection and gives all the advantage to out-of-state Big Business. 

Compare SB 212 page 5; lines 23-25 and Moulton Assembly substitute page 4; lines 1-3. 

AGRICULTURE, CONSTRUCTION, FORESTRY & COMMERCIAL LAWN & GROUNDS CARE EQUIPMENT 

SENATE         :           Senate SB 212 makes no reference to leases of equipment
                                     in these industries.  Any lease of this equipment is covered
                                     by the bill. 

MOULTON    :           The Moulton Assembly substitute exempts “a contract for
                                     the lease of agriculture equipment, construction equipment,
                                     forestry equipment, or commercial use lawn and grounds
                                     care equipment.” 

The Moulton language exempts leases for all these types of equipment, even leaving farmers in jeopardy.  Compare the entire Senate SB 212 and Moulton Assembly substitute page 2; lines 22 & 23. 

Thank you for taking the time to review this legislation and the damage that was done.  WIB is happy to discuss this legislation.  Call our toll-free member HOTLINE  at 800-362-9644.

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