The Court of Appeals of Wisconsin, District I, recently held that the National Bank Act does not preempt the Wisconsin Consumer Act’s requirement to send a notice of right to cure to a borrower in default prior to filing a collection action. Bank of America., N.A. v. Riffard, No. 2023AP125, 2025 Wisc. App. LEXIS 157 (Feb. 18, 2025).
BACKGROUND
A Wisconsin borrower defaulted on two credit card accounts issued by a national bank. The bank filed separate collection actions seeking the unpaid balances on those accounts. In response, the borrower asserted that the bank violated the Wisconsin Consumer Act (WCA) by failing to send him notices of his right to cure, as required by Wisc. Stat. § 425.105(1). The trial court found that the bank was not required to send right-to-cure notices because Wisc. Stat. § 425.105(1) was preempted by the National Bank Act. Accordingly, the trial entered judgments on both accounts in favor of the bank. The borrower appealed those judgments. On appeal, the Court of Appeals of Wisconsin, District One, held that the National Bank Act did not preempt the WCA’s notice-of-right-to-cure requirements and remanded the cases back to the trial court with instructions to dismiss the collection actions.
WCA prohibits a creditor from accelerating a loan or filing a collection action before providing a notice of right to cure and allowing fifteen days for the borrower to cure the default. Wisc. Stat. § 425.105(1). If the borrower cures the default, then the borrower’s rights under the agreement are restored “as though no default had occurred.” Wisc. Stat. § 425.105(2). Furthermore, federal courts in Wisconsin have repeatedly held that post-default assignees must either provide notice of the right to cure or confirm that the creditor provided the notice. See, e.g., Bahena v. Jefferson Capital Sys., LLC, 363 F. Supp. 3d 914, 921-22 (W.D. Wisc. 2019).
The court in Riffard said that a trial court should dismiss a creditor’s collection complaint when the creditor has failed to comply with the WCA’s notice-of-right-to-cure requirements; but noted that the WCA does not provide a borrower with any relief beyond dismissal of the complaint. However, federal courts in Wisconsin have held that consumers can seek damages under the FDCPA against “debt collectors” that file collection actions when no right-to-cure notice was provided. See Bahena, 363 F. Supp. 3d at 927; Boerner, 358 F. Supp. 3d at 773-81. Therefore, the court’s decision in Riffard could lead to an uptick in claims and counterclaims alleging a failure to send a notice of right to cure.
OTHER STATE LAWS
WCA and its “notice to cure” provision are an adoption of the Uniform Consumer Credit Code (“UCCC”) which was adopted by the Uniform Law Commission in 1968. Ten other states have adopted the UCCC and have similar notice to cure provisions. The full text of the UCCC and a listing of states that have adopted it are available here.
IMPACT ON ASSIGNED DEBT
This decision has potential implications for debt buying companies and collection agencies that are attempting to collect debts where the creditor did not provide the Right to Cure Notice. Members are encouraged to seek the advice of counsel concerning the impact of Riffard and its implications in other states that have adopted the UCCC, and in other states which have not adopted the UCCC but have “notice to cure” provisions.
This Member Alert is intended for members of the Receivables Management Association International, is for informational purposes only, and is in no way intended to provide legal advice. Members are encouraged to consult with an attorney of their choice for legal advice concerning this matter.