Payday Loan Resolution, LLC v. DFI (Agency Police Power Over Out-of-State Business)

In Payday Loan Resolution, LLC v. DFI (2018AP821), the Court of Appeals District IV held that Florida debt settlement business Payday Loan Resolution is subject to Wisconsin Department of Financial Institutions (DFI) licensing requirements and enforcement.

DFI received two consumer complaints against Payday from Wisconsin residents. DFI then proceeded with enforcement actions against Payday, stating that Payday was operating as an unlicensed “adjustment service company” under Wisconsin law. In response to DFI’s enforcement actions, Payday argued that, as a Florida company, it is not subject to Wisconsin regulation. Ultimately, DFI ordered Payday to cease its business activities in Wisconsin, pay a forfeiture, and issue refunds to Wisconsin consumers. Payday sought judicial review of the order, arguing that the order violates due process rights because Wisconsin does not have personal jurisdiction over Florida-based Payday.

The appeals court determined Payday’s due process rights were not violated, and DFI could enforce regulations against Payday. The court relied on a 1953 Wisconsin Supreme Court decision Metropolitan Finance Corp. v. Matthews, which established that Wisconsin can exercise its police power to regulate an out-of-state entity which conducts activities in the state intimately related to local welfare. The court said the contractual transactions between Payday and the Wisconsin consumers were sufficient to establish that Payday “requires activities within the state” according to Metropolitan Finance. Therefore, DFI could enforce the licensing requirement against Payday.