We received several inquiries relating to the September 2013 WDA Journal article “Lending Laws: Do they apply to your practice?”
This follow-up article addresses some of those inquiries. The various state and federal lending laws are complex. And, while this article is intended to provide guidance to Wisconsin Dental Association members, it is not a substitute for consultation with an
attorney and/or accountant. The previous article outlined situations where a dental practice may unintentionally be deemed to have extended credit to a patient and, by doing so, would have to comply with the applicable lending laws.
But, I would like to take a step back and discuss one of the primary purposes of the lending laws, which is consumer protection from predatory lending practices. For example, when you receive a credit card statement or statement for your car loan, the statement must include certain disclosures such as the interest rate, minimum required payment, how much you would pay if you only made the minimum payment and many other pieces of information.
So, if a dental practice offers a payment plan to patients that “looks and feels” like the extension of credit, it is wise to review that plan and determine if the lending laws apply.
The reality is that many patients can’t pay dental bills in full, yet need the services now rather than at a later date when money may be more readily available. To address this need, dental practices regularly offer deferred payment plans to patients.
The following are four categories of payment methods that will not run afoul of the lending laws:
Cash/check payment at the date of service
Payment by credit card
Four installments or less
Plans that involve greater than four installment payments or that include finance charges, whether labeled as interest or as service fees, are subject to the lending laws.