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Dangers of Businesses taking the Law into their own hands

To the unsuspecting business, there are a surprising amount of consumer protection laws in Wisconsin, especially relating to penalties from a business. Businesses regularly get themselves into hot water by imposing sanctions on consumers without taking those laws into account, the consequences can be dire and expensive. A recent Wisconsin Appellate case James Cook et al v. Public Storage, Inc. reminds us of the consequences of not taking proper legal action when owed money by a consumer.

The basics of the case were the following: Cook rented a storage facility from Public Storage Inc. He fell behind on his payments and then defaulted. Public Storage then proceeded to auction off his goods for $600 to pay for the $200 that was owed to the Storage unit. It turned out that the items were worth $19,000 and that Public Storage never correctly notified Cook, did not conduct the auction correctly, and did not return the extra profit from the sale.

Public Storage Inc. had an obligation under Wis. Stat. Sec. 704.90(2m) and (5)(b) to provide proper notice in the case of default and to conduct the auction in a commercially reasonable manner. They did neither of these things, and resulted in this law suit. Public Storage was forced to pay its own attorney’s fees, Cook’s attorney’s fees, and $100,000 in punitive damages. All told Public Storage Inc. paid $400,520.02 to the other side resulting from actions to collect $200 in unpaid storage fees.

While this is an extreme example, it illustrates why it is so important to be sure that you understand and comply with all of the applicable statutes when you are imposing a sanction on a customer for non-payment.

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