Q: Must a UCC financing statement use the exact name of the debtor?
A: Yes. The Wisconsin Department of Financial Institutions (DFI) uses an exact match computer search logic for Uniform Commercial Code (UCC) 1 financing statements. If an exact name is not used, a search of DFI’s database for the debtor's name may not result in finding the debtor's name, deeming the bank's UCC financing statement to be seriously misleading.
Under Wisconsin’s UCC rules, a financing statement deemed seriously misleading is ineffective. Thus, for a UCC financing statement to be effective, it must provide the exact name of the debtor. Where the debtor is an organization, this means the UCC financing statement should provide the name that appears on the registered organization’s public record, filed with DFI. For an individual debtor, the UCC financing statement should provide the name of the individual as it appears on their operator’s license (driver’s license) or identification card. If the name does not match, it could fail to appear using DFI’s search logic, and leave bank unperfected on its security interest.
Wisconsin’s UCC does not require banks to keep a copy of the driver’s license. Banks may do so, however, if seeking to retain evidence that the filing was made as the name appears on the license. Note that in this case, WBA recommends keeping it in a different file than the loan file to avoid creating any potential fair lending issues.
Be aware that a financial institution has four months after a debtor’s name change before a financing statement becomes "seriously misleading." For this reason, WBA recommends establishing a system to check whether a debtor’s name has changed every few months.
Because the sufficiency of a debtor’s name hinges upon DFI’s search logic, one of the easiest ways to ensure the name is sufficient is to check for the filing on DFI’s site yourself.
As always, if you have any questions on UCC matters or other compliance-related concerns, call the WBA legal hotline at 608-441-1200 or contact us via email.