STATE OF MICHIGAN DEPARTMENT OF COMMERCE FINANCE INSTITUTIONS BUREAU

STATE OF MICHIGAN DEPARTMENT OF COMMERCE FINANCE INSTITUTIONS BUREAU

IN RE: REQUEST BY OAK BROOK/CASH NOW PARTNERS d/b/a MONEY CONNECTION FOR A DECLARATORY RULING IN THE APPLICABILITY OF THIS REGULATORY LOAN ACT OF 1963, AS AMENDED, TO CERTAIN TRANSACTIONS.

CHOICE

We. Facts

Oak Brook/Cash Now Partners d/b/a Cash Connection (“Cash Connection”) is a company that runs within the greater metropolitan Detroit area. Its activity that is primary is checks for the charge, along with other ancillary solutions include issuance of cash sales, delivering and getting Western Union cash transfers, along with other associated solutions. Money Connection has required a ruling for an ongoing solution that is a variation on its check cashing company.

With its normal check cashing company money Connection will cash payroll, federal federal government, and individual checks for the fee of 10% associated with the quantity of the check. Money Connection has inquired about an expansion of their check that is personal cashing to a site referred to as “Payday Advance.” The wage advance transaction, as described by money Connection, varies from the check that is normal deal for the reason that there is a dental contract to put on a present-dated look for a amount of as much as week or two. The check is held due to the fact cabinet has inadequate funds in their account in the time the check is exchanged for money, but guarantees to own funds in the or her account in the agreed upon date, the client’s next payday, that the check will soon be presented for re re payment. Because of this additional service one more 5% cost is charged. The transaction that is typical be for $100.00, and would not meet or exceed $500.00. Each customer would be required to complete an employment verification form, bank authorization form (customer authorizes his or her bank to disclose checking account information), and a file card containing certain personal information before making a Payday Advance.

On January 26, 1995, a letter from Cash Connection’s counsel was received by the Commissioner of the Financial Institutions Bureau (“Bureau”) requesting a declaratory ruling on the applicability of the Regulatory Loan Act of 1 963, as amended, MCL 493.1 et thursday. seq.; MSA 23.667(1 ) et. seq., (hereinafter “Regulatory Loan Act”) into the above-described pay day loan deal. More particularly, Money Connection asked:

“Is a check cashing business which cashes a individual search for a client and agrees to wait presentment for re re payment of these check to your drawer/maker’s bank before the client’s next payday involved in the creating of financing susceptible to certain requirements for the Regulatory Loan Act of 1963 citation omitted.”

The ask for ended up being made pursuant to area 63 for the Administrative treatments Act of 1969, as amended, MCL 24.263; MSA 3.560(163).

II. Statutes

At problem in this demand is whether or not the Regulatory Loan Act does apply towards the pay day loan deal as described. The chapters of the Act become talked about in this ruling are:

“Sec. 1. (1) an individual shall perhaps maybe maybe perhaps not participate in the business enterprise of creating loans of money . . . in an amount . . . A greater rate of interest, discount, or consideration, than the lender would be permitted by law to charge if the lender were payday loans Orange City not a licensee except as authorized by this act and without first obtaining a license from the commissioner for each location at which business is to be conducted under this act, or by obtaining a license under the consumer financial services act citation omitted within the regulatory loan ceiling and charge, contract for, or receive on the loan.

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