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 REGARDING THE APPLICABILITY OF THIS REGULATORY LOAN ACT OF 1963, AS AMENDED, TO CERTAIN TRANSACTIONS.

CHOICE

I. Facts

Oak Brook/Cash Now Partners d/b/a Cash Connection (“Cash Connection”) is a small business that operates within the greater Detroit that is metropolitan area. Its main activity is cashing checks for the cost, as well as other ancillary solutions include issuance of income purchases, delivering and getting Western Union cash transfers, as well as other relevant solutions. Money Connection has required a ruling on solution this is certainly a variation on its check cashing company.

With its normal check cashing company money Connection will cash payroll, federal federal federal federal government, and private checks for the fee of 10% associated with the quantity of the check. Money Connection has inquired about an expansion of the check that is personal cashing to a site referred to as “Payday Advance.” The pay day loan transaction, as described by money Connection, varies from the check that payday loans Pittsfield is normal deal for the reason that there is an dental contract to put up a present-dated search for a amount of as much as fourteen days. The check is held considering that the cabinet has inadequate funds in their account regarding the time the check is exchanged for money, but guarantees to own funds in their or her account from the agreed upon date, the client’s next payday, that the check is likely to be presented for re re payment. An additional 5% fee would be charged for this added service. The typical deal would be for $100.00, and would not meet or exceed $500.00. Before generally making a pay day loan, each client will be needed to finish a work verification kind, bank authorization type (consumer authorizes their bank to reveal bank account information), and a file card containing particular information that is personal.

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”) towards the Payday Advance that is above-described deal. More particularly, Money Connection asked:

“Is a check cashing company which cashes a individual search for a consumer 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 generating of that loan at the mercy of what’s needed of this Regulatory Loan Act of 1963 citation omitted.”

The request ended up being made pursuant to area 63 associated with 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 is relevant 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 maybe maybe maybe not take part in the business enterprise of creating loans of money . . . in an amount . . . in the regulatory loan roof and cost, agreement for, or get from the loan a larger interest rate, discount, or consideration, compared to loan provider is allowed for legal reasons to charge in the event that loan provider are not a licensee except as authorized by this work and without very first finding a permit through the commissioner for every location of which company is become carried out under this work, or by finding a permit beneath the customer financial services act citation omitted.