STATE OF MICHIGAN DEPARTMENT OF COMMERCE BANKING INSTITUTIONS BUREAU

STATE OF MICHIGAN DEPARTMENT OF COMMERCE BANKING INSTITUTIONS BUREAU

IN RE: REQUEST BY OAK BROOK/CASH NOW PARTNERS d/b/a MONEY CONNECTION FOR A DECLARATORY RULING FROM 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 company that runs into the greater Detroit that is metropolitan area. Its activity that is primary is checks for a charge, as well as other ancillary solutions include issuance of cash requests, delivering and getting Western Union cash transfers, along with other relevant solutions. Money Connection has required a ruling on solution that is a variation on its check cashing company.

With its check that is normal cashing money Connection will cash payroll, federal federal government, and individual checks for a fee of 10% associated with the level of the check. Money Connection has inquired about an expansion of the individual check cashing procedure to something referred to as “Payday Advance.” The pay day loan transaction, as described by money Connection, differs from the check that is normal deal for the reason that there is an dental agreement to put on a present-dated search for a time period of as much as 2 weeks. The check is held due to the fact cabinet has funds that are insufficient his / her account in the time the check is exchanged for money, but guarantees to own funds inside the or her account in the agreed upon date, the client’s next payday, that the check may be presented for payment. An additional 5% fee would be charged for this added service. The typical transaction would be for $100.00, and would not go beyond $500.00. Before generally making a pay day loan, each client could be necessary to finish a jobs verification type, bank authorization kind (consumer authorizes their bank to reveal bank checking account information), and a file card containing particular private information.

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”) to your above-described wage advance deal. More particularly, Money Connection asked:

“Is a check cashing business which cashes a individual search for a consumer and agrees to wait presentment for re re re re payment of such check to your drawer/maker’s bank before the client’s next payday involved in the generating of financing at the mercy of the demands associated with 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 is relevant to your pay day loan deal as described. The chapters of the Act become talked about in this ruling are:

“Sec payday loan companies in Hughes Springs. 1. (1) an individual shall maybe maybe perhaps not take part in the business enterprise of creating loans of income . . . in an amount . . . in the regulatory loan roof and charge, agreement for, or get regarding the loan a higher interest, discount, or consideration, as compared to loan provider will be allowed for legal reasons to charge in the event that loan provider weren’t 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 getting a permit beneath the customer financial services act citation omitted.

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