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

We. Facts

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

In its normal check cashing company money Connection will cash payroll, federal federal federal government, and private checks for the cost of 10% regarding the level of the check. Money Connection has inquired about an expansion of the individual check cashing procedure to a site referred to as “Payday Advance.” The wage advance transaction, as described payday loans Muncy PA 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 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 in the or her account in the agreed upon date, the consumer’s next payday, that the check will undoubtedly be presented for re payment. Because of this additional service yet another 5% cost could be charged. The typical deal would be for $100.00, and could not go beyond $500.00. Before you make a wage advance, each consumer will be necessary to finish a work verification type, bank authorization type (consumer authorizes their bank to reveal bank checking account information), and a file card containing specific 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”) into the above-described wage advance deal. More particularly, Money Connection asked:

“Is a check cashing company which cashes a individual search for a consumer and agrees to postpone presentment for re re re payment of these check to your drawer/maker’s bank before the consumer’s next payday involved with the generating of financing at the mercy of what’s needed of this Regulatory Loan Act of 1963 citation omitted.”

The obtain had been 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 the Regulatory Loan Act is relevant towards the wage advance deal as described. The chapters of the Act become talked about in this ruling are:

“Sec. 1. (1) an individual shall perhaps perhaps maybe not take part in business of earning loans of income . . . 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 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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