Legal Status: Legal

Citation:
Mich. Comp. Laws 487.2121 et seq.

Loan Terms:
Maximum Loan Amount: $600
Loan Term: Max: 31 days
Maximum Finance Rate and Fees: 15% of first $100, 14% of second $100, 13% of third $100, 12% of fourth $100, 11% of fifth $100, 11% of sixth $100 + any database verification fee
Finance Charge for 14-day $100 loan: $15
APR for 14-day $100 loan: 390%

Debt Limits:
Maximum Number of Outstanding Loans at One Time: One with licensee or more than one with any other licensee
Rollovers Permitted: None (cannot renew; lender may extend only if it does not charge a fee)
Cooling-off Period:
Repayment Plan: Yes

Collection Limits:
Collection Fees: One $25 returned check charge
Criminal Action: Prohibited

Where to Complain, Get Information:
Regulator: Michigan Office of Financial and Insurance Services
Address: P.O. Box 30220 Lansing MI 48909
Phone: (877) 999-6442
Fax: (517) 335-4978

Applicability: This statute applies to businesses engaging in deferred presentment service transactions. Otherwise, regulatory loan act applies. Mich. Comp. Laws § 493.1 et seq. (25% per year plus a loan processing fee of up to 5% of the loan amount up to $250).

Exemptions: This act does not apply to a state or nationally chartered bank or a state or federally chartered savings and loan association, savings bank, or credit union whose deposits or member accounts are insured by an agency of the U.S. government. By January 1, 2006, the commissioner by administrative bulletin, order, or rule shall establish an application process and an application timeline for license applications under this act. A separate license is required for each location from which the business of providing deferred presentment service transactions is conducted. Licensees must: have and maintain net worth of at least $50,000for each licensed location, subject to a maximum of $250,000in required net worth for any 1 licensee; obtain a surety bond of $50k; demonstrate to the commissioner that the applicant has the financial responsibility, financial condition, business experience, character, and general fitness to reasonably warrant a belief that the applicant will conduct its business lawfully and fairly. A licensee shall post a copy of its license in a conspicuous location at the place of business of the licensee.

Required disclosures: A licensee shall post prominently in an area designed to be seen by the customer before he or she enters into a deferred presentment service transaction the following notice in at least 36-point type: “A deferred presentment service transaction is not intended to meet long-term financial needs. We can only defer cashing your check for up to 31 days. You should use this service only to meet short-term cash needs. State law prohibits us from entering into a transaction with you if you already have a deferred presentment service agreement in effect with us or have more than one deferred presentment service agreement in effect with any other person who provides this service. If you enter into a transaction with us, we must immediately give you a copy of your signed agreement. We will pay the proceeds of a transaction to you by check, by money order, or in cash, as you request. State law entitles you to the right to cancel an agreement and receive a refund of the fee. To do this, if you enter into a transaction today, you must notify us and return the money you receive by the time this office closes tomorrow or on our next business day if we are not open tomorrow. State law prohibits us from renewing an agreement for a fee. You have to pay any other agreement in full before obtaining additional money from us. State law prohibits us from using any criminal process to collect on an agreement. State law entitles you to information regarding filing a complaint against us if you believe that we have violated the law. If you feel we are acting unlawfully, you should call the Office of Financial and Insurance Services toll-free at 1-877-999-6442. If you are unable to pay your deferred presentment service transaction and have entered into 8 deferred presentment service transactions with any licensee in any 12-month period, state law entitles you to request a repayment of that transaction in installments. We are required to advise you of this option at the time it is available. If you elect this option, you must notify us, either orally or in writing, within 30 days after the maturity date of the deferred presentment transaction. The notice must be provided to us at our place of business. You may be charged an additional fee when the transaction is rescheduled in installments. You will be ineligible to enter into a deferred presentment service transaction with any licensee during the term of the repayment plan. If we refuse to provide this option under the stipulations above, you should contact the Office of Financial and Insurance Services toll-free at 1-877-999-6442.” A licensee shall post prominently in an area designed to be seen by the customer before he or she enters into a deferred presentment service transaction a schedule of all fees and charges imposed for deferred presentment service transactions in at least 36-point type. A licensee shall document a deferred presentment service transaction by entering into a written deferred presentment service agreement signed by both the customer and the licensee that must include: the name, street address, facsimile number, and telephone number of the licensee; the signature and printed or typed name of the individual who enters into; the transaction number assigned by the database provider, if any; the amount of the check presented to the licensee by the customer; an itemization of the fees to be paid by the customer; a calculation of the cost of the fees and charges to the customer, expressed as a percentage rate per year; a clear description of the customer’s payment obligation under the agreement; a schedule of all fees associated with the deferred presentment service transaction and an example of the amounts the customer would pay based on the amount of the deferred presentment service transaction; the maturity date; a provision that the licensee will defer presentment, defer negotiation, and defer entering a check into the checkclearing process until the maturity date; a description of the process a drawer may use to file a complaint against the licensee; the following notice in at least 12-point type: “A deferred presentment service transaction is not intended to meet long-term financial needs. We can only defer cashing your check for up to 31 days. You should use this service only to meet short-term cash needs. State law prohibits us from entering into this transaction with you if you already have a deferred presentment service agreement in effect with us or have more than one deferred presentment service agreement in effect with any other person who provides this service. We must immediately give you a copy of your signed agreement. We will pay the proceeds of this transaction to you by check, by money order, or in cash, as you request. State law entitles you to the right to cancel this agreement and receive a refund of the fee. To do this, you must notify us and return the money you receive today by the time this office closes tomorrow or on our next business day if we are not open tomorrow. State law prohibits us from renewing this agreement for a fee. You have to pay an agreement in full before obtaining additional money from us. State law prohibits us from using any criminal process to collect on this agreement. State law entitles you to information regarding filing a complaint against us if you believe that we have violated the law. If you feel we are acting unlawfully, you should call the Office of Financial and Insurance Services toll-free at 1-877-999-6442. If you are unable to pay your deferred presentment service transaction and have entered into 8 deferred presentment service transactions with any licensee in any 12-month period, state law entitles you to request a repayment of that transaction in installments. We are required to advise you of this option at the time it is available. If you elect this option, you must notify us, either orally or in writing, within 30 days after the maturity date of the deferred presentment transaction. The notice must be provided to us at our place of business. You may be charged an additional fee when the transaction is rescheduled in installments. You will be ineligible to enter into a deferred presentment service transaction with any licensee during the term of the repayment plan. If we refuse to provide this option under the stipulations above, you should contact the Office of Financial and Insurance Services toll-free at 1-877-999-6442.” Each licensee shall post a sign, printed in bold faced, 36-point type, in a conspicuous location at each customer service window, station, or desk at each place of business, that states the following: “Under Michigan law, you are entitled to receive the proceeds of this transaction in cash. If you request the proceeds in a check or money order, you may be charged additional check cashing or other processing fees by others for cashing the check or money order.” If a drawer enters into 8 deferred presentment service transactions with any licensee in any 12-month period, the licensee shall provide the drawer an option to repay that eighth transaction and each additional transaction in that 12-month period pursuant to a written repayment plan subject to the terms set forth by the statute.

Loan Terms: A licensee may enter into 1 deferred presentment service transaction with a customer for any amount up to $600.00. Maximum deferral period of 31 days. See stat. for arbitration provision requirements.

Permitted Fees: A licensee may charge both of the following as part of the service fee: 15% of the first $100.00 of the deferred presentment service transaction; 14% of the second $100.00 of the deferred presentment service transaction; 13% of the third $100.00 of the deferred presentment service transaction; 12% of the fourth $100.00 of the deferred presentment service transaction; 11% of the fifth $100.00 of the deferred presentment service transaction; 11% of the sixth $100.00 of the deferred presentment service transaction; a database verification fee. A licensee may contract for and collect a returned check charge of $25 (to be adjusted every 5 years by Commissioner)that does not exceed the maximum returned check charge if the drawer’s check is returned by the drawee due to insufficient funds, a closed account, or a stop payment order. The licensee may only contract for and collect 1 returned check charge under this subsection in a transaction with a customer. A licensee may also exercise any other remedy available under any law applicable to the return of a check because of a closed account or a stop payment order.

Prohibited acts: A licensee shall not: enter into a deferred presentment service transaction with a customer if the customer has an open deferred presentment service transaction with the licensee or has more than 1 open deferred presentment service transaction with any other licensee, and shall verify whether the customer has an open deferred presentment service transaction with the licensee or has more than 1 open deferred presentment service transaction with any other licensee. At the time of entering into a deferred presentment service transaction, a licensee shall not do any of the following: charge interest under the agreement; include a maturity date that is more than 31 days after the date of the transaction; charge an additional fee for cashing the licensee’s business check or money order if the licensee pays the proceeds to the drawer by business check or money order; include a confession of judgment in the agreement; charge or collect any other fees for a deferred presentment service transaction; a licensee shall not refuse to provide a deferred presentment service transaction to a customer solely because the customer has exercised his or her rights under this act. A licensee shall not present a check for payment before the maturity date or during the term of the repayment plan. In addition to the remedies and penalties under this act, a licensee that presents a check for payment before the maturity date or during the term of the repayment plan is liable for all expenses and damages caused to the drawer and the drawee as a result of the violation. A licensee shall not renew a deferred presentment service agreement but may extend a deferred presentment service agreement at no charge.

Enforcement: Commissioner may issue: cease and desist orders; consent orders; andmay suspend or revoke a license

Penalties: Commissioner may order violators of these sections to pay a civil fine of not less than $1,000.00 or more than $10,000.00 for each violation. However, if the commissioner finds that a person has violated this act and that the person knew or reasonably should have known that he or she was in violation of this act, the commissioner may order the person to pay a civil fine of not less than $5,000.00 or more than $50,000.00 for each violation. The commissioner may also order the person to pay the costs of the investigation. Any current or former executive officer or agent who violates a final order from the Commissioner issued is guilty of a misdemeanor punishable by a fine of not more than $5,000.00 or imprisonment for not more than 1 year, or both.

Private right of action: A person injured by a licensee’s violation of this act may maintain a civil cause of action against the licensee and may recover actual damages and an amount equal to the service fee paid in connection with each deferred presentment service transaction that is found to violate this act, plus reasonable attorney fees. At any time before signing a new deferred presentment service agreement with a licensee, a drawer who believes that the licensee has violated this act in connection with a deferred presentment service transaction may deliver to the licensee a notice in writing that the licensee has violated the act. The drawer shall identify the nature of the violation and include documentary or other evidence of the violation in the notice. No later than the close of the third business day after receipt of such a notice, the licensee shall determine if it has violated the law as alleged in the notice. If the licensee determines that it has, it shall return to the drawer the check it received in the deferred presentment service transaction and any service fee paid by the drawer to the licensee. The drawer shall deliver to the licensee cash or a cash equivalent in an amount equal to the amount of cash the drawer received in the transaction. In addition, the licensee shall make restitution to the drawer for each violation in an amount equal to 5 times the amount of the fee charged in the deferred presentment service transaction, but not less than $15.00 or more than the face amount of the drawer’s check. A licensee that makes restitution for a violation under this subsection may be subject to a civil action under section 53 with respect to that violation. A licensee that makes restitution for a violation under this subsection shall immediately notify the commissioner of that action. The licensee shall give the commissioner detailed information about the terms of the deferred presentment service transaction and shall provide other information requested by the commissioner.