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STATE OF MICHIGAN DEPARTMENT OF COMMERCE BANKING INSTITUTIONS BUREAU

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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

We. Facts

Oak Brook/Cash Now Partners d/b/a Cash Connection (“Cash Connection”) is a small business that runs into the greater Detroit that is metropolitan area. Its activity that is primary is checks for the cost, along with other ancillary solutions include issuance of income instructions, 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 individual checks for a fee of 10% associated with quantity of the check. Money Connection has inquired about an expansion of its 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 is normal deal for the reason that there is an dental contract to put up a present-dated look for a time period of as much as 2 weeks. The check is held as the cabinet has inadequate funds in his / her account in the time the check is exchanged for money, but guarantees to possess funds inside the or her account in the agreed upon date, the consumer’s next payday, that the check will likely 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 go beyond $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. payday loans Plymouth MN, (hereinafter “Regulatory Loan Act”) to your above-described pay day loan deal. More particularly, Money Connection asked:

“Is a check cashing business which cashes an individual look for a client and agrees to wait presentment for re payment of these check towards the drawer/maker’s bank through to the consumer’s next payday involved with the generating of financing at the mercy of the needs associated with the Regulatory Loan Act of 1963 citation omitted.”

The ask for was made pursuant to area 63 regarding 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 to your wage advance deal as described. The parts of the Act become talked about in this ruling are:

“Sec. 1. (1) an individual shall perhaps maybe perhaps not take part in the business enterprise of earning loans of money . . . in an amount . . . inside the regulatory loan roof and fee, agreement for, or get in the loan a better interest, discount, or consideration, as compared to loan provider could be 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 from the commissioner for every location from which company is become carried out under this work, or by receiving a permit beneath the customer financial services act citation omitted.

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