June 12, 2018, Introduced by Reps. Sowerby, Wittenberg, Ellison, Sneller, Geiss, Moss, Camilleri, Guerra, Gay-Dagnogo, Byrd, Sabo, Yanez, Hertel, Chirkun, Hoadley, Dianda, Peterson, Love, Pagan, Green, Cochran, Hammoud, Elder, Cambensy, Liberati, Zemke, LaGrand, Rabhi, Chang and Clemente and referred to the Committee on Financial Services.
A bill to amend 2005 PA 244, entitled
"Deferred presentment service transactions act,"
by amending sections 33 and 40 (MCL 487.2153 and 487.2160).
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 33. (1) A licensee may enter into 1 deferred presentment
service transaction with a customer for any amount up to $600.00. A
licensee may charge the customer a service fee for each deferred
presentment
service transaction. A service fee is earned by the
licensee
on the date of the transaction and is not interest. A
licensee
may charge both of the following as part of the service
fee,
as applicable:
(a)
An amount that does not exceed the aggregate of the
following,
as applicable:
(i) Fifteen percent of the first $100.00 of the
deferred
presentment
service transaction.
(ii) Fourteen percent of the second $100.00 of the
deferred
presentment
service transaction.
(iii) Thirteen percent of the third $100.00 of the
deferred
presentment
service transaction.
(iv) Twelve percent of the fourth $100.00 of the
deferred
presentment
service transaction.
(v) Eleven percent of the fifth $100.00 of the
deferred
presentment
service transaction.
(vi) Eleven percent of the sixth $100.00 of the
deferred
presentment
service transaction.
(b)
The amount of any database verification fee allowed under
section
34(5).The service fee on a
deferred presentment service
transaction must not exceed an annual percentage rate of 36%. As
used in this subsection:
(a) "Annual percentage rate" means a rate calculated for a
military annual percentage rate under 32 CFR 232.4.
(b) "Service fee" does not include a permissible returned
check charge under section 38.
(2) 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 by complying with section 34.
(3) At the time of entering into a deferred presentment
service transaction, a licensee shall do all of the following:
(a) Before the drawer signs the agreement, provide the
following notice to the drawer, in a document separate from the
agreement and in at least 12-point type:
"1. After signing this agreement, if you believe that we have
violated the law, you may do 1 of the following:
a. Before the close of business on the day you sign the
agreement, notify us in person of the violation. You must provide
supporting documents or other evidence of the violation.
b. At any time before signing a new deferred presentment
service agreement with us, notify us in writing of the violation.
Your written notice must state the violation and provide supporting
documents or other evidence of the violation.
2. We have 3 business days to determine if we agree that we
have violated the law and let you know of that determination.
3. If we agree that we have violated the law, we must return
your check and you must return the cash received under the
agreement. Additionally, for each violation, we must pay you
restitution equal to 5 times the amount of the fee we charged you
under the agreement but not less than $15.00 or more than the face
amount of your check. You may also pursue an action for your actual
damages against us.
4. If we do not agree that we have violated the law, we may
present your check for payment or enter your check into the check-
clearing process on or after the maturity date. If your check is
returned to us unpaid, we may take other legal steps to collect our
money.
5. If you still believe we violated the law, you may file a
written complaint including supporting documents or other evidence
with
the Office of Financial and Insurance Services. Department of
Insurance
and Financial Services. The Office Department is required
to investigate your complaint and has the authority to order us to
pay you restitution if they agree that we violated the law. In
addition,
the Office Department can order us to pay civil fines or
take
away our right to do business. To do so, contact the Office of
Financial
and Insurance Services Department
of Insurance and
Financial Services toll-free at 1-877-999-6442.".
(b) Provide a copy of the signed agreement to the drawer.
(c) Pay the proceeds under the agreement to the drawer by
delivering a business check of the licensee, a money order, or
cash, as requested by the drawer.
(4) At the time of entering into a deferred presentment
service transaction, a licensee shall not do any of the following:
(a) Charge interest under the agreement.
(b) Include a maturity date that is more than 31 days after
the date of the transaction.
(c) 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.
(d) Include a confession of judgment in the agreement.
(e) Except as provided in this act, charge or collect any
other fees for a deferred presentment service transaction.
(5) 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.
(6) 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.".
(7) A deferred presentment service transaction that violates
this section is void and uncollectible as to any principal, fee, or
charge.
Sec. 40. A licensee shall not do any of the following:
(a) Enter into a tying arrangement through which the licensee
conditions the sale of 1 financial service to a consumer on the
agreement by the consumer to purchase 1 or more other financial
services from the licensee or an affiliate or subsidiary of the
licensee.
(b) Knowingly permit a person to violate an order that has
been issued under this act or any other financial licensing act
that prohibits that person from being employed by, an agent of, or
a control person of the licensee.
(c) Enter into a deferred presentment service transaction
without first determining and documenting that the customer has a
reasonable ability to repay the loan. In determining whether the
customer has a reasonable ability to repay the deferred presentment
service transaction, the licensee must, at a minimum, verify the
customer's current and anticipated income and expenses, and the
customer's credit history. For purposes of this subsection, a
customer does not have the reasonable ability to repay a deferred
presentment service transaction if payments for the proposed
deferred presentment service transaction cause the customer to have
a debt-to-income ratio higher than 41%. As used in this
subdivision:
(i) "Debt-to-income ratio" means the ratio of a customer's
total monthly debt obligations to the customer's gross monthly
income.
(ii) "Total monthly debt obligations" consists of the sum of a
customer's rent or mortgage-related obligations, any other secured
or unsecured debt obligations, and payments for child support and
alimony.
(d) Make, offer, assist, arrange, guarantee, or collect a
deferred presentment service transaction with fees or charges that
are greater than permitted under this act.
(e) Engage in any device or subterfuge to evade the
requirements of this act.
Enacting section 1. This amendatory act takes effect 90 days
after the date it is enacted into law.