Bill Text: MI SB0432 | 2017-2018 | 99th Legislature | Introduced
Bill Title: Financial institutions; payday lending; general revisions; provide for. Amends secs. 2, 11, 22, 31, 32, 33 & 35 of 2005 PA 244 (MCL 487.2122 et seq.). TIE BAR WITH: SB 0431'17
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2017-06-06 - Referred To Committee On Banking And Financial Institutions [SB0432 Detail]
Download: Michigan-2017-SB0432-Introduced.html
SENATE BILL No. 432
June 6, 2017, Introduced by Senators ROBERTSON, JOHNSON, BIEDA and GREGORY and referred to the Committee on Banking and Financial Institutions.
A bill to amend 2005 PA 244, entitled
"Deferred presentment service transactions act,"
by amending sections 2, 11, 22, 31, 32, 33, and 35 (MCL 487.2122,
487.2131, 487.2142, 487.2151, 487.2152, 487.2153, and 487.2155),
section 2 as amended by 2016 PA 140 and section 35 as amended by
2016 PA 141.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 2. (1) As used in this act:
(a) "Applicant" means a person that is seeking a license to
engage in the business of providing deferred presentment service
transactions under this act.
(b) "Check" means a draft that is payable on demand and drawn
on a bank, savings bank, savings and loan association, or credit
union. Check includes any negotiable instrument that represents
evidence of an obligation to pay even if it is described on its
face by another term.
(c) "Closed" in connection with a deferred presentment service
transaction means that 1 of the following has occurred concerning
each of the customer's checks that is the basis of the deferred
presentment service transaction:
(i) The check is redeemed by the customer by payment to the
licensee of the face amount of the check in cash or payment from a
debit card that meets the requirements of section 35(11).
(ii) The check is exchanged by the licensee for a cashier's
check or cash from the customer's financial institution.
(iii) The check is deposited by the licensee and the licensee
has evidence that the person has satisfied the obligation.
(iv) The check is collected by the licensee or its agent
through any civil remedy available under the laws of this state.
(v) The check is collected by means of a repayment plan agreed
on by the customer and the licensee or as the result of credit
counseling where the licensee is paid the amount agreed upon by the
licensee under that plan.
(vi) The check is collected by the licensee under section
35(9) and the licensee has evidence that the person has satisfied
the obligation.
(d) "Commissioner" means the director or his or her authorized
representative.
(e) "Customer" means an individual who inquires into the
availability of or applies for a deferred presentment service
transaction or a drawer who enters into a deferred presentment
service transaction.
(f) "Database provider" means 1 of the following:
(i) A third party provider selected by the director under
section 22 to operate the statewide database described in that
section.
(ii) If the director has not selected a third party provider
under section 22, the director.
(g) Subject to subsection (2), "deferred presentment service
transaction" means a transaction between a licensee and a customer
under which the licensee agrees to do all of the following:
(i) Pay to the customer an agreed-upon amount in exchange for
a fee.
(ii) Hold a customer's check for a period of time before
negotiation, redemption, or presentment of the checks.
(h) "Department" means the department of insurance and
financial services.
(i) "Director" means the director of the department or his or
her authorized representative.
(j) "Drawee" means a bank, savings bank, savings and loan
association, credit union, or other person on which a check is
drawn.
(k) "Drawer" means a customer who enters into a deferred
presentment service transaction with a licensee.
(l) "Executive officer" means an officer or director of a
licensee or any other individual who has the authority to
participate in the direction, directly or indirectly, through 1 or
more persons, or the management or policies of a licensee.
(m)
"Financial licensing act" means this act or any of the
financial
licensing acts acts"
means that term as defined in
section 2 of the consumer financial services act, 1988 PA 161, MCL
487.2052.
(n) "Licensee" means a person that is licensed to engage in
the business of providing deferred presentment service transactions
under this act.
(o) "Maturity date" means the date on which a drawer's check
is to be redeemed, presented for payment, or entered into the
check-clearing process in a deferred presentment service
transaction.
(p) "Office" or "office of financial and insurance services"
means the department.
(q) "Person" means an individual, partnership, association,
corporation, limited liability company, or other legal entity
except a governmental entity.
(r) "Redeem" means that the customer pays to the licensee an
amount equal to the face amount of a check included in a deferred
presentment service transaction, on or before the maturity date or
after the check is deposited and returned unpaid by the drawee, and
the licensee returns the check to the customer.
(s) "Small loan" means a small loan under the small loan
regulatory act.
(2) Deferred presentment service transaction does not include
a delay in presentment of a loan repayment check, at the request of
the
borrower, by a person that is licensed or registered under the
consumer
financial services act, 1988 PA 161, MCL 487.2051 to
487.2072,
the regulatory loan act, 1939 PA 21, MCL 493.1 to 493.24,
the
secondary mortgage loan act, 1981 PA 125, MCL 493.51 to 493.81,
the
motor vehicle sales finance act, 1950 (Ex Sess) PA 27, MCL
492.101
to 492.141, 1984 PA 379, MCL 493.101 to 493.114, the money
transmission
services act, 2006 PA 250, MCL 487.1001 to 487.1047,
or
the mortgage brokers, lenders, and servicers licensing act, 1987
PA
173, MCL 445.1651 to 445.1684.any
of the financial licensing
acts.
Sec. 11. (1) Subject to subsection (2), a person shall not
engage in the business of providing deferred presentment service
transactions
after June 1, 2006 through
any method, including, but
not limited to, mail, telephone, internet, mobile device
application, or in person, without a license under this act.
(2) A separate license is required for each location from
which the business of providing deferred presentment service
transactions is conducted. However, a person that is licensed under
this act and the small loan regulatory act may engage in the
business of providing deferred presentment service transactions and
small loans at the same location under those separate licenses.
(3) (2)
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 United States government.
(4) (3)
By January 1, 2006, the commissioner
director by
administrative bulletin, order, or rule shall establish an
application process and an application timeline for license
applications under this act.
(5) (4)
A person may continue to engage in
the business of
providing deferred presentment service transactions in this state
after June 1, 2006 and without a license until 1 of the following
occurs:
(a) The person fails to meet its applications deadline.
(b)
The commissioner director acts on the person's complete
application.
Sec.
22. (1) On or before December 31, 2006, the commissioner
The director shall develop, implement, and maintain a statewide,
common database that has real-time access through an internet
connection, is accessible at all time to licensees under this act
and
the small loan regulatory act, and to
the commissioner director
for purposes of subsections (10) and (11), and meets the
requirements
of this section. Before the commissioner determines
that
the database is fully operational for the purposes of this
act,
for at least 30 days the database provider shall operate a
pilot
program of the database to test all of the processes of the
database.
The database provider shall make the pilot program
available
to all applicants and licensees. During the 30-day period
that
begins on the date the commissioner determines that the
database
is fully operational, the commissioner shall not approve
the
imposition of any database verification fees under section
34(5).
(2)
The commissioner director may operate the database
described in subsection (1) or may select and contract with a
single third party provider to operate the database. If the
commissioner
director contracts with a third party provider for the
operation of the database, all of the following apply:
(a)
The commissioner director shall ensure that the third
party provider selected as the database provider operates the
database pursuant to the provisions of this act.
(b)
The commissioner director shall consider cost of service
and ability to meet all the requirements of this section in
selecting a third party provider as the database provider.
(c) In selecting a third party provider to act as the database
provider,
the commissioner director shall give strong consideration
to the third party provider's ability to prevent fraud, abuse, and
other unlawful activity associated with deferred presentment
service transactions and provide additional tools for the
administration and enforcement of this act.
(d) The third party provider shall only use the data collected
under this act as prescribed in this act and the contract with the
office
department and for no other purpose.
(e) If the third party provider violates this section, the
commissioner
director shall terminate the contract and the third
party provider is barred from becoming a party to any other state
contracts.
(f) A person injured by the third party provider's violation
of this act may maintain a civil cause of action against the third
party provider and may recover actual damages plus reasonable
attorney fees.
(3) The database described in subsection (1) shall allow a
licensee
accessing under this act
or the small loan regulatory act
to access the database to do all of the following:
(a) Verify whether a customer has any open deferred
presentment service transactions with any licensee that have not
been closed.
(b) Provide information necessary to ensure licensee
compliance
with any requirements imposed by the federal office of
foreign
asset control Office of
Foreign Asset Control under federal
law.
(c) Track and monitor the number of customers who notify a
licensee of violations of this act, the number of times a licensee
agreed that a violation occurred, the number of times that a
licensee did not agree that a violation occurred, the amount of
restitution
paid, and any other information the commissioner
director requires by rule.
(d) Determine whether a customer is eligible for repayment of
the deferred presentment service transaction in installments as
provided in section 35(2) and notify the licensee of that
eligibility.
(4) While operating the database, the database provider shall
do all of the following:
(a) Establish and maintain a process for responding to
transaction verification requests due to technical difficulties
occurring with the database that prevent the licensee from
accessing the database through the internet.
(b) Comply with any applicable provisions of the social
security number privacy act, 2004 PA 454, MCL 445.81 to 445.87.
(c) Comply with any applicable provisions of the identity
theft
protection act, 2004 PA 452, MCL 445.61 to 445.77.445.79d.
(d) Provide accurate and secure receipt, transmission, and
storage of customer data.
(e) Meet the requirements of this act.
(5) When the database provider receives notification that a
deferred presentment service transaction is closed under section
34, the database provider shall designate the transaction as closed
in the database immediately, but in no event after 11:59 p.m. on
the
day the commissioner director
or database provider receives
notification.
(6) The database provider shall automatically designate a
deferred presentment service transaction as closed in the database
5 days after the transaction maturity date unless a licensee
reports to the database provider before that time that the
transaction remains open because of the customer's failure to make
payment; that the transaction is open because the customer's check
or an electronic redeposit is in the process of clearing the
banking system; or that the transaction remains open because the
customer's check is being returned to the licensee for insufficient
funds, a closed account, or a stop payment order, or any other
factors determined by the commissioner. If a licensee reports the
status of a transaction as open in a timely manner, the transaction
remains an open transaction until it is closed under section 34 and
the database provider is notified that the transaction is closed
under that section.
(7) If a licensee stops providing deferred presentment service
transactions, the database provider shall designate all open
transactions with that licensee as closed in the database 60 days
after the date the licensee stops offering deferred presentment
service transactions, unless the licensee reports to the database
provider before the expiration of the 60-day period which of its
transactions remain open and the specific reason each transaction
remains
open. The licensee shall also provide to the commissioner
director a reasonably acceptable plan that outlines how the
licensee will continue to update the database after it stops
offering deferred presentment service transactions. The
commissioner
director shall promptly approve or disapprove the plan
and immediately notify the licensee of his or her decision. If the
plan is disapproved, the licensee may submit a new plan or may
submit a modified plan for the licensee to follow. If at any time
the
commissioner director reasonably determines that a licensee
that has stopped offering deferred presentment service transactions
is not updating the database in accordance with its approved plan,
the
commissioner director shall immediately close or instruct the
database provider to immediately close all remaining open
transactions of that licensee.
(8) The response to an inquiry to the database provider by a
licensee shall only state that a person is eligible or ineligible
for a new deferred presentment service transaction and describe the
reason for that determination. Only the person seeking the
transaction may make a direct inquiry to the database provider to
request a more detailed explanation of a particular transaction
that was the basis for the ineligibility determination. Any
information regarding any person's transactional history is
confidential, is not subject to public inspection, is not a public
record subject to the disclosure requirements of the freedom of
information act, 1976 PA 442, MCL 15.231 to 15.246, is not subject
to discovery, subpoena, or other compulsory process except in an
action under section 53, and shall not be disclosed to any person
other than the commissioner.
(9) The database provider may charge licensees under this act
a verification fee for access to the database, in amounts approved
by
the commissioner director under section 34(5). The database
provider may charge licensees under the small loan regulatory act a
verification fee for access to the database, in amounts approved by
the director.
(10)
The commissioner director may access the database
provided under subsection (1) only for purposes of an investigation
of, examination of, or enforcement action concerning an individual
database provider, licensee, customer, or other person. The
commissioner
director and any employees of the commissioner, the
office, or this state shall not obtain or access a customer's
social security number, driver license number, or other state-
issued identification number in the database except as provided in
this subsection. An individual who violates this subsection is
guilty of a misdemeanor punishable by imprisonment for not more
than 93 days or a fine of not more than $1,000.00, or both, and if
convicted, an individual who violates this subsection shall be
dismissed from office or discharged from employment.
(11)
The commissioner director shall investigate violations of
and
enforce this section. The commissioner director shall not
delegate its responsibilities under this subsection to any third
party provider.
(12)
The commissioner director shall do all of the following:
(a) Require by rule that data are retained in the database
only as required to ensure licensee compliance with this act.
(b) Require by rule that data in the database concerning a
customer transaction are archived within 365 days after the
customer transaction is closed unless needed for a pending
enforcement action.
(c) Require by rule that any identifying customer information
is deleted from the database when data are archived.
(d) Require by rule that data in the database concerning a
customer transaction are deleted from the database 3 years after
the customer transaction is closed or any enforcement action
pending 3 years after the customer transaction is closed is
completed, whichever is later.
(13)
The commissioner director may maintain access to data
archived under subsection (12) for future legislative or policy
review.
(14) The department by rule may provide for a single, combined
database for purposes of this act and the small loan regulatory
act, if the combined database meets the requirements of this
section and section 19 of the small loan regulatory act.
Sec. 31. (1) 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:
"1. 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.
2. You should use this service only to meet short-term cash
needs.
3. 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.
4. If you enter into a transaction with us, we must
immediately give you a copy of your signed agreement.
5. We will pay the proceeds of a transaction to you by check,
by money order, or in cash, as you request.
6. 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.
7. 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.
8. State law prohibits us from using any criminal process to
collect on an agreement.
9. 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 Department
of Insurance and
Financial Services toll-free at 1-877-999-6442.
10. 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
Department of Insurance and
Financial Services toll-free
at 1-877-999-6442.".
(2) 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.
(3) A licensee that conducts deferred presentment service
transactions on the internet shall post the notice described in
subsection (1) and the fee schedule described in subsection (2) in
a prominent and conspicuous place on its internet website that is
fully accessible to its customers and the public.
Sec. 32. (1) 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.
(2) A licensee shall include all of the following in the
written deferred presentment service agreement:
(a) The name of the customer.
(b) The name, street address, facsimile number, and telephone
number of the licensee.
(c) The signature and printed or typed name of the individual
who enters into the deferred presentment service agreement on
behalf of the licensee.
(d) The date of the transaction.
(e) The transaction number assigned by the database provider,
if any.
(f) The amount of the check presented to the licensee by the
customer.
(g) An itemization of the fees to be paid by the customer.
(h) A calculation of the cost of the fees and charges to the
customer, expressed as a percentage rate per year.
(i) A clear description of the customer's payment obligation
under the agreement.
(j) 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.
(k) The maturity date.
(l) A provision that the licensee will defer presentment,
defer negotiation, and defer entering a check into the check-
clearing process until the maturity date.
(m) A description of the process a drawer may use to file a
complaint against the licensee.
(n) The following notice in at least 12-point type:
"1. 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.
2. You should use this service only to meet short-term cash
needs.
3. 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.
4. We must immediately give you a copy of your signed
agreement.
5. We will pay the proceeds of this transaction to you by
check, by money order, or in cash, as you request.
6. 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.
7. 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.
8. State law prohibits us from using any criminal process to
collect on this agreement.
9. 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 Department
of Insurance and
Financial Services toll-free at 1-877-999-6442.
10. 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
Department of Insurance and
Financial Services toll-free
at 1-877-999-6442.".
(3) A licensee may include an arbitration provision in a
deferred presentment service transaction agreement if the
arbitration provision meets all of the following:
(a) Provides that the licensee agrees to pay any costs of the
arbitration.
(b) Provides that an arbitration proceeding shall be held
within 10 miles of the drawer's address contained in the deferred
presentment service transaction agreement unless the drawer
consents to another location after an arbitrable dispute occurs.
(c) Provides that an arbitration proceeding shall be conducted
by a neutral arbitrator who was not and is not currently being paid
by the licensee and who has no financial interest in a party to the
arbitration.
(d) Requires that the arbitrator shall provide the drawer with
all the substantive rights that the drawer would have if the
drawer's claim were asserted in a court proceeding and shall not
limit any other claim or defense the drawer has concerning the
claim.
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).
(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, notice, printed in bold
faced,
boldfaced, 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 licensee that conducts deferred presentment service
transactions on the internet shall post the notice described in
subsection (6) in a prominent and conspicuous place on its internet
website that is fully accessible to its customers and the public.
Sec. 35. (1) A licensee shall not renew a deferred presentment
service agreement. A licensee may extend a deferred presentment
service agreement only if the licensee does not charge a fee in
connection with the extended transaction. A licensee who extends an
agreement under this subsection shall not create a balance owed
above the amount owed on the original agreement.
(2) 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 following terms:
(a) The drawer shall request the repayment plan, either orally
or in writing, within 30 days after the maturity date of the
deferred presentment service transaction.
(b) The drawer shall repay the transaction in 3 equal
installments with 1 installment due on each of the next 3 dates on
which the drawer receives regular wages or compensation from an
employer or other regular source of income, pursuant to a written
repayment plan agreement.
(c) The drawer shall pay a fee to the licensee for
administration of the repayment plan. The initial amount of the fee
is $15.00. Beginning March 1, 2011, and by March 1 of every fifth
year after March 1, 2011, the licensee may adjust the fee by an
amount determined by the director to reflect the cumulative
percentage change in the Detroit consumer price index over the
preceding 5 calendar years. As used in this subsection, "Detroit
consumer price index" means the most comprehensive index of
consumer prices available for the Detroit area from the Bureau of
Labor Statistics of the United States Department of Labor.
(d) The drawer shall agree not to enter into any additional
deferred presentment transactions during the repayment plan term.
(3) A licensee shall advise a customer of the repayment option
described in subsection (2) at the time he or she is eligible. If a
customer believes he or she has been illegally denied the repayment
option under this section, he or she is entitled to contact the
department toll-free at 1-877-999-6442. If a customer has entered
into 8 deferred presentment service transactions in any 12-month
period, the database provider shall notify the licensee when the
licensee submits the required customer information to the database
for that customer that the customer is entitled to a repayment plan
under this section. The database provider shall instruct the
licensee to provide the customer with the following notice, in a
document separate from the deferred presentment transaction
agreement and in at least 12-point type:
"If you are unable to pay your deferred presentment service
transaction and have entered into 8 deferred presentment
transactions 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 eighth
deferred presentment transaction in the 12-month period. 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 department of
insurance
and financial services Department
of Insurance and
Financial Services toll-free at 1-877-999-6442.".
(4) During the term of a repayment plan by a drawer under this
section, the database provider shall notify the licensee at the
time the licensee submits the required customer information to the
database for that customer that the customer is presently in a
repayment plan under this section with 1 or more other licensees
and the licensee shall not enter into a deferred presentment
transaction with that individual.
(5) 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. If a drawer has not requested a repayment plan on or
before the maturity date, the licensee may redeem, present for
payment, or enter the check into the check-clearing process under
the terms of the original deferred presentment service transaction
agreement.
(6) A drawer satisfies his or her obligation under a deferred
presentment service agreement when the check the licensee is
holding is paid by the drawee or is redeemed by the drawer by
paying to the licensee an amount equal to the full amount of the
check.
(7) Unless the drawer has entered into a written repayment
plan under subsection (2), a licensee shall deposit a check held in
connection with a deferred presentment service transaction on the
maturity date if the check is not redeemed in the manner described
in section 2(1)(c)(i), or exchanged in the manner described in
section 2(1)(c)(ii), on or before the maturity date.
(8) A licensee shall deposit a check held in connection with a
deferred presentment service transaction on any repayment plan
installment date described in subsection (2) if the drawer fails to
make the installment payment.
(9) If the drawer has an outstanding deferred presentment
service transaction in which a check held in connection with the
transaction was deposited and returned unpaid, the licensee may
collect the check by means of 1 or more telephone-initiated entries
if all of the following are met:
(a) The drawer agrees to each telephone-initiated entry.
(b) Each telephone-initiated entry is a single, date-specific
payment and does not authorize more than 1 payment or periodic
payments.
(c) The licensee does not charge the drawer a fee in
connection with the telephone-initiated entry or entries.
(10) If the payment to satisfy an outstanding deferred
presentment transaction obligation is made in person, the licensee
shall immediately return the check held in connection with the
deferred presentment service transaction to the drawer. If the
payment to satisfy the obligation is not made in person, the
licensee shall return the check to the drawer by mailing it to the
address listed on the deferred presentment transaction service
agreement within 1 business day after the licensee obtains evidence
that the drawer has satisfied the obligation.
(11) A licensee shall only accept a payment by debit card to
redeem a check the licensee is holding if the drawer certifies to
the licensee that the debit card draws funds from the same account
on which the check is drawn.
(12) As used in this section, "telephone-initiated entry"
means a debit transaction to a drawer's account that is processed
through an automated clearing house, as that term is defined in
section 1 of 2002 PA 738, MCL 124.301, and initiated pursuant to an
authorization obtained from the drawer orally by telephone.
Enacting section 1. This amendatory act takes effect 90 days
after the date it is enacted into law.
Enacting section 2. This amendatory act does not take effect
unless Senate Bill No._431
of the 99th Legislature is enacted into law.
