HB-4834, As Passed Senate, September 13, 2005

 

 

 

 

 

 

 

 

 

 

 

 

SENATE SUBSTITUTE FOR

 

HOUSE BILL NO. 4834

 

 

 

 

 

 

 

 

 

 

 

 

 

     A bill to regulate the business of providing deferred

 

presentment service transactions; to require the licensing of

 

providers of deferred presentment service transactions; to

 

prescribe powers and duties of certain state agencies and

 

officials; and to prescribe penalties and provide remedies.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

                                 ARTICLE 1

 

     Sec. 1. This act shall be known and may be cited as the

 

"deferred presentment service transactions act".

 

     Sec. 2. (1) As used in this act:

 

     (a) "Applicant" means a person seeking a license to engage in

 

the business of providing deferred presentment service transactions

 

under this act.


 

     (b) "Check" means a draft 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.

 

     (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

 

upon 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.

 

     (d) "Commissioner" means the commissioner of the office of

 

financial and insurance services 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 commissioner under

 

section 22 to operate the statewide database described in that

 

section.

 

     (ii) If the commissioner has not selected a third party

 

provider under section 22, the commissioner.

 

     (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) "Drawee" means a bank, savings bank, savings and loan

 

association, credit union, or other person upon which a check is

 

drawn.

 

     (i) "Drawer" means a customer who enters into a deferred

 

presentment service transaction with a licensee.

 

     (j) "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.

 

     (k) "Financial licensing act" means this act, the consumer

 

financial services act, 1988 PA 161, MCL 487.2051 to 487.2072, or

 

any of the acts listed in section 2(d) of the consumer financial

 

services act, 1988 PA 161, MCL 487.2052.


 

     (l) "Licensee" means a person licensed to engage in the

 

business of providing deferred presentment service transactions

 

under this act.

 

     (m) "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.

 

     (n) "Office" means the office of financial and insurance

 

services of the department of labor and economic growth.

 

     (o) "Person" means an individual, partnership, association,

 

corporation, limited liability company, or other legal entity

 

except a governmental entity.

 

     (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 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 sale of checks

 

act, 1960 PA 136, MCL 487.901 to 487.916, or the mortgage brokers,

 

lenders, and servicers licensing act, 1987 PA 173, MCL 445.1651 to

 

445.1684.

 

ARTICLE 2

 

     Sec. 11. (1) Subject to subsection (2), a person shall not

 

engage in the business of providing deferred presentment service

 

transactions after April 1, 2006 without a license under this act.


House Bill No. 4834 as amended September 13, 2005

 

A separate license is required for each location from which the

 

business of providing deferred presentment service transactions is

 

conducted.

 

     (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.

 

     (3) 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.

     <<(4) A person may continue to engage in the business of providing deferred presentment service transactions in this state after April 1, 2006 and without a license until 1 of the following occurs:

     (a) The person fails to meet its applications deadline.

     (b) The commissioner acts on the person's complete application.>>

     Sec. 12. To obtain a license, an applicant shall satisfy all

 

of the following requirements:

 

     (a) Have and maintain net worth of at least $50,000.00 for

 

each licensed location, subject to a maximum of $250,000.00 in

 

required net worth for any 1 licensee, determined in accordance

 

with generally accepted accounting principles.

 

     (b) 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. In

 

determining whether this subdivision is satisfied, and for the

 

purpose of investigating compliance with this act, the commissioner

 

may review any of the following:

 

     (i) The relevant business records and the capital adequacy of

 

the applicant.

 

     (ii) The competence, experience, integrity, and financial

 

ability of any person who is a member, partner, executive officer,


 

or a shareholder with 10% or more interest in the applicant.

 

     (iii) Any record regarding the applicant, or any person referred

 

to in subparagraph (ii), of any criminal activity, fraud, or other

 

act of personal dishonesty, any act, omission, or practice that

 

constitutes a breach of a fiduciary duty, or any suspension,

 

removal, or administrative action by any agency or department of

 

the United States or any state.

 

     Sec. 13. (1) An applicant shall submit an application for a

 

license to the commissioner. Each application for a license shall

 

be in writing and under oath, in a form prescribed by the

 

commissioner, and shall include all of the following information:

 

     (a) The name, street address, and telephone number of the

 

business location within this state from which the applicant will

 

offer deferred presentment service transactions, if available.

 

     (b) The legal name, residence, street address, and telephone

 

number and business address of the applicant and, if the applicant

 

is not an individual, of each executive officer and each person who

 

directly or indirectly owns or controls 10% or more of the

 

ownership interest in the applicant.

 

     (c) If the applicant will not operate a physical business

 

location in this state or if in addition to the location described

 

in subdivision (a) the applicant will make deferred presentment

 

service transactions by other means, a detailed description of the

 

manner in which deferred presentment service transactions will be

 

offered to customers in this state.

 

     (d) Any other information the commissioner considers necessary

 

under this act.


 

     (2) An applicant shall include an application fee in an amount

 

determined by the commissioner with the application described in

 

subsection (1).

 

     Sec. 14. (1) A licensee shall pay a license fee, in an amount

 

determined by the commissioner under subsection (2), within 60 days

 

of submitting its license application, and then annually.

 

     (2) The commissioner shall annually establish a schedule of

 

license fees based upon each licensee's business volume, number of

 

locations, and any other business factors considered reasonable by

 

the commissioner in order to generate funds sufficient to pay, but

 

not to exceed, the office's reasonably anticipated costs of

 

administering this act. A licensee shall pay the actual travel,

 

lodging, and meal expenses incurred by office employees who travel

 

out of state to examine the records of or investigate the licensee.

 

An office employee who travels under this subsection shall comply

 

with all travel regulations and rate schedules currently in effect

 

for the reimbursement of expenses incurred by classified state

 

employees in connection with official state business.

 

     (3) Money received under this act shall be deposited in an

 

interest bearing account in the state treasury and credited to the

 

office to be used only for the operation of the office.

 

     (4) In addition to the license fee required under subsection

 

(1), except as provided in this subsection, a licensee shall

 

furnish a $50,000.00 surety bond to secure the performance of its

 

obligations, issued by a bonding company or insurance company

 

authorized to do business in this state and in a form satisfactory

 

to the commissioner. However, if 1 person owns 20% or more of the


 

ownership interest in 2 or more licensees, the group of licensees

 

having that common ownership is only obligated to furnish one

 

$50,000.00 surety bond.

 

     Sec. 15. (1) After the commissioner receives a completed

 

license application, the commissioner shall investigate to

 

determine whether the requirements of this act are satisfied. If

 

the commissioner finds that the requirements of this act are

 

satisfied, the commissioner shall issue to the applicant a license

 

to engage in deferred presentment service transactions.

 

     (2) A licensee shall post a copy of its license in a

 

conspicuous location at the place of business of the licensee.

 

     Sec. 16. (1) If the commissioner determines that an applicant

 

is not qualified to receive a license, the commissioner shall

 

notify the applicant in writing that the application has been

 

denied, stating the basis for denial.

 

     (2) If the commissioner denies an application, or if the

 

commissioner fails to act on an application within 60 days after

 

the filing of a properly completed application, or within a longer

 

time period agreed to by the commissioner and the applicant, the

 

applicant may submit a written demand to the commissioner for a

 

hearing before the commissioner on the question of whether the

 

commissioner should grant a license. If a hearing is held, the

 

commissioner shall reconsider the application, and issue a written

 

order granting or denying the application after the hearing.

 

     Sec. 17. (1) A license issued under this article is not

 

transferable or assignable.

 

     (2) The prior written approval of the commissioner is required


 

for the continued operation of a licensee if there is a change in

 

control of that licensee. The commissioner may require information

 

considered necessary to determine whether a new application is

 

required. The person that requests the approval shall pay the cost

 

incurred by the commissioner in investigating the change of control

 

request.

 

     (3) A licensee shall do all of the following:

 

     (a) At least 15 days before providing deferred presentment

 

service transactions at any new location or under section 13(1)(c),

 

provide written notice to the commissioner on a form prescribed by

 

the commissioner of the name, street address, and telephone number

 

of the new location or the detailed description required in section

 

13(1)(c).

 

     (b) At least 15 days before discontinuing deferred presentment

 

service transactions at any existing location or under section

 

13(1)(c), provide written notice to the commissioner on a form

 

prescribed by the commissioner of the name, street address, and

 

telephone number of the discontinued location or the detailed

 

description of the services required in section 13(1)(c).

 

     (4) A licensee shall comply with any request for information

 

or documentation made by the commissioner under this act and shall

 

comply with any reasonable written time deadlines imposed by the

 

commissioner on that request.

 

     (5) As used in this section, "control" means 1 of the

 

following:

 

     (a) For a corporation, direct or indirect ownership of, or the

 

right to control, 10% or more of the voting shares of the


 

corporation, or the ability of a person to elect a majority of the

 

directors or otherwise effect a change in policy.

 

     (b) For any entity other than a corporation, the ability to

 

change the principals of the organization, whether active or

 

passive.

 

     Sec. 18. The commissioner may determine and identify by order

 

or rule events that may occur to a licensee that require the

 

licensee to file a written report with the commissioner describing

 

the event and its expected impact on the activities of the

 

licensee, on a form prescribed by the commissioner for the event.

 

     Sec. 19. (1) A license issued under this article shall expire

 

on September 30 of each year unless earlier suspended, surrendered,

 

or revoked under this act. A licensee may renew a license for a 12-

 

month period by submitting a complete application that shows

 

continued compliance with this act, in a form prescribed by the

 

commissioner, and paying the license renewal fee to the

 

commissioner. The licensee shall submit a renewal application under

 

this subsection on or before August 1 and the commissioner shall

 

proceed in the manner described in sections 15(1) and 16.

 

     (2) Before October 1, 2006, the commissioner may issue a

 

license to an applicant under this article that is for a period

 

longer than 12 months and that expires on September 30, 2007.

 

     Sec. 20. (1) The commissioner may issue orders and rules that

 

he or she considers necessary to enforce and implement this act.

 

The commissioner shall make a copy of any order or rule issued

 

under this subsection available to each licensee within a

 

reasonable time after issuance.


 

     (2) If any information previously submitted to the

 

commissioner by a licensee under this act is no longer accurate,

 

the licensee shall promptly file in writing with the commissioner a

 

correction of the information. If requested by the commissioner,

 

the licensee shall provide a written report of its business

 

operations, including information described in subsection (3),

 

within a reasonable time after the commissioner's request.

 

     (3) If the commissioner has not implemented a database under

 

section 22 or the database described in that section is not fully

 

operational, as determined by the commissioner, a licensee shall do

 

all of the following:

 

     (a) Provide an annual written report of its business

 

operations, including business volume and other information on the

 

business of providing deferred presentment service transactions.

 

     (b) Every February 1, May 1, August 1, and November 1, report

 

to the commissioner on a form prescribed by the commissioner all of

 

the following:

 

     (i) The number of customers who during the preceding calendar

 

quarter notified the licensee of a violation of this act.

 

     (ii) A breakdown of the number of times the licensee agreed

 

that a violation of this act occurred and the number of times that

 

the licensee did not agree that a violation occurred.

 

     (iii) If the licensee agreed that the violation occurred, the

 

amount of restitution that was paid to any customer under this act.

 

     (iv) Any other information the commissioner considers necessary

 

under this act.

 

     (4) To assure compliance with this act, the commissioner may


 

examine the relevant business, books, and records of any licensee.

 

     Sec. 21. Each licensee shall keep and use in its business any

 

books, accounts, and records the commissioner requires under this

 

act. A licensee shall preserve the books, accounts, and records for

 

at least 3 years, unless applicable state or federal law concerning

 

record retention requires a longer retention period.

 

     Sec. 22. (1) On or before December 31, 2006, the commissioner

 

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, and to the commissioner for

 

purposes of subsections (10) and (11), and meets the requirements

 

of this section.

 

     (2) The commissioner 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 contracts

 

with a third party provider for the operation of the database, all

 

of the following apply:

 

     (a) The commissioner 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 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 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 and for no other purpose.

 

     (e) If the third party provider violates this section, the

 

commissioner 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 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 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

 

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.

 

     (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 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 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 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 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 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 a verification

 

fee for access to the database, in amounts approved by the

 

commissioner under section 34(5).

 

     (10) The commissioner 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 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, shall be

 

dismissed from office or discharged from employment.

 

     (11) The commissioner shall investigate violations of and

 

enforce this section. The commissioner shall not delegate its

 

responsibilities under this subsection to any third party provider.

 

     (12) Within 30 days after the implementation of the database,

 

as determined by the commissioner, a licensee shall enter into the

 

database all transactions entered into with customers during the

 

period from the effective date of this act to the date of the

 

implementation of the database.

 

     (13) The commissioner 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.

 

     (14) The commissioner may maintain access to data archived

 

under subsection (13) for future legislative or policy review.

 

ARTICLE 3

 

     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 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 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.

 

     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 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 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. The Office 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 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 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.".


 

     Sec. 34. (1) A licensee shall verify a customer's eligibility

 

to enter into a deferred presentment service transaction by doing 1

 

of the following, as applicable:

 

     (a) If the commissioner has not implemented a database under

 

section 22 or the database described in section 22 is not fully

 

operational, as determined by the commissioner, verifying that the

 

customer does not have an open deferred presentment service

 

transaction with the licensee. The licensee shall maintain a

 

database of all of the licensee's transactions at all of its

 

locations and search that database to meet its obligation under

 

this subdivision.

 

     (b) If the commissioner has implemented a database under

 

section 22 and the database described in that section is fully

 

operational, as determined by the commissioner, accessing the

 

database and verifying that the customer does not have an

 

outstanding deferred presentment service transaction with the

 

licensee and does not have more than 1 open deferred presentment

 

service transaction that has not been fully repaid with any other

 

licensee.

 

     (2) If the commissioner has not implemented a database under

 

section 22; the database described in that section is not fully

 

operational, as determined by the commissioner; or the licensee is

 

unable to access the database and the alternative mechanism for

 

verification described in subsection (3) is also unavailable, as

 

determined by the commissioner, a licensee may rely upon the

 

written verification of the borrower in a statement provided in

 

substantially the following form in at least 12-point type:


 

     "I DO NOT HAVE ANY OUTSTANDING DEFERRED PRESENTMENT SERVICE

 

TRANSACTIONS WITH THIS LICENSEE AND I DO NOT HAVE MORE THAN ONE

 

OUTSTANDING DEFERRED PRESENTMENT SERVICE TRANSACTION WITH ANY OTHER

 

LICENSED DEFERRED PRESENTMENT SERVICE PROVIDER IN THIS STATE.".

 

     (3) If a licensee is unable to access the database described

 

in section 22 due to technical difficulties occurring with the

 

database, as determined by the commissioner, the licensee shall

 

utilize the process established in section 22(4) to verify

 

transactions.

 

     (4) The commissioner may use the database to administer and

 

enforce this act.

 

     (5) If approved by the commissioner, the database provider may

 

impose a database verification fee for the actual costs of

 

entering, accessing, and verifying data in the database described

 

in section 22 to verify that a customer does not have any other

 

open deferred presentment service transactions with the licensee

 

and does not have more than 1 open deferred presentment service

 

transaction with any other licensees. A database verification fee

 

is payable to the database provider in a manner prescribed by the

 

commissioner. A licensee may charge a customer all or part of the

 

database verification fee under section 33(1)(b) but may not charge

 

a customer any other fee except as authorized in section 33(1) or

 

35(2).

 

     (6) A licensee may rely on the information contained in the

 

database described in section 22 as accurate and is not subject to

 

any administrative penalty or civil liability as a result of

 

relying on inaccurate information contained in the database.


 

     (7) Before entering into a deferred presentment service

 

transaction, a licensee shall submit to the database provider the

 

customer's name and address, the customer's social security number,

 

driver license number, or other state-issued identification number,

 

the amount of the transaction, the customer's check number, the

 

date of the transaction, the maturity date of the transaction, and

 

any other information reasonably required by the commissioner or

 

the database provider, in a format reasonably required by the

 

commissioner.

 

     (8) When a deferred presentment service transaction is closed,

 

the licensee shall designate the transaction as closed and

 

immediately notify the database provider, but in no event after

 

11:59 p.m. on the day the transaction is closed. The commissioner

 

shall assess an administrative fine of $100.00 for each day that

 

the licensee fails to notify the database provider that the

 

transaction has been closed. It is a defense to the assessment of

 

an administrative fine that notifying the database provider was not

 

possible due to temporary technical problems with the database or

 

to circumstances beyond the licensee's control.

 

     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 commissioner 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


 

office of financial and insurance services 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 Office of Financial

 

and Insurance 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.

 

     Sec. 36. (1) No later than the close of business on the day he

 

or she signed a deferred presentment service agreement, a drawer

 

who believes that a licensee has violated this act may notify the

 

licensee in person that the licensee has violated the act. The

 

drawer shall identify the nature of the violation and provide

 

documentary or other evidence of the violation at that time.

 

     (2) 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.

 

     (3) No later than the close of the third business day after

 

receipt of a notice under subsection (1) or (2), the licensee shall

 

determine if it has violated the law as alleged in the notice.

 

     (4) If the licensee determines that it has violated the law,

 

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.


 

     (5) If the licensee determines that it did not violate the

 

law, the licensee shall immediately notify the commissioner and the

 

drawer of that determination. 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. The licensee shall include in the

 

notification to the drawer that the drawer has the right to file a

 

written complaint with the office if he or she does not agree with

 

the determination that the licensee did not violate the law. The

 

licensee shall include in the notice detailed information on how

 

the drawer can contact the office to obtain a complaint form.

 

     (6) A drawer who receives a notice of determination by the

 

licensee that it did not violate the law may file a written

 

complaint with the office on a form prescribed by the commissioner.

 

The drawer shall include with the complaint documentary or other

 

evidence of the violation.

 

     (7) If the licensee has otherwise complied with this section

 

and has determined that it did not violate the law, the licensee

 

may present the drawer's check for payment on or after the maturity

 

date. If a check presented for payment under this subsection is not

 

honored, and the licensee is not in violation of this act in

 

connection with the deferred presentment service transaction, the

 

licensee may initiate any lawful collection effort.

 

     (8) The commissioner shall promptly investigate a complaint

 

filed by a drawer under this section. If after investigating the

 

drawer's complaint, the commissioner concludes that the licensee

 

violated this act, the commissioner may order the licensee to make


 

restitution to the drawer in an amount equal to 3 times the amount

 

provided for in subsection (4), but not less than $45.00 or more

 

than 3 times the face amount of the drawer's check. A licensee

 

ordered to pay restitution under this subsection is also subject to

 

any other applicable penalties and remedies available under this

 

act for the violation.

 

     (9) A licensee shall enter information regarding alleged

 

violations and determinations under this section into the database

 

as required by the commissioner.

 

     Sec. 37. (1) A drawer may rescind a deferred presentment

 

service agreement without cost to the drawer and for any reason if

 

the drawer, not later than the close of business on the business

 

day following the date of the deferred presentment service

 

transaction, either delivers to the licensee cash in an amount

 

equal to the amount the drawer received if the drawer received cash

 

in the transaction or returns to the licensee the licensee's check

 

the drawer received if the drawer received a check from the

 

licensee in the transaction. The licensee shall return to the

 

drawer the check received in the transaction and any service fee

 

paid by the drawer to the licensee. A drawer who rescinds an

 

agreement under this section is not eligible for restitution under

 

section 36 with regard to the rescinded agreement.

 

     (2) A drawer may redeem a check from the licensee holding the

 

check in a deferred presentment service transaction at any time

 

before the maturity date. A licensee shall return the check to the

 

drawer upon receipt of cash or its equivalent in the full amount of

 

the check. A licensee shall not contract for or collect a charge


 

for accepting partial payments from the customer if the full amount

 

is paid by the maturity date.

 

     Sec. 38. (1) A licensee shall endorse a check given to it by a

 

drawer with the actual name under which the licensee is doing

 

business before the licensee negotiates or presents the check for

 

payment.

 

     (2) A licensee may contract for and collect a returned check

 

charge that does not exceed the maximum returned check charge

 

determined under subsection (3) if the drawer's check that the

 

licensee is holding in a deferred presentment service transaction

 

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. In addition to the charge authorized

 

by this section, a licensee may 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.

 

     (3) The initial maximum amount of a returned check charge

 

described in subsection (2) is $25.00. Beginning March 1, 2011, and

 

by March 1 of every fifth year after March 1, 2011, the licensee

 

may adjust the maximum returned check charge by an amount

 

determined by the commissioner 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.


 

     (4) A drawer is not subject to any criminal penalty for

 

entering into a deferred presentment service transaction and is not

 

subject to any criminal penalty in the event the drawer's check is

 

dishonored.

 

     Sec. 39. (1) A licensee shall maintain each deferred

 

presentment service agreement until the expiration of 3 years after

 

the date the deferred presentment service agreement is satisfied

 

and make available for examination by the commissioner any deferred

 

presentment service agreements and all related documents in its

 

possession or control including, but not limited to, any

 

applications, credit reports, employment verifications, or loan

 

disclosure statements.

 

     (2) A licensee shall preserve and keep available for

 

examination by the commissioner all documents pertaining to a

 

rejected application for a deferred presentment service transaction

 

for any period of time required by law.

 

     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.

 

ARTICLE 4


 

     Sec. 45. (1) A customer may file a written complaint with the

 

office on a form prescribed by the commissioner regarding a

 

licensee. The customer shall include with the complaint documentary

 

or other evidence of the violation or activities of the licensee.

 

The commissioner shall investigate a complaint filed by a customer

 

under this subsection.

 

     (2) The commissioner may investigate or conduct examinations

 

of a licensee and conduct hearings as the commissioner considers

 

necessary to determine whether a licensee or any other person has

 

violated this act, or whether a licensee has conducted business in

 

a manner that justifies suspension or forfeiture of its authority

 

to engage in the business of providing deferred presentment service

 

transactions in this state.

 

     (3) The commissioner may subpoena witnesses and documents,

 

papers, books, records, and other evidence in any manner over which

 

the commissioner has jurisdiction, control, or supervision. The

 

commissioner may administer oaths to any person whose testimony is

 

required. If a person fails to comply with a subpoena issued by the

 

commissioner or to testify with respect to any matter concerning

 

which the person may be lawfully questioned, the commissioner may

 

petition the circuit court for Ingham county to issue an order

 

requiring the person to attend, give testimony, or produce

 

evidence.

 

     Sec. 46. (1) If in the opinion of the commissioner a licensee

 

is, has, or is about to engage in a practice that poses a threat of

 

financial loss or threat to the public welfare, or is, has, or is

 

about to violate this act, state or federal law, or an applicable


 

rule or regulation, the commissioner may serve a notice of

 

intention to issue a cease and desist order. A notice served under

 

this section shall contain a statement of the facts constituting

 

the alleged practice or violation and shall fix a time and place

 

for a hearing at which the commissioner will determine whether to

 

issue an order to cease and desist against the licensee.

 

     (2) A licensee that fails to appear at a hearing under

 

subsection (1) consents to the issuance of a cease and desist

 

order. If a licensee consents, or upon the record made at the

 

hearing the commissioner finds that the practice or violation

 

specified in the notice has been established, the commissioner may

 

serve upon the licensee an order to cease and desist from the

 

practice or violation. The order may require the licensee and its

 

executive officers, employees, and agents to cease and desist from

 

the practice or violation and to take affirmative action to correct

 

the conditions resulting from the practice or violation.

 

     (3) Except to the extent it is stayed, modified, terminated,

 

or set aside by the commissioner or a court, a cease and desist

 

order is effective on the date of service. A cease and desist order

 

issued with the consent of the licensee is effective at the time

 

specified in the order and remains effective and enforceable as

 

provided in the order.

 

     Sec. 47. (1) The commissioner may, after notice and hearing,

 

suspend or revoke a license if the commissioner finds that the

 

licensee has knowingly or through lack of due care done any of the

 

following:

 

     (a) Failed to pay the annual license fee, an examination fee,


 

or any other fee imposed by the commissioner under this act.

 

     (b) Committed any fraud, engaged in any dishonest activities,

 

or made any misrepresentations.

 

     (c) Violated this act or any rule or order issued under this

 

act or violated any other law in the course of the licensee's

 

dealings as a licensee.

 

     (d) Made a false statement in the application for the license,

 

failed to give a true reply to a question in the application, or

 

failed to reply to a request of the commissioner authorized in this

 

act.

 

     (e) Demonstrated incompetency or untrustworthiness to act as a

 

licensee.

 

     (f) Engaged in a pattern or practice that poses a threat of

 

financial loss or threat to the public welfare.

 

     (2) If the reason for revocation or suspension of a licensee's

 

license at any 1 location is of general application to all

 

locations operated by a licensee, the commissioner may revoke or

 

suspend all licenses issued to a licensee.

 

     (3) A notice served under this section shall contain a

 

statement of the facts constituting the violation or pattern of

 

practice and shall fix a time and place at which the commissioner

 

will hold a hearing to determine whether the commissioner should

 

issue an order to suspend or terminate 1 or more licenses of the

 

licensee.

 

     (4) If a licensee fails to appear at a hearing under

 

subsection (1), the licensee consents to the issuance of the order

 

to suspend or terminate 1 or more licenses of the licensee. If a


 

licensee consents, or upon the record made at the hearing the

 

commissioner finds that the pattern of practice or violation

 

specified in the notice has been established, the commissioner may

 

serve upon the licensee an order suspending or terminating 1 or

 

more licenses of the licensee.

 

     (5) Except to the extent it is stayed, modified, terminated,

 

or set aside by the commissioner or a court, an order suspending or

 

terminating 1 or more licenses of the licensee is effective on the

 

date of service. An order suspending or terminating 1 or more

 

licenses of the licensee issued with the consent of the licensee is

 

effective at the time specified in the order and remains effective

 

and enforceable as provided in the order.

 

     Sec. 48. (1) If the commissioner finds that a person has

 

violated this act, state or federal law, or an applicable rule or

 

regulation, the commissioner may order the person 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.

 

     (2) A civil fine assessed under subsection (1) may be sued for

 

and recovered by and in the name of the commissioner and may be

 

collected and enforced by summary proceedings by the attorney

 

general. In determining the amount of a fine, the commissioner


 

shall consider the extent to which the violation was a knowing and

 

willful violation, the extent of the injury suffered because of the

 

violation, the corrective action taken by the licensee to ensure

 

that the violation will not be repeated, and the record of the

 

licensee in the complying with this act.

 

     Sec. 49. (1) If in the opinion of the commissioner a person

 

has engaged in fraud, the commissioner may serve upon that person a

 

written notice of intention to prohibit that person from being

 

employed by, an agent of, or an executive officer of a licensee

 

under this act. As used in this subsection, "fraud" includes

 

actionable fraud, actual or constructive fraud, criminal fraud,

 

extrinsic or intrinsic fraud, fraud in the execution, in the

 

inducement, in fact, or in law, or any other form of fraud.

 

     (2) A notice issued under subsection (1) shall contain a

 

statement of the facts supporting the prohibition and, except as

 

provided under subsection (7), set a hearing on a date within 60

 

days after the date of the notice. If the person does not appear at

 

the hearing, he or she is considered to have consented to the

 

issuance of an order in accordance with the notice.

 

     (3) If after a hearing held under subsection (2) the

 

commissioner finds that any of the grounds specified in the notice

 

have been established, the commissioner may issue an order of

 

suspension or prohibition from being a licensee or from being

 

employed by, an agent of, or an executive officer of any licensee

 

under this act.

 

     (4) An order issued under subsection (2) or (3) is effective

 

when served on a person. The commissioner shall also serve a copy


 

of the order upon the licensee of which the person is an employee,

 

agent, or executive officer. The order remains in effect until it

 

is stayed, modified, terminated, or set aside by the commissioner

 

or a reviewing court.

 

     (5) After 5 years from the date of an order issued under

 

subsection (2) or (3), the person subject to the order may apply to

 

the commissioner to terminate the order.

 

     (6) If the commissioner considers that a person served a

 

notice under subsection (1) poses an imminent threat of financial

 

loss to customers, the commissioner may serve upon the person an

 

order of suspension from being employed by, an agent of, or an

 

executive officer of any licensee. The suspension is effective on

 

the date the order is issued and, unless stayed by a court, remains

 

in effect until the commissioner completes the review required

 

under this section, and the commissioner has dismissed the charges

 

specified in the order.

 

     (7) Unless otherwise agreed to by the commissioner and the

 

person served with an order issued under subsection (6), the

 

commissioner shall hold the hearing required under subsection (2)

 

to review the suspension not earlier than 5 days or later than 20

 

days after the date of the notice.

 

     (8) If a person is convicted of a felony involving fraud,

 

dishonesty, or breach of trust, the commissioner may issue an order

 

suspending or prohibiting that person from being a licensee and

 

from being employed by, an agent of, or an executive officer of any

 

licensee under this act. After 5 years from the date of the order,

 

the person subject to the order may apply to the commissioner to


 

terminate the order.

 

     (9) The commissioner shall mail a copy of any notice or order

 

issued under this section to the licensee of which the person

 

subject to the notice or order is an employee, agent, or executive

 

officer.

 

     (10) Within 30 days after the commissioner has notified the

 

parties that the case has been submitted to him or her for final

 

decision, the commissioner shall render a decision that includes

 

findings of fact supporting the decision and serve upon each party

 

to the proceeding a copy of the decision and an order consistent

 

with the decision.

 

     (11) Except for a consent order, a party to the proceeding or

 

a person affected by an order issued under this section may obtain

 

a judicial review of the order. A consent order may be reviewed as

 

provided under the administrative procedures act of 1969, 1969 PA

 

306, MCL 24.201 to 24.328. Except for an order under judicial

 

review, the commissioner may terminate or set aside any order. The

 

commissioner may terminate or set aside an order under judicial

 

review with the permission of the court.

 

     (12) Unless ordered by the court, the commencement of

 

proceedings for judicial review under subsection (11) does not stay

 

the commissioner's order.

 

     (13) The commissioner may apply to the circuit court of Ingham

 

county for the enforcement of any outstanding order issued under

 

this section.

 

     (14) Any current or former executive officer or agent who

 

violates a final order issued under this section 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.

 

     (15) An executive officer who is subject to an order issued

 

under this section and who meets all of the following requirements

 

is not in violation of the order:

 

     (a) He or she does not in any manner, directly or indirectly,

 

participate in the control or management of a licensee after the

 

date the order is issued.

 

     (b) He or she transfers any interest he or she owns in the

 

licensee to an unrelated third party within 6 months after the date

 

the order is final.

 

     Sec. 50. (1) A licensee who is ordered to cease and desist,

 

whose license is suspended or terminated, or who is ordered to pay

 

a fine under this act is entitled to a hearing before the

 

commissioner if a written request for a hearing is filed with the

 

commissioner not more than 30 days after the effective date of the

 

order.

 

     (2) Any administrative proceedings under this act are subject

 

to the administrative procedures act of 1969, 1969 PA 306, MCL

 

24.201 to 24.328.

 

     Sec. 51. (1) The commissioner may promulgate rules under the

 

administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to

 

24.328, to enforce and administer this act.

 

     (2) By July 31, 2007, the commissioner shall submit a report

 

to the standing committees of the senate and house of

 

representatives concerned with regulatory reform issues that

 

includes the following information:


 

     (a) The number of persons engaged in the business of providing

 

deferred presentment service transactions in this state on the

 

effective date of this act and the number on June 30, 2007.

 

     (b) A general report on the business of providing deferred

 

presentment service transactions in this state as of June 30, 2007.

 

The report shall include the number of licensees, the number of

 

customers, the number and amount of transactions, and any other

 

financial information about deferred presentment service

 

transactions in this state requested by the legislature or

 

considered relevant by the commissioner.

 

     Sec. 52. A person who provided deferred presentment service

 

transactions in this state before the effective date of this act is

 

considered to have complied with applicable state law if the person

 

provided those transactions in substantial conformity with the

 

rulings and interpretive statements then in effect that were issued

 

by the office or its predecessor agency.

 

     Sec. 53. 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.