Deferred Presentment FAQ

  • Deferred Presentment FAQ

    Updated 05/03/19

FAQ
General Operational Questions
What is the Deferred Presentment Service Transactions Act (DPSTA)?

2005 PA 244 creates a new act entitled the Deferred Presentment Service Transactions Act (DPSTA), to provide a regulatory framework for the deferment of the presentment (depositing) of checks by deferred presentment providers (Industry also calls these providers ‘payday lenders’).

Who is subject to the DPSTA?

The 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.

Who is NOT subject to the DPSTA?

The 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.

Can the Director conduct an investigation or examination of a licensee?

Yes.

How long must a licensee or any person subject to the act maintain its financial records and other records that DIFS can examine or investigate?

Financial records must be maintained for at least three years.  Documents related to a deferred presentment transaction must be maintained for at least three years from the date the deferred presentment service agreement is satisfied.

What is the minimum term of a deferred presentment transaction? What is the maximum term of a deferred presentment transaction?

The minimum term is 7 days.  The maximum term is 31 days.

How many deferred presentment transactions can a customer have open at any one time?

Two. However, the customer may only have one open transaction at one licensed location at any one time.

What is the maximum deferred presentment transaction amount?

$600.  A customer can have two separate open transactions each in the amount of $600 or less.

What is the service fee that a licensee may assess to a customer on a deferred presentment transaction?

For a deferred transaction in the amount of $600, a service fee in the amount of $76 may be charged. This is broken down into:

  1. 15% for the first $100
  2. 14% for the second $100
  3. 13% for the third $100
  4. 12% for the fourth $100
  5. 11% for the fifth $100
  6. 11% for the sixth $100

For a $100 deferred presentment transaction the fee is calculated as $15. For a $250 deferred presentment transaction the fee is calculated as $15+$14+$6.50=$35.50. For a $600 deferred presentment transaction the fee is calculated as $15+$14+$13+$12+$11+$11=$76.

What is the database verification fee that a licensee may assess to a customer on a deferred presentment transaction?

$0.61 (Starting July 1, 2019)

$0.49 (Prior to July 1, 2019)

The fee cannot be charged for rescinded or cancelled transactions. 

How must the licensee pay the proceeds of a deferred presentment transaction to the customer?

The licensee must pay the proceeds by check, by money order, or in cash, as requested by the customer.

Can a licensee require a customer to accept proceeds from a deferred presentment transaction on a debit card?

No.  The licensee must first pay the proceeds to the customer by cash, money order, or check, as requested by the customer. Subsequently, as a separate transaction, the customer may choose to put the proceeds received on a debit card.

Who is Veritec Solutions, LLC?

Veritec Solutions, LLC (“Veritec”) is the approved deferred presentment database provider authorized by the Director to accept and maintain deferred presentment transactions.  Veritec maintains a customer care center, which may be contacted at 1-866-643-7701.

Are all licensed deferred presentment providers required to enter all deferred presentment transactions into the Veritec database?

Yes.

How does a licensee handle a customer complaint?

No later than the close of the 3rd business day after receipt of a complaint, the licensee must determine if it has violated the Act. 

 

If the licensee determines that it has violated the law, it shall return to the drawer (customer) the check it received in the deferred presentment service transaction and any service fee paid by the drawer to the licensee.  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 shall immediately notify the Director of that action.

 

If the licensee determines that it did not violate the law, the licensee shall immediately notify the Director and the drawer of that determination.  The licensee shall give the Director detailed information about the terms of the deferred presentment service transaction and shall provide other information requested by the Director.  The licensee shall include in the notification to the drawer that the drawer has the right to file a written complaint with DIFS if he or she does not agree with the determination that the licensee did not violate the law and provide detailed information on how the drawer can contact DIFS to obtain a complaint form.

 

To meet the requirement of notifying the Director, the licensee must enter the complaint into the Veritec database.  The licensee must enter the nature of the violation, whether the licensee agrees or disagrees that a violation occurred, a detailed response to the complaint, and if restitution was paid to the customer.

 

Refer to MCL 487.2146 Section 36(3)-(9) for specific requirements on handling complaints.

What is the allowable returned check charge?

$28.66 beginning February 18, 2016.
$26.88 from March 1, 2011 to February 18, 2016.

$25.00 prior to March 1, 2011.
Refer to Bulletin 2016-06-CF for the current calculation of the returned check charge.

Can a deferred presentment service transaction remain open in the Veritec database if all the customer owes is the returned check charge?

No.  The transaction is to be closed upon repayment of the underlying transaction debt.  A deferred presentment transaction is defined as closed when the licensee receives payment of the face amount of the check.

Can a licensee hold a customer's check beyond the maturity date?

No.  The licensee must deposit the check on the maturity date unless the drawer has entered into a written repayment plan

Can a licensee extend the maturity date of a deferred presentment transaction?

Yes. An extension of the maturity date must be in writing and signed by both the licensee and the customer.  Under no circumstances can the agreement be extended beyond 31 days from the agreement date.

If the maturity date is extended, must the new maturity date be entered in the Veritec database?

Yes.  The licensee should follow the instructions given by Veritec for “extended transactions”.

If a customer enters into a transaction with an original term of 31 days, can the maturity date be extended?

No.  A check held under the DPSTA must be presented for payment within 31 days, unless the individual has entered into a written repayment plan.

Are licensees required to close a transaction when the paper check is deposited or the check is converted to an ACH and submitted for payment?

No.  Closed in connection with a deferred presentment service transaction is defined as “the check is deposited by the licensee and the licensee has evidence the person has satisfied the obligation”.  Refer to Bulletin 2008-14-CF for specific information regarding closing transactions in the database.

Can a customer redeem a check that is the basis for a deferred presentment transaction by using a credit card?

No. 

Can a customer redeem a check that is the basis for a deferred presentment transaction by using a debit card?

Starting August 24, 2016, a check may be redeemed with a debit card.  The debit card payment must be made in person and the check returned to the customer.

When is the licensee required to close a transaction if the customer redeems the check with a debit card payment?

The transaction must be closed no later than 11:59pm of the day the payment was made.

Can a licensee accept a post-dated check from a customer in connection with a deferred presentment transaction?

No.  The check must be dated as of the transaction date.  The check must not be post-dated to the maturity date.

How can a licensee collect after the check returns?

The customer can make a payment in person by cash, debit card, or money order. The customer can also authorize a payment over the telephone.  The licensee must comply with the NACHA Operating Rules for a Telephone Initiated entry (TEL Entry).

What is a TEL Entry?

A TEL Entry (Telephone Initiated Entry) is debit entry originated based on an oral authorization provided to the licensee by a customer via the telephone.  The authorization for a Single Entry TEL Entry must include the date on or after which the ACH debit to the customer’s account will occur, the amount of the transaction, the customer’s name or identity, the account being debited, the telephone number for customer inquiries, the date of the customer’s authorization, and a statement by the licensee that the authorization obtained is for a single entry ACH debit, a one-time electronic funds transfer, or similar reference.

 

The licensee must either make an audio recording of the oral authorization or provide a written notice confirming the oral authorization prior to the settlement date.  The written notice or audio recording must be maintained for at least two years from the date of the authorization.

 

Refer to NACHA Operating Rules Article 2, Subsection 2.5.15 for more information about TEL Entries.

When must a licensee close a transaction in the Veritec database satisfied with a TEL entry?

A licensee should close the transaction by 11:59 p.m. of the fourth business day from the effective entry date of the TEL entry. Refer to Bulletin 2008-14-CF for specific information regarding closing transactions in the database by ACH.

What payment method should be used to close a transaction in the Veritec database for a TEL entry?

A payment method of ACH must be entered into the database when the transaction is satisfied by a TEL entry.

Can payments be made at a licensed deferred presentment location other than the location that originated the transaction?

Yes. Written approval from DIFS must be granted prior to accepting payments at a licensed location other than the location that originated transaction.  A request must be made in writing and include a detailed procedure that will be used in handling these transactions.  The procedure must include how the licensee will comply with the DPSTA in handling these transactions.

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    The answers provided are not meant to be a substitute for legal advice.