Michigan House Bill HB5364

Michigan 2023-2024 Regular Session

• Introduced: 11/14/23
• Refer: 11/14/23
• Refer: 1/10/24
• Report Pass: 5/23/24

Caption

Financial institutions: payday lending; citations to the motor vehicle sales finance act in the deferred presentment service transactions act; revise. Amends sec. 2 of 2005 PA 244 (MCL 487.2122). TIE BAR WITH: HB 5354'23

Impact

The bill's provisions are designated to amend section 2 under MCL 487.2122, specifically focusing on redefining terms related to checks, customers, and licensees. It implies a more structured approach to deferred presentment service transactions, requiring that these transactions are not only clearly defined but also well-regulated. This may potentially lower the risks to consumers participating in such transactions, aligning Michigan's regulations with best practices to ensure transparency about fees and repayment obligations. Proponents believe that these amendments will foster a more secure environment for consumers, reducing the likelihood of exorbitant fees or unfair practices by lending institutions.

Summary

House Bill 5364 aims to amend the Deferred Presentment Service Transactions Act (2005 PA 244) in Michigan, particularly revising provisions related to licensing and operational practices of businesses engaged in deferred presentment service transactions, such as payday lenders. The bill proposes changes in how financial institutions handle checks and payments involved in these transactions, with an objective to enhance consumer protections and improve the effectiveness of financial services intended for individuals seeking short-term loans. The impact of these changes is expected to clarify and streamline existing regulations, which may facilitate easier compliance for businesses.

Contention

Despite the notable benefits proposed by HB 5364, discussions around the bill have raised concerns among various stakeholders. Critics argue that increasing regulations could limit access to crucial financial services for low-income individuals, for whom such transactions often serve as a necessary financial relief. There are fears that heightened compliance costs may be passed on to consumers, effectively increasing the costs of borrowing. Moreover, the bill's tie-bar with another bill (HB 5354) indicates a connection to broader legislative efforts that may affect the operational landscape for payday lenders. This linkage has raised questions about the overall direction of regulatory frameworks in Michigan regarding financial services.

Summary_points

Overall, HB 5364 positions itself as a significant legislative effort that balances the need for consumer protections while also addressing the operational realities faced by payday lending businesses. The forthcoming discussions and amendments will likely shape the bill's final form and its future effect on the financial landscape within Michigan.