01-001445RX Wendy Betts And Donna Reuter vs. Department Of Banking And Finance Status: Closed DOAH Final Order on Friday, September 7, 2001.

Summary: Petitioners failed to show rule is invalid within meaning of s. 120.52(8)(b) and (c), F.S. Rule interprets Ch. 560, F.S., to clarify activities allowed within scope of statute. Agency permitted to modify statutory cites to law implemented section of rule.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

WENDY BETTS AND DONNA REUTER, )

)

Petitioners )

)

vs. ) Case No. 01- 1445RX

)

DEPARTMENT OF BANKING AND )

FINANCE, )

)

Respondent, )

)

And )

)

ADVANCE AMERICA, CASH ADVANCE )

CENTERS OF FLORIDA, INC., )

)

Intervenor. )

)

FINAL ORDER

Pursuant to notice, a formal hearing was conducted in this

case on May 29 and 30, 2001, in Tallahassee, Florida, before

Carolyn S. Holifield, a duly-designated Administrative Law Judge

of the Division of Administrative Hearings.

APPEARANCES

For Petitioners : E. Clayton Yates, Esquire

Law Offices of E. Clayton Yates, P.A.

205 South Second Street

Fort Pierce, Florida 34950

Richard A. Fisher, Esquire

30 Second Street

Cleveland, Tennessee 37364-0191

For Respondent : James H. Harris, Esquire

Margaret S. Karniewicz, Esquire

Suite 526, Fletcher Building

101 East Gaines Street

Tallahassee, Florida 32399-0350

For Intervenor : Virginia B. Townes, Esquire

Citrus Center, 17th Floor

255 South Orange Avenue

Orlando, Florida 32802

Lori S. Rowe, Esquire

301 South Bronough Street

Suite 600

Tallahassee, Florida 32302-3189

STATEMENT OF THE ISSUE

Whether Rule 3C-560.803, Florida Administrative Code,

constitutes an invalid exercise of delegated legislative

authority.

PRELIMINARY STATEMENT

On April 13, 2001, Petitioners, Wendy Betts and Donna

Reuter, filed a Petition against the Department of Banking and

Finance (Department). The Petition stated that Petitioners

wanted an administrative determination that Rule 3C-560.803,

Florida Administrative Code, is "illegal” as an invalid exercise

of delegated legislative authority. The Petition also stated

that if the Rule were found to be valid, Petitioners sought to

have the Department's interpretation and implementation of Rule

3C-560.803, Florida Administrative Code, and Chapter 560,

Florida Statutes, “permitting payday loans” declared invalid.

The Department forwarded the Petition to the Division of

Administrative Hearings on or about April 16, 2001, for

assignment of an Administrative Law Judge to conduct the final

hearing.

On May 15, 2001, the Department filed a Request for

Official Recognition of the following: Chapter 560, Florida

Statutes; Section 655.86, Florida Statutes; Final Order issued

in Department of Banking and Finance v. Title Loan, Inc., d/b/a

Cash Cow, et. al. , DBF Administrative Proceeding No. 3616a-B-

1/97 (February 24, 1999); and Florida Attorney General Opinion

2000-26. On May 25, 2001, the Department filed a Second Request

for Official Recognition in which it sought to have official

recognition taken of Rule 1S-1.004, Florida Administrative Code.

On May 22, 2001, Intervenor filed a Request for Official

Recognition of proposed amendments to Rules 3C-560.704, 3C-

560.704, 3C-560.803, and 3C-560.804, Florida Administrative

Code, that were published in the February 16, 2001, issue of the

Florida Administrative Weekly. At the final hearing,

Petitioners filed a Request for Official Recognition in which

they sought to have recognized officially certain documents

attached to the deposition of Robert Fox. The Department's and

Intervenor's requests for official recognition were granted as a

matter preliminary to the hearing. Prior to a ruling on

Petitioners' Request for Official Recognition, it was withdrawn.

The parties entered into a Prehearing Stipulation in which

they agreed to facts that required no proof at hearing.

At the hearing, Petitioners submitted the deposition

testimony of Wendy Betts, Donna Reuter, and Robert Alan Fox.

These depositions were admitted as Petitioners' Exhibits 1, 2,

and 3, respectively. The Department presented the testimony of

Ray B. Kinsey, Jr., an expert in the area of banking and check

clearing, and Robert Alan Fox, an assistant general counsel for

the Department. The Department had seven exhibits admitted into

evidence. The Intervenor presented the testimony of William

Douglas Johnson, formerly an assistant director with the

Department, and had two exhibits admitted into evidence. At the

request of the Department, the record was left open for 30 days

from the date of the hearing to allow the Department to depose

Jeffrey David Jones, who was unavailable on the day of the

formal hearing.

At the conclusion of the evidentiary portion of the

hearing, Intervenor objected to documents included as exhibits

in the deposition of Robert Fox. Specifically, Intervenor

objected to the following : Exhibit A, partial minutes and

transcripts of meetings of the Money Transmitters Task Force,

which were held prior to the enactment of Chapter 560, Florida

Statues; Exhibit E, a series of handwritten charts and computer

compilations; and Exhibit F, the affidavit of Harry Hooper. The

Department adopted the foregoing objections. Upon

consideration, the foregoing objections are sustained and the

documents referred to therein are rejected and accordingly, have

not been considered in preparation of this Final Order.

At the conclusion of the hearing, the parties agreed to

file proposed final orders within 30 days of either the filing

of the transcript or the filing of the deposition of Jeffrey

David Jones, whichever was later. The two-volume Transcript was

filed on June 13, 2001, and the deposition of

Mr. Jones was filed on June 28, 2001. The Department and

Intervenor filed Proposed Final Orders, and the Petitioners

filed Amended Proposed Findings of Fact on July 30, 2001. The

Proposed Final Orders and the Amended Findings of Fact have been

duly considered in rendering this Final Order.

FINDINGS OF FACT

1. Respondent, the Department of Banking and Finance

(Department), is the state agency charged with the

implementation of the Money Transmitters' Code (Code), Chapter

560, Florida Statutes, and with regulation of the entities

registered thereunder.

2. Intervenor, Advance America, Cash Advance Centers of

the State of Florida, Inc. (Advance America), is a check casher

doing business in Florida, registered under Part III of the

Money Transmitters' Code and regulated by the Department.

3. Petitioner, Wendy Betts, is a resident of the State of

Florida who, from July 1996 through March 1999, engaged in

check-cashing transactions with a number of registered check

cashers, including Advance America.

4. Petitioner, Donna T. Reuter, is a resident of the State

of Florida who, from 1996 or 1997 until September 2000, engaged

in check-cashing transactions with a number of registered check

cashers, including Advance America.

5. Petitioners engaged in check-cashing transactions

because they needed cash. At the time Petitioners engaged in

the check-cashing transactions, they had no other source

available to meet their need for cash.

6. During the three years that Petitioner Reuter engaged

in the check-cashing transactions described in paragraph 4, the

procedures used by each of the check-cashing businesses was the

same or very similar. Petitioner Reuter would write a check to

the check-cashing business for the amount of cash that she

wanted, plus the fee the business charged for cashing the check.

The check-cashing business would, in turn, agree to hold the

check until the end of Petitioner Reuter’s payday, or for 10 to

14 days. At the agreed-upon time, the check-cashing business

would deposit the check written by Petitioner Reuter unless she

came back to the business to redeem the check. Petitioner

Reuter could redeem the check by giving the check casher

currency in the amount of the check. Upon receiving the

currency, the check-cashing company would give Petitioner Reuter

the check that she had previously written to the company.

7. In many instances, when Petitioner Reuter went to the

check-cashing business and redeemed her check, after redeeming

the previously written check, she would write another check to

the check-cashing company. That check would be written for the

amount of cash Petitioner Reuter wanted, plus the amount of fees

the company charged for cashing the check. Again, the

understanding between Petitioner Reuter and the check-cashing

company was that the company would deposit the check in

approximately two weeks, or at the end of her next payday,

unless she came in to redeem it. Petitioner Reuter refers to

this consecutive transaction as a “rollover.”

8. During the period between 1996 or 1997 and 1999,

Petitioner Reuter engaged in numerous check-cashing and rollover

transactions with approximately seven check-cashing companies.

These transactions became problematic for Petitioner Reuter

because of the number, frequency, and on-going nature of the

transactions. Petitioner Reuter often had checks being held for

her at several check-cashing companies at the same time.

Eventually, it became evident to Petitioner Reuter that the

total amount of the checks that were being held for her by the

various check-cashing companies exceeded the amount of funds she

had in her checking account or otherwise available to her.

9. Petitioner Reuter was afraid that she could be

criminally prosecuted if, on the agreed-upon date, she could not

redeem the checks she had written to the check-cashing companies

or did not have the funds in her checking account to cover the

checks when the check-cashing companies deposited them.

10. Petitioner Betts engaged in check-cashing transactions

with about nine check-cashing companies. At one point,

Petitioner Betts was doing business with three check-cashing

businesses during the same period of time. As part of these

transactions, Petitioner Betts wrote a check to each check-

cashing company for the amount of cash she wanted to receive,

plus the amount of the company’s fee. In turn, the company gave

Petitioner Betts currency for the amount of the check, exclusive

of the fees it charged for cashing the check. The check-cashing

company agreed to hold the check for about two weeks or until

Petitioner Betts’ next payday, or allow her to come in and

redeem the check.

11. If Petitioner Betts could not redeem the check or did

not have the funds in her checking account to cover the check,

at least one company agreed to extend the time for which it

would hold the check. Such an extension was subject to

Petitioner Betts’ paying the check-cashing company a fee over

and above what she had paid for the initial check-cashing

transaction.

12. In the typical transaction, Petitioner Betts would

redeem the check at the time specified in the initial agreement

but would then, in a consecutive transaction, write another

check for the amount of cash she wanted to receive, plus the fee

charged by the check-cashing company for cashing the check. The

check-cashing company would cash the check for Petitioner Betts

and give her the amount of money written on the check, minus the

amount of the check-cashing fee.

13. Petitioner Betts believed that she would be criminally

prosecuted and/or lose her driver’s license if she did not

redeem her checks on the agreed-upon date or did not have funds

in her checking account to cover the checks when they were

deposited by the check-cashing companies.

14. As a result of Petitioner Betts’ continuing, repeated,

and simultaneous check-cashing transactions with numerous check-

cashing businesses and her financial situation, she was unable

to redeem the checks she had written to the check-cashing

companies. Moreover, on the dates that the check-cashing

companies were to deposit Petitioner Betts’ checks, she

typically did not have sufficient funds in her checking account

to cover the checks she had written to the companies.

15. A "check cashing" occurs when the check casher

receives the customer's personal check and gives currency to the

customer. The customer's check covers the amount of currency

provided as well as a fee for the service.

16. "Deferred deposit," also sometimes referred to as

"payday lending" occurs subsequent to the check-cashing

transaction when a check casher agrees to hold the customer's

check for a certain agreed period of time.

17. Petitioners are not currently engaged in check-cashing

transactions and do not reasonably anticipate engaging in check-

cashing transactions in the future.

18. At the time that Petitioners engaged in check-cashing

transactions, for some transactions they wrote checks dated with

the date of the check-cashing transaction and for some

transactions, Petitioners wrote checks dated with later dates.

19. At the time that Petitioners engaged in check-cashing

transactions, Petitioners' writing of the checks for a date

later than the date of the transaction neither encouraged nor

discouraged Petitioners' entering into the check-cashing

transactions.

20. Petitioners did not know of the existence of the

postdated check rule, Rule 3C-560.803, Florida Administrative

Code, at the time they engaged in the aforementioned check

cashing transactions.

21. In the Joint Prehearing Statement, Petitioners

provided the following statement of their position in this

proceeding. "The Petitioners contend that Rule 3C-560.803,

Florida Administrative Code, is invalid under the standards set

forth in Southwest Florida Water Management District v. Save the

Manatee, Inc. , 773 So. 2d 594 (Fla. 1st DCA 2000), but if held

to be valid the Rule merely allows a registered check casher to

accept a postdated check and does not permit a deferred

presentment transaction, also called a "payday loan."

22. The Department has no rule, order, or declaratory

statement authorizing deferred deposit transactions or repeated,

consecutive deferred deposit transactions by a registered check

casher.

23. In 1994, the Legislative enacted Chapter 560, Florida

Statutes, the Money Transmitters’ Code. After the enactment,

the Department received a written inquiry from Larry Lang,

president of the Florida Check Cashers Association, Inc.,

concerning whether check cashers were permitted to defer, for an

agreed-upon period, the deposit of checks they had cashed. This

type of transaction was referred to as a "deferred deposit"

transaction.

24. Mr. Lang's letter, which was received by the

Department on or about February 23, 1995, stated in relevant

part:

It is the position of the FCCA [Florida

Check Cashers Association] that member

stores may cash checks for customers and

defer the deposit of those checks for a

reasonable period of time, mutually agreed

upon between the store and the customer,

provided that the fee charged for cashing

these checks shall not exceed the statutory

fee allowable for the specific type of check

cashed. This service shall be referred to

as "Deferred Deposit."

25. In response to Mr. Lang's letter and other inquiries

regarding the Department's position on what was allowable under

Chapter 560, Florida Statutes, the Department examined the

relevant statutes. An assistant general counsel with the

Department, Jeffrey D. Jones, determined that nothing in the

governing statutory provisions prohibited deferred deposit

transactions, so long as the check casher did not charge a fee

in excess of the amount prescribed by statute.

26. Assistant General Counsel Jeffrey D. Jones summarized

his analysis and conclusion in a February 24, 1995, letter to

Mr. Lang which stated in part:

Since Chapter 560, Florida Statutes, does

not explicitly prohibit the concept of

deferred deposits and since all other

provisions of Chapter 560, Florida Statutes,

would be adhered to, I see no reason to

object to your offering of the above

described services. Again, this analysis is

based upon the fact that the deferred

deposit service will be offered and managed

pursuant to the provisions of Chapter 560,

Florida Statutes, and specifically within

the fee caps contained within Section

560.309(4), Florida Statutes.

27. Although the term "postdated check" was not used in

either Mr. Lang's letter to the Department or in Mr. Jones'

response thereto, the "deferred deposit" transaction described

in both letters contemplated and encompassed the use of a

postdated check. Moreover, the Department understood that

deferred presentment or deferred deposit transactions could

involve postdated checks as well as other negotiable

instruments.

28. William Douglas Johnson was the assistant director of

the Department from 1994 through 1999. As assistant director,

Mr. Johnson had supervisory responsibility over the Department's

regulation of money transmitters. Moreover, with regard to the

Money Transmitters' Code, Mr. Johnson participated in policy-

making decisions, interpreted state statutes and administrative

rules, and was involved in the promulgation of administrative

rules.

29. After reviewing Assistant General Counsel Jones'

February 24, 1995, letter, Mr. Johnson believed that the legal

opinion expressed in that letter needed to be adopted as a rule.

Mr. Johnson believed a rule would provide clarification both to

the check cashing industry and consumers as to whether "deferred

deposit" or "deferred presentment" transactions were allowed

under the provisions of Chapter 560, Florida Statutes.

30. Another factor considered by the Department when it

was contemplating adopting a postdated check rule was that the

check casher would be prevented from filing criminal charges or

even threatening criminal charges against a customer whose

postdated check was returned for insufficient funds. The

Department's position was based on its knowledge that

controlling judicial interpretations of Florida's criminal

statutes imposing penalties for passing bad checks prevented

criminal prosecution of a person who tendered a postdated check

that was later returned for insufficient funds.

31. Prior to the Department's making a final decision on

whether to promulgate a postdated check rule, in February 1997,

Mr. Johnson asked Robert Alan Fox, an assistant general counsel

employed by the Department, for a legal opinion on the status of

postdated checks under Florida law. Mr. Fox's opinion concluded

that postdated checks were extensions of credit. With regard to

postdated checks, it was Mr. Fox's opinion that a rule allowing

check cashers to accept a postdated check was not necessary

because Chapter 560, Florida Statutes, already authorized check

cashers to do so.

32. Notwithstanding Mr. Fox's opinion that no postdated

check rule was required, both assistant general counsels ,

Mr. Fox and Mr. Jones, agreed that nothing in Chapter 560,

Florida Statutes, required the check casher to deposit the

customer's check or prohibited the check casher from holding the

customer's check.

33. The Department has consistently followed the legal

opinion expressed in the February 24, 1995, letter, discussed

above in paragraph 26, that a "deferred deposit" transaction is

not prohibited by Chapter 560, Florida Statutes, provided that

the fees charged do not exceed the caps set in Section

560.309(4), Florida Statutes. Inasmuch as this was its policy,

the Department believed it was necessary and appropriate to

promulgate the policy as a rule.

34. Subsection 560.105(3), Florida Statutes, authorizes

the Department to adopt rules pursuant to Subsection 120.536(1),

Florida Statutes, and Section 120.54, Florida Statutes, to

implement the provisions of Chapter 560, Florida Statutes.

35. Consistent with the provisions of Section 120.54,

Florida Statutes, the Department filed Rule 3C-560.803, Florida

Administrative Code, for adoption with the Department of State.

36. The Department followed all applicable rulemaking

procedures and the rule took effect on September 24, 1997. Rule

3C-560.803, Florida Administrative Code, states the following:

A check casher may accept a postdated

check, subject to the fees established in

Section 560.309(4), F.S.

37. At the time the rule was promulgated, the specific

authority cited for the rule was Section 560.105(3), Florida

Statutes, and the law implemented cited for the rule was Section

655.86, Florida Statutes.

38. Section 655.86, Florida Statutes, addresses the

issuance of postdated checks and imposes on the person drawing a

postdated check, the duty to notify, in writing, the separate

office or branch of the financial institution upon which the

postdated check is drawn. According to that provision, if the

drawer of the check fails to provide the statutorily prescribed

notice, the financial institution is absolved from liability if

it cashes the postdated check before the date the drawer of the

check specified. By implication, Section 655.86, Florida

Statutes, recognizes that a postdated check is a type of

negotiable instrument under Florida law.

39. At some point after the Petition was filed and prior

to the hearing, the Department decided to correct and/or modify

the law implemented section of Rule 3C-560.803, Florida

Administrative Code, by adding the appropriate statutory cites.

40. By letter dated May 24, 2001, the Department, through

its General Counsel, requested that the Department of State,

Bureau of Administrative Code, add citations to Subsections

560.103(3) and (14) and 560.302(1), Florida Statutes, to the law

implemented section of Rule 3C-560.803. Section 120.74, Florida

Statutes, both requires and permits agencies to correct

technical defects in adopted rules.

41. Petitioners have not claimed any injury or harm by the

aforementioned technical modification to the rule.

CONCLUSIONS OF LAW

42. The Division of Administrative Hearings has

jurisdiction over the subject matter and the parties to this

proceeding. Section 120.56, Florida Statutes.

43. Subsection 120.56 (3)(a), Florida Statutes, provides

in part:

(a ) A substantially affected person may

seek an administrative determination of the

invalidity of an existing rule at any time

during the existence of the rule.

44. In order to be deemed a "substantially affected

person" who has standing, the Petitioner challenging a rule

under Section 120.56, Florida Statutes, must show: (1) that he

or she would suffer a real and sufficiently immediate injury

from the challenged rule; and (2) that the alleged interest is

arguably within the zone of interest to be protected or

regulated. Lanoue v. Florida Department of Law Enforcement , 751

So. 2d 94, 96 (Fla. 1st DCA 1999).

45. As to the first prong of the "substantially affected"

test, Petitioners have suffered a real and sufficiently

immediate injury in fact. They have paid fees for the repeated

and consecutive check-cashing transactions they have engaged in

with check cashers. The manner and frequency with which the

check cashers assessed fees to Petitioners resulted in

Petitioners’ becoming indebted to the check cashers for

excessive amounts that they could not pay.

46. As to the second prong of the "substantially affected"

test, the injuries suffered by Petitioners must be within the

"zone of interest" to be protected. The court in Lanoue

explained the zone of interest element as follows:

[T ]he general rule regarding the zone of

interest element of the substantially

affected test is that such element is met

where a party asserts that a statute, or a

rule implementing such statute, encroaches

upon an interest protected by a statute or

the constitution . . . In the context of a

rule challenge, the protected zone of

interest need not be found in the enabling

statute of the challenged rule itself.

Id. at 98, citing Ward v. Board of Trustees of the

Internal Improvement Trust Fund, and Department of

Environmental Protection , 651 So. 2d 1236, 1238 (Fla.

4th DCA 1995).

47. In the instant case, the injuries suffered by

Petitioners are within the protected zone of interest. One

purpose of Chapter 560, Florida Statutes, is to provide a

regulatory scheme for the operation of money transmitters,

including check cashers. See Subsection 560.102 (1), Florida

Statutes. However, among the other purposes of the Money

Transmitters' Code are to provide for and promote (1) the

protection of the maintenance of public confidence in the money

transmitter industry and (2) the protection of the interests of

the public in the money transmitter system. See Subsections

560.102 (2) (b) and (c), Florida Statutes.

48. By the express language of Section 560.102 (2) (b) and

(c), Florida Statutes, Chapter 560, Florida Statutes, is to

protect the maintenance of public confidence in the money

transmitter industry and protect the interests of the public in

the money transmitter system. The challenged rule, at least as

applied, encroaches upon the protected zone of interests of

Petitioners.

49. Petitioners have standing pursuant to Subsection

120.56(3) (a), Florida Statutes, to challenge the validity of

Rule 3C-560.803, Florida Administrative Code.

50. The burden of proof, absent a statutory directive to

the contrary, is on the party asserting the affirmative of an

issue before an administrative tribunal. Florida Department of

Transportation v. J.W.C. Company , 396 So. 2d 778, 788 (Fla. 1st

DCA 1981). Because Chapter 120, Florida Statutes, does not

provide otherwise, Petitioners, who are challenging the existing

rule, have the ultimate burden to establish that the rule is

invalid.

51. An existing rule may be challenged pursuant to

Section 120.52, Florida Statutes, only on the ground

that it is an “invalid exercise of delegated

legislative authority,” as defined in Section

120.52(8), Florida Statutes, which provides as

follows:

(8) "Invalid exercise of delegated

legislative authority" means action which

goes beyond the powers, functions, and

duties delegated by the Legislature. A

proposed or existing rule is an invalid

exercise of delegated legislative authority

if any one of the following applies:

(a ) The agency has materially failed to

follow the applicable rulemaking procedures

or requirements set forth in this chapter;

(b ) The agency has exceeded its grant of

rulemaking authority, citation to which is

required by s. 120.54(3)(a)1.;

(c ) The rule enlarges, modifies, or

contravenes the specific provisions of law

implemented, citation to which is required

by s. 120.54(3)(a)1.;

(d ) The rule is vague, fails to establish

adequate standards for agency decisions, or

vests unbridled discretion in the agency;

(e ) The rule is arbitrary or capricious;

(f ) The rule is not supported by

competent substantial evidence; or

(g ) The rule imposes regulatory costs on

the regulated person, county, or city which

could be reduced by the adoption of less

costly alternatives that substantially

accomplish the statutory objectives.

A grant of rulemaking authority is necessary

but not sufficient to allow an agency to

adopt a rule; a specific law to be

implemented is also required. An agency may

adopt only rules that implement or interpret

the specific powers and duties granted by

the enabling statute. No agency shall have

authority to adopt a rule only because it is

reasonably related to the purpose of the

enabling legislation and is not arbitrary

and capricious or is within the agency's

class of powers and duties, nor shall an

agency have the authority to implement

statutory provisions setting forth general

legislative intent or policy. Statutory

language granting rulemaking authority or

generally describing the powers and

functions of an agency shall be construed to

extend no further than implementing or

interpreting the specific powers and duties

conferred by the same statute.

52. In the Petition filed in this case, Petitioners

challenged the validity of Rule 3C-560.803, Florida

Administrative Code, as an invalid exercise of delegated

legislative authority. Petitioners contend that there is no

specific authority for the Department to promulgate the Rule and

that the Department has no explicit power or duty identified in

the enabling statute to promulgate the Rule.

53. Petitioners did not specify upon which provisions of

Section 120.56(8), Florida Statutes , they were seeking to have

the challenged rule declared invalid. Based on the language in

the Petition, it is determined that the Petitioners contend that

the Rule is an invalid exercise of delegated legislative

authority under Subsections 120.56(8) (b) and (c), Florida

Statutes.

54. When promulgated, Rule 3C-560.803, Florida

Administrative Code, Subsection 560.105(3), Florida Statutes,

was cited as specific authority for the Rule and Section 655.86,

Florida Statutes, was cited as the law implemented.

55. Section 655.86, Florida Statutes, provides:

It is the duty of the person drawing a

postdated check to notify, in writing, the

separate office or branch of the institution

upon which such check is drawn, giving a

complete description thereof, including the

name of the payee, the date, the number, and

the amount thereof; otherwise, the

institution is not liable for paying such

check.

56. Chapter 560, Florida Statutes, provides a statutory

scheme for the regulation of the money transmitter industry in

the State of Florida. The purposes of Chapter 560, Florida

Statutes, also known as the Money Transmitters' Code are

described in Section 560.102. That section provides the

following:

The purposes of the code are to:

(1 ) Provide general regulatory powers to

be exercised by the Department of Banking

and Finance in relation to the regulation of

the money transmitter industry. The code

applies to all money transmitters

transacting business in this state and to

the enforcement of all laws relating to the

money transmitter industry.

(2 ) Provide for and promote, subject to

the provisions of the code:

(a ) The safe and sound conduct of the

business of money transmitters who are

subject to the code.

(b ) The maintenance of public confidence

in the money transmitter industry.

(c ) The protection of the interests of

the public in the money transmitter system.

(d ) The deterrence of the use of money

transmitters as a vehicle for money

laundering.

(e ) The opportunity for money

transmitters to be and remain competitive

with each other and with other business

organizations existing under the statutes of

this state, and with other money

transmitters and organizations organized

under the laws of other states, the United

States, or foreign countries.

(f ) The opportunity for money

transmitters to effectively serve the

convenience and needs of their customers and

the public and to participate in and promote

the economic progress and welfare of this

state and the United States.

(g ) The opportunity for the management of

money transmitter businesses to exercise its

business judgment within the framework of

the code.

(h ) Only such rulemaking power and

administrative discretion to the department

as is necessary, in order that the

supervision and regulation of money

transmitters may be flexible and readily

responsive to changes in economic

conditions, in technology, and in money

transmitter practices.

57. Section 560.105, Florida Statutes, empowers the

Department with supervisory powers and rulemaking authority with

regard to the Chapter 560, Florida Statutes, the Money

Transmitters' Code. That section provides the following:

Consistent with the purposes of the code

the department shall have:

(1 ) Supervision over all money

transmitters and their authorized vendors.

(2 ) Access to books and records of

persons over whom the department exercises

supervision as is necessary for the

performance of the duties and functions of

the department prescribed by the code.

(3 ) Power to issue orders and declaratory

statements, disseminate information, and

otherwise exercise its discretion to

effectuate the purposes, policies, and

provisions of the code and to adopt rules

pursuant to ss. 120.536(1) and 120.54 to

implement the provisions of the code.

( emphasis supplied.)

58. Subsection 560.105(3), Florida Statutes, expressly

delegates to the Department the authority to promulgate rules to

implement the provisions of the Money Transmitters' Code.

Pursuant to that rulemaking authority, the Department adopted

Rule 3C-560-803, Florida Administrative Code.

59. Notwithstanding the Department’s rulemaking authority,

its reliance on Section 655.86, Florida Statutes, as law

implemented for Rule 3C-560.803, Florida Administrative Code, is

not well-founded. Section 655.86, Florida Statutes, lends

credence to the Department’s position that postdated checks may

be written and accepted by check cashers. However, that

provision deals with financial institutions, not money

transmitters. The clear import of Section 655.86, Florida

Statutes, is to absolve financial institutions from liability

for cashing postdated checks if the maker or drawer of the check

had not provided the prescribed statutory notice.

60. Pursuant to Rule 1S-1.004(3), Florida Administrative

Code, by letter dated May 24, 2001, the Department requested

that the Florida Department of State, Bureau of Administrative

Code, add Subsections 560.103(3) and (14) and 560.302(1),

Florida Statutes, as the law implemented for Rule 3C-560.803,

Florida Administrative Code.

61. Rule 1S-1.004(3), Florida Administrative

Code, provides the following:

(3 ) The specific authority, law

implemented and history notes shall be

corrected or modified by writing a letter to

the Bureau of Administrative Code specifying

the change. Such a change does not require

notification in the Florida Administrative

Weekly.

62. Subsections 560.103(3) and (14) and 560.302(1),

Florida Statutes, were enacted and in effect at the time Rule

3C-560.803, Florida Administrative Code, was promulgated. In

accordance with Rule 1S-1.004, Florida Administrative Code,

those legal citations did not require publication and were

not published in the Florida Administrative Weekly.

63. The Department’s requested additions to the legal

citations of Rule 3C-560.803, Florida Administrative Code,

were added to the rule and published in the Florida

Administrative Code, June 2001 Supplement.

64. The statutory provisions added to the law implemented

section of Rule 3C-560.803 are definitions included in the Money

Transmitters' Code. Subsections 560.103(3) and (14), Florida

Statutes, provide:

(3) "Check casher" means a person who,

for compensation, sells currency in exchange

for payment instruments received, except

travelers checks and foreign-drawn payment

instruments.

* * *

(14) "Payment instrument" means a check,

draft, warrant, money order, travelers check

or other instrument or payment of money,

whether or not negotiable. Payment

instrument does not include an instrument

that is redeemable by the issuer in

merchandise or service, a credit card

voucher, or a letter of credit.

65. Subsection 560.302(1), Florida Statutes, provides:

In addition to the definitions provided in

s. 560.103, unless otherwise clearly

indicated by the context, for purposes of

this part:

(1) "Cashing" means providing currency

for payment instruments , except for

travelers checks and foreign-drawn payment

instruments. ( emphasis supplied.)

66. Rule 3C-560.803, Florida Administrative Code,

“implements” or "interprets" the above-cited statutory

definitions by clarifying that a postdated check is within the

definition of payment instrument and that a check casher may

accept a postdated check subject to the fees established in

Section 560.309(4), Florida Statutes. There is no requirement

in Chapter 560, Florida Statutes, that requires a check casher

to deposit the customer’s check or that prohibits the check

casher from holding the customer’s check for an agreed-upon

period of time. The only limitations are the fees set forth in

Section 560.309(4), Florida Statutes.

67. Pursuant to Sections 560.102, 560.105, and 560.106,

Florida Statutes, the Department has been charged by the

Legislature to interpret and implement the provisions of the

Money Transmitters’ Code. By adopting Rule 3C-560.803, Florida

Administrative Code, the Department carried out its statutory

duties.

68. The inclusion of these additional statutory cites to

the law implemented section of the Rule is deemed to be a

technical change and, as such, no notification in the Florida

Administrative Code is required. See Rule 1S-1.004, Florida

Administrative Code.

69. The Florida Supreme Court has recognized the

principle that rules may clarify the details of an enabling

statute and that agencies may use their expertise to flesh

out the Legislature’s stated intent by adopting rules

necessary to effectuate the Legislature’s overall policy.

Avatar Development Corporation v. State , 723 So. 2d 199 (Fla.

1998). In Southwest Florida Management District v. Save the

Manatee , 773 So. 2d 594, 599 (Fla. 1st DCA 2000), the court

noted that “the use of the word ‘interpret’ suggests that a

rule will be more detailed than the applicable enabling

statute.”

70. A check, regardless of whether it is postdated,

falls within the definition of “payment instrument” as

defined in Section 560.103(14), Florida Statutes, and thus,

the enabling statute authorizes the challenged Rule.

71. Rule 3C-560.803, Florida Administrative Code, does

not enlarge, modify, or contravene the statute and is a

proper exercise of the Department’s delegated legislative

authority.

72. The promulgation of Rule 3C-560.803, Florida

Administrative Code, falls within the power and duties expressly

delegated to the Department. Moreover, the Rule serves to

implement the provisions of the Money Transmitters' Code as

expressly authorized in Section 560.102, Florida Statutes, by

interpreting the language of the Code so as to clarify

activities that fall within the regulatory scope of the Code.

73. Rule 3C-560.803, Florida Administrative Code, is

consistent with the language of the Money Transmitters' Code

defining "check cashers," "payment instruments" and "cashing."

Moreover, the rule interprets and provides clarification for

those regulated by the Department under Chapter 560, Florida

Statutes. According to the Rule, check cashers may, but are not

required to cash postdated checks, but have the discretion to do

so.

74. Nothing in Chapter 560, Florida Statutes, requires a

check casher to deposit a check. Rather, the Money

Transmitters' Code addresses the cashing of checks by those

regulated by Chapter 560, Florida Statutes. The act of

"cashing" the check is complete at the time the check casher

pays the maker or drawer of the check in currency. Therefore,

Chapter 560, Florida Statutes, does not prohibit a check casher

from holding a customer's postdated check for an agreed period

of time.

75. The Money Transmitters' Code establishes fees for

"cashing" checks and limits such fees to those prescribed in

Subsection 560.309(4), Florida Statutes. Rule 3C-560.803,

Florida Administrative Code, authorizes, "check cashers" to cash

postdated checks but explicitly limits the fees that may be

charged for cashing these "payment instruments" to those

prescribed in Subsection 560.309(4), Florida Statutes.

76. The Department's adoption of Rule 3C-560.803, Florida

Administrative Code, does not exceed the scope of its delegated

legislative authority. As the First District explained in

Southwest Florida Water Management District v. Save the Manatee

Club, Inc. , at 599, Section 120.536 was amended in 1999 to

narrow the agencies' authority to promulgate rules:

The new law gives the agencies authority to

"implement or interpret" specific powers and

duties contained in the enabling statute. A

rule that is used to implement or carry out

a directive will necessarily contain

language more detailed than that used in the

directive itself. Likewise, the use of the

term "interpret" suggests that a rule will

be more detailed than the applicable

enabling statute. There would be no need

for interpretation if all of the details

were contained in the statute itself.

77. Rule 3C-560.803, Florida Administrative Code, provides

more detail than the statute, but it does not enlarge, modify or

contravene the language it seeks to interpret.

78. The challenged rule is similar in purpose and function

to that upheld by the First District Court of Appeal in Board of

Podiatric Medicine v. Florida Medical Association , 779 So. 2d

658 (Fla. 1st DCA 2001). In that case, the Board of Podiatric

Medicine promulgated a proposed rule interpreting the term

"human leg" as used in Section 461.003(3), Florida Statutes.

The Rule was held by an Administrative Law Judge to be invalid

because it expanded the scope of the practice of podiatric

medicine. The appellate court overruled that decision:

In light of the broad discretion and

deference which is accorded an agency in the

interpretation of a statute which it

administers, Public Employees Relations

Commission v. Dade County Police Benevolent

Association , 467 So. 2d 987 (Fla. 1985), and

because such an interpretation should be

upheld when it is within the range of

permissible interpretations, Board of

Trustees of Internal Improvement Trust Fund

v. Levy , 656 So. 2d 1359 (Fla. 1st DCA

1995), the judge should not have rejected

the board's definition of the term "human

leg" as used in Section 461.003(3), and as

provided in Rule 64B18-23.001. This

definition does not enlarge, modify, or

contravene the statute, and is neither

arbitrary nor capricious, and is fully

supported by competent substantial evidence

so as to be a proper exercise of the Board's

delegated legislative authority.

Id. at 660.

79. Rule 3C-560.803, Florida Administrative Code,

implements the definitional sections of Chapter 560, Florida

Statutes. It does not enlarge, modify or contravene the

statutory definitions interpreted. Petitioners have adduced no

evidence that would support a finding that the Rule represents

an unlawful exercise of delegated legislative authority by the

Department.

80. In the Petition filed in this case, Petitioners

challenged the validity of Rule 3C-560.803, Florida

Administrative Code, as an invalid exercise of delegated

legislative authority. Petitioners contend there is no specific

authority for the Department to promulgate the Rule and that the

Department has no explicit power or duty identified in the

enabling statute to promulgate the Rule.

81. Contrary to argument of Petitioner, Rule 3C-560.803,

Florida Administrative Code, is a valid and proper exercise of

the Department's delegated authority. The Rule merely

authorizes check cashers to accept postdated checks subject to

the fees established in Section 560.309(4), Florida Statutes.

The rule does not establish the fees nor does it authorize

“rollover transactions” or “payday loans.”

82. Petitioners have made no showing that their

substantial interests or the fairness of the proceedings were

impaired by the Department's request to the Department of State

for a correction to the law implemented citations for Rule 3C-

560.803, Florida Administrative Code.

83. Petitioners have not alleged, nor proven that Rule 3C-

560.803 is invalid under the provisions of Subsections 120.52(8)

(a) and (d) through (g), Florida Statutes.

84. Finally, Petitioners contend that the Department’s

interpretation and implementation of Rule 3C-560.803, Florida

Administrative Code, should be declared “invalid.” Petitioners

argue that the Department’s interpretation and implementation of

the Rule permits “payday lending.” Petitioner’s assertion and

argument are without merit.

85. Rule 3C-560.803, Florida Administrative Code, is

interpreted by the Department to authorize a check casher to

cash postdated checks, subject to the fees established in

Section 560.309(4), Florida Statutes. This interpretation is

within the range of permissible interpretations and is entitled

to deference.

86. Petitioners have failed to show that Rule 3C-560.803,

Florida Administrative Code, constitutes an invalid exercise of

delegated legislative authority within the meaning of Section

120.52(8), Florida Statutes.

ORDER

Based on the foregoing Findings of Fact and Conclusions of

Law, it is ORDERED that the Petition filed in this cause be

DISMISSED.

DONE AND ORDERED this 7th day of September, 2001, in

Tallahassee, Leon County, Florida.

___________________________________

CAROLYN S. HOLIFIELD

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488- 9675 SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 7th day of September, 2001.

COPIES FURNISHED :

Robert Beitler, General Counsel

Department of Banking and Finance

101 East Gaines Street

Fletcher Building, Suite 526

Tallahassee, Florida 32399-0350

J. Thomas Cardwell, Esquire

Akerman , Senterfitt & Eidson , P.A.

255 South Orange Avenue, 10th Floor

Post Office Box 231

Orlando, Florida 32802-0231

Lori S. Rowe, Esquire

Gray, Harris & Robinson, P.A.

301 South Bronough Street, Suite 600

Post Office Box 11189

Tallahassee, Florida 32302-3189

E. Clayton Yates, Esquire

Law Offices of E. Clayton Yates, P.A.

205 South Second Street

Fort Pierce, Florida 34950

Honorable Robert F. Milligan

Department of Banking and Finance

Office of Comptroller

The Capitol, Plaza Level 09

Tallahassee, Florida 32399-0350

Carroll Webb, Executive Director

Joint Administrative Procedures Committee

120 Holland Building

Tallahassee, Florida 32399-1300

David Greenbaum

Legislative Research Director

Committee on Governmental Rules

and Regulations

218 House Office Building

Tallahassee, Florida 32399

Liz Cloud, Chief

Bureau of Administrative Code

The Elliott Building

Tallahassee, Florida 32399-0250

Richard A. Fisher, Esquire

30 Second Street

Cleveland, Tennessee 37364-0191

James H. Harris, Esquire

Margaret S. Karniewicz, Esquire

Suite 526, Fletcher Building

101 East Gaines Street

Tallahassee, Florida 32399-0350

Virginia B. Townes, Esquire

Citrus Center, 17th Floor

255 South Orange Avenue

Orlando, Florida 32802

Tina D. White

Legislative Analyst

Senate Governmental Regulations

Oversight and Productivity Committee

535 Knott Building

Tallahassee, Florida 32399-1100

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is

entitled to judicial review pursuant to Section 120.68, Florida

Statutes. Review proceedings are governed by the Florida Rules

of Appellate Procedure. Such proceedings are commenced by

filing one copy of a notice of appeal with the Clerk of the

Division of Administrative Hearings and a second copy,

accompanied by filing fees prescribed by law, with the District

Court of Appeal, First District, or with the District Court of

Appeal in the Appellate District where the party resides. The

notice of appeal must be filed within 30 days of rendition of

the order to be reviewed.