The following opinion is presented on-line for informational use only and does not replace the official version. (Mich. Dept. of Attorney General Web Site - http://www.ag.state.mi.us)

STATE OF MICHIGAN

BILL SCHUETTE, ATTORNEY GENERAL

A precious metal and gem dealer licensed under the Precious Metal and Gem Dealers Act, 1981 PA 95, MCL 445.481 et seq., cannot receive or purchase a precious item by mail from the public, or where the customer otherwise fails to appear in person before the dealer to present the customer’s driver’s license or state personal identification card, and provide a thumbprint and signature, to be recorded by the dealer as required by the Act. MCL 445.484(1).

Opinion No. 7278

May 8, 2014

The Precious Metal and Gem Dealer Act, 1981 PA 95, MCL 445.481 et seq., governs transactions by precious metal and gem dealers within the State.  In 2006, the Act was amended to exempt from licensing and registration requirements an “internet drop-off store.”  2006 PA 295.  A legislative analysis explained the purpose of Public Act 295 and described internet drop-off stores:

Internet Drop-off stores constitute a new and growing service industry.  They are independent firms that sell personal goods for others on the Internet, notably through e-Bay.  Reportedly, the businesses list, photograph, sell, package, and ship products for their customers.  Some even sort personal items at the homes of the owners of the personal goods to be auctioned online.  The aim of the bills in the package is to prevent these enterprises from being treated under state and local regulations as second hand stores or junk dealers.  The bills do not allow drop-off stores to physically engage in sales transactions on the premises of the firm’s fixed place of business (although they must have a fixed place of business in the state). [House Fiscal Analysis, HB 5955, 5956, 5957, and 5958, May 4, 2006.]

Consistent with this description, the Precious Metal and Gem Dealer Act^[1] was amended to exempt internet drop-off stores from the dealer registration requirement.  MCL 445.483(2) and (3).

According to your request, “dealers now want to send ‘kits’ to customers.  With these ‘kits’ customers complete a form and send back the items, via the mail, without ever setting foot inside a physical store.”  You ask whether it is “legal for a gem dealer to buy and receive precious metals or gems from the public via the mail, without the customer ever being physically present in the store.”

Under well-established rules of statutory construction, every statute is to be enforced according to its plain meaning, Roberts v Mecosta County Gen Hosp, 466 Mich 57, 63; 642 NW2d 663 (2002), and “[e]ach word of a statute is presumed to be used for a purpose.” Levy v Martin, 463 Mich 478, 493-494; 620 NW2d 292 (2001), quoting Robinson v Detroit, 462 Mich 439, 459; 613 NW2d 307 (2000). 

The reference to a “gem dealer” in connection with the other references to internet drop-off stores in your request creates some ambiguity because the terms are not interchangeable.  An “internet drop-off store” is “a person, corporation, or firm that contracts with other persons, corporations, or firms to offer its precious items for sale, purchase, consignment, or trade through means of an internet website.”  MCL 445.482(d).  Purchases and sales cannot be physically transacted on the premises of an internet drop-off store.  MCL 445.483(3).  An internet drop-off store that complies with subsection (3), MCL 445.483(3)(a), is not a “dealer” for purposes of the Act.  Rather, it is exempt from registering as a dealer.  MCL 445.483(2).[2]  A “dealer” is “any person, corporation, partnership, or association, which, in whole or in part, engages in the ordinary course of repeated and recurrent transactions of buying or receiving precious items from the public within this state.”  MCL 445.482(b).  And dealers must register in order to conduct business under the Act.  MCL 445.483(1).  (“A dealer shall not conduct business in a local governmental unit in this state unless the dealer has obtained a valid certificate of registration from that local governmental unit or local police agency.”) 

The stringent requirements for “dealers” who buy and sell precious items from their place of business contemplate that the individual seller will appear before the dealer in person to complete the transaction.  Section 4(1) provides that “[a]t the time a dealer receives or purchases a precious item, the dealer . . . shall insure that the following information is recorded accurately on a record of transaction form.”  MCL 445.484(1)(emphasis added).  

The information a dealer must obtain “at the time” of the transaction and “record[ ] accurately” includes a “thumbprint,” the “driver’s license number or state of Michigan personal identification card number,” and the “signature” of the “customer.”  MCL 445.484(1)(e) and (h).[3]  With respect to the driver’s license or personal identification cards, the Act provides that a “dealer” shall not “[k]nowingly receive or purchase a precious item from a person unless that person presents a valid driver’s license or a valid state of Michigan personal identification card.”  MCL 445.486(b)(emphasis added).  Since the statute does not define the term “presents” it can be questioned whether the required information might be presented in a fashion other than by the customer physically appearing before the dealer.    

But, reading these sections together as a whole, Plymouth Stamping v Lipshu, 436 Mich 1, 17; 461 NW2d 859 (1990), the Act does not allow precious metal and gem dealers to buy or receive metals and gems from customers not physically present in the dealer’s store.  This conclusion is supported by the plain language of the Act, which requires the dealer to obtain the customer’s driver’s license or personal identification card at the time of the transaction, and the additional requirements that the dealer obtain the “thumbprint” and “signature” of the customer as well.  The law thus requires dealers to verify the identity of the customer through at least three separate means.  This verification can only be done with the customer’s physical presence.  Permitting a transaction to occur without the physical presence of the customer, such as through the mail or through a third party, defeats the ability of the dealer to ensure that the statutorily required identifiers do, in fact, belong to the customer.

The reasons for these requirements are fairly obvious.  Precious metal and gem dealers may be used by criminals seeking to sell or profit from precious items obtained in a fraudulent or unlawful manner.  Requiring the customer to appear in person at the dealer’s place of business in order to confirm the customer’s identity and make a record of the transaction, which must be forwarded to the local police agency, MCL 445.484(3), helps to deter unlawful activity and assist local police in investigating criminal activity.  Allowing a customer to complete such a transaction by mail or without an actual face-to-face meeting with the dealer, would be contrary to the plain language of the Act and negate the intent of the Legislature.    

It is my opinion, therefore, that a precious metal and gem dealer licensed under the Precious Metal and Gem Dealers Act, 1981 PA 95, MCL 445.481 et seq., cannot receive or purchase a precious item by mail from the public, or where the customer otherwise fails to appear in person before the dealer to present the customer’s driver’s license or state personal identification card, and provide a thumbprint and signature, to be recorded by the dealer as required by the act.  MCL 445.484(1).