Square Slapped With Cease And Desist By Illinois State Department
1–10 of 43 posts
Re: Square Slapped With Cease And Desist By Illinois State Department
#2Is Square even in Illinois?
If not, then can someone explain to me how Illinois has the power to enforce this statute? I am not a lawyer, but it would seem to me to be a pretty clear case of interstate commerce, which is under federal jurisdiction.
Re: Square Slapped With Cease And Desist By Illinois State Department
#3As I understand it, the big deal with money transmission licenses is that they tend to require sizable bonds (they exist in part to mitigate the risk that you'll build up a client base and one day take all the float and move to Antigua --- or, for that matter, that you'll go out of business while holding the bag on millions of dollars of client payables.
The requirements to get a license in Illinois are straightforward: you need to meet a (low-seeming) net worth requirement, you can't have outstanding regulatory problems with the state, your management can't be felons. You also have to post a surety bond equivalent to max(100k, daily average volume).
If Square isn't already required to be a money transmitter in (say) CA or NY, it'd be surprising if they had to be one in IL, but either way this seems like a speed bump for Square.
Re: Square Slapped With Cease And Desist By Illinois State Department
#4Is Square even in Illinois? If not, then can someone explain to me how Illinois has the power to enforce this statute? I am not a lawyer, but it would seem to me to be a pretty clear case of interstate commerce, which is under federal jurisdiction.
IIRC money transfers are regulated as banking activities, not interstate commerce.
Every US state seems to have a variant of these rules; for instance, here's every license Paypal needs to operate:
Re: Square Slapped With Cease And Desist By Illinois State Department
#5Is Square even in Illinois? If not, then can someone explain to me how Illinois has the power to enforce this statute? I am not a lawyer, but it would seem to me to be a pretty clear case of interstate commerce, which is under federal jurisdiction.
The Commerce Clause grants powers to Congress, it does not limit the powers of states.
If someone uses Square to accept a payment or receive the benefit of a payment within the state, they can regulate it. If Square disagrees or believes the law is unjust, they can cease business in the state, or file a lawsuit against the state.
Re: Square Slapped With Cease And Desist By Illinois State Department
#6As I understand it, the big deal with money transmission licenses is that they tend to require sizable bonds (they exist in part to mitigate the risk that you'll build up a client base and one day take all the float and move to Antigua --- or, for that matter, that you'll go out of business while holding the bag on millions of dollars of client payables. The requirements to get a license in Illinois are straightforwa…
Just because another state has not yet taken enforcement action doesn't mean Square isn't in violation. The TechCrunch article mentions they have been in talks with the state for a while, which means they could be talking to 40 other states that have the same concerns... we don't know.
If you are big enough to be noticed by the states as a major money mover, you're probably big enough to get the proper licenses to conduct business. The last thing we need is deregulation in the financial space.
Re: Square Slapped With Cease And Desist By Illinois State Department
#7As I understand it, the big deal with money transmission licenses is that they tend to require sizable bonds (they exist in part to mitigate the risk that you'll build up a client base and one day take all the float and move to Antigua --- or, for that matter, that you'll go out of business while holding the bag on millions of dollars of client payables. The requirements to get a license in Illinois are straightforwa…
Just because another state has not yet taken enforcement action doesn't mean Square isn't in violation. The TechCrunch article mentions they have been in talks with the state for a while, which means they could be talking to 40 other states that have the same concerns... we don't know. If you are big enough to be noticed by the states as a major money mover, you're probably big enough to get the proper licenses to co…
Of the various regulatory hurdles you have to jump over to be a business that handles money for other people, money transmitter licenses seem like one of the most reasonable requirements, so I guess I agree. It must suck a lot to have to deal with every state on these, but I'm not sure we'd like federal requirements any more.
Re: Square Slapped With Cease And Desist By Illinois State Department
#8Is Square even in Illinois? If not, then can someone explain to me how Illinois has the power to enforce this statute? I am not a lawyer, but it would seem to me to be a pretty clear case of interstate commerce, which is under federal jurisdiction.
The Commerce Clause grants powers to Congress, it does not limit the powers of states. If someone uses Square to accept a payment or receive the benefit of a payment within the state, they can regulate it. If Square disagrees or believes the law is unjust, they can cease business in the state, or file a lawsuit against the state.
I don't think that's true; if you Google "dormant commerce clause", you'll see why. State laws restricting interstate commerce have to have a legitimate interest for that particular state and their interference with interstate commerce has to be outweighed by their benefit.
Re: Square Slapped With Cease And Desist By Illinois State Department
#9Ah, the great corrupt state of Illinois!
I wonder who and how much money got passed under the table to investigate and pursue this.
Yes, I realize that no money may have been passed and that someone might have just been doing "their job" (as they see it).
Re: Square Slapped With Cease And Desist By Illinois State Department
#10Earlier quoted context omitted.
The Commerce Clause grants powers to Congress, it does not limit the powers of states. If someone uses Square to accept a payment or receive the benefit of a payment within the state, they can regulate it. If Square disagrees or believes the law is unjust, they can cease business in the state, or file a lawsuit against the state.
I don't think that's true; if you Google "dormant commerce clause", you'll see why. State laws restricting interstate commerce have to have a legitimate interest for that particular state and their interference with interstate commerce has to be outweighed by their benefit.
My point still stands that its up to the state to make the determination, not you or I. Obviously they feel that Square is doing something that they can regulate.