Selling a catalytic converter in Michigan

Who may sell a detached converter

Michigan does not restrict converter sales to licensed businesses. What it does is make every individual seller go through the same gate. In a purchase transaction, a seller who is an individual, or an individual acting as agent or representative of a seller, has to present an operator's or chauffeur's license, military identification card, Michigan identification card, passport, or other government-issued identification containing a photograph, and allow the dealer to make a photocopy or electronic copy of it (§ 445.425(2)(a)). That person has to allow the dealer to take a thumbprint, used only for identification by the dealer and for investigation by a law enforcement agency (§ 445.425(2)(b)).

Two statements follow. The individual has to give the dealer a signed statement certifying that he or she owns, or is otherwise authorized to sell, the scrap metal and is at least sixteen years old (§ 445.425(2)(c)). And an individual convicted of a crime involving the theft, conversion, or sale of scrap metal may not enter into a purchase transaction at all, with the individual certifying as part of the transaction that he or she has no such conviction (§ 445.425(2)(d)). The dealer examines the identification presented and, where it shows a date of birth, confirms from it that the individual is at least sixteen (§ 445.425(1)(d)).

Where the converter comes with a commercial relationship the rules relax. An industrial or commercial customer is a person operating from a fixed location that sells scrap metal to a dealer under a written agreement providing for regular or periodic sale, delivery, purchase, or receiving of scrap metal (§ 445.423(d)), and the converter payment restrictions do not apply to purchases of the listed items from such a customer (§ 445.425(1)(b)(ii)). A dealer is also not required to obtain the ordinary record information for a transaction with an industrial or commercial customer where payment is made directly to that customer, its personal and business identifying information is on file and matches a written description of the type of scrap it customarily sells, and that information is reviewed and validated or updated at least every two years (§ 445.427(3)).

What the buyer must record

A dealer prepares and maintains a separate, accurate, and legible record of each purchase transaction, keeps it for at least one year in a location readily accessible to local, state, or federal law enforcement or to railroad police investigating stolen railroad property for inspection during normal business hours, and makes it or copies available on request to any such agency (§ 445.427(1)). The record holds the name and address of the seller and of the individual delivering the scrap metal where that is a different person, and the name, address, and identifying number from the identification presented under § 445.425(2)(a), for which a legible scan or photocopy suffices (§ 445.427(2)(a), (b)). Where an individual appears in more than one transaction, the dealer may keep that information in a separate file and reuse it (§ 445.427(2)(a), (b)).

The transaction itself is recorded in detail. The record holds the plate number of any licensed vehicle used to bring the metal in, the date and time, a description of the predominant types of scrap metal made according to the custom of the trade, and the weight, quantity, or volume described and calculated according to the custom of the trade, together with the name of the scale operator who weighs and inspects the metal and the name of the employee who purchased or authorized the purchase where that was someone else (§ 445.427(2)(c) to (f)). It records the consideration paid and the method of payment (§ 445.427(2)(h)).

Three images or impressions complete it. The record holds a photograph or digital, electronic, or video image of the scrap metal purchased, which may be an overhead image of the vehicle and the metal on the scale where both are weighed, or an image of the metal on the scale where only the metal is weighed, and it is sufficient even if each individual item is not shown (§ 445.427(2)(g)). It holds a legible thumbprint (§ 445.427(2)(j)) and a digital photograph of the seller, or of the individual delivering the metal where that is a different person, including the face and taken at the time the metal arrives (§ 445.427(2)(k)). The signed ownership statement goes in as well (§ 445.427(2)(i)). A dealer may use an electronic record-keeping system for all of this where the system allows immediate access to each seller's transaction activities, documents, and images (§ 445.427(4)). Separately, the dealer has to train each scale operator, purchaser, and supervisor it employs about the act's legal requirements and the dealer's responsibilities under it (§ 445.425(1)(e)).

How you are paid

Cash is out as a general rule. Unless § 445.426 applies and except for industrial or commercial customers, a dealer may pay a seller only by check or money order, retaining a photograph or digital or electronic image of the delivery of that check or money order to the seller or the individual acting for the seller that includes that person's face, or by an electronic payment card or encrypted receipt that may only be converted to cash at an automated teller machine on the dealer's premises used solely for that purpose and producing an image of the cash being dispensed that includes the recipient's face (§ 445.425(1)(a)). Payment by that card or receipt is expressly not treated as payment in cash (§ 445.425(1)(a)(ii)).

Converters sit in a narrower list. In a purchase transaction involving catalytic converters, the only methods a dealer may use are a direct deposit or electronic transfer to the seller's account at a financial institution, a check or money order as described in § 445.425(1)(a)(i), or an electronic payment card or encrypted receipt as described in § 445.425(1)(a)(ii) (§ 445.426(1)). The same list applies to air conditioners and their evaporator coils and condensers and to copper wire, pipe, and fittings (§ 445.426(1)(b), (c)). The converter restriction does not apply where the seller is an automotive recycler as defined in § 2a of the Michigan vehicle code, a manufacturer or wholesaler of converters, or a muffler shop, tire store, or other retail business that sells converters separately or as part of an exhaust system (§ 445.426(1)(a)). At twenty-five dollars the payment also has to go in the mail: where the purchase price in a § 445.426(1) transaction is twenty-five dollars or more, or where all of a seller's such transactions in a business day come to twenty-five dollars or more, the dealer must pay the seller for those items by mailing a check or money order, an electronic payment card or encrypted receipt, or a nontransferable receipt redeemable at the dealer's premises, to the seller at the address shown on the identification card presented under § 445.425(2)(a), and shall not deliver that payment in person or using any other form of delivery (§ 445.426(5)). Because § 445.426(1) makes only the check, money order, and card options subject to subsection (5), a direct deposit or electronic transfer to the seller's account is the one route that escapes the mailing rule (§ 445.426(1), (5)).

Industrial and commercial customers have their own menu: by agreement, a check, money order, or the card or receipt described above, which may be mailed to the customer's street address or post office box or to another person or box as the customer directs, or by bank wire transfer or other electronic delivery to the customer's account (§ 445.425(1)(b)(i)). A dealer may also accept barter or a trade or exchange of scrap metal or other property as all or part of the consideration (§ 445.425(1)(c)). Michigan's holding rule is conditional rather than standing: a dealer tags and holds for seven calendar days any article containing nonferrous metal bought from a seller where the article has altered or obliterated serial numbers, where its identification or type would reasonably give the dealer knowledge that it is or was the property of a governmental entity or a business, where it is a cemetery-related or apparently ceremonial article, or where it is copper wiring, in each case without a written receipt or documentation, and also where the article is subject to a law enforcement notification or bulletin received before the purchase (§ 445.429(1)). The tag and hold duty carries the § 445.427 record duty with it (§ 445.429(2)) and does not apply to an article already tagged and held by one dealer that is resold directly to another dealer (§ 445.429(3)(b)).

Penalties

Most of the act is enforced by state civil infractions. Except as otherwise provided, a person that violates the act knowing or having reason to know that it is doing so is responsible for a state civil infraction and may be ordered to pay a civil fine of not more than five thousand dollars (§ 445.435(1)). A dealer that knowingly violates § 445.426(4) is responsible for a state civil infraction and pays a fine of five hundred dollars for a first violation, one thousand for a second, and five thousand for a third or subsequent violation (§ 445.435(2)).

Two sets of conduct are criminal. A person who violates § 445.427 or § 445.429 knowing or having reason to know of the violation is guilty of a misdemeanor punishable by a fine of not more than five hundred dollars or imprisonment for not more than ninety-three days, or both, with an affirmative defense where a record-keeping system malfunctioned and the dealer diligently pursued repair and kept manual records in the meantime (§ 445.433(1)). And in connection with a purchase transaction, a dealer that buys scrap metal or an item described in § 445.430 knowing or having reason to know it was stolen, and a person that sells such property to a dealer on the same knowledge, are each guilty of a felony punishable by imprisonment for not more than five years or a fine of not more than five thousand dollars, or both, rising to a ten thousand dollar fine for a second or subsequent offense (§ 445.433(2)).

The private remedy is where the real exposure sits. A person may bring a private cause of action against a seller or a dealer in a court of competent jurisdiction for monetary damages suffered from a violation of the act (§ 445.437(1)). Where the court finds the violation included the purchase or sale of stolen property and that the purchaser, in an action against the purchaser, or the seller, in an action against the seller, knew or should have known the property was stolen, the court has to award treble damages for the value of the property stolen, measured as the greater of the replacement cost, the cost of repairing the damage caused by the larceny, or the total of both (§ 445.437(2)). Costs and reasonable attorney fees may be awarded as well (§ 445.437(3)). Several categories may not be bought at all either, which matters where a converter arrives with other material. A person may not knowingly sell or attempt to sell, and a dealer may not knowingly purchase or offer to purchase, public fixtures, metal clearly marked as belonging to someone other than the seller, cemetery-related or apparently ceremonial articles, metal removed from railroad property or a railroad right-of-way, or a silver alloy telecommunication battery with a threaded insert terminal connection, each subject to an exception where the seller is the owner or holds written authorization (§ 445.430(a) to (e)). And except where the seller has specific written documentation of ownership or authority, no seller may sell and no dealer may buy any nonferrous article marked with the name, initials, markings, or logo of a governmental entity, utility, cemetery, or railroad, any beer kegs, or any public fixtures (§ 445.429(4)). The act's remedies are cumulative and do not exempt anyone from licensing or other obligations under other acts or ordinances (§ 445.439).

What this means when you sell to us

Bring a government photo ID; we copy it and record the number (§ 445.425(2)(a), § 445.427(2)(b)). You give a thumbprint, sign a statement that you own the converters or may sell them and are at least sixteen, and certify that you have no conviction for the theft, conversion, or sale of scrap metal (§ 445.425(2)(b) to (d)). We photograph you and the units on the scale, record the weight, the consideration, and the method of payment, and keep it all for a year (§ 445.427(1), (2)). Cash is not available. For converters, payment is a direct deposit or electronic transfer, a check or money order, or an electronic payment card, and where the transaction comes to twenty-five dollars or more Michigan requires the check or card to be mailed to the address on your ID rather than handed to you, unless we pay by direct deposit or electronic transfer (§ 445.426(1), (5)).