Disputing Claims of Using Unlicensed Philadelphia Money Transmitters

Getting accused of operating an unlicensed money transmitter in Philly? That sucks. I feel ya.

As a lawyer in this city, I’ve seen it happen more times than I can count. Let’s talk about how you can dispute these claims so you don’t end up in hot water.

First things first – what does “unlicensed money transmitter” even mean?

Basically, it means the government thinks you’re moving money around without the proper licenses. In Philly, you need a license from the Department of Banking and Securities to operate as a money transmitter or currency exchange. If you don’t have one, you could be looking at felony charges. Not good.

Now I know what you’re thinking – “But I’m not a money transmitter!” Yeah, I feel you. The definition under Pennsylvania law is super broad. It covers receiving money for transmission, transporting money, and even just storing money for others. So if you’re doing anything that involves handling money for other people, the state could try to call you a money transmitter.

It’s wack, I know. The government tries to wrap up tons of normal business activities under this law. Let’s talk about how you can fight back if you get accused.

First, look at the specifics of what you’re doing.

If you literally just receive money and send it somewhere else, with nothing else going on, yeah that’s probably money transmitting. But there are plenty of legit reasons to handle money as part of a real business.

For example, say you run an e-commerce site. You take payment from customers and ship products. That’s not just transmitting money – there’s a real sale of goods happening. Or say you’re a property manager collecting rent for owners. You provide a service of managing the property in exchange for the money. Not just transmitting.

Situations like these have been defended successfully in court before. The government can’t just call every business that handles money a money transmitter. You need to show there’s a real service or product involved beyond just moving money around.

Some other typical examples I’ve seen accused:

• Payment processors – they facilitate payments for merchants, but also provide fraud protection, record keeping, etc.
• Crowdfunding platforms – they host campaigns and provide a platform for raising funds.
• Delivery drivers – they transport goods and facilitate payment as part of that service.
• Billing companies – they handle payments as part of providing billing and invoicing services.

You get the idea. If you do something more involved than just receiving and sending money, you have a case. Gather evidence about the real services you provide. Get client testimonials. Show how you add value beyond transmitting funds.

Another angle is if you handle payments within a closed loop system.

Say you operate a rewards program where people earn points they can spend within your business. Or you run a video game where players can buy virtual currency. Courts have found those don’t count as general money transmission because the funds stay in your system.

Or if you only facilitate payments between users of your own platform – like an eBay or Etsy. Users pay each other for goods, but the money flows through your system. This can be defended as just facilitating payments inside your own ecosystem, not openly transmitting money.

Bottom line – don’t just accept the state’s accusations. Talk to customers, gather evidence, and mount a defense showing how you provide real services beyond just transmitting money. Get accounts from people about how you deliver value. Show how the funds flow through your specific business model. Often the government casts too wide a net without understanding how businesses really operate.

And reach out to a lawyer like me! I can help make sure your defense targets the right arguments. We can get statements from customers, document your procedures, and show precedents that support your business activities. I can dig into the specifics of your case and identify the best angles to dispute the claims.

Dealing with the Department of Banking and Securities is no fun. But with the right preparation, you can show that your business is following the law. I hate to see good companies get accused of “money transmitting” when they’re really not. Call me today and let’s talk about building your case. I know how much your business means to you, and I want to help protect it. Let’s do this.