REPORT TITLE: 
Check cashing


DESCRIPTION:
Establishes stronger consumer protection regulations on the
check cashing industry by:  (1) Setting caps on the fees that
may be charged by check cashing businesses; (2) Requiring notice
of fees to consumers; and (3) Specifying other prohibited acts
with regard to deferred deposit transaction.  Makes violation of
the check cashing law an unfair or deceptive act or practice.
Makes wilful violations of the Act punishable by a fine of up to
$500 and 30 days imprisonment.  (HB460 CD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        460
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 2
TWENTIETH LEGISLATURE, 1999                                S.D. 1
STATE OF HAWAII                                            C.D. 1
                                                             
________________________________________________________________
________________________________________________________________


                     A BILL FOR AN ACT

RELATING TO CHECK CASHING.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  The Hawaii Revised Statutes is amended by adding
 
 2 a new chapter to be appropriately designated and to read as
 
 3 follows:
 
 4                             "CHAPTER
 
 5                           CHECK CASHING
 
 6      �    -1 Definitions.  As used in this chapter, unless the
 
 7 context requires otherwise:
 
 8      "Check" means any check, draft, money order, or other
 
 9 instrument for the transmission or payment of money.  "Check"
 
10 does not include a traveler's check or foreign denomination or
 
11 foreign drawn payment instrument.
 
12      "Check casher" means a person or entity that engages in the
 
13 business of cashing checks for a fee.
 
14      "Deferred deposit" means a transaction in which a check
 
15 casher refrains from depositing a personal check written by a
 
16 customer until a date after the transaction date, pursuant to a
 
17 written agreement.
 
18      "Fee" includes any payment of cash or other consideration
 
19 paid or given by a customer to a check casher in exchange for the
 
20 cashing of a check, including an exchange of value for the
 

 
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 1 purchase of catalog items, which is in excess of regular retail
 
 2 value, or for coupons, which may be redeemed for goods or
 
 3 services.
 
 4      �   -2  Posting and notice of fees charged.  Any person who
 
 5 cashes one or more checks for a fee shall:
 
 6      (1)  Post in a conspicuous place in every location at which
 
 7           the person does business a notice that sets forth:
 
 8           (A)  The fees charged for cashing a check, for selling
 
 9                or issuing a money order, and for the initial
 
10                issuance of any membership or identification
 
11                cards; and
 
12           (B)  That consumer complaints about the check cashing
 
13                business may be filed with the department of
 
14                commerce and consumer affairs, and includes and
 
15                identifies the telephone number of the consumer
 
16                information service of the department of commerce
 
17                and consumer affairs;
 
18      (2)  Provide written notice to each customer of the fees
 
19           charged for cashing checks that is separate from and in
 
20           addition to any posted notice;
 
21      (3)  Obtain a written acknowledgement from the customer that
 
22           written notice of the fees charged for cashing checks
 
23           was provided; and
 

 
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 1      (4)  Provide each customer a receipt documenting any and all
 
 2           fees charged.
 
 3      �   -3  Authorized fees.  Except as provided in section
 
 4      -4, no check casher shall charge fees in excess of the
 
 5 following amounts:
 
 6      (1)  Five per cent of the face amount of the check or $5,
 
 7           whichever is greater;
 
 8      (2)  Three per cent of the face amount of the check or $5,
 
 9           whichever is greater, if the check is the payment of
 
10           any kind of state public assistance or federal social
 
11           security benefit payable to the bearer of the check;
 
12      (3)  Ten per cent of the face amount of a personal check or
 
13           money order, or $5, whichever is greater; or
 
14      (4)  No more than $10 to set up an initial account and issue
 
15           an optional membership or identification card, and no
 
16           more than $5 for a replacement optional identification
 
17           card.
 
18 The fees allowed in this section shall not be assessed in any
 
19 transaction or agreement in which the check casher defers deposit
 
20 of the check.
 
21      �   -4  Deferred deposits, when allowed.(a)  No check
 
22 casher may defer the deposit of a check except as provided in
 
23 this section.
 

 
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 1      (b)  Each deferred deposit shall be made pursuant to a
 
 2 written agreement that has been signed by the customer and the
 
 3 check casher or an authorized representative of the check casher.
 
 4 The written agreement shall contain a statement of the total
 
 5 amount of any fees charged for the deferred deposit, expressed
 
 6 both in United States currency and as an annual percentage rate.
 
 7 The written agreement shall authorize the check casher to defer
 
 8 deposit of the personal check until a specific date not later
 
 9 than thirty-one days from the date the written agreement was
 
10 signed.  The written agreement shall not permit the check casher
 
11 to accept collateral.
 
12      (c)  The face amount of the check shall not exceed $300 and
 
13 the deposit of a personal check written by a customer pursuant to
 
14 a deferred deposit transaction may be deferred for no more than
 
15 thirty-one days.  A check casher may charge a fee for deferred
 
16 deposit of a personal check in an amount not to exceed fifteen
 
17 per cent of the face amount of the check.  Any fees charged for
 
18 deferred deposit of a personal check in compliance with this
 
19 section shall be exempt from chapter 478.
 
20      (d)  A check casher shall not enter into an agreement for
 
21 deferred deposit with a customer during the period of time that
 
22 an earlier agreement for a deferred deposit for the same customer
 
23 is in effect.  A deferred deposit transaction shall not be
 

 
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 1 repaid, refinanced, or consolidated by or with the proceeds of
 
 2 another deferred deposit transaction.
 
 3      (e)  A check casher who enters into a deferred deposit
 
 4 agreement and accepts a check passed on insufficient funds, or
 
 5 any assignee of that check casher, shall not be entitled to
 
 6 recover damages in any action brought pursuant to or governed by
 
 7 chapter 490.  Instead, the check casher may charge and recover a
 
 8 fee for the return of a dishonored check in an amount not greater
 
 9 than $20.
 
10      (f)  No amount in excess of the amounts authorized by this
 
11 section and no collateral products such as insurance shall be
 
12 directly or indirectly charged by a check casher pursuant or
 
13 incident to a deferred deposit agreement.
 
14      �   -5  Exemptions.  This chapter shall not apply to:
 
15      (1)  Any person who is principally engaged in the bona fide
 
16           retail sale of goods or services, and who, either as
 
17           incident to or independent of the retail sale or
 
18           service, from time to time cashes items for a fee or
 
19           other consideration, where not more than $2, or two per
 
20           cent of the amount of the check, whichever is greater,
 
21           is charged for the service; or
 
22      (2)  Any person authorized to engage in business as a bank,
 
23           trust company, savings bank, savings and loan
 

 
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 1           association, financial services loan company, or credit
 
 2           union under the laws of the United States, any state or
 
 3           territory of the United States, or the District of
 
 4           Columbia.
 
 5      �   -6  Penalties.(a)  Any person who violates this
 
 6 chapter shall be deemed to have engaged in an unfair or deceptive
 
 7 act or practice in the conduct of any trade or commerce within
 
 8 the meaning of section 480-2(a).  Aggrieved consumers may seek
 
 9 those remedies set forth in section 480-13(b).
 
10      (b)  Any person who is not a consumer and is injured by a
 
11 wilful violation of the chapter may bring an action for the
 
12 recovery of damages, a proceeding to restrain and enjoin those
 
13 violations, or both.  If judgment is for the plaintiff, the
 
14 plaintiff shall be awarded a sum not less than $1,000 or
 
15 threefold damages, whichever sum is greater, and reasonable
 
16 attorneys' fees together with the costs of suit.
 
17      (c)  A wilful violation of this chapter shall be punishable
 
18 by a fine of up to $500 and up to thirty days imprisonment.
 
19      (d)  A customer who enters into a written deferred deposit
 
20 agreement and offers a personal check to a check casher pursuant
 
21 to that agreement shall not be subject to any criminal penalty
 
22 for failure to comply with the terms of that agreement unless the
 
23 check is dishonored because the customer closed the account or
 

 
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 1 stopped payment on the check.
 
 2      �   -7  Other relief available.  The penalties provided in
 
 3 this chapter are in addition to penalties and remedies otherwise
 
 4 available against the same conduct under the common law or other
 
 5 state or federal statutes or rules."
 
 6      SECTION 2.  This Act shall take effect on July 1, 1999, and
 
 7 shall be repealed on July 1, 2001.