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.  (SD1)

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

 
Page 2                                                     460
                                     H.B. NO.           H.D. 2
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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 the
 
 8           fees charged for cashing a check, for selling or
 
 9           issuing a money order, and for the initial issuance of
 
10           any membership or identification cards, states that
 
11           consumer complaints about the check cashing business
 
12           may be filed with the department of commerce and
 
13           consumer affairs, and includes and identifies the
 
14           telephone number of the consumer information service of
 
15           the department of commerce and consumer affairs;
 
16      (2)  Provide written notice to each customer of the fees
 
17           charged for cashing checks that is separate from and in
 
18           addition to any posted notice;
 
19      (3)  Obtain a written acknowledgement from the customer that
 
20           written notice of the fees charged for cashing checks
 
21           was provided; and
 
22      (4)  Provide each customer a receipt documenting any and all
 
23           fees charged.
 

 
Page 3                                                     460
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

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

 
Page 4                                                     460
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 1 check casher or an authorized representative of the check casher.
 
 2 The written agreement shall contain a statement of the total
 
 3 amount of any fees charged for the deferred deposit, expressed
 
 4 both in United States currency and as an annual percentage rate.
 
 5 The written agreement shall authorize the check casher to defer
 
 6 deposit of the personal check until a specific date not later
 
 7 than thirty-one days from the date the written agreement was
 
 8 signed.  The written agreement shall not permit the check casher
 
 9 to accept collateral.
 
10      (c)  The face amount of the check shall not exceed $400 and
 
11 the deposit of a personal check written by a customer pursuant to
 
12 a deferred deposit transaction may be deferred for no more than
 
13 thirty-one days.  A check casher may charge a fee for deferred
 
14 deposit in an amount not to exceed fifteen per cent of the face
 
15 amount of the check.
 
16      (d)  A check casher shall not enter into an agreement for
 
17 deferred deposit with a customer during the period of time that
 
18 an earlier agreement for a deferred deposit for the same customer
 
19 is in effect.  A deferred deposit transaction shall not be
 
20 repaid, refinanced, or consolidated by or with the proceeds of
 
21 another deferred deposit transaction.
 
22      (e)  A check casher who enters into a deferred deposit
 
23 agreement and accepts a check passed on insufficient funds, or
 

 
Page 5                                                     460
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

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

 
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                                     H.B. NO.           H.D. 2
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 1      §   -6  Penalties.(a)  Any person who violates this
 
 2 chapter shall be deemed to have engaged in an unfair or deceptive
 
 3 act or practice in the conduct of any trade or commerce within
 
 4 the meaning of section 480-2(a).  Aggrieved consumers may seek
 
 5 those remedies set forth in section 480-13(b).
 
 6      (b)  Any person who not a consumer and is injured by a
 
 7 wilful violation of the chapter may bring an action for the
 
 8 recovery of damages, a proceeding to restrain and enjoin those
 
 9 violations, or both.  If judgment is for the plaintiff, the
 
10 plaintiff shall be awarded a sum not less than $1,000 or
 
11 threefold damages, whichever sum is greater, and reasonable
 
12 attorneys' fees together with the costs of suit.
 
13      (c)  A wilful violation of this chapter shall be punishable
 
14 by a fine of up to $500 and up to thirty days imprisonment.
 
15      (d)  A customer who enters into a written deferred deposit
 
16 agreement and offers a personal check to a check casher pursuant
 
17 to that agreement shall not be subject to any criminal penalty
 
18 for failure to comply with the terms of that agreement unless the
 
19 check is dishonored because the customer closed the account or
 
20 stopped payment on the check.
 
21      §   -7  Other relief available.  The penalties provided in
 
22 this chapter are in addition to penalties and remedies otherwise
 

 
 
 
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                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 1 available against the same conduct under the common law or other
 
 2 state or federal statutes or rules."
 
 3      SECTION 2.  This Act shall take effect on July 1, 1999.