Honolulu, Hawaii
                                                     , 1999

                                   RE:  H.B. No. 460
                                        H.D. 2
                                        S.D. 1

Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Commerce and Consumer Protection, to which
was referred H.B. No. 460, H.D. 2, entitled: 


begs leave to report as follows:

     The purpose of this measure is establish 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 posted and separate written notices to
          consumers of actual fees;

     (3)  Specifying other prohibited acts with regard to check
          cashing; and

     (4)  Making violations of check cashing laws an unfair or
          deceptive trade practice in the conduct of trade or
          commerce pursuant to Section 480-2(a), Hawaii Revised

     The Office of Consumer Protection and American Association
of Retired Persons presented testimony in support of this
measure.  Community Financial Services Association of America
presented testimony in support of the intent of the measure with

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                                   Page 2

proposed amendments.  Hawaii Check Cashing and Check Fora Check
presented testimony in opposition to this measure.

     Your Committee finds that more consumers are using deferred
deposit transactions in order to meet day-to-day financial needs.
These transactions are also known as "payday advances".  In these
transactions the consumer writes a check to a check cashing
business.  In exchange for a fee, the business will cash the
check and agree to not deposit the check for a specific period of
time, typically one week to a month.

     Your Committee further finds that although many consumers
utilize these services with satisfactory results, abuses may take
place in an unregulated industry.  Excess fees, rollover of
debts, and mandatory collateral purchases may all be used in
order to inflate the cost of the services rendered.

     Your Committee has amended this measure to:

     (1)  Add definitions for the terms "check casher" and
          "deferred deposit";

     (2)  Require that the required notices include fees charged
          for issuing money orders, and initial issuance of
          membership or identification cards;

     (3)  Delete the "prohibited practices" section of the

     (4)  Add a new section specifying the conditions under which
          deferred deposit transactions are allowed, including:

          (A)  Prohibiting deferred deposit transactions where
               the check casher holds the check for more than 31

          (B)  Prohibiting deferred deposit transactions for more
               than $400;

          (C)  Requiring a written agreement signed by both the
               consumer and the check casher which sets forth the
               actual fees and interest rate;

          (D)  Limiting fees that may be charged by check cashers
               in deferred deposit transactions to 15% of the
               face amount of the check;

          (E)  Prohibiting rollover of deferred deposit
               transaction balances;

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                                   Page 3

          (F)  Limiting the fees a check casher may charge for
               dishonored checks to $20; and

          (G)  Prohibiting the sale of collateral products
               pursuant to a deferred deposit agreement;

     (5)  Amend the penalties section to:

          (A)  Allow consumers, injured by a wilful violation of
               this Act, to bring a court action to restrain the
               practice of the check casher and recover damages
               and attorney's fees; and

          (B)  Specify that a wilful violation of this Act is
               punishable by a fine of up to $500 and up to 30
               days imprisonment; and

     (6)  Make technical, nonsubstantive amendments.

     As affirmed by the record of votes of the members of your
Committee on Commerce and Consumer Protection that is attached to
this report, your Committee is in accord with the intent and
purpose of H.B. No. 460, H.D. 2, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as H.B. No. 460, H.D. 2, S.D. 1, and be placed on the
calendar for Third Reading.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Commerce and
                                   Consumer Protection,

                                   BRIAN KANNO, Co-Chair

                                   BRIAN T. TANIGUCHI, Co-Chair