Report Title:

Check Cashing



Amends the check cashing laws to require registration of check cashers, provide further requirements on deferred deposit transactions, and clarify applicability requirements.



S.B. NO.













relating to check cashing.





SECTION 1. Chapter 480F, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"480F-   Registration required. (a) No check casher shall conduct business in this State, including deferred deposit transactions, without first registering with the division of financial institutions under this chapter.

(b) The director shall prescribe the form of the application for registration. Each application shall be accompanied by the appropriate fee as prescribed by the director.

(c) Check casher registration shall be updated annually and shall include the following:

(1) The address of the principal office of the check casher;

(2) The name and address of the check casher's agent for service of process in this State; and

(3) Payment of the appropriate registration fees, as established by the director."

SECTION 2. Section 480F-1, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Director" means the director of commerce and consumer affairs."

SECTION 3. Section 237-24.75, Hawaii Revised Statutes, is amended to read as follows:

"[[]237-24.75[]] Additional exemptions. In addition to the amounts exempt under section 237-24, this chapter shall not apply to [amounts]:

(1) Amounts received as a beverage container deposit collected under chapter 342G, part VIII[.]; and

(2) Amounts received in fees and interest by check cashers for deferred deposit transactions."

SECTION 4. Section 480F-2, Hawaii Revised Statutes, is amended to read as follows:

"[[]480F-2[]] Posting and notice of fees charged. Any person who cashes one or more checks for a fee shall:

(1) Post in a conspicuous place in every location at which the person does business a notice that sets forth[:] in at least    point type:

(A) The fees charged for cashing a check, for selling or issuing a money order, and for the initial issuance of any membership or identification cards; [and]

(B) That consumer complaints about the check cashing business may be filed with the department of commerce and consumer affairs, and includes and identifies the telephone number and address of the consumer information service of the department of commerce and consumer affairs;

(C) The fees charged and annual percentage rate of interest for a deferred deposit transaction;

(D) A warning that deferred deposit transactions are not suitable for long-term borrowing;

(E) The limitation on deferred deposit transactions that a consumer shall only have one open deferred deposit transaction from all sources; and

(F) Instructions on how and where to obtain information on financial education and credit counseling;

(2) Provide written notice to each customer of the fees charged for cashing checks that is separate from and in addition to any posted notice;

(3) Obtain a written acknowledgment from the customer that written notice of the fees charged for cashing checks was provided; and

(4) Provide each customer a receipt documenting any and all fees charged."

SECTION 5. Section 480F-4, Hawaii Revised Statutes, is amended by amending subsections (b), (c), (d), and (e) to read as follows:

"(b) Each deferred deposit shall be made pursuant to a written agreement that has been signed by the customer and the check casher or an authorized representative of the check casher. The written agreement shall contain a statement of the total amount of any fees charged for the deferred deposit, expressed both in United States currency and as an annual percentage rate. The written agreement shall authorize the check casher to defer deposit of the personal check until a specific date not later than thirty-two days from the date the written agreement was signed. The written agreement shall not permit the check casher to accept collateral. The written agreement shall contain a statement that provides the customer a twenty-four hour right to rescind the agreement.

The written agreement shall contain a statement that a payment plan option is available after    or more consecutive deferred deposit transactions. An interest-free payment plan option shall be provided to non-default customers with a maximum term of ninety days. An interest-free payment plan option shall be provided to customers in default with a minimum term of sixty days. Any collection letter written to a customer in default shall inform the customer of the option for interest-free payment. No interest shall be charged on any payment plan option; however, a late or administrative fee of $30 may be assessed. There shall be a thirty day period after the completion of any payment plan during which no new payment plan shall commence. For purposes of this subsection, "consecutive deferred deposit transactions" means back to back transactions occurring within twenty-four hours of each other.

(c) The face amount of the check shall not exceed $600 and the deposit of a personal check written by a customer pursuant to a deferred deposit transaction may be deferred for no more than thirty-two days. No check casher shall make a deferred deposit transaction in an amount, including principal and fees, greater than twenty-five per cent of a customer's gross monthly income. A check casher may charge a fee for deferred deposit of a personal check in an amount not to exceed fifteen per cent of the face amount of the check. Any fees charged for deferred deposit of a personal check in compliance with this section shall be exempt from chapter 478.

(d) A check casher shall not enter into an agreement for deferred deposit with a customer during the period of time that an earlier agreement for a deferred deposit for the same customer is in effect[.] from any source. A deferred deposit transaction shall not be repaid, refinanced, or consolidated by or with the proceeds of another deferred deposit transaction.

(e) A check casher who enters into a deferred deposit agreement and accepts a check passed on insufficient funds, or any assignee of that check casher, shall not be entitled to recover damages in excess of principal, interest, and out of pocket legal costs in any action brought pursuant to or governed by chapter 490. No additional interest may be collected except the ten per cent allowed by law on uncollected judgments. Instead, the check casher may charge and recover a fee for the return of a dishonored check in an amount not greater than [$20.] $30."

SECTION 6. Section 480F-5, Hawaii Revised Statutes, is amended to read as follows:

"[[]480F-5[]] Exemptions. This chapter shall not apply to[:

(1) Any person who is principally engaged in the bona fide retail sale of goods or services, and who, either as incident to or independent of the retail sale or service, from time to time cashes items for a fee or other consideration, where not more than $2, or two per cent of the amount of the check, whichever is greater, is charged for the service; or

(2) Any] any person authorized to engage in business as a bank, trust company, savings bank, savings and loan association, financial services loan company, or credit union under the laws of the United States, any state or territory of the United States, or the District of Columbia."

SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 8. This Act shall take effect on July 1, 2007.