HOUSE OF REPRESENTATIVES
THIRTIETH LEGISLATURE, 2019
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO CHECK CASHING.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Chapter 480F, Hawaii Revised Statutes, is amended by adding five new sections to be appropriately designated and to read as follows:
"§480F- Registration required. (a) No check casher shall conduct business in the State, including deferred deposit transactions, without first registering with the department 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 the State; and
(3) Payment of the appropriate registration fees, as established by the director.
§480F- Voluntary payment plans. (a) At the time of origination of a third consecutive deferred deposit transaction made to a customer by a check casher, and at the time of origination of any subsequent consecutive deferred deposit transactions, the check casher shall offer the customer in writing the option to participate in a voluntary payment plan. Should the customer be in financial hardship, a voluntary payment plan may be requested by the customer and arranged by the customer and the check casher at any time.
(b) The voluntary payment plan shall be structured to pay the existing debt, both the principal and the fee, in at least six equal payments of no more than five per cent of the customer's monthly pretax paycheck that coincide with the customer's periodic pay dates or the date the customer is scheduled to receive benefits, unless the customer requests different payment due dates. The payments made pursuant to the voluntary payment plan shall be applied directly to the existing debt, and the lender shall not charge the customer any additional fee other than an administration fee not to exceed $30 for participation in the voluntary payment plan. The administration fee charged for a voluntary payment plan in compliance with this section shall be exempt from chapter 478.
(c) The check casher shall provide a written copy of the voluntary payment plan agreement to the customer. The check casher shall be prohibited from engaging in collection activities while the customer continues to make payments in accordance with the payment plan. The check casher is prohibited from making any additional deferred deposit transactions to the customer prior to the completion of the voluntary payment plan.
(d) The check casher may require the customer to provide a post-dated check or electronic authorization for funds transferred for each payment under the voluntary payment plan. If any check or electronic authorization accepted by the check casher as payment for a voluntary payment plan is dishonored, the check casher shall not charge the customer a fee for the dishonored instrument.
(e) If the customer fails to make payments in accordance with a voluntary payment plan, the check casher is entitled to take action as otherwise allowed under this chapter to collect the remaining funds due and may charge the customer a one-time default fee of $30.
§480F- Single deferred deposit transaction limitation. A check casher shall take reasonable measure to ensure that no customer has more than one deferred deposit transaction outstanding at a time from all sources. Check cashers shall receive written confirmation from each customer that the customer does not have any outstanding deferred deposit transactions as of the date the customer enters into a deferred deposit transaction with the check casher.
§480F- Records and reports. Every check casher shall keep records and make reports with respect to the operation of business as provided in rules adopted by the director pursuant to chapter 91.
§480F- Rules. The director shall adopt rules necessary to implement this chapter pursuant to chapter 91."
SECTION 2. Section 480F-1, Hawaii Revised Statutes, is amended by adding three new definitions to be appropriately inserted and to read as follows:
""Department" means the department of commerce and consumer affairs.
"Director" means the director of commerce and consumer affairs.
"Financial hardship" means any hardship from loss of income, reduced work hours, increased living costs, or other hardships outside of the control of the customer at the discretion of the check casher and evidenced with documentation."
SECTION 3. 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 thirty-eight 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 [
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];
(2) Provide written
notice to each customer [
of the fees charged for cashing checks] in
twelve-point type to each customer that is separate from and in addition to
any posted notice[ ;], containing the following information:
(A) The fees charged for cashing checks; and
(B) That consumer complaints about the check cashing business may be filed with the department, and includes and identifies the telephone number and address of the consumer information service of the department;
(3) Obtain a written
acknowledgment from the customer that written notice [
of the fees charged
for cashing checks] as required by paragraph (2) was provided[ ;]
to the customer; and
(4) Provide each customer a receipt documenting any and all fees charged."
SECTION 4. Section 480F-4, Hawaii Revised Statutes, is amended to read as follows:
"§480F-4 Deferred deposits, when allowed. (a) No check casher may defer the deposit of a check except as provided in this section.
(b) In addition to the notice required by section 480F-2, a check casher that defers the deposit of any checks shall post in a conspicuous place in every location at which the check casher does business a notice that sets forth in thirty-eight point type:
(1) The total amount of any fees charged for the deferred deposit, expressed both in United States currency and as an annual percentage rate;
(2) That customers have a right to rescind a deferred deposit transaction within twenty-four hours of the transaction;
(3) That deferred deposit transactions are not suitable for long-term borrowing;
(4) That a customer may have no more than one outstanding deferred deposit transaction from all sources;
(5) Information on available financial education services, including contact information for an approved budget and credit counselor or an approved housing counselor; and
(6) A copy of the registration to do business as a check casher as required by this chapter.
(b)] (c) 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 following:
(1) The total
amount of any fees charged for the deferred deposit, expressed both in United
States currency and as an annual percentage rate[
(2) Notices stating that:
(A) The customer has a right to rescind a deferred deposit transaction within twenty-four hours of the transaction;
(B) The customer may have no more than one outstanding deferred deposit transaction from all sources;
(C) Deferred deposit transactions are not suitable for long-term borrowing;
(D) The customer may enter into a voluntary payment plan if the customer:
(i) Is experiencing financial hardship; or
(ii) Has entered into three or more consecutive transactions with the same check casher; and
(E) Information on available financial education services, including contact information for an approved budget and credit counselor or an approved housing counselor.
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.
(c)] (d) 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. 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)] (e) 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. A deferred deposit transaction
shall not be repaid, refinanced, or consolidated by or with the proceeds of
another deferred deposit transaction.
(e)] (f) 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 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.] the fee incurred by the check casher from its financial
(f)] (g) No amount in excess of the amounts authorized
by this section and no collateral products such as insurance shall be directly
or indirectly charged by a check casher pursuant or incident to a deferred
(h) For the purposes of this section:
"Approved budget and credit counselor" and "approved housing counselor" shall have the same meaning as those terms are defined in section 667-1."
SECTION 5. 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 6. (a) The state auditor shall conduct a sunrise analysis of the regulation of payday lenders and deferred deposit agreements and its impact on consumer protection in the State.
(b) In conducting the analysis, the state auditor shall examine the following:
(1) The increasing impact of out-of-state internet lenders who operate in the State;
(2) Data regarding consumer complaints;
(3) The impact of chapter 480F, Hawaii Revised Statutes, on consumers within the State over the past fifteen years; and
(4) Any further measures necessary for increased consumer protection in the State.
(c) The auditor shall submit a report of findings and recommendations, including any proposed legislation, to the legislature no later than twenty days prior to the convening of the regular session of 2020.
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, 3000.
Check Cashers; Registration; Voluntary Payment Plans; Notices
Requires check cashers to be registered with DCCA and to offer a voluntary payment plan to customers under certain circumstances. Establishes the terms of voluntary payment plans. Clarifies that a customer may only have one outstanding deferred deposit transaction from any source. Amends notices to customers required of check cashers. Removes the exemption for persons engaged in the bona fide retail sale of goods or services. Requires the Auditor to conduct a sunrise analysis of the regulation of payday lenders and deferred deposit agreements in the State. (HB332 HD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.