TWENTY-EIGHTH LEGISLATURE, 2015
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 eight new sections to be appropriately designated and to read as follows:
"§480F-A Registration required. (a) No check casher shall conduct business in this State, including deferred deposit transactions, without first registering with the department.
(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 cashers shall register 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) The payment of the appropriate registration fees, as established by the director.
§480F-B Bond or other security device. (a) Each application for registration shall be accompanied by a surety bond, irrevocable letter of credit, or other similar security device acceptable to the director in the amount of $10,000, which shall be maintained during the term of the registration.
(b) The security device shall be in a form satisfactory to the director and shall run to the State to pay any costs or expenses which a registered check casher is required to pay to the State under this chapter, and also to the State for the benefit of any claimants against the registered check casher to secure the faithful performance of the obligations of the registered check casher relating to check cashing in the State. In the case of a bond, the aggregate liability of the surety bond shall not exceed the principal sum of the bond.
Claimants against the registered check casher may bring suit directly on the security device or the director may bring suit on behalf of the State or on behalf of the claimants, either in one action or in successive actions. In the event of any claims that result in payment from the security device, the registered check casher within thirty days shall provide replacement security to maintain the minimum amount required under subsection (a).
(c) To meet the requirement of a security device or of any portion of the principal amount thereof, the licensee may deposit with the director, or with such banks in this State as the licensee may designate and the director may approve, cash, interest-bearing stocks and bonds, notes, debentures, or other obligations:
(1) Of the United States or any agency or instrumentality thereof;
(2) Guaranteed by the United States;
(3) Of the State, a county of the State, or instrumentality of the State; or
(4) Guaranteed by the State,
in an aggregate amount based upon the principal amount or market value, whichever is lower, of not less than the amount of the security device or portion thereof.
(d) The securities or cash deposited pursuant to subsection (c) shall secure the same obligations as would a security device, but the depositor shall:
(1) Be entitled to receive all interest and dividends thereon;
(2) Have the right, with the approval of the director, to substitute other securities for those deposited; and
(3) Be required to substitute other securities for those deposited upon a showing of good cause and written order of the director.
(e) The security device shall remain in effect until cancellation, which may only occur after thirty days written notice to the director. Cancellation shall not affect any liability incurred or accrued during that period.
(f) The security device shall remain in place for no longer than one year after the registered check casher ceases check cashing operations in the State. The director may also permit a licensee to substitute a letter of credit or other form of security device acceptable to the director for the security device in place at the time the registered check casher ceases check cashing operations in the State.
§480F-C Records and reports. Each registered check casher shall keep records and make reports with respect to the operation of the check casher's business as provided in rules adopted by the director pursuant to chapter 91.
§480F-D Examinations. (a) The director may conduct an annual on-site examination of a registered check casher with or without prior notice. An examination may be conducted more frequently than annually if the director has a reasonable basis to believe that the registered check casher is not in compliance with this chapter. The examination may be conducted by the department or by an independent investigator hired by the director. As part of the examination, the department or the investigator may request relevant financial data from a registered check casher in addition to the records and reports required to be maintained under section 480F-C.
(b) The registered check casher shall bear the cost of reasonable expenses incurred by the department or an independent investigator hired by the director in conducting an examination or making a report of the examination.
(c) In addition to payment by the registered check casher of the reasonable cost of an examination or report, as provided in subsection (b), the director shall charge an examination fee to each registered check casher examined or investigated by the department, based upon the cost per hour per examiner. The hourly fee shall be $60.
(d) In addition to the examination fee, the director shall charge any registered check casher examined or investigated by the department, additional amounts for travel, per diem, mileage, and other reasonable expenses incurred in connection with the examination.
§480F-E Confidentiality of records. (a) The director and all employees, contractors, attorneys contracted or employed by the State, and appointees of the department, shall not divulge or furnish any information in their possession or obtained by them in the course of their official duties to persons outside the department. This shall not apply to disclosure otherwise permitted by this section or any other law regulating registered check cashers, in which case the disclosure shall not authorize or permit any further disclosure of the information.
(b) Any information that may not be divulged or furnished pursuant to subsection (a) is confidential and not subject to subpoena or other legal process.
(c) The director shall furnish a copy of a report of examination to the registered check casher. The report and its contents shall remain the property of the director and shall not be disclosed to any person who is not an officer, director, employee, authorized auditor, attorney, other consultant, or advisor of the registered check casher. Any person who has received the report from the registered check casher shall be bound by the confidentiality provisions of this section. The report and its contents shall not be subject to subpoena or other legal process requiring disclosure.
(d) The director may furnish reports of examination and other information relating to the examination of a registered check casher to:
(1) The governor, the attorney general, and heads of other state governmental agencies with regulatory authority over the registered check casher;
(2) Federal, state, or foreign regulatory agencies if the requesting agency agrees to use the information only for functions directly related to the exercise of its appropriate supervisory authority; and
(3) Other agencies of the United States or a state for use where necessary to investigate regulatory, civil, or criminal charges in connection with the affairs of any registered check casher under the supervision of the director.
§480F-F Suspension or revocation of registrations. (a) The director may suspend or revoke a registration if the director finds that:
(1) The registered check casher knowingly violates any material provision of this chapter or any rule or order validly adopted by the director under the authority of this chapter;
(2) The registered check casher is conducting its business in an unsafe or unsound manner;
(3) The registered check casher is insolvent;
(4) The registered check casher has suspended payment of its obligations, has made an assignment for the benefit of its creditors, or has admitted, in writing, its inability to pay its debts as they become due;
(5) The registered check casher has filed for bankruptcy, reorganization, arrangement, or other relief under any bankruptcy law; or
(6) The registered check casher refuses to permit the director to make any examination authorized by this chapter.
(b) The director may deny, suspend, revoke, or refuse to renew a certificate of registration only after proper notice and an opportunity for a hearing pursuant to chapter 91.
§480F-G Fees and expenses. No applicant or registrant shall be issued a certificate of registration unless the appropriate fees have been paid. Unless otherwise provided by law, the director shall establish the amount of all fees and expenses by rules adopted pursuant to chapter 91, and the fees shall be deposited with the director to the credit of the compliance resolution fund established pursuant to section 26-9(o).
§480F-H Rules. The director shall adopt rules, pursuant to chapter 91, to implement this chapter."
SECTION 3. Section 480F-1, Hawaii Revised Statutes, is amended by adding two 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."
SECTION 4. Section 480F-4, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:
"(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
.] or within twenty-four hours immediately following the end
of an earlier agreement for a deferred deposit. The check casher must verify
such information as follows:
(1) If the check casher maintains a database of customers, the check casher shall verify whether the customer has terminated a deferred deposit agreement with the check casher within the previous twenty-four hours; and
(2) The check casher shall obtain the signed, written verification of the customer that the customer has not terminated a deferred deposit agreement with that check casher or any other check casher within the previous twenty-four hours.
A deferred deposit transaction shall not be repaid, refinanced, or consolidated by or with the proceeds of another deferred deposit transaction."
SECTION 5. Section 480F-6, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:
"(c) A wilful violation of this chapter
shall be punishable by [
(1) A fine of up to [
(2) Revocation of registration;
(3) Up to thirty days imprisonment."
SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 7. This Act shall take effect on July 1, 2030.
Check Cashing; Deferred Deposit Agreements; Fees; Annual Percentage Rate
Creates standards, including authorization for the Department of Commerce and Consumer Affairs to adopt rules, for check cashing businesses, including requirements for registration, surety, recordkeeping, examinations, and confidentiality. Sets new penalties for check cashing businesses that violate the established standards. (SB737 HD2)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.