STAND. COM. REP. NO. 437________
                                 Page 1

 
                                 STAND. COM. REP. NO. 437________

                                 Honolulu, Hawaii
                                                   , 1999

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




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

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

     "A BILL FOR AN ACT RELATING TO CHECK CASHING,"

begs leave to report as follows:

     The purpose of this bill is to protect the public through
the regulation of businesses that cash checks for a fee.  As
received by your Committee, this bill:

     (1)  Requires check cashing companies to register with the
          Department of Commerce and Consumer Affairs (DCCA), pay
          application and renewal fees, and provide DCCA with
          information including the fees charged consumers;

     (2)  Mandates that check cashing companies provide customers
          with posted and written notice of check cashing fees,
          and obtain the customer's written acknowledgment that
          notice of fees was provided;

     (3)  Prohibits specified practices by check cashing
          companies, including the charging of fees in excess of
          specified percentages and amounts;

     (4)  Establishes criminal, civil, and administrative
          penalties for violation of the measure and rules
          adopted thereunder by DCCA, and civil liability of

 
                                 STAND. COM. REP. NO. 437________
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          check cashing companies to consumers in the amount of
          three times actual damages, or $250, whichever is
          greater.

     DCCA and the American Association of Retired Persons (AARP),
submitted testimony in support of the bill, suggesting
amendments.  Thomas Cook, a vendor of travel-related services,
proposed an amendment to the bill.  Your Committee also received
testimony from Kamaaina Loan opposing this measure.

     DCCA testified that the check cashing industry has undergone
significant growth over the past ten years, and that as the
popularity and success of the business grew, so did the amounts
charged for service.  DCCA stated that many states have enacted
laws regulating the industry's business practices, including both
fee caps and registration programs, but that resource limitations
within the DCCA required consideration of alternative regulatory
models.  DCCA urged the Committee to consider amending the bill
to remove registration requirements and establish fee caps,
stating that DCCA could not support the measure if the
registration requirements were included.  DCCA also suggested
amendments for the purpose of improving the clarity and
effectiveness of the law.

     Thomas Cook requested an amendment to narrow the definition
of the term, "check", to exclude foreign denomination and foreign
drawn payment instruments, because of concern that activities
beyond the focus of traditional check cashing regulatory schemes
and similar to those conducted by the company would fall within
the scope of the bill.

     The AARP submitted testimony that this measure will protect
those in lower income brackets, the military, and tourists, who
have limited access to checking accounts in the State, and who,
as the most frequent users of check cashing organizations, are
most vulnerable to overreaching by these organizations.  The AARP
requested an amendment that would strengthen the protection
provided under the customer notice of fees provision of the bill,
by requiring that the posted notice identify the State department
at which consumer complaints should be filed, and include its
phone number.

     Your Committee, in accord with the testimony of DCCA, Thomas
Cook, and AARP, has amended this measure to:

     (1)  Narrow the definition of "check" to exclude traveler's
          checks, and foreign denomination or foreign drawn
          payment instruments;


 
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     (2)  Remove the bill's registration requirements and
          associated provisions;

     (3)  Establish fee caps that clearly distinguish between
          three categories of checks:

          (A)  Personal checks and money orders;

          (B)  State public assistance and federal social
               security checks; and

          (C)  Other checks,

          with the lowest fee caps applicable to personal checks
          and money orders, and then in ascending order to state
          and federal checks, and other checks;

     (4)  Require that the check cashing company's posted notice
          of fees state that customer complaints should be filed
          with the DCCA, and include and identify the phone
          number of the DCCA consumer information service;

     (5)  Prohibit check cashing for a fee or advertisements
          indicating that checks will be cashed for a fee where
          the customer's identification is not provided prior to
          payment; and

     (6)  Remove provisions for criminal, civil, administrative
          penalties and fines, and make violation of the law an
          unfair or deceptive act or practice in the conduct of
          any trade or commerce under section 480-2(a), Hawaii
          Revised Statutes, and thereby subject to civil
          penalties of not less than $500 nor more than $10,000.

     Your Committee has also made technical, nonsubstantive
amendments for purposes of clarity, consistency, and style.


 
 
 
 
 
 
 
 
 
 
 
 
                                 STAND. COM. REP. NO. 437________
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     As affirmed by the record of votes of the members of your
Committee on Consumer Protection and Commerce that is attached to
this report, your Committee is in accord with the intent and
purpose of H.B. No. 460, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as H.B. No.
460, H.D. 1, and be referred to the Committee on Finance.

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



                                   ______________________________
                                   RON MENOR, Chair