STAND. COM. REP. NO. 439________

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 936
                                     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. 936 entitled: 

     "A BILL FOR AN ACT RELATING TO COMMERCIAL PAPER,"

begs leave to report as follows:

     The purpose of this bill, as received, is to allow those
seeking to recover the amount owed under a dishonored check or
other negotiable instrument, to assess a service charge of not
more than $20, provided the maker of the instrument is given
notice of the assessment prior to acceptance of the instrument by
the payee.

     Your Committee received testimony in support of this bill
from a number of collection agencies, the Hawaiian Collectors
Association, Inc., Retail Merchants of Hawaii (RMH), Kauai Credit
Adjusters, Ltd., an attorney specializing in debtor-creditor law,
and other members of the business community.  The Department of
Commerce and Consumer Affairs (DCCA) took no position on the
bill.

     Many testifiers, who stated that the service charge was
necessary to deter consumers from writing bad checks and to
defray collection costs, found the measure fair, and the $20 fee,
reasonable.  Credit Associates of Maui, Ltd. testified that
returned check fees between $15 and $40 were charged by the
majority of businesses in Hawaii, and several testifiers stated
that the maximum $20 fee would protect the consumer from unfair
and unreasonable service fees.

 
 
                                 STAND. COM. REP. NO. 439________
                                 Page 2

 

     Upon consideration of the measure, its purpose, and the
testimony submitted, your Committee has amended this measure by:

     (1)  Removing the requirement that notice of the assessment
          be provided the maker of a dishonored instrument prior
          to acceptance of the instrument by the payee; and

     (2)  Making technical amendments to the form of the bill to
          make clear that:

          (A)  The service charge of not more than $20 may be
               assessed regardless of whether there is an
               accompanying action for treble damages; and

          (B)  Prior to bringing an action for treble damages,
               plaintiffs inform defendants, and request payment
               of not only the amount owed on the instrument, but
               also of the service charge.

     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. 936, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as H.B. No.
936, H.D. 1, and be referred to the Committee on Judiciary and
Hawaiian Affairs.

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



                                   ______________________________
                                   RON MENOR, Chair