REPORT TITLE: 
Check cashing

DESCRIPTION:
Requires the registration of check-cashing businesses.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           362
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                     A BILL FOR AN ACT

RELATING TO CHECK CASHING.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  The Hawaii Revised Statutes is amended by adding
 
 2 a new chapter to be appropriately designated and to read as
 
 3 follows:
 
 4                             "CHAPTER
 
 5                           CHECK CASHING
 
 6      §   -1 Definitions.  As used in this chapter, unless the
 
 7 context requires otherwise:
 
 8      "Applicant" means a person filing an application for
 
 9 registration under this chapter.
 
10      "Check" means any check, draft, money order, or other
 
11 instrument for the transmission or payment of money.  "Check"
 
12 does not include a traveler's check.
 
13      "Check-cashing business" means any person who engages in the
 
14 business of cashing checks for a fee.
 
15      "Department" means the department of commerce and consumer
 
16 affairs.
 
17      "Director" means the director of commerce and consumer
 
18 affairs.
 

 
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 1      "Person" means an individual, partnership, association,
 
 2 joint-stock association, limited liability company, trust, or
 
 3 corporation.
 
 4      "Registrant" means a person registered under this chapter.
 
 5      "Registration" means registration filed under this chapter.
 
 6      §   -2 Registration required.(a)  No person shall engage
 
 7 in a check-cashing business unless the person has first
 
 8 registered with the department in accordance with this chapter
 
 9 and rules adopted by the department in accordance with chapter
 
10 91.
 
11      (b)  Registration pursuant to this chapter shall not be
 
12 required for the following:
 
13      (1)  Any person not holding itself to be engaged in the
 
14           check-cashing business, who is principally engaged in
 
15           the bona fide retail sale of goods or services, who
 
16           either as incident to or independently of the retail
 
17           sale or service, from time to time cashes items for a
 
18           fee or other consideration, where not more than $2 or
 
19           two per cent of the amount of the check, whichever is
 
20           greater, is charged for the service; or
 
21      (2)  Any person authorized to engage in business as a bank,
 
22           savings institution, or credit union under the laws of
 

 
 
 
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 1           the United States, any state or territory of the United
 
 2           States, or the District of Columbia.
 
 3      §   -3 Application for registration; contents; fee.  An
 
 4 application for registration pursuant to this chapter shall be
 
 5 made in writing, under oath, and on a form prescribed by the
 
 6 director.  The application shall include:
 
 7      (1)  The name and address of the applicant, if the applicant
 
 8           is a natural person;
 
 9      (2)  The name and address or each partner, officer,
 
10           director, manager or member acting in a managerial
 
11           capacity, and registered agent of the business entity,
 
12           if the applicant is a business entity;
 
13      (3)  Information concerning the financial responsibility,
 
14           background, experience, and activities of the applicant
 
15           and its partners, officers, directors, and managers or
 
16           members who act in a managerial capacity;
 
17      (4)  The address of each location at which the applicant
 
18           proposes to do business; and
 
19      (5)  The name of a designated agent in the state for service
 
20           of process.
 
21      §   -4 Registration standards.(a)  Upon filing an
 
22 application for registration, the director shall investigate the
 
23 applicant with respect to:
 

 
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 1      (1)  The business records of the applicant;
 
 2      (2)  The competence, experience, integrity, and financial
 
 3           ability of any individual who:
 
 4           (A)  Is a director, officer, or supervisory employee of
 
 5                the business; or
 
 6           (B)  Owns or controls the business; and
 
 7      (3)  The record of the applicant or of any person referenced
 
 8           in paragraph (2) with respect to:
 
 9           (A)  Any criminal activity;
 
10           (B)  Any fraud or other act of personal dishonesty;
 
11           (C)  Any act, omission, or practice that constitutes a
 
12                breach of a fiduciary duty; or
 
13           (D)  Any suspension or removal, by any agency or
 
14                department of the United States or any state, from
 
15                participation in the conduct of any federally or
 
16                state-licensed or regulated business.
 
17      (b)  If the investigation under subsection (a) results in
 
18 findings that the applicant is not properly qualified to conduct
 
19 business under this chapter, those findings are grounds for
 
20 denial of the application.
 
21      §   -5 Registration term; renewal.  (a)  Registration
 
22 pursuant to this chapter shall remain effective through the
 

 
 
 
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 1 remainder of the calendar year of its date of issuance, unless
 
 2 sooner surrendered, suspended, or revoked.
 
 3      (b)  Registration shall be renewed annually, in such form as
 
 4 the director may prescribe.
 
 5      (c)  A registrant who fails to renew the registrant's
 
 6 certificate of registration within the time required by this
 
 7 section shall not be registered pursuant to this chapter.
 
 8      §   -6 Application and renewal registration fees.  The
 
 9 application and each renewal application shall be filed with a
 
10 nonrefundable fee of $   , together with a fee of $    for each
 
11 additional business location of the applicant.  The fees
 
12 collected by the director shall be used to offset the costs of
 
13 administering the chapter.
 
14      §   -7 Change of control of registrant; notification and
 
15 application to director.(a)  A registrant shall immediately
 
16 notify the director of any change of control of the registrant.
 
17      (b)  A person who acquires stock, partnership, or member
 
18 interests resulting in a change of control of the registrant
 
19 shall apply to the director for approval of the transfer.  The
 
20 application shall contain information showing that the
 
21 requirements of this chapter for obtaining a certificate of
 
22 registration will be satisfied after the change of control.  If
 
23 the director determines that those requirements will not be
 

 
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 1 satisfied, the director may deny the application and prohibit the
 
 2 applicant from participating in the business of the registrant.
 
 3      (c)  As used in this section, "change of control" means:
 
 4      (1)  A transfer of voting stock, partnership, or member
 
 5           interests that results in giving a person, directly or
 
 6           indirectly, the power to direct the management and
 
 7           policy of a registrant; or
 
 8      (2)  A transfer or at least twenty-five per cent of the
 
 9           outstanding voting stock, partnership, or member
 
10           interests of the licensee.
 
11      §   -8 Posting of certificate of registration and notice of
 
12 fees charged.  (a) A registrant shall:
 
13      (1)  Post in a conspicuous place in every location at which
 
14           the registrant conducts business:
 
15           (A)  A copy of the registrant's certificate of
 
16                registration; and
 
17           (B)  A notice that states the fees charged for cashing
 
18                a check; and
 
19      (2)  Give written notice to each customer of the fees
 
20           charged for cashing checks.  The notice shall be signed
 
21           by the customer before any such services are provided.
 

 
 
 
 
 
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 1      §   -9 Receipt of fees charged.  If the customer has paid a
 
 2 fee for cashing a check, the registrant shall provide each
 
 3 customer with a receipt of fees charged.
 
 4      §   -10  Prohibited activities.  A check-cashing business
 
 5 shall not:
 
 6      (1)  Charge fees, except as otherwise provided by this
 
 7           chapter, in excess of five per cent of the face amount
 
 8           of the payment instrument, or six per cent without the
 
 9           provision of identification, or $5, whichever is
 
10           greater;
 
11      (2)  Charge fees in excess of three per cent of the face
 
12           amount of the payment instrument, or four per cent
 
13           without the provision of identification, or $5,
 
14           whichever is greater, if the payment instrument is the
 
15           payment of any kind of state public assistance or
 
16           federal social security benefit payable to the bearer
 
17           of the payment instrument;
 
18      (3)  Charge fees for checks in excess of ten per cent of the
 
19           face amount of the check, or $5, whichever is greater;
 
20      (4)  Cash or advance any money on a postdated check;
 
21      (5)  Agree to hold a check for later deposit;
 
22      (6)  Issue any check without concurrently receiving the full
 
23           principal amount in cash or its equivalent; or
 

 
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 1      (7)  Engage in any false or misleading advertising.
 
 2      §   -11  Records of check-cashing business.(a)  A
 
 3 registrant shall maintain all books, accounts, records, and
 
 4 documents necessary to determine the registrant's compliance with
 
 5 the provisions of this chapter.  Books, accounts, records, and
 
 6 documents shall be retained for a period of at least three years.
 
 7      (b)  The records required to be maintained may be maintained
 
 8 by the registrant at any location; provided that the registrant
 
 9 notifies the director, in writing, of the location of the records
 
10 in its application or otherwise.  The registrant shall make the
 
11 records available to the director for examination and
 
12 investigation in the state within seven days after receipt of a
 
13 written request.
 
14      (c)  Registrants shall not be required to preserve or retain
 
15 any of the records required by this section or copies of those
 
16 records for a period longer than three years unless a longer
 
17 period is expressly required by the laws of this state or any
 
18 federal law.  A registrant may destroy any of its records or
 
19 copies after the expiration of the retention period required by
 
20 this section.
 
21      (d)  The original of any record of a registrant includes the
 
22 data or other information comprising a record stored or
 
23 transmitted in or by means of any electronic, computerized,
 

 
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 1 mechanized, or other information storage or retrieval or
 
 2 transmission system or device that can upon request generate,
 
 3 regenerate, or transmit the precise data or other information
 
 4 comprising the records.  An original also includes the visible
 
 5 data or other information so generated, regenerated, or
 
 6 transmitted if it is legible or can be made legible by
 
 7 enlargement or other process.
 
 8      §   -12  Reporting requirements.  A registrant under this
 
 9 chapter shall:
 
10      (1)  Disclose to the director the fees charged to consumers
 
11           for services regulated by this chapter; and
 
12      (2)  Conspicuously disclose to the public, at each business
 
13           location, the fees charged to consumers for its
 
14           services.
 
15      §   -13  Suspension or revocation of registration.  After
 
16 notice and hearing, the director may suspend or revoke a
 
17 registrant's registration if the director finds that:
 
18      (1)  A fact or condition exists that, if it had existed at
 
19           the time the registrant applied for its registration,
 
20           would have been grounds for denying the application;
 
21      (2)  The registrant's net worth has become inadequate and
 
22           the registrant, after ten days' written notice from the
 

 
 
 
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 1           director, fails to take such steps as the director
 
 2           determines necessary to remedy the deficiency;
 
 3      (3)  The registrant knowingly violated a material provision
 
 4           of this chapter or a rule or order validly adopted by
 
 5           the director under authority of this chapter;
 
 6      (4)  The registrant is conducting its business in an unsafe
 
 7           or unsound manner;
 
 8      (5)  The registrant is insolvent;
 
 9      (6)  The registrant has suspended payment of its
 
10           obligations, made an assignment for the benefit of its
 
11           creditors, or admitted in writing its inability to pay
 
12           its debts as they become due;
 
13      (7)  The registrant has applied for an adjudication of
 
14           bankruptcy, reorganization, arrangement, or other
 
15           relief under any bankruptcy;
 
16      (8)  The registrant refuses to permit the director to make
 
17           an examination authorized by this chapter;
 
18      (9)  The registrant fails to promptly and adequately respond
 
19           to communications from the director; or
 
20     (10)  The registrant wilfully fails to make a report required
 
21           by this chapter.
 

 
 
 
 
 
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 1      §   -14  Penalties.(a)  A person who carries on a business
 
 2 regulated by this chapter without a valid registration is guilty
 
 3 of a misdemeanor.
 
 4      (b)  A registrant who fails to comply with a provision of
 
 5 this chapter is subject to a civil action in which a court may
 
 6 assess a penalty not to exceed $5,000 for each violation or
 
 7 actual damages, whichever is greater.
 
 8      §   -15  Liability.  Any person who wilfully violates any
 
 9 provision of this chapter with respect to any consumer is liable
 
10 to the consumer for an amount equal to three times any actual
 
11 damage sustained by the consumer as a result of the failure or
 
12 the sum of $250, whichever is greater.
 
13      §   -16  Rules.  The director shall establish rules, in
 
14 accordance with chapter 91, as may be necessary to carry out the
 
15 purposes of this chapter."
 
16      SECTION 2.  This Act shall take effect upon its approval.
 
17 
 
18                           INTRODUCED BY:_________________________