RESOLUTION

WHEREAS, payday loans, also referred to as "deferred presentments", "cash advances", deferred deposits", or "check loans", constitute one of the fastest growing forms of short-term lending; and

WHEREAS, payday loan companies, also known as check cashers, make short-term loans averaging $100 to $500 to consumers by accepting a post-dated check or electronic fund transfer agreement with proper identification, charging a fee, and providing immediate cash; and

WHEREAS, payday loans are frequently relied upon by individuals who are living from paycheck to paycheck, and who need a cash advance to bridge that gap; and

WHEREAS, the State regulates check cashing practices under chapter 480F, Hawaii Revised Statutes; and

WHEREAS, S.B. No. 1413 (2005) proposes, among other things, to require check cashers to file comprehensive annual reports with the Department of Commerce and Consumer Affairs (DCCA) that disclose financial information about the check casher and detailed information regarding deferred deposit agreements made during the preceding calendar year, and that verify that the check casher is not using improper means to collect deferred deposits; and

WHEREAS, the measure also requires check cashers to file copies of deferred deposit agreement forms with DCCA; and

WHEREAS, the measure contemplates the establishment of a complaints database on check cashers since it requires check cashers to provide customers with a pamphlet that, among other things, informs customers that DCCA provides information about complaints filed about check cashers and the resolution of those complaints; and

WHEREAS, the above requirements appear to establish a system for the regulation of check cashers; and

WHEREAS, the Hawaii Regulatory Licensing Reform Act (Act), codified in chapter 26H, Hawaii Revised Statutes (chapter 26H), establishes a state policy of undertaking the regulation of professions and vocations only where reasonably necessary to protect the health, safety, or welfare of consumers; and

WHEREAS, therefore, chapter 26H requires that before measures are enacted that subject previously unregulated professions or vocations to regulatory control, the measure be referred by concurrent resolution to the Auditor for analysis; now, therefore,

BE IT RESOLVED by the Senate of the Twenty-third Legislature of the State of Hawaii, Regular Session of 2005, the House of Representatives concurring, that the Auditor is requested to conduct a sunrise analysis of S.B. No. 1413 (2005) that sets forth the probable effects of the proposed regulatory measure, assesses whether its enactment is consistent with the Act's policies, and assesses alternative forms of regulation; and

BE IT FURTHER RESOLVED that the Auditor is requested to submit the Auditor's findings and recommendations to the Legislature no later than twenty days before the convening of the Regular Session of 2006; and

BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Auditor and the Director of Commerce and Consumer Affairs.

Report Title:

Check Cashers; Regulation; Sunrise Analysis