STAND. COM. REP. NO. 1542

Honolulu, Hawaii

RE:    H.B. No. 483

       H.D. 1

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

Madam:

     Your Committee on Commerce, Consumer Protection, and Affordable Housing, to which was referred H.B. No. 483, H.D. 1, entitled:

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

begs leave to report as follows:

     The purpose of this measure is to require the Department of Commerce and Consumer Affairs to regulate the check cashing industry through licensing requirements.

     Your Committee received testimony in support of this measure from Financial Service Providers of Hawaii, Inc.; Legal Aid Society of Hawaii; Hawai‘i Alliance for Community-Based Economic Development (HACBED); Aloha United Way; and Hawaii Asset Building Coalition; and one individual.  Testimony in opposition was received from the Department of Taxation; Maui Loan; Kama‘aina Loan; National Association of Consumer Advocates; and one individual.  The Department of Commerce and Consumer Affairs and the Office of Consumer Protection provided comments on the measure.

     Your Committee finds that deferred deposit transactions, or payday loans, are short-term loans that have the potential to trap consumers in a cycle of debt that does not allow them to build assets for their future.  Hawaii is one of only four states that does not require a license to provide a payday loan.  In 2005, the Office of the State Auditor conducted a sunrise analysis on the regulation of check cashing and deferred deposit agreements and recommended that chapter 480F, Hawaii Revised Statutes, be strengthened to be more consumer friendly. 

     Your Committee has amended this measure by inserting the provisions of S.B. No. 1935, S.D. 1, a similar measure which

requires registration of check cashers instead of licensing. 

     As amended, the measure:

     (1)  Requires registration, rather than licensing, of check cashers with the Department of Commerce and Consumer Affairs;

     (2)  Raises the limit on the maximum amount of a deferred deposit transaction from twenty-five per cent to thirty per cent of a consumer's gross monthly income;

     (3)  Includes language to require the availability of an extended repayment plan after any consumer has entered into four or more consecutive transactions (back-to-back agreements within twenty-four hours of the payment of a previous transaction); provided that the customer requests the option within twenty-four hours of the last payment due date; and

     (4)  Changes the effective date from January 1, 2050, to July 1, 2050, to encourage more discussion on this matter.

     As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Affordable Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 483, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 483, H.D. 1, S.D. 1, and be placed on the calendar for Third Reading.

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

____________________________

BRIAN T. TANIGUCHI, Chair