HB430

SECTION 1. Chapter 480F, Hawaii Revised Statutes, is amended by adding eight new sections to be appropriately designated and to read as follows:

"§480F-A Licensed required. No check casher shall engage in business without a license obtained under this chapter and the rules of the director.

§480F-B Fees; biennial renewal; restoration. (a) No applicant shall be examined under this chapter until the appropriate fees have been paid.

(b) Every person holding a license under this chapter shall register with the director and pay a biennial renewal fee on or before June 30 of each even-numbered year. Failure to pay the renewal fee shall constitute a forfeiture of the license as of the date of expiration. Any license so forfeited may be restored within one year after the expiration upon filing of an application and payment of the renewal and restoration fees.

§480F-C Bond. Every check casher shall give and keep in force a bond with the director in the penal sum of $5,000 with good and sufficient surety or sureties approved by the director, conditioned that:

(1) The licensee shall not violate this chapter; and

(2) The licensee shall faithfully, promptly, and truly refund all fees illegally or incorrectly obtained from applicants to the director.

§480F-D Application for license. (a) Every individual, partnership, corporation, or association seeking a license to operate as a check casher shall file a written application with the director that shall contain information and shall be in the form as the director may prescribe; provided that in addition to complying with all other requirements of this chapter, no license shall be issued unless the applicant:

(1) Has passed a certified check casher examination as designated by the director; or

(2) Has in the applicant's employ a principal agent.

(b) Every principal agent shall file a written application with the director that shall contain the information and shall be in the form as the director may prescribe and no license shall be issued unless the applicant has passed a certified check casher examination as designated by the director.

The examination shall cover the following:

(1) State statutes and rules relating to check cashers;

(2) Federal statutes and rules relating to check cashers; and

(3) General principles of business law.

(c) A principal agent who does not engage in the check casher business in the State during the succeeding year shall not be required to pay the renewal fee as long as the principal agent remains inactive. Should the principal agent wish to resume work as a principal agent at some future time, the principal agent shall notify the director and remit the renewal fee for the current biennial period.

(d) Every applicant, including all officers, directors, partners, members, or managers of the applicant, shall possess a reputation for honesty, truthfulness, financial integrity, and fair dealing and shall not have been convicted of a felony directly related to the operation of a commercial employment agency, unless the conviction has been expunged or annulled.

§480F-E Issuance of license. (a) Upon receipt of an application for a license to conduct business as a check casher, the director may issue the license if the applicant has met the requirements of this chapter and chapter 436B.

(b) Every license issued shall be valid only as to the check casher and any branch offices of the check casher.

(c) No license shall be issued to a check casher that establishes or maintains a place of business in, or conducts business from, a home, apartment, hotel room, or any other location where the premises may be considered not in the public interest, unless approved by the director.

(d) A license issued under this chapter shall not be transferable.

§480F-F Records and reports. Every check casher shall keep records and make reports with respect to the operation of the business as the director by rule may prescribe. Any records required by rule shall be preserved.

§480F-G Payment plans. (a) A payment plan option for non-default customers may be up to ninety days. No interest may be charged but a late administrative fee of $30 may be added. A thirty-day cooling off period is mandatory after completing a payment plan.

(b) An interest free payment plan with a minimum term of sixty days must be offered for customers in default. All collection letters shall inform the customers of this option.

§480F-H Amounts not taxable. All fees paid and interest earned from deferred deposit transactions are exempt from the general excise tax under chapter 237."

SECTION 2. Section 237-24, Hawaii Revised Statutes, is amended to read as follows:

"§237-24 Amounts not taxable. This chapter shall not apply to the following amounts:

(1) Amounts received under life insurance policies and contracts paid by reason of the death of the insured;

(2) Amounts received (other than amounts paid by reason of death of the insured) under life insurance, endowment, or annuity contracts, either during the term or at maturity or upon surrender of the contract;

(3) Amounts received under any accident insurance or health insurance policy or contract or under workers' compensation acts or employers' liability acts, as compensation for personal injuries, death, or sickness, including also the amount of any damages or other compensation received, whether as a result of action or by private agreement between the parties on account of the personal injuries, death, or sickness;

(4) The value of all property of every kind and sort acquired by gift, bequest, or devise, and the value of all property acquired by descent or inheritance;

(5) Amounts received by any person as compensatory damages for any tort injury to the person, or to the person's character reputation, or received as compensatory damages for any tort injury to or destruction of property, whether as the result of action or by private agreement between the parties (provided that amounts received as punitive damages for tort injury or breach of contract injury shall be included in gross income);

(6) Amounts received as salaries or wages for services rendered by an employee to an employer;

(7) Amounts received as alimony and other similar payments and settlements;

(8) Amounts collected by distributors as fuel taxes on "liquid fuel" imposed by chapter 243, and the amounts collected by such distributors as a fuel tax imposed by any Act of the Congress of the United States;

(9) Taxes on liquor imposed by chapter 244D on dealers holding permits under that chapter;

(10) The amounts of taxes on cigarettes and tobacco products imposed by chapter 245 on wholesalers or dealers holding licenses under that chapter and selling the products at wholesale;

(11) Federal excise taxes imposed on articles sold at retail and collected from the purchasers thereof and paid to the federal government by the retailer;

(12) The amounts of federal taxes under chapter 37 of the Internal Revenue Code, or similar federal taxes, imposed on sugar manufactured in the State, paid by the manufacturer to the federal government;

(13) An amount up to, but not in excess of, $2,000 a year of gross income received by any blind, deaf, or totally disabled person engaging, or continuing, in any business, trade, activity, occupation, or calling within the State; a corporation all of whose outstanding shares are owned by an individual or individuals who are blind, deaf, or totally disabled; a general, limited, or limited liability partnership, all of whose partners are blind, deaf, or totally disabled; or a limited liability company, all of whose members are blind, deaf, or totally disabled;

(14) Amounts received by a producer of sugarcane from the manufacturer to whom the producer sells the sugarcane, where:

(A) The producer is an independent cane farmer, so classed by the Secretary of Agriculture under the Sugar Act of 1948 (61 Stat. 922, Chapter 519) as the Act may be amended or supplemented;

(B) The value or gross proceeds of sale of the sugar, and other products manufactured from the sugarcane, is included in the measure of the tax levied on the manufacturer under section 237-13(1) or (2);

(C) The producer's gross proceeds of sales are dependent upon the actual value of the products manufactured therefrom or the average value of all similar products manufactured by the manufacturer; and

(D) The producer's gross proceeds of sales are reduced by reason of the tax on the value or sale of the manufactured products;

(15) Money paid by the State or eleemosynary child-placing organizations to foster parents for their care of children in foster homes; and

(16) Amounts received by a cooperative housing corporation from its shareholders in reimbursement of funds paid by such corporation for lease rental, real property taxes, and other expenses of operating and maintaining the cooperative land and improvements; provided that such a cooperative corporation is a corporation:

(A) Having one and only one class of stock outstanding;

(B) Each of the stockholders of which is entitled solely by reason of the stockholder's ownership of stock in the corporation, to occupy for dwelling purposes a house, or an apartment in a building owned or leased by the corporation; and

(C) No stockholder of which is entitled (either conditionally or unconditionally) to receive any distribution not out of earnings and profits of the corporation except in a complete or partial liquidation of the corporation[.];

(17) Amounts received as fees paid or interest earned from deferred deposit transactions under chapter 480F."

SECTION 3. Section 480F-2, Hawaii Revised Statutes, is amended to read as follows:

"[[]§480F-2[]] Posting and notice of fees charged. Any person who cashes one or more checks for a fee shall:

(1) Post in a conspicuous place in every location at which the person does business a notice that sets forth[:] in point type:

(A) The fees and annual percentage rate, where applicable, charged for cashing a check, for a deferred deposit transaction, for selling or issuing a money order, and for the initial issuance of any membership or identification cards; [~~and~~]

(B) That consumer complaints about the check cashing business may be filed with the department of commerce and consumer affairs, and includes and identifies the telephone number and address of the consumer information service of the department of commerce and consumer affairs;

(D) That only one deferred deposit transaction can be open from all sources;

(E) Provide information on where to obtain financial education and credit counseling; and

(F) Include a copy of the license to do business as a check casher.

(2) Provide written notice in point type to each customer [~~of the fees charged for cashing checks~~] that is separate from and in addition to any posted notice[:] that contains the following information:

(A) The fees and annual percentage rate to be charged for cashing a check, for a deferred deposit transaction, for selling or issuing a money order, or for the initial issuance of any membership or identification cards;

(D) That only one deferred deposit transaction can be open from all sources;

(E) That a payment plan option is available after four or more consecutive back-to-back transactions within twenty-four hours;

(F) The right to rescind a deferred deposit transaction within twenty-four hours of the transaction; and

(G) Provide information on where to obtain financial education and credit counseling.

(3) Obtain a written acknowledgment from the customer that written notice of [~~the fees charged for cashing checks~~] all of the information contained in subsection (2) was provided; and

(4) Provide each customer a receipt documenting any and all fees charged."

SECTION 4. Section 480F-4, Hawaii Revised Statutes, is amended by amending subsections (c), (d), and (e) to read as follows:

"(c) The face amount of the check shall not exceed $600 and the deposit of a personal check written by a customer pursuant to a deferred deposit transaction may be deferred for no more than thirty-two days. A check casher may charge a fee for deferred deposit of a personal check in an amount not to exceed fifteen per cent of the face amount of the check. The total amount of a transaction, including principal and fees, may not exceed twenty-five per cent of the customer's gross monthly income. Any fees charged for deferred deposit of a personal check in compliance with this section shall be exempt from chapter 478.

(d) A check casher shall not enter into an agreement for deferred deposit with a customer during the period of time that an earlier agreement for a deferred deposit for the same customer is in effect[.] from any source. A deferred deposit transaction shall not be repaid, refinanced, or consolidated by or with the proceeds of another deferred deposit transaction.

(e) A check casher who enters into a deferred deposit agreement and accepts a check passed on insufficient funds, or any assignee of that check casher, shall not be entitled to recover damages in excess of principal, interest and out of pocket legal or court costs in any action brought pursuant to or governed by chapter 490. No additional interest may be collected except the ten per cent allowed by law on uncollected judgments. Instead, the check casher may charge and recover a fee for the return of a dishonored check in an amount not greater than [~~$20~~] $30."

SECTION 5. Section 480F-5, Hawaii Revised Statutes, is amended to read as follows:

"[[]§480F-5[]] Exemptions. This chapter shall not apply to[:

~~(1)~~ Any person who is principally engaged in the bona fide retail sale of goods or services, and who, either as incident to or independent of the retail sale or service, from time to time cashes items for a fee or other consideration, where not more than $2, or two per cent of the amount of the check, whichever is greater, is charged for the service; or

~~(2)~~ ~~Any~~] any person authorized to engage in business as a bank, trust company, savings bank, savings and loan association, financial services loan company, or credit union under the laws of the United States, any state or territory of the United States, or the District of Columbia."

SECTION 6. Section 480F-6, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) A [~~wilful~~] violation of this chapter shall be punishable by a fine of up to $500 and up to thirty days imprisonment."

SECTION 7. There is appropriated out of the general revenues of the State of Hawaii the sum of $ , or so much thereof as may be necessary for fiscal year 2007-2008, and the same sum, or so much thereof as may be necessary for fiscal year 2008-2009, for establishing a financial literacy education program for consumers.

The sums appropriated shall be expended by the department of commerce of consumer affairs for the purposes of this Act.

SECTION 8. In codifying the new sections added by section 1 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 9. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 10. This Act shall take effect on July 1, 2007.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	430
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII