HOUSE OF REPRESENTATIVES	H.B. NO.	744
TWENTY-EIGHTH LEGISLATURE, 2015
STATE OF HAWAII

A BILL FOR AN ACT

relating to check cashing.

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

     SECTION 1.  In 2005 the state auditor prepared a sunrise analysis in anticipation of the regulation of check cashers regarding the issuance of deferred deposit agreements.  Deferred deposit agreements are commonly referred to as payday loans and are small, short term, unsecured loans that borrowers commit to repay from their next paycheck or a regular income payment.

     Chapter 480F, Hawaii Revised Statutes, permits a check casher to charge a fee of 15 per cent of the face amount of the check for a deferred deposit agreement.  The maximum amount of the check is capped at $600.  According to the auditor, under this scenario, the interest charged to a borrower can amount to 459 per cent annualized interest rate on a fourteen day loan.

     The legislature finds that it is in the interest of the public to limit the interest rate a check casher is allowed to charge by way of a deferred deposit agreement.  This would help to limit the problem of borrowers being led into a debt trap from which they cannot escape.

     The purpose of this Act is to limit the interest a check casher can charge pursuant to a deferred deposit agreement.

     SECTION 2.  Section 480F-4, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  Each deferred deposit shall be made pursuant to a written agreement that has been signed by the customer and the check casher or an authorized representative of the check casher.  The written agreement shall contain a statement of the total amount of any fees and interest charged for the deferred deposit, expressed both in United States currency and as an annual percentage rate[.] not to exceed 36 per cent per annum.  As used in this section, per annum is defined as a 365 day year.  The written agreement shall authorize the check casher to defer deposit of the personal check until a specific date not later than thirty-two days from the date the written agreement was signed.  The written agreement shall not permit the check casher to accept collateral."

     SECTION 3.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

Report Title:

Check Cashing; Deferred Deposit Agreements; Interest

Description:

Places a cap on the interest that a check casher can charge pursuant to a deferred deposit agreement at 36 per cent per annum.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.