PRINTER'S NO. 66
No. 56 Session of 1993
INTRODUCED BY THOMAS, TRELLO, MELIO, O'DONNELL, BISHOP, JAMES, BUTKOVITZ, TIGUE, LEDERER, JAROLIN, MIHALICH, KIRKLAND AND KELLER, JANUARY 27, 1993
REFERRED TO COMMITTEE ON RULES, JANUARY 27, 1993
AN ACT 1 Regulating the check-cashing industry; providing for the 2 licensing of check cashers, for additional duties of the 3 Department of Banking and for certain terms and conditions of 4 the business of check cashing; establishing the Check Cashing 5 Industry Recovery Fund; and providing penalties. 6 TABLE OF CONTENTS 7 Chapter 1. General Provisions 8 Section 101. Short title. 9 Section 102. Purpose. 10 Section 103. Definitions. 11 Section 104. Authority of department. 12 Chapter 3. Licensing Provisions 13 Section 301. License requirement and form. 14 Section 302. License terms and fees. 15 Section 303. Duration of license. 16 Section 304. Check Cashing Industry Recovery Fund. 17 Section 305. Conditions for licensing. 18 Chapter 5. Enforcement 19 Section 501. Suspension and revocation of license.
1 Section 502. Change of location. 2 Section 503. Fees and charges. 3 Section 504. Endorsement of checks, drafts or money orders 4 cashed. 5 Section 505. Restrictions on business of licensee. 6 Section 506. Books, accounts and records. 7 Section 507. Criminal penalty. 8 Section 508. Private remedy. 9 Chapter 11. Miscellaneous Provisions 10 Section 1101. Application of act. 11 Section 1102. Expiration. 12 Section 1103. Effective date. 13 The General Assembly of the Commonwealth of Pennsylvania 14 hereby enacts as follows: 15 CHAPTER 1 16 GENERAL PROVISIONS 17 Section 101. Short title. 18 This act shall be known and may be cited as the Check Cashing 19 Licensing Act. 20 Section 102. Purpose. 21 The General Assembly hereby finds and declares that check 22 cashers which engage in the business of cashing checks, drafts 23 or money orders provide vital banking services which some 24 citizens of this Commonwealth find unavailable or inconvenient 25 to obtain from traditional banking institutions. Some customers, 26 however, have been charged unreasonable rates by some check 27 cashers for these services. Therefore, it is in the public 28 interest, convenience and welfare to have the Commonwealth set 29 check cashing rates and to regulate the manner in which these 30 services are provided. 19930H0056B0066 - 2 -
1 Section 103. Definitions. 2 The following words and phrases when used in this act shall 3 have the meanings given to them in this section unless the 4 context clearly indicates otherwise: 5 "Check." A type of negotiable instrument as defined in 13 6 Pa.C.S. § 3104 (relating to form of negotiable instrument). 7 "Check casher." Any person, partnership, association or 8 corporation engaging in the business of cashing checks, drafts 9 or money orders for a fee. 10 "Department." The Department of Banking of the Commonwealth. 11 "Draft." A type of negotiable instrument as defined in 13 12 Pa.C.S. § 3104 (relating to form of negotiable instrument). 13 "Fund" or "recovery fund." The Check Cashing Industry 14 Recovery Fund. 15 "Licensee." A check casher licensed by the Department of 16 Banking to engage in the business of cashing checks, drafts or 17 money orders. 18 "Money order." As defined in the act of September 2, 1965 19 (P.L.490, No.249), referred to as the Money Transmission 20 Business Licensing Law. 21 "Secretary." The Secretary of Banking of the Commonwealth. 22 Section 104. Authority of department. 23 The department shall have the authority to: 24 (1) Issue rules, regulations and orders as may be 25 necessary for the administration and enforcement of this act 26 and the proper conduct of the business of check cashing. 27 (2) Examine any instrument, document, account, book, 28 record or file of a check casher, any employee or any other 29 person, or make such other investigation as may be necessary 30 to administer this act. 19930H0056B0066 - 3 -
1 (3) Conduct administrative hearings of any matter 2 pertaining to this act, issue subpoenas to compel the 3 attendance of witnesses and the production of instruments, 4 documents, accounts, books and records at any such hearing, 5 which may be retained by the department until the completion 6 of all proceedings in connection with which they were 7 produced, and administer oaths and affirmations to any person 8 whose testimony is required. In the event a person fails to 9 comply with a subpoena issued by the department or to testify 10 on any matter concerning which that person may be lawfully 11 interrogated, on application by the department, the 12 Commonwealth Court may issue an order requiring the 13 attendance of such person, the production of instruments, 14 documents, accounts, books or records or the giving of 15 testimony or may institute contempt of court penalties. 16 (4) Employ three additional staff to administer and 17 enforce this act. 18 CHAPTER 3 19 LICENSING PROVISIONS 20 Section 301. License requirement and form. 21 (a) Licensing required.--No person, partnership, association 22 or corporation shall engage in the business of cashing checks, 23 drafts or money orders for a consideration without first 24 obtaining a license under this act. 25 (b) Form of application.--Application for a license shall be 26 in writing, under oath, shall be in the form prescribed by the 27 department and shall contain the following: 28 (1) The applicant's name and address of residence. 29 (2) If the applicant is a partnership or association, 30 the name and address of every member and, if a corporation, 19930H0056B0066 - 4 -
1 of each officer and director. 2 (3) The name and address of the business, if the 3 business will be conducted at a specific address. 4 (4) Evidence of a lease, mortgage or agreement of sale 5 for the business location. 6 (5) Evidence that the applicant has complied with all 7 municipal and county requirements for doing business. 8 (6) Evidence that the applicant has no outstanding debts 9 to the Commonwealth or evidence that a payoff agreement is in 10 place. 11 (c) Additional information.--The department may request any 12 additional information which it deems necessary to the licensing 13 procedure. 14 Section 302. License terms and fees. 15 Applicants for a license to conduct business shall remit to 16 the department for each location: 17 (1) An investigation fee in an amount equal to the 18 actual cost of the investigation with a cap to be determined 19 by departmental regulations. 20 (2) A license fee of $350. No abatement of any license 21 fee shall be made if the license is issued for less than one 22 year. 23 Section 303. Duration of license. 24 On or before January 1 of each year, a licensee shall pay a 25 license renewal fee of $350. Every licensee shall, 60 days prior 26 to the date of expiration, apply for license renewal on a form 27 provided by the department. The department shall renew the 28 license if, after considering any relevant factors and the 29 comments and complaints of the public and consumers, if any, the 30 license renewal applicant is in compliance with the provisions 19930H0056B0066 - 5 -
1 of this act. Any license renewal applicant requesting a change 2 of address shall pay to the department a fee in an amount equal 3 to the cost of investigation of the new address with a cap on 4 the fee to be determined by departmental regulations. 5 Section 304. Check Cashing Industry Recovery Fund. 6 (a) Payments into fund.--Each check casher shall pay prior 7 to the issuance of its license, in addition to the applicable 8 licensing and investigation fees, a further fee of $1,000 which 9 shall be paid and credited to the Check Cashing Industry 10 Recovery Fund, which is hereby established as a separate account 11 in the State Treasury. Each check casher shall pay this fee only 12 upon issuance of its first license. The department may assess an 13 additional fee at renewal or at such time deemed necessary by 14 the department, not to exceed $1,000, if it finds that the 15 initial fund balance is insufficient to address the losses of 16 aggrieved parties. All fees shall be paid into the State 17 Treasury and credited to the fund. The deposits shall be 18 allotted solely for the purpose of the fund as prescribed in 19 this act. The fund shall be invested and interest and dividends 20 shall accrue to the fund. 21 (b) Application for recovery from fund.-- 22 (1) When an aggrieved person obtains a final judgment in 23 a court of competent jurisdiction against a check casher upon 24 grounds of fraud, misrepresentation or deceit with reference 25 to a transaction for which a license is required under this 26 act, the aggrieved person may, upon termination of all 27 proceedings, including reviews and appeals, file an 28 application in the court in which the judgment was entered 29 for an order directing payment out of the fund of the amount 30 unpaid upon the judgment. 19930H0056B0066 - 6 -
1 (2) The aggrieved person shall be required to show the 2 following: 3 (i) He is not a spouse of the payor or the personal 4 representative of the spouse. 5 (ii) He has obtained a final judgment as set out in 6 this section. 7 (iii) All reasonable personal acts, rights of 8 discovery and such other remedies at law and in equity as 9 exist have been exhausted in the collection thereof. 10 (iv) He is making the application no more than one 11 year after the termination of the proceedings, including 12 reviews and appeals in connection with the judgment. 13 (3) Should the court direct payment from the fund, the 14 license of that check casher shall automatically suspend upon 15 the effective date of the payment from the fund. No such 16 check casher shall be granted reinstatement until it has 17 repaid in full, plus interest at the rate of 10% a year, the 18 amount paid from the fund. 19 Section 305. Conditions for licensing. 20 (a) Conditions for license.--The department shall execute a 21 license to permit the cashing of checks, drafts and money 22 orders, in accordance with this act at the location specified in 23 the application for license if the department finds that the 24 financial responsibility, experience and general fitness of the 25 applicant, and of the members thereof if the applicant is a 26 partnership or association, and of the officers and directors 27 thereof if the applicant is a corporation, warrants a belief 28 that the business will be operated honestly and fairly within 29 the purposes of this act. 30 (b) Procedure for public comment.--To determine the 19930H0056B0066 - 7 -
1 financial responsibility, experience, character and general 2 fitness of the applicant, the department shall consider public 3 comment. The procedure for public comment shall be as follows: 4 (1) The applicant shall publish notice, within ten days 5 after being notified by the department, that the application 6 is completed. Notice shall be published in English and 7 Spanish or other language if deemed necessary by the 8 department in a newspaper having general circulation in the 9 community in which the applicant intends to locate. 10 (2) The applicant shall transmit to the department two 11 copies of each notice and each publisher's affidavit of 12 publication. 13 (3) Upon publication, the application and all related 14 communications may be inspected in the department during 15 working hours by any person. This inspection shall be upon 16 written request and by appointment. The department may refuse 17 to disclose information that it deems is confidential. 18 (4) Within 30 days of the date of publication of notice, 19 anyone may file a communication in protest or in favor of the 20 application by submitting two copies to the department. 21 (5) The applicant may file an answer to any protest 22 until ten days after the last date for filing of 23 communication by submitting two copies to the department. 24 (6) The department shall consider all such communication 25 in its evaluation of the application. 26 (c) Felony conviction.--The department shall not issue a 27 license if it finds that the applicant, or any person who is a 28 director, officer, partner, agent, employee or substantial 29 stockholder of the applicant, has been convicted of a felony in 30 any jurisdiction or of a crime which, if committed within this 19930H0056B0066 - 8 -
1 Commonwealth, would constitute a felony. 2 (d) Acts constituting conviction.--For the purpose of this 3 act, a person shall be deemed to have been convicted of a crime 4 if that person pleaded guilty to a charge thereof before a court 5 or magistrate, or has been found guilty thereof by the decision 6 or judgment of a court or magistrate or by the verdict of a 7 jury, irrespective of the pronouncement of sentence or the 8 suspension thereof, unless the plea of guilty, or the decision, 9 judgment or verdict, has been set aside, reversed or otherwise 10 abrogated by lawful judicial process or unless the person 11 convicted of the crime has received a pardon from the President 12 of the United States or the Governor or other pardoning 13 authority in the jurisdiction where the conviction occurred, or 14 shall have received a certificate of good conduct granted by the 15 Pennsylvania Board of Probation and Parole to remove the 16 disability under this act because of such conviction. 17 (e) Notification of denial.--If the department finds that 18 the applicant fails to meet any of the conditions set forth in 19 this section, the license shall not be issued and the department 20 shall notify the applicant of the denial. If an application is 21 denied or withdrawn, the department shall retain the 22 investigation fee and shall return the license fee to the 23 applicant. 24 (f) Information on license.--The license issued pursuant to 25 this section shall state: 26 (1) The name of the licensee. 27 (2) If the license is a partnership or association, the 28 names of the members thereof. 29 (3) The name and address of the business. 30 (4) Any other information deemed necessary by the 19930H0056B0066 - 9 -
1 department. 2 (g) Conspicuous posting.--The license shall be kept 3 conspicuously posted in the place of business of the licensee. 4 The license shall not be sold, transferred or assigned. 5 (h) Effect of license.--The license shall remain in full 6 force and effect until it is surrendered by the licensee or 7 revoked or suspended as provided in this act. 8 CHAPTER 5 9 ENFORCEMENT 10 Section 501. Suspension and revocation of license. 11 (a) Notice.--The department, upon 30 days written notice to 12 the licensee forwarded by registered mail to the place of 13 business of such licensee as shown in the application for 14 license or as amended on the license certificate in case of 15 change of address subsequent to issuance of the license 16 certificate, may revoke or suspend any license if it finds any 17 of the following: 18 (1) The licensee has made any material misstatement in 19 the application for license. 20 (2) The licensee has violated any provision of this act. 21 (3) The licensee has violated any rule or regulation of 22 the department issued under this act. 23 (4) The licensee has failed to comply with any demand, 24 rule or regulation lawfully made by the department under the 25 authority of this act. 26 (5) The licensee refuses or has refused to permit the 27 department or its designated representative to make 28 examinations authorized by this act. 29 (6) The licensee has failed to maintain satisfactory 30 records required by this act or as prescribed by the 19930H0056B0066 - 10 -
1 department. 2 (7) The licensee has falsified any records required by 3 this act to be maintained of the business contemplated by 4 this act. 5 (8) The licensee has failed to file any report with the 6 department within the time stipulated in this act. 7 (9) The licensee has used unfair or deceptive practices. 8 (10) Any fact or condition exists or is discovered 9 which, if it had existed or had been discovered at the time 10 of filing of the application for the license, would have been 11 grounds for the department to refuse to issue such license. 12 (11) The licensee has failed to report to the department 13 any change in ownership at least ten days prior to the 14 effective date of the ownership change. 15 (b) Particular license subject.--The department may revoke 16 or suspend only the particular license with respect to which 17 grounds for revocation may occur or exist, but if it finds that 18 grounds for revocation are of general application to all places 19 of business or to more than one place of business operated by a 20 licensee, it may revoke all of the licenses issued to such 21 licensee or those licenses to which grounds for revocation 22 apply, as the case may be. 23 (c) Issuance of another license.--Whenever a license has 24 been revoked, the department shall not issue another license 25 until the expiration of at least five years from the effective 26 date of revocation of such license and shall never issue a 27 license if such licensee or an owner, partner, member, officer, 28 director, employee, agent or spouse of the licensee shall have 29 pleaded guilty, entered a plea of nolo contendere, or has been 30 found guilty by a judge or a jury of a second offense violation 19930H0056B0066 - 11 -
1 of this act. 2 (d) Appeals.--Appeals may be taken from the action of the 3 department in suspending and revoking licenses in accordance 4 with the procedures of 2 Pa.C.S. (relating to administrative law 5 and procedure). 6 Section 502. Change of location. 7 A licensee may make a written application to the department 8 to change the business address, stating the reasons for the 9 proposed change. If the department approves the application, a 10 new license shall be issued in accordance with Chapter 3, 11 stating the new location of the licensed business. 12 Section 503. Fees and charges. 13 (a) Allowable fees.--The licensee shall not charge or 14 collect, in fees, charges or otherwise, for cashing a check or 15 draft drawn on a bank or other financial institution an amount 16 in excess of the following percentages of the face amount of the 17 check or draft: 18 (1) One percent for entitlement checks from Federal or 19 State government programs, including, but not limited to, Aid 20 to Families with Dependent Children (AFDC), General 21 Assistance, Social Security, Railroad Retirement, government 22 and veterans' disability payments and government pensions. 23 (2) Two percent for non-entitlement checks. 24 (3) Five percent for personal checks. 25 (b) Fee schedule.--In every check casher location there 26 shall be conspicuously posted and at all times displayed a 27 schedule of fees and charges based on a model form to be 28 published by the department in the Pennsylvania Bulletin. The 29 schedule shall state the maximum fees or charges and shall 30 include a table of amounts and corresponding maximum fees along 19930H0056B0066 - 12 -
1 with the telephone number of the Consumer Services Division of 2 the Department of Banking. Where the department determines it 3 desirable, the schedule shall also be posted in languages other 4 than English. 5 (c) Receipt.--Based on the model form to be published by the 6 department in the Pennsylvania Bulletin, the licensee shall 7 provide a receipt to each consumer for each transaction. The 8 receipt shall include the name and address of the licensee, the 9 total amount of the check cashed, the fee charged, the remaining 10 balance, a statement in English and Spanish or other language 11 determined to be desirable by the department of the maximum fee 12 permitted under this act, and the telephone number of the 13 Consumer Services Division of the Department of Banking. 14 (d) Other goods and services.--The check casher shall not 15 require consumers to purchase other goods or services in order 16 to cash checks, drafts or money orders. A licensee shall not 17 discount normal check cashing fees or charges for cashing 18 checks, drafts or money orders upon the purchase of other goods 19 or services. 20 (e) Natural person payee.--No licensee shall cash a check, 21 draft or money order which is not made out to a natural person. 22 Section 504. Endorsement of checks, drafts or money orders 23 cashed. 24 Before a check casher deposits with any banking institution a 25 check, draft or money order cashed by the check casher, the same 26 must be endorsed with the actual name under which such check 27 casher is doing business and must have the words "licensed 28 casher of checks" legibly written or stamped immediately after 29 or below such name. 30 Section 505. Restrictions on business of licensee. 19930H0056B0066 - 13 -
1 (a) Advancement of moneys.--No check casher shall at any 2 time cash or advance any money on a postdated check, draft or 3 money order or engage in the business of transmitting money or 4 receiving money for transmission, unless licensed under the act 5 of September 2, 1965 (P.L.490, No.249), referred to as the Money 6 Transmission Business Licensing Law. 7 (b) Exceptions.--Notwithstanding subsection (a), a licensee 8 may cash a check payable on the first banking business day 9 following the date of cashing if: 10 (1) the check is drawn by the United States, the 11 Commonwealth or any political subdivision of the Commonwealth 12 or by any department, bureau, agency, authority, 13 instrumentality or officer (acting in official capacity) of 14 the United States, or the Commonwealth or any political 15 subdivision of the Commonwealth; or 16 (2) the check is a payroll check drawn by an employer to 17 the order of its employee. 18 Section 506. Books, accounts and records. 19 (a) Keeping and use of information.--Each check casher shall 20 keep and use in the business, in a form satisfactory to the 21 department, such books, accounts and records as will enable the 22 department to determine whether the check casher is complying 23 with the provisions of this act and the rules and regulations 24 adopted under this act. Every check casher shall preserve such 25 books, accounts and records for five years. 26 (b) Filing of information.--Every check casher shall 27 annually, on or before May 1, file a report with the department 28 giving such information as the department may require concerning 29 the business and operations of the licensee during the 30 proceeding calendar year. In addition to the annual report, the 19930H0056B0066 - 14 -
1 department may require such additional regular or special 2 reports deemed necessary to the proper operation and enforcement 3 of this act. These reports shall be made under oath or 4 affirmation and shall be in the form prescribed by the 5 department which shall make and publish annually an analysis of 6 these reports. 7 (c) Examination and cost of information.--The department may 8 examine the affairs, business, records, books, documents, 9 accounts and papers of any licensee. The actual cost of these 10 examinations shall be paid to the department by the licensee 11 examined, and the department may bring an action for the 12 recovery of these costs in any court of competent jurisdiction. 13 Section 507. Criminal penalty. 14 Any person, partnership, association or corporation, and any 15 member, officer, director, agent or employee thereof, who 16 violates any of the provisions of this act commits a misdemeanor 17 and shall, upon conviction, be sentenced to pay a fine of not 18 more than $500 or to imprisonment for not more than one year, or 19 both. 20 Section 508. Private remedy. 21 (a) Liability.--Any person who fails to comply with any 22 provision of this act with respect to any consumer is liable to 23 the consumer for an amount equal to three times any actual 24 damage sustained by the consumer as a result of the failure or 25 the sum of $250, whichever is greater. 26 (b) Recovery of costs.--In the case of any successful action 27 to enforce the liability under subsection (a), the consumer 28 shall recover from the licensee the costs of the action, 29 together with a reasonable attorney fee as determined by the 30 court. 19930H0056B0066 - 15 -
1 CHAPTER 11 2 MISCELLANEOUS PROVISIONS 3 Section 1101. Applicability. 4 This act shall not apply to any insured depository 5 institution or affiliate or service corporation of any 6 depository institution supervised or regulated by the Department 7 of Banking, the National Credit Union Administration, the Office 8 of Thrift Supervision, the Federal Deposit Insurance 9 Corporation, the Board of Governors of the Federal Reserve or 10 the Federal Reserve Banks. It also shall not apply to companies 11 licensed by the Department of Banking under the act of April 8, 12 1937 (P.L.262, No.66), known as the Consumer Discount Company 13 Act, the act of December 12, 1980 (P.L.1179, No.219), known as 14 the Secondary Mortgage Loan Act, and the act of December 22, 15 1989 (P.L.687, No.90), known as the Mortgage Bankers and Brokers 16 Act, in the normal course of business with specific relation to 17 lending transactions. 18 Section 1102. Expiration. 19 This act shall expire two years from the effective date of 20 this act. 21 Section 1103. Effective date. 22 This act shall take effect in 180 days. L4L12DGS/19930H0056B0066 - 16 -