PRIOR PRINTER'S NOS. 18, 774 PRINTER'S NO. 1066
No. 14 Session of 1997
INTRODUCED BY THOMAS, BELARDI, MANDERINO, HENNESSEY, KAISER, YOUNGBLOOD, HERSHEY, PISTELLA, ROBINSON, JOSEPHS, MICHLOVIC RAMOS, WASHINGTON, TIGUE, CORRIGAN, STEELMAN, HERMAN, DeLUCA, BATTISTO, LEDERER, STEIL, RUBLEY, FLICK, MELIO, TULLI, STABACK, CORNELL, BARLEY, D. W. SNYDER, E. Z. TAYLOR AND BARD, JANUARY 27, 1997
AS AMENDED ON THIRD CONSIDERATION, HOUSE OF REPRESENTATIVES, MARCH 18, 1997
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; and providing penalties. 5 TABLE OF CONTENTS 6 Chapter 1. General Provisions 7 Section 101. Short title. 8 Section 102. Purpose. 9 Section 103. Definitions. 10 Section 104. Authority of department. 11 Chapter 3. Licensing Provisions 12 Section 301. License requirement and form. 13 Section 302. Annual license fee. 14 Section 303. Issuance of license. 15 Section 304. Conditions for licensing. 16 Chapter 5. Enforcement
1 Section 501. Suspension and revocation of and refusal to issue 2 license. 3 Section 502. Change of status. 4 Section 503. Fees and charges. 5 Section 504. Endorsement of checks, drafts or money orders 6 cashed. 7 Section 505. Restrictions on business of licensee. 8 Section 506. Books, accounts and records. 9 Section 507. Departmental penalty. 10 Section 508. Criminal penalty. 11 Section 509. Private remedy. 12 Chapter 11. Miscellaneous Provisions 13 Section 1101. Applicability. 14 Section 1102. Report to General Assembly. 15 Section 1103. Disposition of funds. 16 Section 1104. Effective date. 17 The General Assembly of the Commonwealth of Pennsylvania 18 hereby enacts as follows: 19 CHAPTER 1 20 GENERAL PROVISIONS 21 Section 101. Short title. 22 This act shall be known and may be cited as the Check Cashing 23 Licensing Act. 24 Section 102. Purpose. 25 The General Assembly hereby finds and declares that check 26 cashers which engage in the business of cashing checks, drafts 27 or money orders provide vital banking services which some 28 citizens of this Commonwealth find unavailable or inconvenient 29 to obtain from traditional banking institutions. Some customers, 30 however, have been charged unreasonable rates by some check 19970H0014B1066 - 2 -
1 cashers for these services. Therefore, it is in the public 2 interest, convenience and welfare to have the Commonwealth set 3 check-cashing rates and to regulate the manner in which these 4 services are provided. 5 Section 103. Definitions. 6 The following words and phrases when used in this act shall 7 have the meanings given to them in this section unless the 8 context clearly indicates otherwise: 9 "Cashing." Providing currency for payment instruments, 10 except for travelers checks and foreign denominations payment 11 instruments. 12 "Check." A type of negotiable instrument as defined in 13 13 Pa.C.S. § 3104 (relating to negotiable instrument). 14 "Check casher." Any person, partnership, association or 15 corporation engaging in the business of cashing checks, drafts 16 or money orders for a fee. 17 "Department." The Department of Banking of the Commonwealth. 18 "Draft." A type of negotiable instrument as defined in 13 19 Pa.C.S. § 3104 (relating to negotiable instrument). 20 "Licensee." A check casher licensed by the Department of 21 Banking to engage in the business of cashing checks, drafts or 22 money orders. 23 "Money order." As defined in the act of September 2, 1965 24 (P.L.490, No.249), referred to as the Money Transmission 25 Business Licensing Law. 26 "Secretary." The Secretary of Banking of the Commonwealth or 27 a designee. 28 Section 104. Authority of department. 29 The department shall have the authority to: 30 (1) Issue rules, regulations and orders as may be 19970H0014B1066 - 3 -
1 necessary for the administration and enforcement of this act
2 and the proper conduct of the business of check cashing.
3 (2) Examine any instrument, document, account, book,
4 record or file of a check casher, any employee or any other
5 person, or make such other investigation as may be necessary
6 to administer this act.
7 (3) Conduct administrative hearings of any matter
8 pertaining to this act, issue subpoenas to compel the
9 attendance of witnesses and the production of instruments,
10 documents, accounts, books and records at any such hearing
11 which may be retained by the department until the completion
12 of all proceedings in connection with which they were
13 produced and administer oaths and affirmations to any person
14 whose testimony is required. In the event a person fails to
15 comply with a subpoena issued by the department or to testify
16 on any matter concerning which that person may be lawfully
17 interrogated, on application by the department, the
18 Commonwealth Court may issue an order requiring the
19 attendance of such person, the production of instruments,
20 documents, accounts, books or records or the giving of
21 testimony or may institute contempt of court penalties.
22 CHAPTER 3
23 LICENSING PROVISIONS
24 Section 301. License requirement and form.
25 (a) Licensing required.--No person, partnership, association
26 or corporation shall engage in the business of cashing checks,
27 drafts or money orders for a consideration FEE without first <--
28 obtaining a license under this act.
29 (b) Form of application.--Application for a license shall be
30 in writing, under oath, shall be in the form prescribed by the
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1 department and shall contain the following: 2 (1) The applicant's name and address of residence. 3 (2) If the applicant is a partnership or association, 4 the name and address of every member and, if a corporation, 5 of each officer and director. 6 (3) The name and address of the business. 7 (4) Evidence of a lease, mortgage or agreement of sale 8 for the business location. 9 (5) Evidence in the form of a signed statement by the 10 applicant that the applicant has complied with all municipal 11 and county requirements for doing business. 12 (6) Evidence in the form of a signed statement by the 13 applicant that the applicant has no outstanding debts to the 14 Commonwealth or evidence that a payoff agreement is in place. 15 (c) Additional information.--The department may request any 16 additional information which it deems necessary to the licensing 17 procedure. 18 Section 302. Annual license fee. 19 (a) Amount.--An applicant shall pay to the department at the 20 time an application is filed an initial license fee of $500 for 21 each location. On or before January 1 of each year a licensee 22 shall pay a license renewal fee of $350. Each licensee shall, 90 23 days prior to the date of expiration, apply for license renewal 24 on a form provided by the department. The department shall renew 25 the license if the license renewal applicant is in compliance 26 with the provisions of this act. 27 (b) Recovery of costs.--No abatement of any license fee 28 shall be made if the license is issued for a period of less than 29 one year. The department shall be entitled to recover any cost 30 of investigation in excess of license or renewal fees from the 19970H0014B1066 - 5 -
1 licensee or from any person who is not licensed under this act 2 but who is presumed to be engaged in business contemplated by 3 this act. 4 Section 303. Issuance of license. 5 (a) Time limit.--Within 90 days after a complete application 6 is received, the department shall either issue a license or 7 refuse to issue or renew a license as provided for by section 8 501. Upon receipt of an application for license, the department 9 shall conduct such investigation as it deems necessary to 10 determine that the applicant and its officers, directors and 11 principals are of good character and ethical reputation. 12 (b) Appeal of denial.--If the department refuses to issue a 13 license, it shall notify the applicant, in writing, of the 14 denial and the reason therefor and of the applicant's right to 15 appeal from such action to the Commonwealth Court. An appeal 16 from the department's refusal to approve an application for a 17 license shall be filed by the applicant within 30 days of notice 18 thereof. 19 Section 304. Conditions for licensing. 20 (a) Conditions for license.--The department shall issue 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 and general fitness of the applicant, 25 and of the members thereof if the applicant is a partnership or 26 association, and of the officers and directors thereof if the 27 applicant is a corporation, warrants the conclusion that the 28 business will be operated honestly and fairly within the 29 purposes of this act. 30 (b) Procedure for public comment.--To determine the 19970H0014B1066 - 6 -
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 a newspaper having 7 general circulation in the community in which the applicant 8 intends to locate. 9 (2) The applicant shall transmit to the department a 10 copy of the notice and the publisher's affidavit of 11 publication. 12 (3) Upon publication, the application and all related 13 communications may be inspected in the department during 14 working hours by any person. This inspection shall be upon 15 written request and by appointment. The department may refuse 16 to disclose information that it deems is confidential. The 17 department shall not be liable for disclosure of information 18 deemed confidential by the applicant. 19 (4) Within 30 days of the date of publication of notice, 20 anyone may file a communication in protest or in favor of the 21 application by submitting two copies to the department. 22 (5) The applicant may request a copy of such 23 communication and may file an answer to any protest until ten 24 days after the last date for filing of communication by 25 submitting two copies to the department. 26 (6) The department shall consider all such communication 27 in its evaluation of the application. 28 (c) Felony conviction.--The department shall not issue a 29 license if it finds that the applicant, or any person who is a 30 director, officer, partner or agent has been convicted of or 19970H0014B1066 - 7 -
1 pled guilty or nolo contendere to a felony or to a crime 2 committed in this Commonwealth or another jurisdiction which, if 3 committed within this Commonwealth, would constitute a felony. 4 (d) Information on license.--The license issued pursuant to 5 this section shall state: 6 (1) The name of the licensee. 7 (2) The name and address of the business. 8 (3) Any other information deemed necessary by the 9 department. 10 (f) Conspicuous posting.--The license shall be kept 11 conspicuously posted in the place of business of the licensee. 12 The license shall not be sold, transferred or assigned. 13 (g) Effect of license.--The license shall remain in full 14 force and effect until it expires or is surrendered by the 15 licensee or revoked or suspended as provided in this act. 16 CHAPTER 5 17 ENFORCEMENT 18 Section 501. Suspension and revocation of and refusal to issue 19 license. 20 (a) Notice.--The department, upon 30 days written notice to 21 the licensee forwarded by registered mail to the place of 22 business of such licensee as shown in the application for 23 license or as amended on the license certificate in case of 24 change of address subsequent to issuance of the license 25 certificate, may refuse to issue, revoke or suspend any license 26 if it finds any of the following: 27 (1) The licensee or applicant has made any material 28 misstatement in the application for license. 29 (2) The licensee or applicant has violated any provision 30 of this act. 19970H0014B1066 - 8 -
1 (3) The licensee or applicant has violated any, order, 2 rule or regulation of the department issued under this act. 3 (4) The licensee or applicant has failed to comply with 4 any order, rule or regulation lawfully made by the department 5 under the authority of this act. 6 (5) The licensee or applicant refuses or has refused to 7 permit the department or its designated representative to 8 make examinations or investigations authorized by this act. 9 (6) The licensee or applicant has failed to maintain 10 satisfactory records required by this act or as prescribed by 11 the department. 12 (7) The licensee or applicant has falsified any records 13 required by this act to be maintained of the business 14 contemplated by this act. 15 (8) The licensee or applicant has failed to file any 16 report with the department within the time stipulated in this 17 act. 18 (9) The licensee or applicant has used unfair or 19 deceptive practices. 20 (10) Any fact or condition exists or is discovered 21 which, if it had existed or had been discovered at the time 22 of filing of the application for the license, would have been 23 grounds for the department to refuse to issue such license. 24 (11) The licensee or applicant has failed to report to 25 the department any change in ownership at least ten days 26 prior to the effective date of the ownership change. 27 (b) Multiple license suspension or revocation.--The 28 department may revoke or suspend only the particular license 29 with respect to which grounds for revocation may occur or exist, 30 but if it finds that grounds for revocation are of general 19970H0014B1066 - 9 -
1 application to all places of business or to more than one place 2 of business operated by a licensee, it may revoke all of the 3 licenses issued to such licensee or those licenses to which 4 grounds for revocation apply, as the case may be. 5 (c) Issuance of another license.--Whenever a license has 6 been revoked, the department shall not issue another license 7 until the expiration of at least five years from the effective 8 date of revocation of such license and shall never issue a 9 license if such licensee or an owner, partner, member, officer, 10 director, employee, agent or spouse of the licensee shall have 11 pleaded guilty, entered a plea of nolo contendere, or has been 12 found guilty by a judge or a jury of a second offense violation 13 of this act. 14 (d) Appeals.--Appeals may be taken from the action of the 15 department in suspending and revoking licenses in accordance 16 with the procedures of 2 Pa.C.S. (relating to administrative law 17 and procedure). 18 Section 502. Change of status. 19 A licensee shall make written application to the department 20 on any change in status including address change, ownership 21 change, change of directors, officers or principals by stating 22 the reason for the proposed change. If the department approves 23 the application a new license shall be issued. 24 Section 503. Fees and charges. 25 (a) Allowable fees.--The licensee shall not charge or 26 collect, in fees, charges or otherwise, for cashing a check or 27 draft drawn on a bank or other financial institution an amount 28 in excess of the following percentages of the face amount of the 29 check or draft: 30 (1) One-half of one percent of the face amount of a 19970H0014B1066 - 10 -
1 check which is an entitlement check from Federal or State 2 government programs, including, but not limited to, Aid to 3 Families with Dependent Children (AFDC), General Assistance, 4 Social Security, Railroad Retirement, government and 5 veterans' disability payments and government pensions. 6 (2) Two percent of the face amount of a nonentitlement 7 check. 8 (3) Five percent of the face amount of a personal check. 9 (b) Fee schedule.--In every check-casher location there 10 shall be conspicuously posted and at all times displayed a 11 schedule of fees and charges based on a model form to be 12 published by the department in the Pennsylvania Bulletin. The 13 schedule shall state the maximum fees or charges and shall 14 include a table of amounts and corresponding maximum fees along 15 with the telephone number of the Consumer Services Division of 16 the Department of Banking. 17 (c) Receipt.--Based on the model form to be published by the 18 department in the Pennsylvania Bulletin, the licensee shall 19 provide a receipt to each consumer for each transaction. The 20 receipt shall include the name and address of the licensee, the 21 total amount of the check cashed, the fee charged, the maximum 22 fee permitted under the act, the type of check and the telephone 23 number of the Consumer Affairs Division of the Department of 24 Banking. 25 (d) Other goods and services.--The check casher shall not 26 require consumers to purchase other goods or services in order 27 to cash checks, drafts or money orders. A licensee shall not 28 discount normal check-cashing fees or charges for cashing 29 checks, drafts or money orders upon the purchase of other goods 30 or services. 19970H0014B1066 - 11 -
1 Section 504. Endorsement of checks, drafts or money orders 2 cashed. 3 Before a check casher deposits with any banking institution a 4 check, draft or money order cashed by the check casher, the same 5 must be endorsed with the actual name under which such check 6 casher is doing business and must have the words "licensed 7 casher of checks" legibly written or stamped immediately after 8 or below such name. 9 Section 505. Restrictions on business of licensee. 10 (a) Advancement of moneys.--No check casher shall at any 11 time cash or advance any money on a postdated check, draft or 12 money order. No check casher shall make loans without the 13 appropriate license or engage in the business of transmitting 14 money or receiving money for transmission, unless licensed under 15 the act of September 2, 1965 (P.L.490, No.249), referred to as 16 the Money Transmission Business Licensing Law. 17 (b) Exceptions.--Notwithstanding subsection (a), a licensee 18 may cash a check payable on the first banking business day 19 following the date of cashing if: 20 (1) the check is drawn by the United States, the 21 Commonwealth or any political subdivision of the Commonwealth 22 or by any department, bureau, agency, authority, 23 instrumentality or officer (acting in official capacity) of 24 the United States, or the Commonwealth or any political 25 subdivision of the Commonwealth; or 26 (2) the check is a payroll check drawn by an employer to 27 the order of its employee. 28 Section 506. Books, accounts and records. 29 (a) Keeping and use of information.--Each check casher shall 30 keep and use in the business, in a form satisfactory to the 19970H0014B1066 - 12 -
1 department, such books, accounts and records as will enable the 2 department to determine whether the check casher is complying 3 with the provisions of this act and the rules and regulations 4 adopted under this act. Every check casher shall preserve such 5 books, accounts and records for five years. 6 (b) Filing of information.--Every check casher shall 7 annually, on or before September 1, file a report with the 8 department giving such information as the department may require 9 concerning the business and operations of the licensee during 10 the preceding calendar year. In addition to the annual report, 11 the department may require such additional regular or special 12 reports deemed necessary to the proper operation and enforcement 13 of this act. These reports shall be made under oath or 14 affirmation and shall be in the form prescribed by the 15 department which shall make and publish annually an analysis of 16 these reports. 17 (c) Examination and cost of information.--The department may 18 examine the affairs, business, records, books, documents, 19 accounts and papers of any licensee. The actual cost of these 20 examinations shall be paid to the department by the licensee 21 examined, and the department may bring an action for the 22 recovery of these costs in any court of competent jurisdiction. 23 Section 507. Departmental penalty. 24 Any person who is subject to the provisions of this act who 25 violates any of the provisions of this act shall be subject to a 26 fine levied by the department of up to $2,000 for each offense. 27 Section 508. Criminal penalty. 28 Any person, partnership, association or corporation, and any 29 member, officer, director, agent or employee thereof, who 30 violates any of the provisions of this act commits a misdemeanor 19970H0014B1066 - 13 -
1 of the third degree. 2 Section 509. Private remedy. 3 (a) Liability.--Any person who fails to comply with any 4 provision of this act with respect to any consumer is liable to 5 the consumer for an amount equal to three times any actual 6 damage sustained by the consumer as a result of the failure or 7 the sum of $250, whichever is greater. 8 (b) Recovery of costs.--In the case of any successful action 9 to enforce the liability under subsection (a), the consumer 10 shall recover from the licensee the costs of the action, 11 together with a reasonable attorney fee as determined by the 12 court. 13 CHAPTER 11 14 MISCELLANEOUS PROVISIONS 15 Section 1101. Applicability. 16 This act shall not apply to any insured depository 17 institution or affiliate or service corporation of any 18 depository institution supervised or regulated by the Department 19 of Banking, the National Credit Union Administration, the Office 20 of Thrift Supervision, the Federal Deposit Insurance 21 Corporation, the Comptroller of the Currency or the Board of 22 Governors of the Federal Reserve or the Federal Reserve Banks. 23 It also shall not apply to companies licensed by the Department 24 of Banking under the act of April 8, 1937 (P.L.262, No.66), 25 known as the Consumer Discount Company Act, the act of September 26 2, 1965 (P.L.490, No.249), referred to as the Money Transmission 27 Business Licensing Law, the act of December 12, 1980 (P.L.1179, 28 No.219), known as the Secondary Mortgage Loan Act, and the act 29 of December 22, 1989 (P.L.687, No.90), known as the Mortgage 30 Bankers and Brokers Act, in the normal course of business with 19970H0014B1066 - 14 -
1 specific relation to lending transactions and when engaged in 2 the activities regulated under these acts. 3 Section 1102. Report to General Assembly. 4 Three years from the effective date of this act, the 5 department shall provide a written report to the General 6 Assembly summarizing consumer complaints received by the 7 department relating to check cashing activities and the methods 8 by which the complaints were addressed. The department shall 9 also make recommendations to the General Assembly regarding 10 improvements to this act and the continuance of a licensing 11 program. 12 Section 1103. Disposition of funds. 13 All moneys received by the Treasury Department from the 14 Department of Banking from fees, fines, assessments, charges and 15 penalties, collected or recovered from persons, firms, 16 corporations or associations, under the supervision of the 17 Department of Banking pursuant to the provisions of this act 18 shall be deposited in the Banking Department Fund. 19 Section 1104. Effective date. 20 This act shall take effect in one year. L17L12DGS/19970H0014B1066 - 15 -