H 4609 General Bill, By Kirsh, Gamble and Law

Similar(S 995)
 A BILL TO AMEND TITLE 34 OF THE CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING
 TO BANKING AND FINANCIAL INSTITUTIONS, BY ADDING CHAPTER 41 SO AS TO PROVIDE
 FOR THE LICENSURE AND REGULATION OF CHECK CASHING SERVICES.

   02/11/98  House  Introduced and read first time HJ-7
   02/11/98  House  Referred to Committee on Labor, Commerce and
                     Industry HJ-7

A BILL

TO AMEND TITLE 34, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO BANKING AND FINANCIAL INSTITUTIONS, BY ADDING CHAPTER 41 SO AS TO PROVIDE FOR THE LICENSURE AND REGULATION OF CHECK-CASHING SERVICES.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION 1. Title 34 of the 1976 Code is amended by adding:

Section 34-41-100. As used in this chapter, unless the context clearly requires otherwise:

(1) 'Board' means the State Board of Financial Institutions.

(2) 'Cashing' means providing currency for payment instruments, but does not include the bona fide sale or exchange of travelers checks and foreign denomination payment instruments.

(3) 'Check-cashing service' means a person or an entity engaged in the business of cashing checks, drafts, or money orders for a fee, service charge, or other consideration.

(4) 'Licensee' means a person or an entity licensed to engage in a check-cashing service pursuant to this chapter.

(5) 'Person' means an individual, a partnership, an association, or a corporation.

Section 34-41-120. (A) A person or other entity may not engage in the business of cashing checks, drafts, or money orders for consideration without first obtaining a license pursuant to this chapter. A person or other entity providing a check-cashing service may not avoid the requirements of this chapter by providing a check or other currency equivalent instead of currency when cashing payment instruments.

(B) A person providing check cashing services on the effective date of this act may continue to engage in the business without a license until the board has acted upon the application for a license, but the application must be filed within sixty days after the effective date of this act.

Section 34-41-130. This chapter does not apply to:

(1) a bank, savings institution, credit union, or farm credit system

organized under the laws of the United States or any state; and

(2) a person or an entity principally engaged in the bona fide retail

sale of goods or services who, either as an incident to or independently of a retail sale or service and not holding itself out to be a check-cashing service, from time to time cashes checks, drafts, or money orders for a fee or other consideration, when not more than two dollars is charged for the service.

Section 34-41-140. (A) An application for licensure pursuant to this chapter must be in writing, under oath, and on a form prescribed by the board. The application must include:

(1) the name and address of the applicant;

(2) if the applicant is a firm or partnership, the name and address of each member of the firm or partnership;

(3) if the applicant is a corporation, the name and address of each officer, director, registered agent, and principal;

(4) the addresses of the locations of the business to be licensed; and

(5) other information concerning the financial responsibility,

background experience, and activities of the applicant and its members, officers, directors, and principals as the board requires.

(B) The board may make such investigations as it considers necessary to determine if the applicant has complied with all applicable provisions of this chapter and state and federal law.

(C) The application must be accompanied by payment of an application fee of two hundred fifty dollars and an investigation fee of five hundred dollars. These fees are not refundable or abatable, but, if the license is granted, payment of the application fee satisfies the fee requirement for the first license year or its remainder.

(D) A license expires annually and may be renewed upon payment of a license fee of two hundred fifty dollars, plus a fifty dollar fee for each branch location certificate issued under a license.

Section 34-41-150. (A) A licensee and an applicant shall have and maintain liquid assets of at least fifty thousand dollars for each licensee.

(B) The board shall find that the financial responsibility, character, reputation, experience, and general fitness of the applicant and its members, officers, directors, and principals are such as to warrant belief that the business will be operated efficiently and fairly, in the public interest, and in accordance with law. If the board fails to make such findings, a license may not be issued, and the board shall notify the applicant of the denial and the reasons for it.

(C) Upon the filing and investigation of an application, and compliance by the applicant with Section 34-41-140, and this section, the board shall issue and deliver to the applicant the license applied for to engage in business pursuant to this chapter at the locations specified in the application.

(D) The provisions of the Administrative Procedures Act apply to the denial of a license and the appeal of the denial.

Section 34-41-160. (A) Notwithstanding any other provision of law, a check-cashing service licensed pursuant to this chapter may not directly or indirectly charge or collect fees or other consideration for check-cashing services in excess of:

(1) two percent of the face amount of the check or three dollars, whichever is greater, for checks issued by the federal government, state government, or an agency of the state or federal government, or any county or municipality of this State;

(2) two percent of the face amount of the check or three dollars, whichever is greater, for printed payroll checks. For purposes of this item, 'printed' means typewritten or electronically computer generated; and

(3) seven percent of the face amount of the check or five dollars, whichever is greater, for all other checks, including handwritten payroll checks, or for money orders.

(B) A licensee may not advance monies on the security of a check unless the account on which the presented check is drawn is legitimate, open, and active. A licensee who cashes a check for a fee shall deposit the check not later than three business days from the date the check is cashed.

(C) A licensee shall ensure that in every location conducting business under a license issued pursuant to this chapter, there is conspicuously posted and at all times displayed a notice stating the fees charged for cashing checks, drafts, and money orders. A licensee shall ensure further that notice of the fees currently charged at every location be filed with the board.

(D) A licensee shall endorse in the name of the licensee every check, draft, or money order presented by the licensee for payment.

Section 34-41-170. (A) A person required to be licensed pursuant to this chapter shall maintain in its offices books, accounts, and records as the board requires. The books, accounts, and records must be maintained separately from other business in which the person is engaged and must be retained for a period prescribed by the board.

(B) The licensee shall ensure that each customer cashing a check

is provided a receipt showing the name or trade name of the licensee, the transaction date, amount of the check, and the fee charged.

(C) The board may examine the books, accounts, and records to determine compliance with this chapter and rules adopted pursuant to it. The cost of the examination, as determined by the board, must be paid by the licensee.

Section 34-41-180. A person required to be licensed pursuant to this chapter may not:

(1) charge fees in excess of those authorized pursuant to this chapter;

(2) engage in the business of:

(i) making loans of money or extension of credit;

(ii) discounting notes, bills of exchange, items, or other evidences of debt; or

(iii) accepting deposits or bailments of money or items;

(3) use or cause to be published or disseminated advertising

communication which contains any false, misleading, or deceptive statement or representation;

(4) conduct business at premises or locations other than locations

licensed by the board;

(5) engage in unfair, deceptive, or fraudulent practices, including unconscionable conduct in violation of Section 37-5-108;

(6) cash a check, draft, or money order made payable to a payee other than a natural person, unless the licensee previously has obtained appropriate documentation from the executive entity of the payee clearly indicating the authority of the natural person or persons cashing the check, draft, or money order on behalf of the payee;

(7) engage in the retail sale of goods or services, other than check-cashing services, at the location licensed pursuant to this chapter;

(8) be licensed pursuant to Section 12-21-2720(a)(3) to operate a coin-operated machine; or

(9) permit others to engage in an activity prohibited by this section at a location licensed pursuant to this chapter. For purposes of this section, 'location' means the entire space in which supervised loans are made and must be separated from any space where goods are sold or leased by walls which may be broken only by a passageway to which the public is not admitted.

Section 34-41-190. (A) The board may suspend or revoke a license or licenses issued pursuant to this chapter if, after notice and opportunity for hearing, the board issues written findings that the licensee has:

(1) violated this chapter or applicable state or federal law or

rules;

(2) made a false statement on the application for a license pursuant to this chapter;

(3) refused to permit investigation by the board authorized pursuant to this chapter;

(4) failed to comply with an order of the board;

(5) demonstrated incompetency or untrustworthiness to engage in the business of check cashing; or

(6) has been convicted of a felony or misdemeanor involving fraud, misrepresentation, or deceit.

(B) The board may not suspend or revoke a license issued pursuant to this chapter unless the licensee has been given notice and opportunity for hearing in accordance with the Administrative Procedures Act.

Section 34-41-200. If the board determines that a person required to be licensed pursuant to this chapter has violated its provisions or regulations adopted pursuant to it, the board, upon notice and opportunity for hearing in accordance with the Administrative Procedures Act, may order the person to cease and desist from the violations and to comply with this chapter. The board may designate a hearing officer or hearing panel to conduct hearings or take other action necessary as provided in this section and may seek the assistance of the Attorney General or the Department of Consumer Affairs in enforcing compliance with this chapter. The board may enforce compliance with an order issued pursuant to this section by the imposition and collection of civil penalties authorized under this chapter.

Section 34-41-210. The board may order and impose civil penalties for violations of this chapter or its regulations in an amount not to exceed one thousand dollars for each violation. The board also may order repayment of unlawful or excessive fees charged to customers.

Section 34-41-220. The board, upon a determination that a violation of Section 34-41-120 is wilful, may refer a violation to the Attorney General or to the appropriate circuit solicitor for criminal prosecution. A violation of Section 34-41-120 by a person required to obtain a license pursuant to this chapter is a Class B misdemeanor and each transaction involving the unlawful cashing of a check, draft, or money order constitutes a separate offense. This provision does not affect an action or proceeding commenced or a right accrued before the effective date of this act.

Section 34-41-230. The board may promulgate regulations necessary to carry out the purposes of this chapter, to provide for the protection of the public, and to assist licensees in interpreting and complying with this chapter."

SECTION 2. If a provision of this act or its application to a person or circumstance is held invalid, the invalidity does not affect other provisions or application of the act which can be given effect without the invalid provision or application, and to that end, the provisions of this act are declared to be severable.

SECTION 3. This act takes effect upon approval by the Governor.