S 995 Session 112 (1997-1998)
S 0995 General Bill, By Short, Gregory and Jackson
Similar(H 4609)
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.
02/05/98 Senate Introduced and read first time SJ-8
02/05/98 Senate Referred to Committee on Banking and Insurance SJ-8
03/19/98 Senate Committee report: Favorable with amendment
Banking and Insurance SJ-12
04/14/98 Senate Amended SJ-32
04/14/98 Senate Read second time SJ-32
04/14/98 Senate Ordered to third reading with notice of
amendments SJ-32
04/28/98 Senate Amended SJ-17
04/28/98 Senate Read third time and sent to House SJ-17
04/29/98 House Introduced and read first time HJ-10
04/29/98 House Referred to Committee on Labor, Commerce and
Industry HJ-10
Indicates Matter Stricken
Indicates New Matter
AS PASSED BY THE SENATE
April 28, 1998
S. 995
Introduced by Senators Short, Jackson and
Gregory
S. Printed 4/28/98--S.
Read the first time February 5, 1998.
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.
Amend Title To Conform
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:
"CHAPTER 41
Check-Cashing Services
Section 34-41-10. As used in this chapter, unless the context
clearly requires otherwise, the term:
(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 any person or 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 entity licensed to engage in a
check-cashing service under this chapter.
(5) `Person' means an individual, partnership, association, or
corporation.
Section 34-41-20. (A) No person or other entity may engage in
the business of cashing checks, drafts, or money orders for
consideration without first obtaining a license under this chapter. No
person or other entity providing a check-cashing service may 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 34-41-30. This chapter shall 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) any person or 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, where not more than
two dollars is charged for the service.
Section 34-41-40. (A) An application for licensure under this
chapter shall be in writing, under oath, and on a form prescribed by
the board. The application shall set forth all of the following:
(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 the board deems
necessary to determine if the applicant has complied with all
applicable provisions of this chapter and state and federal law.
(C) The application shall be accompanied by payment of a two
hundred fifty dollar application fee and a five hundred dollar
investigation fee. These fees are not refundable or abatable, but, if
the license is granted, payment of the application fee shall satisfy the
fee requirement for the first license year or remaining part thereof.
(D) Licenses shall expire 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 34-41-50. (A) Every licensee and applicant shall have and
maintain liquid assets of at least fifty thousand dollars per licensee.
(B) Upon the filing and investigation of an application, and
compliance by the applicant with Section 34-41-40, and this section,
the board shall issue and deliver to the applicant the license applied
for to engage in business under this chapter at the locations specified
in the application, provided that the board finds 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, no license shall be
issued, and the board shall notify the applicant of the denial and the
reasons therefor. The provisions of the Administrative Procedures
Act apply to the appeal of the denial of a license.
Section 34-41-60. (A) Notwithstanding any other provision of
law, no check-cashing service licensed under this chapter shall
directly or indirectly charge or collect fees or other consideration for
check-cashing services in excess of the following:
(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 any 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 type written, electronically generated, or
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 any
check unless the account from which the check being presented is
drawn is legitimate, open, and active. Any licensee who cashes a
check for a fee shall deposit the check not later than five days from
the date the check is cashed.
(C) A licensee shall ensure that in every location conducting
business under a license issued under 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 further ensure that notice of the fees currently charged
at every location shall be filed with the board.
(D) A licensee shall endorse every check, draft, or money order
presented by the licensee for payment in the name of the licensee.
Section 34-41-70. (A) Every person required to be licensed under
this chapter shall maintain in its offices such books, accounts, and
records as the board may reasonably require. The books, accounts,
and records shall be maintained separate from any other business in
which the person is engaged and shall be retained for a period
prescribed by the board.
(B) The licensee shall ensure that each customer cashing a check
shall be 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 in
order to determine whether the person is complying with this chapter
and rules adopted pursuant thereto. The cost of the examination shall
be paid by the licensee and shall be determined by the board.
Section 34-41-80. No person required to be licensed under this
chapter shall do any of the following:
(1) charge fees in excess of those authorized under 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 any 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 has previously
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 and deferred presentment services, at the location
licensed under 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 under this chapter. For purposes of this section,
'location' means the entire space in which check cashing services are
provided 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 34-41-90. (A) The board may suspend or revoke any
license or licenses issued pursuant to this chapter if, after notice and
opportunity for hearing, the board issues written findings that the
licensee has engaged in any of the following conduct:
(1) violated this chapter or applicable state or federal law or
rules;
(2) made a false statement on the application for a license under
this chapter;
(3) refused to permit investigation by the board authorized
under 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 any license issued under
this chapter unless the licensee has been given notice and opportunity
for hearing in accordance with the Administrative Procedures Act.
Section 34-41-100. If the board determines that a person required
to be licensed under this chapter has violated this chapter or
regulations promulgated pursuant to this chapter, then the board may,
upon notice and opportunity for hearing in accordance with the
Administrative Procedures Act, 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 as necessary under 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 34-41-110. The board may order and impose civil
penalties upon any person required to be licensed under this chapter
for violations of this chapter or regulations promulgated thereunder.
Civil penalties shall not exceed one thousand dollars for each
violation. The board may also order repayment of unlawful or
excessive fees charged to customers.
Section 34-41-120. The board, upon a determination that a
violation of Section 34-41-20 is wilfull, may refer a violation to the
Attorney General or to the appropriate circuit solicitor for criminal
prosecution. A violation of Section 34-41-20 by a person required to
obtain a license under 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.
Section 34-41-130. 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 any provision of this act or its application to any
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. Section 34-29-100(a) of the 1976 Code, as last
amended by Act 135 of 1995, is further amended to read:
"(a) Each licensee shall keep and use in his business such full
and correct books and accounting records as are in accordance with
sound and accepted accounting principles and practices and such
books and records, including cards used in the card system, if any, as
are in accord with the rules and regulations lawfully made by the
board. Each licensee shall preserve such books, accounts,
and records, including cards used in the card system, if any, for at
least two years after making the final entry on any loan recorded
thereon. The renewal or refinancing of a loan shall constitute a final
entry. Notwithstanding any other provision of law or regulation,
each licensee, subject to the approval of the Director of the Consumer
Finance Division of the South Carolina Board of Financial
Institutions, may retain books and records in any other medium,
electronic or otherwise, that conforms with the requirements of this
section."
SECTION 4. This act takes effect upon approval by the Governor.
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