Current Status Introducing Body:House Bill Number:4196 Primary Sponsor:Harvin Type of Legislation:GB Subject:Sale of Checks Act Residing Body:House Date Tabled:19940601 Computer Document Number:BBM/10577JM.93 Introduced Date:19930513 Date of Last Amendment:19940504 Last History Body:House Last History Date:19940601 Last History Type:Tabled Scope of Legislation:Statewide All Sponsors:Harvin Whipper Type of Legislation:General Bill
Bill Body Date Action Description CMN Leg Involved
____ ______ ____________ ______________________________ ___ ____________
4196 House 19940601 Tabled
4196 House 19940519 Objection withdrawn by Simrill
Representative
4196 House 19940504 Objection by Representative Marchbanks
4196 House 19940504 Amended
4196 House 19940504 Objection by Representative Trotter
Kirsh
Simrill
Witherspoon
4196 House 19940420 Committee Report: Favorable 26
with amendment
4196 House 19930513 Introduced, read first time, 26
referred to Committee
View additional legislative information at the LPITS web site.
AMENDED--NOT PRINTED IN THE HOUSE
Amendment No. 1 (Doc Name
L:\council\legis\amend\BBM\9100JM.94)
May 4, 1994
H. 4196
S. Printed 4/20/94--H.
Read the first time May 13, 1993.
TO ENACT THE "SOUTH CAROLINA SALE OF CHECKS ACT", PROVIDE FOR THE ADMINISTRATION AND ENFORCEMENT OF THIS ACT BY THE DEPARTMENT OF CONSUMER AFFAIRS, AND PROVIDE FOR RELATED MATTERS, INCLUDING A LICENSING PROCEDURE AND THE PROMULGATION OF REGULATIONS.
Amend Title To Conform
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. This act is known and may be cited as the "South Carolina Sale of Checks Act".
SECTION 2. (1) The following financial institutions are exempt from the licensing requirements of this act when the sale of checks takes place in or through places of business located in this State which are authorized to accept deposits on behalf of the financial institutions:
(a) state and federally-chartered banks;
(b) state and federally-chartered savings and loan or building and loan associations;
(c) state and federally-chartered credit unions.
(2) Sales of checks by any of the foregoing through business locations in this State which are not authorized to accept deposits or through other agents, where the financial institution is domiciled outside of this State shall be subject to the provisions of this act.
(3) A financial institution domiciled within this State may designate agents to sell its checks at nonbanking outlets, and the place of business of such agents shall not be construed as a branch bank, office, or facility. The agent must be bonded and the financial institution made solely liable for the payment of the money orders upon proper presentation and demand. The responsibility of both the financial institution and its agent must be carefully defined in a written agreement setting forth the duties of both parties and providing for remuneration of the agent. Agents are required to report on sales and transmit funds therefrom not later than the end of the third business day following receipt of the funds. Arrangements for daily transmission of proceeds of sales is preferable, particularly if the volume of sales justifies. The financial institution's blanket bond coverage shall extend to cover agency transactions and transmission of the funds to the financial institution.
SECTION 3. (A) As used in this act, the term or terms:
(1) "Check" means any check, money order, or any other instrument for the payment or transmission of money, whether or not it is a negotiable instrument under the terms of Chapter 3 of Title 36, relating to commercial paper.
(2) "Licensee" means a corporation duly licensed pursuant to this act.
(3) "Sale" and "selling" means the passing of title from the seller or his agent to a holder or remitter for a price.
(4) "Board" means the State Board of Financial Institutions.
(B) Other statutory definitions applying to this act are:
(1) "Delivery" as defined in item (14) of Section 36-1-201.
(2) "Issue" as defined in item (a) of subsection (1) of Section 36-3-102.
(3) "Signed" as defined in item (39) of Section 36-1-201.
SECTION 4. No person or corporation, other than a bank or trust company, the authorized agent of a licensee, or an incorporated telegraph company which has received money at any of its offices or agencies for immediate transmission by telegraph, shall engage in the business of selling or issuing checks without having first obtained a license under this act. This restriction applies to any nonresident person or corporation that engages in this State in the business of selling or issuing checks through a branch, subsidiary, affiliate, or agent in this State.
SECTION 5. In order to qualify for a license under this act, an applicant shall:
(1) satisfy the board that it is financially responsible and appears able to conduct the business of selling checks in an honest and efficient manner and with confidence and trust of the community; and
(2) comply with the bonding requirements, furnish the statements, and pay the fees prescribed in this act.
SECTION 6. (A) Each application for a license must be in writing and under oath to the board, in such form as the board prescribes, and shall include the following:
(1) the legal name and principal office address of the corporation applying for the license;
(2) the name, residence, and business address of each director or equivalent official and of each officer who will be involved in selling checks in this State;
(3) the date and place of incorporation;
(4) if the applicant has one or more branches, subsidiaries, affiliates, agents, or other locations at or through which the applicant proposes to engage in the business of selling or issuing checks within the State of South Carolina, the complete name of each and the address of each such location;
(5) the location where its initial registered office will be located in this State; and
(6) such other data, financial statements, and pertinent information as the board may require with respect to the applicant, its directors, trustees, officers, members, branches, subsidiaries, affiliates, or agents.
(B) The application must be filed together with:
(1) An investigation and supervision fee established by regulation of the board, which is not refundable but which, if the license is granted, shall satisfy the fee requirement for the first license year or the remaining part thereof; and
(2) A corporate surety bond issued by a bonding company or insurance company authorized to do business in this State and approved by the board. The bond shall be in the principal sum of $100,000.00 and in an additional principal sum of $5,000.00 for each location, in excess of one, at or through which the applicant proposes to engage in this State in the business of selling or issuing checks, until the principal sum shall aggregate $250,000.00. The bond must be in a form satisfactory to the board and shall run to the State of South Carolina for the benefit of any check holders against the licensee or his agents. The condition of the bond must be that the licensee will pay any and all monies that may become due and owing the creditor of or claimant against the licensee arising out of the licensee's business of selling or issuing checks in this State, whether through its own act or the acts of an agent. The aggregate liability of the surety in no event shall exceed the principal sum of the bond. Claimants against the licensee may themselves bring an action directly on the bond. The liability arising under this paragraph is limited to the receipt, handling, transmission, and payment of money arising out of the licensee's business of selling and issuing checks in this State.
(C) In lieu of such corporate surety bond or bonds or of any portion of the principal thereof, the applicant may deposit with the board or a bank or trust company located in this State, as such applicant may designate and the board may approve, bonds, notes, debentures, or other obligations of the United States or any agency or instrumentality thereof or guaranteed by the United States or the State of South Carolina or of a municipality, county, school district, or an instrumentality of the State of South Carolina or guaranteed by the State to an aggregate amount, based upon the principal amount of market value, whichever is lower, of not less than the amount of the required corporate surety bond or portion thereof. The securities must be held to secure the same obligations as would the surety bond; but the depositor is entitled to receive all interest thereon and shall have the right, with the approval of the board, to substitute other securities for those deposited and is required to do so on written order of the board made for good cause shown. In the event of the failure or insolvency of such licensee, the securities, and proceeds therefrom, and the funds deposited pursuant to this section must be applied to the payments in full of claims arising out of transactions in this State for the sale and issuance of checks.
SECTION 7. Every licensee shall forward to the board annually a copy of its certified audit reflecting its condition at the end of the normal accounting period. Each licensee is also required to furnish the board an interim financial statement on a quarterly basis between annual closing periods. Interim financial statements may be prepared by outside accountants or by the licensee's own accountants. In either event, such interim financial statement must be signed by the person responsible for preparing the same. All copies of certified audits and interim financial statements must be forwarded to the board within forty-five days after receipt of the report from outside accountants; however, interim financial statements prepared internally must be provided to the board within forty-five days from the end of the fiscal quarter.
SECTION 8. Each applicant for a license to engage in the business of selling checks shall demonstrate its financial responsibility in accordance with the requirements contained in Section 5 of this act. As a minimum requirement, each applicant must exhibit tangible net worth in accordance with generally accepted accounting practices of not less than five percent of total assets or $50,000.00, whichever is greater; provided, however, such required net worth may be reduced by the aggregate amount of outstanding surety bonds in favor of all licensing jurisdictions similar to that bond required under the provisions of Section 6; and provided further, that the residual tangible net worth is not less than $50,000.00.
SECTION 9. Every licensee or agent or other representative of a licensee under this act shall display prominently on the premises where checks, money orders, or other instruments are issued and sold a certificate in prescribed form indicating that such sales are licensed under the South Carolina Sale of Checks Act. Failure or refusal to so display such certificate where such sales are made shall constitute cause for revocation or suspension of the designation of a representative or agent of a licensee.
SECTION 10. Upon the filing of the application in due form, accompanied by the documents and fee prescribed in this act, the board shall conduct an investigation to determine whether the criteria established by Section 5 have been satisfied. If the board determines to its satisfaction that the criteria of Section 5 have been met it shall issue to the applicant a license to engage in the business of selling and issuing checks in this State. A license issued pursuant to this act shall remain in force and effect through the remainder of the calendar year following its date of issuance unless earlier surrendered, suspended, or revoked pursuant to this act. Where a corporation engages only in the business of selling checks issued by another corporation which is primarily obligated for payment of the checks and the seller is a wholly-owned subsidiary of or is wholly-owned by the sole corporate shareholder of the issuer, the board may grant a single license naming both the seller and issuer as joint licensees. In such cases, only a single license fee shall be collected and only one corporate surety bond pursuant to Section 6 may be required where such bond names both the seller and issuer.
SECTION 11. A license may be renewed for the ensuing twelve-month period upon the filing of an application conforming to the requirements of Section 6 with such modifications as the board may allow. Such renewal application must be filed on or after June first of the year in which the existing license expires. No investigation fee shall be payable in connection with such renewal application; but an annual license fee established by regulation of the board to defray the cost of supervision must be paid with each renewal application, which fee shall not be refunded or prorated if the renewal application is approved and the renewal license thereunder goes into effect on the following January first. If a renewal application is filed with the board before July first of any year, the license sought to be renewed shall continue in force until the issuance by the board of the renewal license applied for or until twenty days after the board shall have refused to issue such renewal license.
SECTION 12. (A) A licensee shall give notice to the board by registered or certified mail of any action which may be brought against it and of any judgment which may be entered against it by any creditor or any claimant with respect to a check sold or issued in this State, with details sufficient to identify the action or judgment, within thirty days after the commencement of any such action or the entry of any such judgment. The corporate surety shall, within ten days after it pays any claim to any creditor or claimant, give notice to the board by registered or certified mail of such payment with details sufficient to identify the claimant or creditor and the claim or judgment so paid. Whenever the principal sum of such bond is reduced by one or more recoveries or payments thereon, the licensee shall furnish a new or additional bond so that the total or aggregate principal sum of such bond or bonds shall equal the sum required under Section 6 or shall furnish an endorsement duly executed by the corporate surety reinstating the bond to the required principal sum thereof. The board may, by reasonable regulations, provide for corresponding measures with respect to deposits made in lieu of a bond under subsection (C) of Section 6.
(B) A licensee shall give notice to the board by registered or certified mail of any increase in the number of locations at which it engages in the business of selling or issuing checks over the number previously reported in either its original or renewal application and shall show to the satisfaction of the board that the bond or securities required under Section 6 have been increased accordingly. This notice must be given quarterly, within thirty days after the end of each calendar quarter, and, if not given, such new location shall not be considered as included under the licensee's license under this act. At any time the board is shown that a licensee has decreased the number of locations at or through which it proposes to engage in the business, the board may decrease the bond or security requirements accordingly.
(C) A bond filed with the board for the purpose of compliance with Section 6 may not be canceled by either the licensee or the corporate surety except upon notice to the board by registered or certified mail with return receipt requested, the cancellation to be effective not less than thirty days after receipt by the board of such notice and only with respect to any breach of condition occurring after the effective date of such cancellation.
SECTION 13. A licensee may conduct its business at one or more locations in this State, so long as such locations have been included in the licensee's application and reports under Section 6 and Section 12 through such agents as it may designate. The board may within ten days after application, for cause, refuse to approve a licensee's designation of any agent or, for cause, suspend a licensee's designation of an agent. In such cases, the agent shall have the same procedural rights as are provided in this act for the denial, suspension, or revocation of a licensee's license. No additional license other than that obtained by the licensee shall be required of any duly reported agent of a licensee. An agent of a licensee shall sell or issue checks only at the location designated in the licensee report to the board or at other locations of which the board has been notified.
SECTION 14. The board shall promulgate regulations for the administration and enforcement of this act.
SECTION 15. (A) The board may suspend or revoke an original or renewal license or the designation of an agent of a licensee on any ground on which it might refuse to issue an original license or for a violation of any provision of this act or of any regulation issued pursuant to authority of this act or for failure of the licensee to pay, within thirty days after it becomes final, a judgment recovered in any court within this State by a claimant or creditor in an action arising out of the licensee's business in this State of selling or issuing checks.
(B) No application for a license under this act shall be denied and no license granted under this article shall be suspended or revoked unless the applicant or licensee is given a reasonable opportunity to be heard by the board. For this purpose, the board shall give the applicant or licensee at least twenty days' written notice of the time and place of such hearing by registered or certified mail addressed to the principal place of business of such applicant or licensee. Any order of the board denying, suspending, or revoking a license shall state the grounds upon which it is based and shall not be effective for twenty days after its issuance. A copy thereof must be forwarded promptly by registered or certified mail addressed to the principal place of business of such applicant or licensee.
(C) A decision of the board denying a license, original or renewal, is conclusive, except that it is subject to judicial review. A decision of the board suspending or revoking a license is subject to judicial review in accordance with the laws of this State.
SECTION 16. At the written request of any claimant or creditor of a licensee whose claim is based on a transaction in this State for the sale or issuance of a check subject to regulation under this act, the board may, in its discretion, take an assignment of such claim in trust for the benefit of the assigning claimant or creditor and may bring any legal action necessary to collect such claim. Two or more such claims against a licensee may be combined in one action.
SECTION 17. Every check issued in the conduct of the business regulated by this act must be signed by the licensee or its authorized representative, and the licensee is liable for the payment thereof to the same extent as a drawer of a negotiable instrument, whether or not the check is a negotiable instrument under Chapter 3 of Title 36.
SECTION 18. (A) No person or corporation shall sell checks as an agent of a principal seller when such principal seller is subject to licensing under this act but has not obtained a license hereunder, and any person who does so shall be deemed to be the principal seller thereof and not merely an agent and shall be liable to the holder or remitter as the principal seller.
(B) No person or corporation, other than a bank or trust company, and agent thereof, a licensee, or an agent of a licensee, shall undertake in the course of carrying on the business regulated in this act to receive, transmit, or handle money on behalf of another to whom he issues a money order or a similar payment paper, and any person who does so shall be liable to the owner of the money order or similar payment paper for the payment thereof to the same extent as a drawer of a negotiable instrument under Chapter 3 of Title 36.
SECTION 19. This act takes effect January 1, 1995.