Current Status Bill Number:
995Type of Legislation: General Bill GBIntroducing Body: SenateIntroduced Date: 19980205Primary Sponsor: ShortAll Sponsors: Short, Jackson and GregoryDrafted Document Number: res1592.lhsResiding Body: HouseCurrent Committee: Labor, Commerce and Industry Committee 26 HLCIDate of Last Amendment: 19980428Subject: Check cashing services, licensure and regulation of; Banks and Savings and Loan Associations, Businesses, Corporations
Body Date Action Description Com Leg Involved ______ ________ _______________________________________ _______ ____________ House 19980429 Introduced, read first time, 26 HLCI referred to Committee Senate 19980428 Amended, read third time, sent to House Senate 19980414 Amended, read second time, ordered to third reading with notice of general amendments Senate 19980414 Committee amendment adopted Senate 19980319 Committee report: Favorable with 02 SBI amendment Senate 19980205 Introduced, read first time, 02 SBI referred to CommitteeView additional legislative information at the LPITS web site.
Indicates Matter Stricken
Indicates New Matter
AS PASSED BY THE SENATE
April 28, 1998
S. Printed 4/28/98--S.
Read the first time February 5, 1998.
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:
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
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.