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Current Status Bill Number:View additional legislative information at the LPITS web site.434 Type of Legislation:General Bill GB Introducing Body:Senate Introduced Date:19990203 Primary Sponsor:Short All Sponsors:Short, Jackson and Gregory Drafted Document Number:l:\s-res\lhs\002chec.kad.doc Companion Bill Number:3515 Residing Body:House Current Committee:Labor, Commerce and Industry Committee 26 HLCI Date of Last Amendment:19990429 Subject:Deferred presentment services, check cashing services, fraudulent checks; Banks and Savings and Loans, Checks History Body Date Action Description Com Leg Involved ______ ________ ______________________________________ _______ ____________ House 19990504 Introduced, read first time, 26 HLCI referred to Committee Senate 19990429 Amended, read third time, sent to House Senate 19990428 Read second time Senate 19990428 Committee amendment adopted Senate 19990225 Committee report: Favorable with 02 SBI amendment Senate 19990203 Introduced, read first time, 02 SBI referred to Committee Versions of This Bill Revised on February 25, 1999 - Word format Revised on April 28, 1999 - Word format Revised on April 29, 1999 - Word format
Indicates Matter Stricken
Indicates New Matter
AS PASSED BY THE SENATE
April 29, 1999
S. 434
S. Printed 4/29/99--S.
Read the first time February 3, 1999.
TO AMEND SECTION 34-39-120 OF THE CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO DEFINITIONS RELATING TO DEFERRED PRESENTMENT SERVICES, SO AS TO DEFINE THE TERM "CASH ADVANCE"; TO AMEND SECTION 34-39-180, RELATING TO RESTRICTIONS AND REQUIREMENTS FOR DEFERRED PRESENTMENT OF A CHECK, SO AS TO PROVIDE THAT THE FACE AMOUNT OF A CHECK TAKEN FOR DEFERRED PRESENTMENT OR DEPOSIT, INCLUDING THE CASH ADVANCE MADE TO THE CUSTOMER AND THE FEE IMPOSED BY THE DEFERRED PRESENTMENT SERVICE, SHALL NOT EXCEED THREE HUNDRED FORTY-FIVE DOLLARS; TO AMEND SECTION 34-39-200, RELATING TO EXEMPTIONS FROM THE DEFERRED PRESENTMENT ACT, SO AS TO REVISE CERTAIN EXEMPTIONS; TO AMEND SECTION 34-41-20, RELATING TO LICENSE REQUIREMENTS FOR CHECK CASHING SERVICES, SO AS TO REQUIRE A SEPARATE LICENSE FOR EACH BUSINESS LOCATION; TO AMEND SECTION 34-41-30, RELATING TO EXEMPTIONS FROM CHECK CASHING SERVICE LAW, SO AS TO REDEFINE THE EXEMPTION FOR RETAIL SELLERS TO ALLOW UP TO TWO DOLLARS, RATHER THAN NO CONSIDERATION; TO AMEND SECTION 34-41-40, RELATING TO CHECK CASHING SERVICE LICENSE APPLICATIONS, TO REVISE THE INVESTIGATION AND LICENSE FEES; TO AMEND SECTION 34-41-60, RELATING TO RESTRICTIONS AND REQUIREMENTS FOR CHECK CASHING SERVICES, SO AS TO DELETE THE REQUIREMENT OF A WRITTEN AGREEMENT; AND TO AMEND SECTION 34-41-80, RELATING TO EXEMPTIONS FROM THE CHECK CASHING LAW, SO AS TO REVISE CERTAIN EXEMPTIONS.
Amend Title To Conform
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 34-39-120 of the 1976 Code is amended by adding an appropriately numbered subsection to read:
"( ) `Cash advance' means the amount of cash or its equivalent that the customer actually receives.
SECTION 2. Section 34-39-180 of the 1976 Code is amended to read:
"Section 34-39-180. (A) A licensee may defer the presentment or deposit of a check for up to thirty-one days pursuant to the provisions of this section.
(B) The face amount of a check taken for deferred presentment or deposit may not exceed three hundred dollars, exclusive of the fees allowed in Section 34-39-180(E) deposit, including the cash advance made to the customer and the fee imposed by the deferred presentment service, shall not exceed three hundred forty-five dollars.
(C) Each check must be documented by a written agreement signed by both the customer and the licensee. The written agreement must contain the name or trade name of the licensee, the transaction date, the amount of the check, and a statement of the total amount of fees charged, expressed both as a dollar amount and as an effective annual percentage rate (APR). The written agreement must authorize expressly the licensee to defer presentment or deposit of the check until a specific date, not later than thirty-one days from the date the check is accepted by the licensee.
(D) The board shall require each licensee to issue a standardized consumer notification and disclosure form in compliance with state and federal truth-in-lending laws before entering into a deferred presentment agreement.
(E) A licensee shall not charge, directly or indirectly, a fee or other consideration in excess of fifteen percent of the face amount of the check for accepting a check for deferred presentment or deposit greater than fifteen percent of the cash advance made to the customer. The fee or other consideration authorized by this subsection may be imposed only once for each written agreement. Records must be kept by each licensee with sufficient detail to ensure that the fee or other consideration authorized by this subsection may be imposed only once for each written agreement.
(F) A check accepted for deferred presentment or deposit pursuant to this chapter may not be repaid from the proceeds of another check accepted for deferred presentment or deposit by the same licensee or an affiliate of the licensee. A licensee shall not renew or otherwise extend presentment of a check or withhold the check from deposit, for old or new consideration, for a period beyond the time set forth in the written agreement with the customer.
(G) If a check is returned to the licensee from a payer financial institution due to insufficient funds, closed account, or stop payment order, the licensee may pursue all legally available civil means to collect the check including, but not limited to, the imposition of a returned check charge as provided in Section 34-11-70(a), except that the service charge imposed by the licensee shall not exceed the lesser of ten dollars or the fee imposed by the financial institution on the licensee for the returned check. An individual who issues a personal check to a licensee under a deferred presentment agreement is not subject to criminal penalty."
SECTION 3. Section 34-39-200 of the 1976 Code is amended to read:
"Section 34-39-200. A person required to be licensed pursuant to this chapter may not:
(1) charge fees in excess of those authorized by 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, except as expressly provided by Section 34-39-180;
(3) use or cause to be published or disseminated advertising communication which contains false, misleading, or deceptive statements or representations;
(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) alter or delete the date on a check accepted by the licensee;
(7) accept an undated check or a check dated on a date other than the date on which the licensee accepts the check;
(8) require a customer to provide security for the transaction or require the customer to provide a guaranty from another person;
(9) engage in the retail sale of goods or services, other than deferred presentment services and Level I check-cashing services as defined in Section 34-41-10, at the location licensed pursuant to this chapter provided, however, that a sale of money orders, prepaid telephone calling cards, postage stamps, payment of utility bills with no additional fee to the customer, vending machines for food, tobacco products or beverage, copying or facsimile services, Western Union money transmission services, or postal boxes at rates not higher than allowed by the United States Postal Service is not the sale of goods or services prohibited by this subsection. For purposes of this item, `money transmission services' means the business of receiving money for transmission or transmitting money within the United States or to locations abroad by any means including, but not limited to, payment instruments, wire, facsimile, or electronic transfer;
(10) be licensed pursuant to Section 12-21-2720(a)(3) to operate a video poker machine operate machines licensed pursuant to Section 12-21-2720(a)(3) at the location licensed pursuant to this chapter; or
(11) permit others to engage in an activity prohibited by this section at a location licensed pursuant to this chapter."
SECTION 4. Sections 34-41-20, 34-41-30, and 34-41-40 of the 1976 Code are amended to read:
"Section 34-41-20. (A) No person or other entity may engage in the business of either Level I or Level II check-cashing service without first obtaining a license pursuant to this chapter. A separate license is required for each location from which the business is conducted. No person or other entity providing a Level I or Level II 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 Level I or Level II check-cashing services on the effective date of this chapter 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 chapter.
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 Level I or Level II check-cashing service, from time to time cashes checks, drafts, or money orders without a fee or other consideration for a fee or other consideration, where not more than two dollars or three percent of the check amount, whichever is less, is charged for the service; provided, that, if a purchase is made at the time the check, draft, or money order, is cashed, no fee or consideration shall be charged for the service.
Section 34-41-40. (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 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, such as other partnerships, associations, and corporations located at or adjacent to the licensed location, of the applicant and its members, officers, directors, and principals as the board requires.
(B) The board may make such investigations as the board considers necessary to determine if the applicant has complied with all applicable provisions of this chapter and state and federal law.
(C) (1) The application must be accompanied by payment of a two hundred fifty dollar application fee and a five hundred dollar investigation fee.
(2) If the same person has more than one license application, then:
(a) the investigation fee is payable only for the first application, provided, that the person shall affirmatively state to the board that he has more than one application. If a person who is already licensed seeks a license for additional locations, the investigation fee shall not be required; and
(b) the application fee is two hundred fifty dollars for the first license and fifty dollars for each additional license applied for by that person.
(3) 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 of it.
(4) For purposes of this subsection, `person' includes a natural person or an individual and an organization.
(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. A license expires annually and may be renewed upon payment of a license fee of two hundred fifty dollars. The annual license renewal fee for an applicant with more than one location is two hundred fifty dollars for the first location and fifty dollars for each additional location."
SECTION 5. Section 34-41-60 of the 1976 Code is amended to read:
"Section 34-41-60. (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 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. A 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 pursuant to this chapter, there is posted conspicuously and at all times displayed a notice stating the fees charged for cashing checks, drafts, and money orders. A licensee further shall ensure that notice of the fees currently charged at every location is 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.
(E) Each check must be documented by a written agreement signed by both the customer and the licensee. In the case of an automated check-cashing machine, a printed receipt of the transaction between the customer and the licensee shall constitute an agreement. The written agreement must contain the name or trade name of the licensee, the transaction date, the amount of the check, and a statement of the total amount of fees charged."
SECTION 6. Section 34-41-80 of the 1976 Code is amended to read:
"Section 34-41-80. No person required to be licensed pursuant to this chapter shall do any of the following:
(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 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) as a Level I licensee, engage in the retail sale of goods or services, other than check-cashing services and deferred presentment services, at the location licensed pursuant to this chapter, provided, however, that a sale of money orders, prepaid telephone calling cards, postage stamps, payment of utility bills with no additional fee to the customer, vending machines for food, tobacco products or beverage, copying or facsimile services, Western Union money transmission services, or postal boxes at rates not higher than allowed by the United States Postal Service is not the sale of goods or services prohibited by this subsection. For purposes of this item, `money transmission services' means the business of receiving money for transmission or transmitting money within the United States or to locations abroad by any means including, but not limited to, payment instruments, wire, facsimile, or electronic transfer;
(8) as a Level II licensee, engage in the business of deferred presentment as provided in Chapter 39 of Title 34;
(9) be licensed pursuant to Section 12-21-2720(a)(3) to operate a video poker machine operate machines licensed pursuant to Section 12-21-2720(a)(3) at the location licensed pursuant to this chapter; or
(10) permit others to engage in an activity prohibited by this section at a location licensed pursuant to this chapter."
SECTION 7. This act takes effect upon approval by the Governor.
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