H.R. 1095 (104th): Check Cashing Act of 1995

104th Congress, 1995–1996. Text as of Mar 01, 1995 (Introduced).

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HR 1095 IH

104th CONGRESS

1st Session

H. R. 1095

To establish a State system of licensing or registering persons engaged in a business which regularly and primarily charges fees for cashing checks, and to provide for insured financial depository institutions to cash checks issued by States or the United States.

IN THE HOUSE OF REPRESENTATIVES

March 1, 1995

Mr. FIELDS of Louisiana introduced the following bill; which was referred to the Committee on Banking and Financial Services


A BILL

To establish a State system of licensing or registering persons engaged in a business which regularly and primarily charges fees for cashing checks, and to provide for insured financial depository institutions to cash checks issued by States or the United States.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ‘Check Cashing Act of 1995’.

SEC. 2. STATE LICENSE OR REGISTRATION REQUIRED FOR CHECK CASHING BUSINESSES.

    (a) IN GENERAL- A person, other than a depository institution, shall not engage in business in a State as a check cashing business unless--

      (1) the State has established a system for licensing or registering check cashing businesses that is approved by the Commission in accordance with section 3;

      (2) the person is licensed by or registered with the State under that approved State system, as applicable; and

      (3) the person engages in that business in accordance with the requirements under that system for licensing or registration, as applicable.

    (b) PENALTY- Any person that violates subsection (a) shall be subject to a civil penalty of not more than $5,000, which may be assessed by Commission.

    (c) EFFECTIVE DATE- Subsections (a) and (b) shall take effect on the date that is 2 years after the date of the enactment of this Act.

    (d) LIMITATION ON APPLICATION TO EXISTING BUSINESSES- Subsections (a) and (b) shall not apply to engagement by a person in business in a State as a check cashing business in the 1-year period beginning on the date of approval of a check cashing business licensing or registration system of the State under section 3, if the person engaged in that business in the State on the date of the enactment of this Act.

SEC. 3. APPROVAL OF STATE CHECK CASHING BUSINESS LICENSING OR REGISTRATION SYSTEM.

    (a) IN GENERAL- Any State may apply to the Commission in accordance with this section for approval of a State check cashing business licensing or registration system.

    (b) REQUIREMENTS FOR APPROVAL- The Commission may approve a State check cashing business licensing or registration system under this section if the Commission finds that the system consists of State laws that--

      (1) prohibit any person from engaging in business in the State as a check cashing business, unless the person--

        (A) holds a license issued under the system, or

        (B) in the case of a registration system, is registered with the State under the system;

      (2) prohibit the issuance of a check cashing business license to a person or the registration of a person as such a business, as applicable, unless the person--

        (A) identifies to the State--

          (i) all persons that are officers of the business; and

          (ii) all persons that own or control more than 5 percent of the total ownership interest in the business;

        (B) complies with bonding or minimum capital requirements established by the State;

      (3) require that any person that engages in business in the State as a check cashing business shall--

        (A) post a schedule of all fees charged for providing check cashing services, in a manner that is conspicuous to the public;

        (B) issue a receipt for each check cashing service provided, that shows the amount of the check or other instrument with respect to which the service is provided, the fee charged for the service, and the date the service is provided; and

        (C) post the name and address of the State agency responsible under State law for

administering the system, in a manner that is conspicuous to the public;

      (4) prohibit any person from charging any fee for providing a check cashing service, that is greater than the amount of fee authorized for that service by the State;

      (5) establish a centralized system for filing of check cashing business licensing or registration documents, as applicable;

      (6) establish criteria for refusal, suspension, and revocation of check cashing business licenses or registrations, as applicable;

      (7) establish criminal or civil penalties (or both) for violations of the State laws;

      (8) ensure the submission to the Commission of any changes in the State laws described in this subsection; and

      (9) comply with such additional requirements as may be established by the Commission in regulations issued under subsection (f).

    (c) LIMITATION ON APPROVAL OF SYSTEMS PROVIDING RECIPROCITY- The Commission may not approve a State check cashing business licensing or registration system under this section if the laws of the State authorize the licensing or registration of a person under the system, as applicable, on the basis of the person having been licensed or registered under the laws of another State and without having to comply with all requirements applicable under the laws of the State that comprise the system.

    (d) SUBMISSION, REVIEW, AND APPROVAL OF STATE APPLICATIONS-

      (1) SUBMISSION OF APPLICATION- A State may submit an application to the Commission for approval of a State check cashing business licensing or registration system under this section--

        (A) in the 1-year period beginning on the date of the issuance of regulations under subsection (f), in the case of a State which on the date of the enactment of this Act does not prohibit, and has in effect laws that establish requirements for, the operation of a check cashing business;

        (B) in the 2-year period beginning on that date of issuance in the case of a State which on that date of enactment does not prohibit, and does not have in effect laws that establish requirements for, the operation of a check cashing business; or

        (C) in the 60-day period beginning on the date of the enactment by the State of any law that repeals a prohibition on the operation of check cashing businesses, in the case of a State which on the date of the enactment of this Act has in effect laws that prohibit the operation of all check cashing businesses.

      (2) REVIEW AND APPROVAL BY COMMISSION- The Commission shall, by not later than 1 year after the date of submittal of an application by a State under this subsection--

        (A) approve the State system if the system complies with the requirements for approval under subsection (b); or

        (B) disapprove the State system, recommend to the State such changes in the system as are necessary for approval, and provide the State one additional year to make changes in State law to effect those changes.

    (e) REVIEW OF CHANGES IN APPROVED STATE SYSTEMS-

      (1) GENERAL- Not later than 1 year after the date of submission to the Commission of any change in the laws described in subsection (b) of a State that has an approved State system, the Commission shall--

        (A) review the change to determine whether the change is in accordance with the requirements for approval of the system under subsection (b);

        (B) approve the change as being in accordance with those requirements, or disapprove the change as not being in accordance with those requirements; and

        (C) notify the State of that approval or disapproval, including with any notification of disapproval a description of such modifications to State law as are necessary for the system to continue to be an approved State system.

      (2) SUBSEQUENT REVIEW; REVOCATION OF APPROVAL- After notifying a State under paragraph (1)(B) that the Commission disapproves a change in the approved State system of the State, the Commission shall--

        (A) review any further modifications in the laws of the State that have been enacted; and

        (B)(i) approve the change and modifications if they are in accordance with the requirements for approval under subsection (b); or

        (ii) revoke the Commission’s approval of the State system if they are not in accordance with those requirements.

    (f) Regulations and Guidelines-

      (1) IN GENERAL- Not later than 60 days after the date of the enactment of this Act, the Commission shall issue regulations and guidelines for the submission of applications and approval of State check cashing business licensing and registration systems under this section.

      (2) ADDITIONAL REQUIREMENTS- Regulations issued under this subsection may include requirements for approval of such systems in addition to the requirements under this section as the Commission considers necessary to protect persons who provide check cashing services, ensure the free flow of commerce, or protect the monetary system of the United States.

    (g) RULE OF CONSTRUCTION- This Act shall not be construed to prohibit a State from establishing, assessing, collecting, and using fees in the administration of a check cashing business licensing or registration system under this Act.

SEC. 4. PROHIBITION ON REFUSAL BY INSURED DEPOSITORY INSTITUTION TO CASH GOVERNMENT CHECKS.

    (a) PROHIBITION- An insured depository institution shall not refuse to cash a government check, and an insured credit union shall not refuse to cash a government check presented by a member of the insured credit union, if--

      (1) the check is presented for cashing by an individual who is the payee of the check, and is properly endorsed by each individual who is a payee of the check;

      (2) the individual who presents the check for cashing provides sufficient identification;

      (3) the check and the identification documents required under paragraph (2) do not bear evidence of forgery, fraud, counterfeiting, alteration, or other tampering; and

      (4) the face value of the check is less than $2500.

    (b) PENALTY- An insured depository institution or insured credit union that violates subsection (a) shall be liable for a civil penalty of not more than $500 for each violation, which may be assessed by--

      (1) the State agency having primary responsibility under State law for administering an approved State system;

      (2) the State agency having primary responsibility under State law for administering laws regulating banking, in the case of a violation in a State that does not have an approved State system; or

      (3) the person having responsibility under subsection (c) for enforcing this section with respect to the depository institution.

    (c) ENFORCEMENT- The requirements of this section shall be enforced--

      (1) under section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818) by the Office of the Comptroller of the Currency, with respect to national banks, and Federal branches and Federal agencies of foreign banks;

      (2) under section 8 of that Act by the Board of Governors of the Federal Reserve, with respect to member banks of the Federal Reserve System (other than national banks), branches and agencies of foreign banks (other than Federal branches, Federal agencies, and insured State branches of foreign banks), commercial lending companies owned or controlled by foreign banks, and organizations operating under section 25 or 25(a) of the Federal Reserve Act;

      (3) under section 8 of that Act by the Board of Directors of the Federal Deposit Insurance Corporation, with respect to banks insured by the Federal Deposit Insurance Corporation (other than members of the Federal Reserve System) and insured State branches of foreign banks;

      (4) under section 8 of that Act by the Director of the Office of Thrift Supervision, with respect to any savings association the deposits of which are insured by the Federal Deposit Insurance Corporation;

      (5) under the Federal Credit Union Act (12 U.S.C. 1752 et seq.) by the Administrator of the National Credit Union Administration, with respect to any insured credit union; and

      (6) under the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.) by the Farm Credit Administration, with respect to any Federal land bank, Federal land bank association, Federal intermediate credit bank, or production credit association.

    (d) RULES OF CONSTRUCTION- This section shall not be construed to--

      (1) prohibit an insured depository institution from charging fees to cash Government checks; or

      (2) prohibit or preempt a State from establishing requirements or limitations with respect to the charging of fees by insured depository institutions for check cashing services, that are different than State requirements or limitations that apply to persons that are not insured depository institutions.

SEC. 5. DISPENSING OF FEDERAL AND STATE GOVERNMENT BENEFITS BY COMMUNITY DEVELOPMENT CREDIT UNIONS.

    (a) LIMITATION ON AUTHORITY OF NATIONAL CREDIT UNION ADMINISTRATION- The National Credit Union Administration Board may not prohibit any Federally chartered credit union from dispensing benefits under any Federal or State assistance program (including benefits under the Aid to Families with Dependent Children program under title IV of the Social Security Act (42 U.S.C. 601 et seq.)) that are authorized to be dispensed by a check cashing service.

    (b) STUDY- After the date that is 2 years after the date of the enactment of this Act, and not later than 3 years after that date of enactment, the Comptroller General of the United States shall conduct a study and submit a report to the Congress on the effectiveness and efficiency of the dispensation of benefits under Federal and State assistance programs (including benefits under the aid to families with dependent children program under title IV of the Social Security Act (42 U.S.C. 601 et seq.) through federally chartered credit unions.

SEC. 6. STUDY OF DEBIT CARD SYSTEMS OF BENEFIT PAYMENTS AND BENEFIT CHECK DELIVERY.

    Not later than 9 months after the date of the enactment of this Act, the Comptroller General of the United States shall conduct a study and submit a report to the Congress on--

      (1) the effects of requiring the use of a debit card system for making all benefit payments by the Federal Government; and

      (2) other innovative ways to enhance and upgrade the current methods by which the Federal Government delivers benefit payment checks.

SEC. 7. DEFINITIONS.

    (a) IN GENERAL- As used in this Act--

      (1) the term ‘approved State system’ means a State check cashing business license or registration system that is approved by the Commission under section 3;

      (2) the term ‘check cashing business’ means a person that regularly and primarily engages in the business of providing any check cashing service for a fee and not in exchange for goods or services;

      (3) the term ‘check cashing service’ means--

        (A) the issuance, redemption, or cashing of a 2-party or multi-party check or similar negotiable instrument;

        (B) the sale, redemption, or cashing of a travelers check, money order, or similar negotiable instrument by an agent of the issuer of the instrument that is authorized to do so; or

        (C) the transmittal of money by wire, in any form or by any method or manner;

      (4) the term ‘Commission’ means the Federal Trade Commission;

      (5) the term ‘depository institution’ has the meaning given that term in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813(c));

      (6) the term ‘Federally chartered credit union’ means a credit union having an organization certificate approved by the National Credit Union Board under section 102 of the Federal Credit Union Act (123 U.S.C. 1752a);

      (7) the term ‘government check’ means any check issued by the United States or any agency of the United States;

      (8) the term ‘insured depository institution’ has the meaning given that term in section 3(c) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c));

      (9) the term ‘insured credit union’ has the meaning given that term in section 101(7) of the Federal Credit Union Act (12 U.S.C. 1752(7));

      (10) the term ‘State’ means the 50 States, the District of Columbia, and the territories and possessions of the United States; and

      (11) the term ‘sufficient identification’ means--

        (A) a valid driver’s license that bears the name and address of the person providing the license as identification;

        (B) a valid photo-identification card issued by a State or Federal agency; or

        (C) a valid United States passport.

    (b) TERMS RELATING TO ENFORCEMENT OF SECTION 4- A term used in section 4 that is not defined in this Act shall have the meaning given that term by--

      (1) section 3(s) of the Federal Deposit Insurance Act (12 U.S.C. 1813(s)); or

      (2) in the case of a term not defined in the Act referred to in paragraph (1), section 1(b) of the International Banking Act of 1978 (12 U.S.C. 3101).