I

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.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Check Cashing Act

5 of 1995’’.
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1 SEC. 2. STATE LICENSE OR REGISTRATION REQUIRED FOR

2 CHECK CASHING BUSINESSES.

3 (a) IN GENERAL.—A person, other than a depository

4 institution, shall not engage in business in a State as a

5 check cashing business unless—

6 (1) the State has established a system for li7 censing or registering check cashing businesses that

8 is approved by the Commission in accordance with

9 section 3;

10 (2) the person is licensed by or registered with

11 the State under that approved State system, as ap12 plicable; and

13 (3) the person engages in that business in ac14 cordance with the requirements under that system

15 for licensing or registration, as applicable.

16 (b) PENALTY.—Any person that violates subsection

17 (a) shall be subject to a civil penalty of not more than

18 $5,000, which may be assessed by Commission.

19 (c) EFFECTIVE DATE.—Subsections (a) and (b) shall

20 take effect on the date that is 2 years after the date of

21 the enactment of this Act.

22 (d) LIMITATION ON APPLICATION TO EXISTING

23 BUSINESSES.—Subsections (a) and (b) shall not apply to

24 engagement by a person in business in a State as a check

25 cashing business in the 1-year period beginning on the

26 date of approval of a check cashing business licensing or
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1 registration system of the State under section 3, if the

2 person engaged in that business in the State on the date

3 of the enactment of this Act.

4 SEC. 3. APPROVAL OF STATE CHECK CASHING BUSINESS

5 LICENSING OR REGISTRATION SYSTEM.

6 (a) IN GENERAL.—Any State may apply to the Com7 mission in accordance with this section for approval of a

8 State check cashing business licensing or registration sys9 tem.

10 (b) REQUIREMENTS FOR APPROVAL.—The Commis11 sion may approve a State check cashing business licensing

12 or registration system under this section if the Commis13 sion finds that the system consists of State laws that—

14 (1) prohibit any person from engaging in busi15 ness in the State as a check cashing business, unless

16 the person—

17 (A) holds a license issued under the sys18 tem, or

19 (B) in the case of a registration system, is

20 registered with the State under the system;

21 (2) prohibit the issuance of a check cashing

22 business license to a person or the registration of a

23 person as such a business, as applicable, unless the

24 person—

25 (A) identifies to the State—
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1 (i) all persons that are officers of the

2 business; and

3 (ii) all persons that own or control

4 more than 5 percent of the total ownership

5 interest in the business;

6 (B) complies with bonding or minimum

7 capital requirements established by the State;

8 (3) require that any person that engages in

9 business in the State as a check cashing business

10 shall—

11 (A) post a schedule of all fees charged for

12 providing check cashing services, in a manner

13 that is conspicuous to the public;

14 (B) issue a receipt for each check cashing

15 service provided, that shows the amount of the

16 check or other instrument with respect to which

17 the service is provided, the fee charged for the

18 service, and the date the service is provided;

19 and

20 (C) post the name and address of the

21 State agency responsible under State law for

22 administering the system, in a manner that is

23 conspicuous to the public;

24 (4) prohibit any person from charging any fee

25 for providing a check cashing service, that is greater
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1 than the amount of fee authorized for that service

2 by the State;

3 (5) establish a centralized system for filing of

4 check cashing business licensing or registration doc5 uments, as applicable;

6 (6) establish criteria for refusal, suspension,

7 and revocation of check cashing business licenses or

8 registrations, as applicable;

9 (7) establish criminal or civil penalties (or both)

10 for violations of the State laws;

11 (8) ensure the submission to the Commission of

12 any changes in the State laws described in this sub13 section; and

14 (9) comply with such additional requirements as

15 may be established by the Commission in regulations

16 issued under subsection (f).

17 (c) LIMITATION ON APPROVAL OF SYSTEMS PROVID18 ING RECIPROCITY.—The Commission may not approve a

19 State check cashing business licensing or registration sys20 tem under this section if the laws of the State authorize

21 the licensing or registration of a person under the system,

22 as applicable, on the basis of the person having been li23 censed or registered under the laws of another State and

24 without having to comply with all requirements applicable

25 under the laws of the State that comprise the system.
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1 (d) SUBMISSION, REVIEW, AND APPROVAL OF STATE

2 APPLICATIONS.—

3 (1) SUBMISSION OF APPLICATION.—A State

4 may submit an application to the Commission for

5 approval of a State check cashing business licensing

6 or registration system under this section—

7 (A) in the 1-year period beginning on the

8 date of the issuance of regulations under sub9 section (f), in the case of a State which on the

10 date of the enactment of this Act does not pro11 hibit, and has in effect laws that establish re12 quirements for, the operation of a check cash13 ing business;

14 (B) in the 2-year period beginning on that

15 date of issuance in the case of a State which on

16 that date of enactment does not prohibit, and

17 does not have in effect laws that establish re18 quirements for, the operation of a check cash19 ing business; or

20 (C) in the 60-day period beginning on the

21 date of the enactment by the State of any law

22 that repeals a prohibition on the operation of

23 check cashing businesses, in the case of a State

24 which on the date of the enactment of this Act
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1 has in effect laws that prohibit the operation of

2 all check cashing businesses.

3 (2) REVIEW AND APPROVAL BY COMMISSION.—

4 The Commission shall, by not later than 1 year after

5 the date of submittal of an application by a State

6 under this subsection—

7 (A) approve the State system if the system

8 complies with the requirements for approval

9 under subsection (b); or

10 (B) disapprove the State system, rec11 ommend to the State such changes in the sys12 tem as are necessary for approval, and provide

13 the State one additional year to make changes

14 in State law to effect those changes.

15 (e) REVIEW OF CHANGES IN APPROVED STATE SYS16 TEMS.—

17 (1) GENERAL.—Not later than 1 year after the

18 date of submission to the Commission of any change

19 in the laws described in subsection (b) of a State

20 that has an approved State system, the Commission

21 shall—

22 (A) review the change to determine wheth23 er the change is in accordance with the require24 ments for approval of the system under sub25 section (b);
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1 (B) approve the change as being in accord2 ance with those requirements, or disapprove the

3 change as not being in accordance with those

4 requirements; and

5 (C) notify the State of that approval or

6 disapproval, including with any notification of

7 disapproval a description of such modifications

8 to State law as are necessary for the system to

9 continue to be an approved State system.

10 (2) SUBSEQUENT REVIEW; REVOCATION OF AP11 PROVAL.—After notifying a State under paragraph

12 (1)(B) that the Commission disapproves a change in

13 the approved State system of the State, the Commis14 sion shall—

15 (A) review any further modifications in the

16 laws of the State that have been enacted; and

17 (B)(i) approve the change and modifica18 tions if they are in accordance with the require19 ments for approval under subsection (b); or

20 (ii) revoke the Commission’s approval of

21 the State system if they are not in accordance

22 with those requirements.

23 (f) REGULATIONS AND GUIDELINES.—

24 (1) IN GENERAL.—Not later than 60 days after

25 the date of the enactment of this Act, the Commis-
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1 sion shall issue regulations and guidelines for the

2 submission of applications and approval of State

3 check cashing business licensing and registration

4 systems under this section.

5 (2) ADDITIONAL REQUIREMENTS.—Regulations

6 issued under this subsection may include require7 ments for approval of such systems in addition to

8 the requirements under this section as the Commis9 sion considers necessary to protect persons who pro10 vide check cashing services, ensure the free flow of

11 commerce, or protect the monetary system of the

12 United States.

13 (g) RULE OF CONSTRUCTION.—This Act shall not be

14 construed to prohibit a State from establishing, assessing,

15 collecting, and using fees in the administration of a check

16 cashing business licensing or registration system under

17 this Act.

18 SEC. 4. PROHIBITION ON REFUSAL BY INSURED DEPOSI19 TORY INSTITUTION TO CASH GOVERNMENT

20 CHECKS.

21 (a) PROHIBITION.—An insured depository institution

22 shall not refuse to cash a government check, and an in23 sured credit union shall not refuse to cash a government

24 check presented by a member of the insured credit union,

25 if—
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1 (1) the check is presented for cashing by an in2 dividual who is the payee of the check, and is prop3 erly endorsed by each individual who is a payee of

4 the check;

5 (2) the individual who presents the check for

6 cashing provides sufficient identification;

7 (3) the check and the identification documents

8 required under paragraph (2) do not bear evidence

9 of forgery, fraud, counterfeiting, alteration, or other

10 tampering; and

11 (4) the face value of the check is less than

12 $2500.

13 (b) PENALTY.—An insured depository institution or

14 insured credit union that violates subsection (a) shall be

15 liable for a civil penalty of not more than $500 for each

16 violation, which may be assessed by—

17 (1) the State agency having primary respon18 sibility under State law for administering an ap19 proved State system;

20 (2) the State agency having primary respon21 sibility under State law for administering laws regu22 lating banking, in the case of a violation in a State

23 that does not have an approved State system; or
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1 (3) the person having responsibility under sub2 section (c) for enforcing this section with respect to

3 the depository institution.

4 (c) ENFORCEMENT.—The requirements of this sec5 tion shall be enforced—

6 (1) under section 8 of the Federal Deposit In7 surance Act (12 U.S.C. 1818) by the Office of the

8 Comptroller of the Currency, with respect to na9 tional banks, and Federal branches and Federal

10 agencies of foreign banks;

11 (2) under section 8 of that Act by the Board

12 of Governors of the Federal Reserve, with respect to

13 member banks of the Federal Reserve System (other

14 than national banks), branches and agencies of for15 eign banks (other than Federal branches, Federal

16 agencies, and insured State branches of foreign

17 banks), commercial lending companies owned or con18 trolled by foreign banks, and organizations operating

19 under section 25 or 25(a) of the Federal Reserve

20 Act;

21 (3) under section 8 of that Act by the Board

22 of Directors of the Federal Deposit Insurance Cor23 poration, with respect to banks insured by the Fed24 eral Deposit Insurance Corporation (other than
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1 members of the Federal Reserve System) and in2 sured State branches of foreign banks;

3 (4) under section 8 of that Act by the Director

4 of the Office of Thrift Supervision, with respect to

5 any savings association the deposits of which are in6 sured by the Federal Deposit Insurance Corporation;

7 (5) under the Federal Credit Union Act (12

8 U.S.C. 1752 et seq.) by the Administrator of the

9 National Credit Union Administration, with respect

10 to any insured credit union; and

11 (6) under the Farm Credit Act of 1971 (12

12 U.S.C. 2001 et seq.) by the Farm Credit Adminis13 tration, with respect to any Federal land bank, Fed14 eral land bank association, Federal intermediate

15 credit bank, or production credit association.

16 (d) RULES OF CONSTRUCTION.—This section shall

17 not be construed to—

18 (1) prohibit an insured depository institution

19 from charging fees to cash Government checks; or

20 (2) prohibit or preempt a State from establish21 ing requirements or limitations with respect to the

22 charging of fees by insured depository institutions

23 for check cashing services, that are different than

24 State requirements or limitations that apply to per25 sons that are not insured depository institutions.
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1 SEC. 5. DISPENSING OF FEDERAL AND STATE GOVERN2 MENT BENEFITS BY COMMUNITY DEVELOP3 MENT CREDIT UNIONS.

4 (a) LIMITATION ON AUTHORITY OF NATIONAL CRED5 IT UNION ADMINISTRATION.—The National Credit Union

6 Administration Board may not prohibit any Federally

7 chartered credit union from dispensing benefits under any

8 Federal or State assistance program (including benefits

9 under the Aid to Families with Dependent Children pro10 gram under title IV of the Social Security Act (42 U.S.C.

11 601 et seq.)) that are authorized to be dispensed by a

12 check cashing service.

13 (b) STUDY.—After the date that is 2 years after the

14 date of the enactment of this Act, and not later than 3

15 years after that date of enactment, the Comptroller Gen16 eral of the United States shall conduct a study and submit

17 a report to the Congress on the effectiveness and efficiency

18 of the dispensation of benefits under Federal and State

19 assistance programs (including benefits under the aid to

20 families with dependent children program under title IV

21 of the Social Security Act (42 U.S.C. 601 et seq.) through

22 federally chartered credit unions.

23 SEC. 6. STUDY OF DEBIT CARD SYSTEMS OF BENEFIT PAY24 MENTS AND BENEFIT CHECK DELIVERY.

25 Not later than 9 months after the date of the enact26 ment of this Act, the Comptroller General of the United
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1 States shall conduct a study and submit a report to the

2 Congress on—

3 (1) the effects of requiring the use of a debit

4 card system for making all benefit payments by the

5 Federal Government; and

6 (2) other innovative ways to enhance and up7 grade the current methods by which the Federal

8 Government delivers benefit payment checks.

9 SEC. 7. DEFINITIONS.

10 (a) IN GENERAL.—As used in this Act—

11 (1) the term ‘‘approved State system’’ means a

12 State check cashing business license or registration

13 system that is approved by the Commission under

14 section 3;

15 (2) the term ‘‘check cashing business’’ means a

16 person that regularly and primarily engages in the

17 business of providing any check cashing service for

18 a fee and not in exchange for goods or services;

19 (3) the term ‘‘check cashing service’’ means—

20 (A) the issuance, redemption, or cashing of

21 a 2-party or multi-party check or similar nego22 tiable instrument;

23 (B) the sale, redemption, or cashing of a

24 travelers check, money order, or similar nego-
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1 tiable instrument by an agent of the issuer of

2 the instrument that is authorized to do so; or

3 (C) the transmittal of money by wire, in

4 any form or by any method or manner;

5 (4) the term ‘‘Commission’’ means the Federal

6 Trade Commission;

7 (5) the term ‘‘depository institution’’ has the

8 meaning given that term in section 3 of the Federal

9 Deposit Insurance Act (12 U.S.C. 1813(c));

10 (6) the term ‘‘Federally chartered credit union’’

11 means a credit union having an organization certifi12 cate approved by the National Credit Union Board

13 under section 102 of the Federal Credit Union Act

14 (123 U.S.C. 1752a);

15 (7) the term ‘‘government check’’ means any

16 check issued by the United States or any agency of

17 the United States;

18 (8) the term ‘‘insured depository institution’’

19 has the meaning given that term in section 3(c) of

20 the Federal Deposit Insurance Act (12 U.S.C.

21 1813(c));

22 (9) the term ‘‘insured credit union’’ has the

23 meaning given that term in section 101(7) of the

24 Federal Credit Union Act (12 U.S.C. 1752(7));
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1 (10) the term ‘‘State’’ means the 50 States, the

2 District of Columbia, and the territories and posses3 sions of the United States; and

4 (11) the term ‘‘sufficient identification’’

5 means—

6 (A) a valid driver’s license that bears the

7 name and address of the person providing the

8 license as identification;

9 (B) a valid photo-identification card issued

10 by a State or Federal agency; or

11 (C) a valid United States passport.

12 (b) TERMS RELATING TO ENFORCEMENT OF SEC13 TION 4.—A term used in section 4 that is not defined in

14 this Act shall have the meaning given that term by—

15 (1) section 3(s) of the Federal Deposit Insur16 ance Act (12 U.S.C. 1813(s)); or

17 (2) in the case of a term not defined in the Act

18 referred to in paragraph (1), section 1(b) of the

19 International Banking Act of 1978 (12 U.S.C.

20 3101).

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