By Ellis S.B. No. 398
74R2582 DWS-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to regulation of check-cashing services; providing a
1-3 penalty.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Title 16, Revised Statutes, is amended by adding
1-6 Article 352 to read as follows:
1-7 Art. 352. CHECK-CASHING SERVICES
1-8 Sec. 1. DEFINITIONS. In this article:
1-9 (1) "Check" includes a money order or other draft.
1-10 (2) "Check-cashing service" means a person in the
1-11 business of cashing checks for consideration, other than:
1-12 (A) a bank, savings and loan association,
1-13 savings bank, or credit union; or
1-14 (B) a person that cashes checks as an incident
1-15 to another business for a consideration of not more than 50 cents a
1-16 check.
1-17 (3) "Commissioner" means the Office of Consumer Credit
1-18 Commissioner.
1-19 (4) "Person" means an individual, firm, or
1-20 corporation.
1-21 (5) "Substantial shareholder" means a person who owns,
1-22 or controls the voting rights of, 10 percent or more of the shares
1-23 of a corporation.
1-24 Sec. 2. LICENSE REQUIRED. A check-cashing service may not
2-1 engage in the business of cashing checks without a license issued
2-2 by the commissioner.
2-3 Sec. 3. APPLICATION. To obtain a license under this article
2-4 a check-cashing service must file with the commissioner a sworn,
2-5 written application, in a form the commissioner prescribes and
2-6 accompanied by the application fee provided by Section 13, stating:
2-7 (1) the name and street address of:
2-8 (A) the applicant, if the applicant is an
2-9 individual;
2-10 (B) each partner, if the applicant is a
2-11 partnership; or
2-12 (C) each director and officer, if the applicant
2-13 is a corporation;
2-14 (2) the street address at which the check-cashing
2-15 service is to engage in business; and
2-16 (3) other information the commissioner requires.
2-17 Sec. 4. REQUIREMENTS FOR ISSUANCE. (a) The commissioner
2-18 may issue the applicant a license if the commissioner finds that:
2-19 (1) the character, experience, financial
2-20 responsibility, and general fitness of the individual applicant,
2-21 each partner of the applicant, or each director and officer of the
2-22 applicant, as applicable, are sufficient to command the confidence
2-23 of the community and to warrant belief that the check-cashing
2-24 service will be operated expertly, fairly, and efficiently in
2-25 compliance with this article;
2-26 (2) the check-cashing service will serve the
2-27 convenience and advantage of the area in which it will operate; and
3-1 (3) the check-cashing service meets the assets
3-2 requirement of Section 7.
3-3 (b) The commissioner may not issue a license to an applicant
3-4 if the commissioner finds that the individual applicant, a partner
3-5 of the applicant, or a director, officer, or substantial
3-6 shareholder of the applicant, as applicable, has been convicted of
3-7 a felony in this state or of an offense in another jurisdiction
3-8 that would have been a felony if committed in this state.
3-9 (c) The commissioner may refuse to issue a license to an
3-10 applicant if the commissioner finds that the individual applicant,
3-11 a partner of the applicant, or a director, officer, or substantial
3-12 shareholder of the applicant, as applicable, has:
3-13 (1) been convicted of a criminal offense not requiring
3-14 denial of the license;
3-15 (2) consorted with a person who has been convicted of
3-16 a criminal offense;
3-17 (3) committed fraud or another act of personal
3-18 dishonesty;
3-19 (4) breached a fiduciary duty by act or omission; or
3-20 (5) had a license or other permit to engage in a
3-21 business revoked by a state or the United States.
3-22 (d) The commissioner may deny a license to an applicant if
3-23 the commissioner finds that during the preceding year a license
3-24 under this article has been revoked for a check-cashing service
3-25 operating at the location at which the applicant intends to engage
3-26 in business.
3-27 Sec. 5. FORM; POSTING. (a) The commissioner shall
4-1 prescribe the form of a license.
4-2 (b) The check-cashing service shall conspicuously post the
4-3 license in a public place at its place of business.
4-4 Sec. 6. TRANSFER OF LICENSE PROHIBITED. A check-cashing
4-5 service may not transfer a license under this article.
4-6 Sec. 7. ASSETS REQUIRED. A check-cashing service shall at
4-7 all times maintain liquid assets of not less than $10,000, except
4-8 that on application and proof of good cause by the service, the
4-9 commissioner may lower this requirement for the service to an
4-10 amount not less than $5,000. The service shall provide proof of
4-11 compliance with this section as the commissioner requires.
4-12 Sec. 8. LOCATION. (a) Except as provided by Subsection
4-13 (b), a check-cashing service may engage in business at only one
4-14 location for each license. This location must be:
4-15 (1) the location stated in the application for the
4-16 license; or
4-17 (2) another location if the change of location is
4-18 approved by the commissioner on application by the service.
4-19 (b) A check-cashing service, on the written approval of the
4-20 commissioner, may operate one or more branch locations at which the
4-21 service cashes checks for a limited group of persons specified in
4-22 the commissioner's approval.
4-23 Sec. 9. CHECK-CASHING FEES. (a) The commissioner by rule
4-24 shall establish the maximum fees that a check-cashing service may
4-25 charge for cashing checks.
4-26 (b) The check-cashing service shall conspicuously post in a
4-27 public place at its place of business, in a form the commissioner
5-1 prescribes, a schedule of:
5-2 (1) the maximum fees permitted under the
5-3 commissioner's rules; and
5-4 (2) the fees charged by the service.
5-5 Sec. 10. RECORDS. A check-cashing service shall keep
5-6 records in the form and for the period the commissioner requires.
5-7 Sec. 11. PROHIBITED ACTS. A check-cashing service may not:
5-8 (1) make a loan;
5-9 (2) discount a note, bill of exchange, check, or other
5-10 evidence of indebtedness;
5-11 (3) cash a postdated check;
5-12 (4) hold a check for deposit later than the first
5-13 banking business day after the date on which the check is delivered
5-14 to the check-cashing service; or
5-15 (5) cash a check with a face amount greater than
5-16 $2,500.
5-17 Sec. 12. SUSPENSION OR REVOCATION OF LICENSE. The
5-18 commissioner may suspend or revoke a license issued under this
5-19 article if the commissioner finds that the check-cashing service
5-20 has:
5-21 (1) violated this article, a rule adopted under this
5-22 article, or other law;
5-23 (2) committed fraud or another dishonest act;
5-24 (3) made a false statement in an application under
5-25 this article or another communication with the commissioner;
5-26 (4) demonstrated incompetence related to the business
5-27 of cashing checks;
6-1 (5) had insufficient business to justify continuance
6-2 of the license; or
6-3 (6) failed to pay a fee as required by this article.
6-4 Sec. 13. FEES. (a) The application fee for a license is
6-5 $250. The application fee for a branch office is $10. An
6-6 application fee is not refundable.
6-7 (b) The annual license fee is $350. The annual fee for each
6-8 branch is $20.
6-9 (c) The fee for a change of location is $100, except that
6-10 the commissioner may waive this fee.
6-11 Sec. 14. RULES. The commissioner may adopt rules to
6-12 implement this article.
6-13 Sec. 15. VIOLATION; PENALTY. (a) A check-cashing service
6-14 commits an offense if the service:
6-15 (1) violates this article or a rule adopted under this
6-16 article; or
6-17 (2) fails to establish and comply with appropriate
6-18 procedures to ensure compliance with Subchapter II, Chapter 53,
6-19 Title 31, United States Code (31 U.S.C. Section 5311 et seq.).
6-20 (b) An offense under this section is a Class B misdemeanor.
6-21 SECTION 2. This Act takes effect January 1, 1996.
6-22 SECTION 3. The importance of this legislation and the
6-23 crowded condition of the calendars in both houses create an
6-24 emergency and an imperative public necessity that the
6-25 constitutional rule requiring bills to be read on three several
6-26 days in each house be suspended, and this rule is hereby suspended.