By Maxey H.B. No. 2722 75R2893 BEM-D A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the cashing of certain checks and to the registration 1-3 of certain persons engaged in a check-cashing business; providing 1-4 penalties. 1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-6 SECTION 1. Title 16, Revised Statutes, is amended by adding 1-7 Articles 352 and 353 to read as follows: 1-8 Art. 352. Registration of Check-Cashing Business 1-9 Sec. 1. SHORT TITLE. This article may be cited as the 1-10 "Consumer Check-Cashing Act." 1-11 Sec. 2. DEFINITIONS. In this article: 1-12 (1) "Check-cashing business" means a person in the 1-13 business of cashing checks for a fee, other than: 1-14 (A) a bank, savings and loan association, 1-15 savings bank, or credit union; 1-16 (B) a grocery or convenience store; or 1-17 (C) a person that cashes checks as an incident 1-18 to another business for a consideration of not more than 50 cents a 1-19 check. 1-20 (2) "Check-cashing service" means: 1-21 (A) the issuance, redemption, or cashing of a 1-22 two-party or multi-party check or similar negotiable instrument; 1-23 (B) the sale, redemption, or cashing of a 1-24 travelers check, money order, or similar negotiable instrument by 2-1 an agent of the issuer of the instrument that is authorized to do 2-2 so; or 2-3 (C) the transmittal of money in any form by wire 2-4 or similar method. 2-5 (3) "Convenience store" means a retail establishment 2-6 that is primarily engaged in the retail sale of groceries and other 2-7 products and services, including: 2-8 (A) prepared foods; 2-9 (B) household items and toiletries; and 2-10 (C) gasoline and services. 2-11 (4) "Finance commission" means the Finance Commission 2-12 of Texas. 2-13 (5) "Person" means an individual, corporation, 2-14 association, or other business entity. 2-15 Sec. 3. REGISTRATION REQUIRED. A check-cashing business may 2-16 not operate in this state unless the business: 2-17 (1) is registered with the finance commission under 2-18 this article; and 2-19 (2) operates in accordance with this article and the 2-20 rules adopted under this article. 2-21 Sec. 4. REGISTRATION. (a) To register, a person must file 2-22 a sworn, written application with the finance commission. The 2-23 finance commission by rule shall adopt the form of the application. 2-24 (b) An application for registration must identify: 2-25 (1) each officer of the business; 2-26 (2) each person that owns or controls more than five 2-27 percent of the business; 3-1 (3) the street address at which the business will be 3-2 operated; and 3-3 (4) any other information required by the finance 3-4 commission. 3-5 (c) An applicant must comply with bonding or minimum capital 3-6 requirements established by the finance commission. 3-7 Sec. 5. OPERATING REQUIREMENTS. A check-cashing business 3-8 shall: 3-9 (1) post a schedule of all fees charged for 3-10 check-cashing services in a manner that is conspicuous to customers 3-11 of the check-cashing business; 3-12 (2) issue a receipt for each check-cashing service 3-13 provided that shows: 3-14 (A) the amount of the check or other instrument 3-15 with respect to which the service is provided; 3-16 (B) the fee charged for the service; and 3-17 (C) the date the service is provided; and 3-18 (3) post a notice that is conspicuous to the public 3-19 that: 3-20 (A) contains the name and address of the finance 3-21 commission; and 3-22 (B) advises the public that a person may make a 3-23 complaint to the finance commission about the check-cashing 3-24 business. 3-25 Sec. 6. MAXIMUM FEE. A check-cashing business may charge a 3-26 fee for providing a check-cashing service in an amount that is not 3-27 more than the greater of 25 cents or .5 percent of the face value 4-1 of the instrument being cashed or the amount being wired. 4-2 Sec. 7. FINANCE COMMISSION RULES. (a) The finance 4-3 commission shall adopt rules that establish: 4-4 (1) a centralized system for filing of check-cashing 4-5 business registration documents; 4-6 (2) criteria for refusal, suspension, and revocation 4-7 of a check-cashing business registration; and 4-8 (3) administrative penalties for violations of this 4-9 article and rules adopted by the finance commission under this 4-10 article. 4-11 (b) The finance commission by rule may adopt other 4-12 requirements for the registration and regulation of the 4-13 check-cashing business and may adopt rules necessary to implement 4-14 this article. 4-15 Sec. 8. ADMINISTRATIVE PENALTY. (a) The finance commission 4-16 may impose an administrative penalty against a person registered 4-17 under this article who violates this article or a rule or order 4-18 adopted under this article. 4-19 (b) The penalty for a violation may be in an amount not to 4-20 exceed $5,000. Each day that a violation continues or occurs is a 4-21 separate violation for the purposes of imposing a penalty. 4-22 (c) The amount of the penalty shall be based on: 4-23 (1) the seriousness of the violation, including the 4-24 nature, circumstances, extent, and gravity of any prohibited acts, 4-25 and the hazard or potential hazard created to the health, safety, 4-26 or welfare of the public; 4-27 (2) the history of any previous violations; 5-1 (3) the amount necessary to deter future violations; 5-2 (4) efforts to correct the violation; and 5-3 (5) any other matter that justice may require. 5-4 (d) If the finance commission determines that a violation 5-5 has occurred, the finance commission may issue a report that states 5-6 the facts on which the determination is based. The finance 5-7 commission shall make a recommendation on the imposition of a 5-8 penalty, including a recommendation on the amount of the penalty. 5-9 (e) Within 14 days after the date on which the report is 5-10 issued, the finance commission shall give written notice of the 5-11 report to the person who committed the alleged violation. The 5-12 notice may be given by certified mail. The notice must include a 5-13 brief summary of the alleged violation and a statement of the 5-14 amount of the recommended penalty and must inform the person that 5-15 the person has a right to a hearing on the occurrence of the 5-16 violation, the amount of the penalty, or both the occurrence of the 5-17 violation and the amount of the penalty. 5-18 (f) Within 20 days after the date the person receives the 5-19 notice, the person in writing may accept the determination and 5-20 recommended penalty of the finance commission or may make a written 5-21 request for a hearing on the occurrence of the violation, the 5-22 amount of the penalty, or both the occurrence of the violation and 5-23 the amount of the penalty. 5-24 (g) If the person accepts the determination and recommended 5-25 penalty of the finance commission, the finance commission shall 5-26 issue an order and impose the recommended penalty. 5-27 (h) If the person requests a hearing or fails to respond 6-1 timely to the notice, the finance commission shall set a hearing 6-2 and give notice of the hearing to the person. The hearing shall be 6-3 held by an administrative law judge of the State Office of 6-4 Administrative Hearings. The administrative law judge shall make 6-5 findings of fact and conclusions of law and promptly issue to the 6-6 finance commission a proposal for a decision about the occurrence 6-7 of the violation and the amount of the penalty. Based on the 6-8 findings of fact, conclusions of law, and proposal for a decision, 6-9 the finance commission by order may find that a violation has 6-10 occurred and impose a penalty or may find that no violation 6-11 occurred. 6-12 (i) The notice of the finance commission's order given to 6-13 the person under Chapter 2001, Government Code, must include a 6-14 statement of the right of the person to judicial review of the 6-15 order. 6-16 (j) Within 30 days after the date the finance commission's 6-17 order is final as provided by Section 2001.144, Government Code, 6-18 the person shall: 6-19 (1) pay the amount of the penalty; 6-20 (2) pay the amount of the penalty and file a petition 6-21 for judicial review contesting the occurrence of the violation, the 6-22 amount of the penalty, or both the occurrence of the violation and 6-23 the amount of the penalty; or 6-24 (3) without paying the amount of the penalty, file a 6-25 petition for judicial review contesting the occurrence of the 6-26 violation, the amount of the penalty, or both the occurrence of the 6-27 violation and the amount of the penalty. 7-1 (k) Within the 30-day period, a person who acts under 7-2 Subsection (j)(3) of this section may: 7-3 (1) stay enforcement of the penalty by: 7-4 (A) paying the amount of the penalty to the 7-5 court for placement in an escrow account; or 7-6 (B) giving to the court a supersedeas bond 7-7 approved by the court for the amount of the penalty and that is 7-8 effective until all judicial review of the finance commission's 7-9 order is final; or 7-10 (2) request the court to stay enforcement of the 7-11 penalty by: 7-12 (A) filing with the court a sworn affidavit of 7-13 the person stating that the person is financially unable to pay the 7-14 amount of the penalty and is financially unable to give the 7-15 supersedeas bond; and 7-16 (B) giving a copy of the affidavit to the 7-17 finance commission by certified mail. 7-18 (l) If the finance commission receives a copy of an 7-19 affidavit under Subsection (k)(2) of this section, the finance 7-20 commission may file with the court within five days after the date 7-21 the copy is received a contest to the affidavit. The court shall 7-22 hold a hearing on the facts alleged in the affidavit as soon as 7-23 practicable and shall stay the enforcement of the penalty on 7-24 finding that the alleged facts are true. The person who files an 7-25 affidavit has the burden of proving that the person is financially 7-26 unable to pay the amount of the penalty and to give a supersedeas 7-27 bond. 8-1 (m) If the person does not pay the amount of the penalty and 8-2 the enforcement of the penalty is not stayed, the finance 8-3 commission may refer the matter to the attorney general for 8-4 collection of the penalty. 8-5 (n) Judicial review of the order of the finance commission: 8-6 (1) is instituted by filing a petition as provided by 8-7 Section 2001.176, Government Code; and 8-8 (2) is under the substantial evidence rule. 8-9 (o) If the court sustains the occurrence of the violation, 8-10 the court may uphold or reduce the amount of the penalty and order 8-11 the person to pay the full or reduced amount of the penalty. If 8-12 the court does not sustain the occurrence of the violation, the 8-13 court shall order that no penalty is owed. 8-14 (p) When the judgment of the court becomes final, the court 8-15 shall proceed under this subsection. If the person paid the amount 8-16 of the penalty and if that amount is reduced or is not upheld by 8-17 the court, the court shall order that the appropriate amount plus 8-18 accrued interest be remitted to the person. The rate of interest 8-19 is the rate charged on loans to depository institutions by the New 8-20 York Federal Reserve Bank, and the interest shall be paid for the 8-21 period beginning on the date the penalty was paid and ending on the 8-22 date the penalty is remitted. If the person gave a supersedeas 8-23 bond and if the amount of the penalty is not upheld by the court, 8-24 the court shall order the release of the bond. If the person gave 8-25 a supersedeas bond and if the amount of the penalty is reduced, the 8-26 court shall order the release of the bond after the person pays the 8-27 amount. 9-1 (q) A penalty collected under this section shall be remitted 9-2 to the comptroller for deposit in the general revenue fund. 9-3 (r) All proceedings under this section are subject to 9-4 Chapter 2001, Government Code. 9-5 Art. 353. Requirement To Cash Government Check 9-6 Sec. 1. DEFINITIONS. In this article: 9-7 (1) "Financial institution" means a state or national 9-8 bank, state or federal savings and loan association, or state or 9-9 federal savings bank. 9-10 (2) "Government check" means a check issued by this 9-11 state or the United States. 9-12 Sec. 2. REQUIREMENT TO CASH. A financial institution shall 9-13 cash a government check and a state or federal credit union shall 9-14 cash a government check presented by a member of the credit union 9-15 if: 9-16 (1) the check is presented for cashing by a payee of 9-17 the check; 9-18 (2) the check is properly endorsed by each payee of 9-19 the check; 9-20 (3) the person who presents the check for cashing 9-21 provides: 9-22 (A) a valid driver's license that bears the name 9-23 and address of the person providing the license as identification; 9-24 (B) a valid photographic identification card 9-25 issued by a state or federal agency; or 9-26 (C) a valid United States passport; 9-27 (4) the check and the identification documents 10-1 required under Subdivision (3) of this section do not bear evidence 10-2 of forgery, fraud, counterfeiting, alteration, or other tampering; 10-3 and 10-4 (5) the check is for an amount that is less than 10-5 $2,500. 10-6 Sec. 3. ENFORCEMENT. This article shall be enforced by the 10-7 official who is responsible for regulating the entity under 10-8 Subtitle 2, Title 79, Revised Statutes (Article 5069-2.01 et seq., 10-9 Vernon's Texas Civil Statutes), as provided by Subsection (l), 10-10 Article 2.01, Title 79, Revised Statutes (Article 5069-2.01, 10-11 Vernon's Texas Civil Statutes). 10-12 Sec. 4. CIVIL PENALTY. A financial institution or credit 10-13 union that violates this article or a rule adopted under this 10-14 article is subject to a civil penalty of not more than $500 for 10-15 each violation. The attorney general shall bring suit to collect 10-16 the penalty. 10-17 Sec. 5. RULES OF CONSTRUCTION. This article does not 10-18 prohibit a financial institution or credit union from charging a 10-19 fee for cashing a government check. 10-20 SECTION 2. This Act takes effect January 1, 1998, except 10-21 that a check-cashing business is not required to be registered 10-22 under Article 352, Revised Statutes, as added by this Act, before 10-23 September 1, 1999. 10-24 SECTION 3. The importance of this legislation and the 10-25 crowded condition of the calendars in both houses create an 10-26 emergency and an imperative public necessity that the 10-27 constitutional rule requiring bills to be read on three several 11-1 days in each house be suspended, and this rule is hereby suspended.