GENERAL ASSEMBLY OF NORTH CAROLINA
SENATE BILL 89
Short Title: Deferred Presentment Services.
Senators Tillman (Primary Sponsor); and Jenkins.
February 14, 2013
A BILL TO BE ENTITLED
AN ACT to allow and regulate the business of providing deferred presentment services to certain persons.
The General Assembly of North Carolina enacts:
SECTION 1. G.S. 53-275 reads as rewritten:
"§ 53-275. Definitions.
As used in this Article, unless the context clearly requires otherwise, the term:
(1) "Cashing" means providing currency for payment instruments, but does not include the bona fide sale or exchange of travelers checks and foreign denomination payment instruments.
(1a) "Cash advance" is as defined in G.S. 53-165(c).
(1b) "Check" means any payment instrument, including any customer authorization for electronic payment.
(2) "Check-cashing service" means any person or entity engaged in the business of cashing checks, drafts, or money orders for a fee, service charge, or other consideration.
(3) "Commission" means the State Banking Commission.
(4) "Commissioner" means the Commissioner of Banks.
(4a) "Deferred presentment transaction" means a transaction pursuant to a written agreement in which one party to the agreement accepts a check dated on the date it was written and holds the check for a period of time set forth in the agreement prior to presentment for payment or deposit.
(5) "Licensee" means a person or entity licensed to engage in a check-cashing business under this Article.
(5a) "Payment instrument" is as defined in G.S. 53-208.2(a)(14).
(6) "Person" means an individual, partnership, association, or corporation.
(7) "Rollover" means the termination or extension of a deferred presentment transaction by the payment of an additional fee and the continued holding of the check, or the substitution of a new check by a customer pursuant to a new deferred presentment transaction."
SECTION 2. Article 22 of Chapter 53 of the General Statutes is amended by adding a new section to read:
"§ 53-281.1. Deferred presentment transactions.
(a) For purposes of a deferred presentment transaction, a licensee may charge a fee to defray operational costs. Operational costs may include investigating the checking account and copying required documents; photographing the person signing the check; securing the check and customer records in a safe, fireproof place; maintaining records as required by this section; maintaining required capital and liquidity; processing, documenting, and closing the transaction; and for other similar expenses that may be incurred by the licensee. The fee authorized by this subsection shall not exceed fifteen percent (15%) of the cash advance amount, and the maximum cash advance amount to a customer shall not exceed five hundred dollars ($500.00). The fee, when made and collected, shall not be deemed interest for any purpose of State law. The licensee shall not charge any fees or interest not specifically authorized by this section. For purposes of this section, a licensee shall include a person or entity licensed under Article 15 of this Chapter.
(b) Any agreement for the deferred presentment of a check must be signed by the maker of the check. The maker of the check shall have the right to redeem the check from the licensee before the agreed date of deposit upon payment to the licensee of the amount of the check. A licensee shall not defer presentment of any personal check for more than 35 calendar days after the date that the check is tendered to the licensee.
(c) Before entering into a deferred presentment transaction, a licensee shall do all of the following:
(1) Provide each customer with a written explanation of (i) the fees charged by the licensee and (ii) the date on which the check will be deposited or presented for payment by the licensee. The written explanation shall be written in clear and understandable language and shall include all information required to comply with the federal Truth in Lending Act, 15 U.S.C. § 1601, et seq. The Commission may adopt rules establishing additional notification requirements to assure complete and accurate disclosure, including a rule requiring each licensee to issue a standardized consumer notification and disclosure form that includes all information required by this subsection. The required style, content, and method of executing the form shall be prescribed by the rules and shall be designed to ensure that the customer, prior to entering into a deferred presentment transaction, receives and acknowledges an accurate and complete notification and disclosure of the itemized and total amounts of all fees and other costs that will or could be imposed as a result of the deferred presentment transaction.
(2) Inquire into whether any customer seeking deferred presentment services has outstanding checks from other licensees by requiring the customer to verify, under penalty of perjury and in a signed writing, that the customer does not have any outstanding checks with any other licensees. No licensee shall knowingly enter into a deferred presentment transaction with a customer who has an outstanding deferred presentment transaction.
(3) Inquire into whether any customer is a member of the Armed Forces of the United States or the spouse or other dependent of a member of the Armed Forces of the United States. A licensee shall not knowingly enter into a deferred presentment transaction with a customer who is a member of the Armed Forces of the United States or the spouse or other dependent of a member of the Armed Forces of the United States.
(d) A licensee shall issue (i) a copy of the deferred presentment agreement required in subsection (c)(1) of this section and (ii) a receipt to each customer who enters into a deferred presentation transaction with the licensee. The receipt shall include the information required in subsection (c)(1) of this section regarding the total amount of the fees charged by the licensee and the date on which the check will be presented for deposit by the licensee.
(e) If the check is returned to the licensee from a payer financial institution due to insufficient funds, a closed account, or a stop payment order, the licensee shall have the right to charge a fee for returned checks pursuant to G.S. 53-175. No customer who issues a personal check to a licensee under this section that is returned due to insufficient funds, a closed account, or a stop payment order shall be subject to criminal prosecution under G.S. 14-107 unless the customer attempted to enter into a deferred presentment transaction through misrepresentation or fraud. No licensee shall report to any credit reporting agency that a customer has not paid, or has willfully refused to pay, a debt incurred under this section.
(f) No licensee shall do any of the following:
(1) Alter or delete the date on any check accepted by the licensee or accept a check bearing no date or a date other than the date on which the licensee accepts the check.
(2) Require a customer to provide security for the deferred presentment transaction or require the customer to provide a guaranty from another person.
(3) Engage in any acts or practices that (i) constitute an unfair and deceptive trade practice in violation of G.S. 75-1.1 or (ii) violate any State or federal law regarding cash transactions and cash transaction reporting.
(g) Upon entering into a deferred presentment transaction, each licensee shall pay directly to the customer the full amount of any check to be held, less the fee authorized by subsection (a) of this section. The payment required under this subsection may be made to the customer in the form of (i) cash, (ii) a check payable on the account of the licensee, (iii) a money order, (iv) a debit card, (v) an electronic funds transfer to the customer's designated account, or (vi) through any other electronic payment mechanism. A licensee shall not charge an additional fee to the customer for making the payment required under this subsection in a form other than cash.
(h) A licensee or any person related to the licensee by common ownership or control shall not engage in the rollover of a deferred presentment transaction. A licensee shall not redeem, extend, or otherwise consolidate a deferred presentment transaction with the proceeds of another deferred presentment transaction made by the same licensee or any person related to the licensee by common ownership or control. Upon payment of the full amount of any check, a licensee shall not enter into another deferred presentment transaction until 24 hours after the check was fully paid by the given customer.
(i) A licensee shall not use any device or agreement, including agreements with other licensees, with the intent to obtain greater charges than otherwise would be authorized by this section or circumvent the rollover prohibition in subsection (h) of this section.
(j) A licensee may provide to a customer once a year an extended payment plan agreement if, at any time on or before the due date of the loan, the customer declares an inability to repay. An extended payment plan shall be subject to the following terms:
(1) The principal balance due under the extended payment plan shall be the outstanding principal balance and finance charges due under the existing loan.
(2) The licensee may not impose a finance charge for entering into the extended payment plan. The licensee may only impose the fees and charges in subsection (e) of this section for returned checks.
(3) The extended payment plan agreement shall allow the customer to pay the sums due under the extended payment plan in at least four substantially equal installments. Each plan installment must be due on a date on which the customer receives regular income.
(k) Except as expressly provided in this section, a deferred presentment transaction shall not be subject to the provisions of Article 15 of this Chapter.
(l) A transaction entered into in violation of this section is void and unenforceable in law or equity."
SECTION 3. G.S. 53-280 reads as rewritten:
"§ 53-280. Maximum fees for service; fees posted; endorsement of checks cashed.
(a) Notwithstanding any other provision of law, no check-cashing business licensed under this Article shall directly or indirectly charge or collect fees or other consideration for check-cashing services in excess of the following:
(1) Three percent (3%) of the face amount of the check or five dollars ($5.00), 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.
as provided for in G.S. 53-281.1, ten percent (10%) of the face amount
of the check or five dollars ($5.00), whichever is greater, for personal
(3) Five percent (5%) of the face amount of the check or five dollars ($5.00), whichever is greater, for all other 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. Except as
G.S. 53-281(a),G.S. 53-281.1, any licensee
who cashes a check for a fee shall deposit the check not later than three
business days from the date the check is cashed.
(c) A licensee shall ensure that in every location conducting business under a license issued under this Article, there is conspicuously posted and at all times displayed a notice stating the fees charged for cashing checks, drafts, and money orders. A licensee shall further ensure that notice of the fees currently charged at every location shall be filed with the Commissioner.
(d) A licensee shall endorse every check, draft, or money order presented by the licensee for payment in the name of the licensee."
SECTION 4. G.S. 53-283(2) reads as rewritten:
"§ 53-283. Prohibited practices.
No person required to be licensed under this Article shall do any of the following:
(2) Engage in the
business of making loans of money, or extensions of credit, or discounting
notes, bills of exchange, items, or other evidences of debt; or accepting
deposits or bailments of money or items, except as expressly provided by
G.S. 53-281.G.S. 53-281.1.
SECTION 5. This act becomes effective July 1, 2013.