A N A C T
RELATING TO FINANCIAL INSTITUTIONS - CHECK CASHING
It is enacted by the General Assembly as follows:
SECTION 1. Section 19-14-1 of the General Laws in Chapter 19-14 entitled "Licensed Activities" is hereby amended to read as follows:
19-14-1. Definitions. -- For purposes of this chapter and chapters 14.1, 14.2, 14.3, 14.4 and 14.5:
(1) "Check" means any check, draft, money order, personal money order, or other instrument for the transmission or payment of money. For the purposes of check cashing, travelers checks or foreign denomination instruments shall not be considered checks. "Check cashing" means providing currency for checks;
(2) "Deliver" means to deliver a check to the first person who in payment for the check makes or purports to make a remittance of or against the face amount of the check, whether or not the deliverer also charges a fee in addition to the face amount, and whether or not the deliverer signs the check;
(3) "Electronic money transfer" means receiving money for transmission within the United States or to locations abroad by any means including, but not limited to, wire, facsimile or other electronic transfer system;
(4) (i) "Lender" means any person who makes or funds a loan within this state with the person's own funds, regardless of whether the person is the nominal mortgagee or creditor on the instrument evidencing the loan;
(ii) A loan is made or funded within this state if any of the following conditions exist:
(A) The loan is secured by real property located in this state;
(B) An application for a loan is taken by an employee, agent, or representative of the lender within this state; or
(C) The loan closes within this state;
(iii) The term "lender" shall also include any person engaged in a transaction whereby the person makes or funds a loan within this state using the proceeds of an advance under a line of credit over which proceeds the person has dominion and control and for the repayment of which the person is unconditionally liable. This transaction is not a table funding transaction. A person is deemed to have dominion and control over the proceeds of an advance under a line of credit used to fund a loan regardless of whether:
(A) The person may, contemporaneously with or shortly following the funding of the loan, assign or deliver to the line of credit lender one or more loans funded by the proceeds of an advance to the person under the line of credit;
(B) The proceeds of an advance are delivered directly to the settlement agent by the line of credit lender, unless the settlement agent is the agent of the line of credit lender;
(C) One or more loans funded by the proceeds of an advance under the line of credit is purchased by the line of credit lender; or
(D) Under the circumstances as set forth in regulations adopted by the director or the director's designee pursuant to this chapter;
(5) "Licensee" means an entity licensed under this chapter;
(6) "Loan" means any advance of money or credit including, but not limited to:
(i) Loans secured by mortgages;
(ii) Insurance premium finance contracts;
(iii) The purchase or acquisition of retail installment contracts or advances to the holders of those contracts;
(iv) Educational loans; or
(v) Any other advance of money;
(7) "Loan broker" means any person who, for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly, solicits, processes, negotiates, places or sells a loan within this state for others in the primary market, or offers to do so. A loan broker shall also mean any person who is the nominal mortgagee or creditor in a table funding transaction. A loan is brokered within this state if any of the following conditions exist:
(i) The loan is secured by real property located in this state;
(ii) An application for a loan is taken by an employee, agent or representative of the loan broker within this state; or
(iii) The loan closes within this state;
(8) "Personal money order" means any instrument for the transmission or payment of money in relation to which the purchaser or remitter appoints or purports to appoint the seller as his or her agent for the receipt, transmission, or handling of money, whether the instrument is signed by the seller or by the purchaser or remitter or some other person;
(9) "Primary market" means the market in which loans are made to borrowers by lenders, whether or not through a loan broker or other conduit;
(10) "Principal owner" means any person who owns, controls, votes or has a beneficial interest in, directly or indirectly, ten percent (10%) or more of the outstanding capital stock of a licensee;
(11) "Sell" means to sell, to issue, or to deliver a check;
(12) "Small loan" means a loan of less than five thousand dollars ($5,000), not secured by real estate, made pursuant to the provisions of chapter 14.2 of this title;
(13) "Small loan lender" means a lender engaged in the business of making small loans within this state; and
(14) "Table funding transaction" means a transaction in which there is a contemporaneous advance of funds by a lender and an assignment by the mortgagee or creditor of the loan to the lender.
(15) "Check casher" means a person or entity that, for compensation, engages, in whole or in part, in the business of cashing checks.
(16) "Deferred deposit transaction" means any transaction such as those commonly known as "pay-day loans," "pay-day advances," or "deferred presentment loans" in which a cash advance is made to a customer in exchange for the customer's personal check or in exchange for the customer's authorization to debit the customer's deposit account and where the parties agree either that the check will not be cashed or deposited, or that the customer's deposit account will not be debited until a designated future date.
SECTION 2. Section 19-14.1 of the General Laws in chapter 19-14.1 entitled "Lenders and Loan Brokers" is hereby amended to read as follows:
19-14.1-10. Special exemptions. -- (a) The licensing provisions of chapter 14 shall not apply to:
(1) Nonprofit charitable, educational, or religious corporations or associations;
(2) Any person who makes less than six (6) loans in this state in any consecutive twelve (12) month period; there is no similar exemption from licensing for loan brokers for brokering loans or acting as a loan broker; or
(3) Persons(s) acting as an agent for a licensee for the purpose of conducting closings at a location other than that stipulated in the license.
(b) The provisions of chapter 14 and chapter 14.1 shall not apply to:
(1) Loans to corporations, joint ventures, partnerships, limited liability companies or other business entities;
(2) Loans over twenty-five thousand dollars ($25,000) in amount to individuals for business or commercial, as opposed to personal, family or household purposes;
(3) Loans principally secured by accounts receivable and/or business inventory;
(4) Loans made by a life insurance company wholly secured by the cash surrender value of a life insurance policy;
(5) Education-purpose loans made by the Rhode Island health and educational building corporation as vested in chapter 38.1 of title 45 of the Rhode Island student loan authority as vested in chapter 62 of title 16;
(6) The acquisition of retail or loan installment contracts by an entity whose sole business in this state is acquiring them from federal banks receivers or liquidators;
(7) Notes evidencing the indebtedness of a retail buyer to a retail seller of goods, services of insurance for a part or all of the purchase price; or
(8) Any state or federal agency which makes, brokers, or funds loans or acts as a lender or a loan broker. This exemption includes exclusive agents or exclusive contractors of the agency specifically designated by the agency to perform those functions on behalf of the agency and which has notified the director, in writing, of the exclusive agency or contract.
(c) No license to make or fund loans, or to act as a lender or small loan lender shall be required of any person who engages in deferred deposit transactions (commonly known as "pay-day advance") while holding a valid license to cash checks pursuant to chapter 14 of this title.
SECTION 3. Sections 19-14.4-4 and 19-14.4-5 of the General Laws in Chapter 19-14.4 entitled "Check Cashing" are hereby amended to read as follows:
19-14.4-4. Fees for services. -- No licensee shall:
(1) Charge check-cashing fees in excess of three percent (3%) of the face amount of the check, or five dollars ($5.00), whichever is greater, if the check is the payment of any kind of state public assistance or federal social security benefit;
(2) Charge check-cashing fees for personal checks in excess of ten percent (10%) of the face amount of the personal check or five dollars ($5.00), whichever is greater; or
(3) Charge check-cashing fees in excess of five percent (5%) of the face amount of the check or five dollars ($5.00), whichever is greater, for all other checks.
(4) Charge deferred deposit transaction fees in excess of ten percent (10%) of the face amount of the check or five dollars ($5.00), whichever is greater.
19-14.4-5. Posting of charges -- Endorsement - Receipt. -- (a) In every location licensed pursuant to this chapter, there shall be
conspicuously posted and at all times displayed a notice stating the charges for cashing checks at all times posted in a conspicuous place within the licensed premises a complete and unambiguous schedule of all fees for cashing checks, deferred deposit transactions and the initial issuance of any identification card.
(b) Before a licensee shall deposit, with any regulated institution or other insured-deposit-taking institution organized under the laws of the United States, a check cashed by the licensee, the check must be endorsed with the name under which the licensee is doing business and must include the words "licensed check cashing services".
(c) The licensee shall provide a receipt for each transaction for the benefit of a customer.
(d) Each check casher shall also post a list of valid identification which is acceptable in lieu of identification provided by the check casher. The information required by this section shall be clear, legible, and in letters not less than one-half (1/2) inch in height. The information shall be posted in a conspicuous location in the unobstructed view of the public within the check cashers' premises. Failure to post information as required by this title, or the imposition of fees or identification requirements contrary to the information posted, shall constitute a deceptive trade practice under chapter 6-13.1.
SECTION 4. Chapter 19-14.4 of the General Laws entitled "Check Cashing" is hereby amended by adding thereto the following section:
19-14.4-5.1. Customer checks - Deferred deposits. -- (a) A check casher may defer the deposit of a personal check written by a customer for a fixed term of fourteen (14) days, pursuant to the provisions of this section. The face amount of the check shall not exceed three hundred dollars ($300).
(b) Each deferred deposit shall be made pursuant to a written agreement that has been signed by the customer and by the check casher or an authorized representative of the check casher. The written agreement shall contain a statement of the total amount of any fees charged for the deferred deposit, expressed both in United States currency and as an annual percentage rate (APR), as required by federal regulations. The written agreement shall authorize the check casher to defer deposit of the personal check until a specific date of fourteen (14) days from the date the written agreement was signed and executed. The written agreement shall not permit the check casher to accept collateral.
(c) A roll-over is any refinance of a deferred deposit transaction or an extension or deferral of the payment due date of such transaction for an additional fee or finance charge.
(d) The maximum amount of a single customer's check is three hundred dollars ($300).
(e) The maximum aggregate amount of concurrently outstanding checks held by the licensee or its affiliate from the same customer is three hundred dollars ($300);
(f) The maximum number of concurrently outstanding checks held by the licensee or its affiliates from the same customer is three (3); and
(g) The maximum number of rollovers permitted is one (1).
SECTION 5. This act shall take effect upon passage.