GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2001
S	1
SENATE BILL 862

 
 
Short Title:	Procedure for Delayed Deposit Checks.	()	
Sponsors:	Senator Jordan.	
Referred to:	Commerce.	
April 4, 2001

A BILL TO BE ENTITLED
AN ACT TO REMOVE THE SUNSET FROM THE PROVISIONS OF THE CHECK CASHiER ACT AUTHORIZING POSTDATED OR DELAYED DEPOSIT CHECKS AND TO amend those provisions to PROVIDE ADDITIONAL CONSUMER PROTECTIONS and requirements on licensees.

The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 53‑281 reads as rewritten:
"§ 53‑281.  Deferred deposit loans.
(a)	A licensee may  make a deferred deposit loan by deferring the deposit of a personal check cashed for a customer for up to 31 days pursuant to the provisions of this section. Prior to any deferred deposit loan transaction made under this section, the licensee shall provide the customer with a brochure prepared and published by the Commissioner of Banks. The brochure shall inform the customer of the relative cost of this form of credit, availability of other forms of credit, the customer's right to obtain credit counseling and stop collection efforts, how to make complaints about a licensee and such other matters as the Commissioner may from time to time believe are necessary or beneficial to consumers.
(b)	The amount of credit extended pursuant to this section shall not exceed three hundred dollars ($300.00). 
(b1)	No customer may have outstanding deferred deposit loan transactions, which in the aggregate exceed three hundred dollars ($300.00), with all licensees. A customer shall have the right to rescind a deferred deposit loan transaction at no cost on or before the close of the next business day following the day of the transaction.
(c)	Each deferred deposit loan transaction shall be documented by a written agreement that has been signed by the customer and the licensee. The written agreement  shall:
(1)	Contain a statement of the total amount of any fees charged, expressed both as a dollar amount and as an effective annual percentage rate (APR).
(2)	Authorize the licensee to defer deposit of the personal check until a specific date not later than 31 days from the date the check is cashed.
(3)	Advise the customer that the customer has the right to rescind the delayed deposit transaction at no cost to the customer on or before the close of the following business day.
(4)	Advise the customer that improprieties in the transaction or in the collection process may be referred to the Commissioner of Banks and state the address and telephone number of the Commissioner.
(5)	Include the following notice set in at least 10-point type:
STATE LAW PROHIBITS YOU FROM HAVING MORE THAN $300.00 OUTSTANDING IN DELAYED DEPOSIT CHECKS AT ONE TIME. FAILURE TO ABIDE BY THIS LAW MAY CREATE FINANCIAL HARDSHIPS FOR YOU AND YOUR FAMILY. YOU HAVE THE RIGHT TO RESCIND THIS TRANSACTION ON OR BEFORE THE CLOSE OF THE FOLLOWING BUSINESS DAY.
(6)	Contain a statement, signed by the customer, attesting that the customer does not have outstanding deferred deposit loan transactions, which in the aggregate exceed three hundred dollars ($300.00) with all licensees, at the time of the transaction which is the subject of the agreement.
(d)	A licensee shall not directly or indirectly charge any fee or other consideration for  making a deferred deposit loan in excess of fifteen percent (15%) of the amount of credit extended.
(e)	No check cashed under the provisions of this section shall be repaid by the proceeds of another check cashed by the same licensee or any affiliate of the licensee. A licensee shall not, for any consideration, renew or otherwise extend any  deferred deposit loan or withhold  a check from deposit for any period beyond the time set forth in the written agreement with the customer. Solely as an accommodation to the customer, a licensee may modify the agreement and extend the agreed date of deposit at no additional fee.
(f)	If a customer is unable to pay the amount due pursuant to a deferred deposit loan transaction, the customer may seek assistance from an authorized consumer credit counselor in establishing a comprehensive debt management repayment plan for the customer. A licensee shall accept any reasonable installment repayment plan offered by an authorized consumer credit counselor, on behalf of the customer, that provides for the repayment of the amounts owed the licensee over a period not to exceed four of a customer's regular pay periods. Once a plan is offered to a licensee by an authorized consumer credit counselor, a licensee shall suspend any collection activities initiated by the licensee until, and only if, the customer does not comply with the repayment plan. For the purposes of this subsection, an 'authorized consumer credit counselor' is a credit counselor who is in good standing with the National Foundation of Credit Counselors or who is accredited by the Council on Accreditation of Services for Families and Children.
(g)	A licensee shall not use the criminal process to collect a deferred deposit loan unless: (i) the account on which the check held by the licensee is drawn was closed by the customer before the agreed date of deposit, (ii) the check was originally written on a closed account, or (iii) the customer stopped payment on the check before the agreed date of deposit. The licensee shall have the right to exercise all civil means authorized by law to collect a deferred deposit check.
(h)	A licensee may make up to five consecutive same-day transactions to a single customer. Following the fifth consecutive same day transaction, the licensee shall not make another deferred deposit loan transaction to the customer until the next business day following the consummation of the last deferred deposit loan transaction. For purposes of this subsection, a 'same day transaction' is a deferred deposit loan transaction that occurs on the same business day as the consummation of a previous deferred deposit loan transaction between the licensee and the customer."
SECTION 2.  G.S. 53‑282 reads as rewritten:
"§ 53‑282.  Record keeping; receipt requirements.
(a)	Every person required to be licensed under this Article shall maintain in its offices the following records:
(1)	Delayed deposit checks currently held for deposit.
(2)	A daily transaction journal, or an equivalent record, of both traditional check cashing and delayed deposit check-cashing transactions.
(3)	The written receipt required by G.S. 53-282(b).
(4)	The customer agreement required by G.S. 53-281.
(5)	A history card, or its equivalent, for each customer that reflects the time, date, and amount of each delayed deposit transaction for that customer during the most recent three-year period. The history card shall also state whether each delayed deposit check was deposited or redeemed for cash.
(6)	Banks statements of the licensee. – If the statements are not maintained on the premises of the licensee, the statements shall be made available immediately upon request of the Commissioner.
In addition to the records required in this subsection, each licensee shall maintain in its offices such books, accounts, and records as the Commissioner may reasonably require. The books, accounts, and records shall be maintained separate from any other business in which the person is engaged, and shall be retained for a period  of three years.
(b)	The licensee shall ensure that each customer cashing a check shall be provided a receipt showing the name or trade name of the licensee, the transaction date, amount of the check, and the fee charged.
(c)	The Commissioner may examine the books, accounts, and records in order to determine whether the person is complying with this Article and rules adopted pursuant thereto. The cost of the examination shall be paid by the licensee and shall be determined by applying the hourly rate for special examinations adopted by the State Banking Commission by regulation.
(d)	The Commissioner may require each licensee to submit any data or information, including information concerning deferred deposit loan transactions, which the Commissioner deems necessary to report on the check-cashing industry."
SECTION 3.  G.S. 53‑283 reads as rewritten:
"§ 53‑283.  Prohibited practices.
No person required to be licensed under this Article shall do any of the following:
(1)	Charge fees in excess of those authorized under this Article.
(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.
(3)	Use or cause to be published or disseminated any advertising communication which contains any false, misleading, or deceptive statement or representation.
(4)	Conduct business at premises or locations other than locations licensed by the Commissioner.
(5)	Engage in unfair, deceptive, or fraudulent practices.
(6)	Cash a check, draft, or money order made payable to a payee other than a natural person unless the licensee has previously obtained appropriate documentation from the executive entity of the payee clearly indicating the authority of the natural person or persons cashing the check, draft, or money order on behalf of the payee.
(7)	Use or threaten to use the criminal process to collect a deferred deposit loan, except as provided in G.S. 53-281(g)."
SECTION 4. G.S. 53‑284(a) reads as rewritten:
"(a)	The Commissioner may suspend or revoke any license or licenses issued pursuant to this Article if, after notice and opportunity for hearing, the Commissioner issues written findings that the licensee has engaged in any of the following conduct:
(1)	Violated this Article or applicable State or federal law or rules.
(2)	Made a false statement on the application for a license under this Article.
(3)	Refused to permit investigation by the Commissioner authorized under this Article.
(4)	Failed to comply with an order of the Commissioner.
(5)	Demonstrated incompetency or untrustworthiness to engage in the business of check cashing.
(6)	Been convicted of a felony or misdemeanor involving fraud, misrepresentation, or deceit.
(7)	Failed to comply with the Commissioner's request for assistance in resolving a complaint.
(8)	Failed to cooperate with any investigation conducted by the Commissioner."
SECTION 5.  Section 3 of S.L. 1997‑391 reads as rewritten:
"Section 3. This act becomes effective October 1, 1997."
SECTION 6.  This act becomes effective October 1, 2001.