Topic:
BANKS AND BANKING;
Location:
BANKS;

OLR Research Report

OLR RESEARCH REPORT

December 30, 1998

  

98-R-1512

STATES' LIMITS OF FEES FOR CHECK CASHING, MONEY TRANSFERS, AND MONEY ORDERS BY NON-DEPOSITORY INSTITUTIONS

  
 

By: Helga Niesz, Principal Analyst

You asked what states impose limits on fees charged by non-depository institutions for check cashing, sale of money orders, and money transfers (wire transfers), and what the limits are.

At least 15 states limit what non-depository check cashers can charge on some types of checks. Table 1 below lists these states and the limits. The basis for the table is a 1997 Consumer Federation of America table, which we have updated through our own statutory research and telephone contacts for about 30 states. Connecticut's law is among the more restrictive, limiting charges to 2% of the face amount for ordinary checks and 1% for state public assistance checks.

No states we know of limit charges for money transfers or for sale of money orders, although some of the states in Table 1 limit what the check cashers can charge for cashing money orders.

CHECK CASHING

Table 1: Check Casher Limits

State

Legal Limits on Charge for Check Cashing

California

For payroll or government checks, 3% with ID,

3.5% without ID, or $3, whichever is greater;

for personal checks, 12% of the face value (15% for deferred deposits) (California Civil Code § 1789.35).

Connecticut

2% (Conn. Agencies Reg. § 36-569-1, CGS § 36a-585);

1% for state checks paid to recipients of public assistance with ID (CGS § 36a-584).

Delaware

Greater of 2% or $4 (Delaware Code § 2742).

Florida

Greater of 5% (or 6% without ID) or $5;

for state public assistance checks or federal Social Security checks, the greater of 3% (or 4% without ID) or $5;

for personal checks or cashing money orders, the greater of 10% or $5 (Florida Statutes § 560.309).

Georgia

Greater of 5% or $5;

for state benefits and Social Security checks, the greater of 3% or $5;

for personal checks, the greater of 10% or $5 (Georgia Code § 7-1-706).

Illinois

1.4% plus 90 cent service charge for checks up to $500;

1.85% (no service charge) for checks over $500 (IL Admin. Code Ch. 38 Sec. 130.30). (State public assistance is now delivered through an electronic benefit transfer system rather than paper checks.)

Indiana

Greater of 10% or $5 (Indiana Code § 28-8-5-17).

Requires additional consumer loan license for check casher to do deferred deposits, called “payday loans.”

Maine

Greater of 5% (6% without ID) or $5;

for personal checks or money orders, greater of 10% or $5; and

for state public assistance or federal Social Security checks, the greater of 3% (4% without ID) or $5 (32 Maine Code § 6138).

Minnesota

For payroll checks and government checks over $500, the greater of 3% or $1 (6% for a first-time customer);

for government checks up to $500, the greater of 2.5% or $1 (5% for first-time customers) (Minn. Rule 2872.0100). The commissioner can disapprove fees that are not “fair and reasonable” (Minn. Stats. § 53A.07 ).

New Jersey

Greater of 2% or 90 cents;

for public aid, greater of 1% or 90 cents; and

for supplemental security income checks (SSI), greater of 1.5% or 90 cents (NJSA 17:15A-43).

New York

1.1% (minimum 60 cents) (Banking Superintendent's Regs Part 400.12). A proposal would increase it to 1.4% (60 cent minimum) in early 1999.

North Carolina

Greater of 10% or $5 for personal checks;

greater of 3% or $5 for checks issued by the state, federal government, their agencies, counties, or municipalities; and

greater of 5% or $5 for all other checks (NC Code Art. 22 § 53-280).

Ohio

3% for all government-issued checks; no limit on others (Ohio Rev. Code § 1315.26).

Table 1 (Continued)

State

Legal Limits on Charge for Check Cashing

Rhode Island

Greater of 10% or $5 for personal checks;

greater of 3% or $5 for state public aid and federal Social Security checks; and

greater of 5% or $5 for all other checks (Gen. Laws of R.I. § 19-14.4-4).

Tennessee

Greater of 10% or $5 for personal checks or money orders;

greater of 3% or $5 for state public aid or federal Social Security checks;

greater of 5% or $5 for all other checks (Tennessee Code 45-18-121).

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