STAND. COM. REP. NO.1400

Honolulu, Hawaii

, 2003

RE: H.B. No. 595

H.D. 1

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred H.B. No. 595, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO CHECK CASHING,"

begs leave to report as follows:

The purpose of this measure is to increase the length of time the deposit of a customer's check by a check cashing service may be deferred and the limit on check transaction amounts.

Written and oral testimonies in support of the measure were submitted by Kamaaina Loan and Advance Til Payday, respectively. The Office of Consumer Protection submitted comments on the measure.

This measure authorizes check cashing services to defer the deposit of checks received from customers for up to thirty-two days from the date of the execution of a contract, an increase from the current thirty-one day maximum. This measure also authorizes check cashers to accept a check with a face value of up to $600, or double the current maximum of $300.

Your Committee finds that state law allows pawnbrokers to contract for finance charges of up to twenty per cent per month on pawn transactions. Your Committee further finds that a check cashing transaction is essentially a pawn transaction, sometimes referred to as a "pawn-a-check". However, this type of transaction is generally riskier than a pawn transaction because the check casher holds no security in the form of collateral and there is a high loss rate. Therefore, in order to establish greater equity in the law as between check cashing services and pawnbrokers, your Committee has amended this measure by increasing the maximum fee chargeable by a check casher from fifteen per cent to twenty per cent of the check's face value.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 595, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 595, H.D. 1, S.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection and Housing,

____________________________

RON MENOR, Chair