Financial Service Centers of New York Asks Bankruptcy Court to Protect Customers in CashPoint Filing
 

BROOKLYN, NY, May 11, 2004 -- In a hearing today in the United States Bankruptcy Court for the Southern District of New York, legal counsel representing the Financial Service Centers of New York (FSCNY) and 25 individual
neighborhood financial services providers requested that Judge Robert
Gerber act to protect consumers who paid utility and other bills using
CashPoint Network Services Inc., which was forced into bankruptcy in
April by creditors after millions of dollars in payments made by
consumers did not reach the intended companies.

FSCNY General Counsel Gerald Goldman said the trade association, along
with 25 member companies, filed papers with the Bankruptcy Court that
call for utilities and other creditors to do two things: (1)
Immediately fully credit all consumer accounts for payments made
through CashPoint; and (2) Halt any collections or service disruption
activity aimed at consumers who made payments using CashPoint.

Goldman said FSCNY and the members companies acted because the
CashPoint Bankruptcy Trustee had issued an order compelling FSCNY
members and other CashPoint agents to turn over all consumer funds
that they had remaining in payment transfer accounts. FSCNY argued
that the Trustee's order does not contain any assurances that the
funds will be properly credited to consumer accounts or that the funds
will reach the intended creditors. The FSCNY papers filed with the
Bankruptcy Court urge that the Trustee be required to take these basic
actions to protect consumer rights during the proceedings.

FSCNY members will comply with the Trustee in turning over the funds
that remained in accounts after CashPoint ceased operation. Judge
Gerber issued a ruling requiring the creditors involved in the
bankruptcy proceeding to reveal to the Bankruptcy Court their plans
for crediting the funds to consumer accounts.

FSCNY, formerly known as the Check Cashers Association of New York,
has been working closely with the New York State Banking Department
and other regulators and government investigators since the CashPoint
situation developed in late April. Regulators in several states
suspended CashPoint's money transmitter license once it was discovered
that millions of dollars in consumer payments were missing.

Speaking today to FSCNY members at the group's annual Conference and
Vendor Show held in Brooklyn, New York Banking Superintendent Diana
Taylor commended FSCNY for its quick action and cooperation during the
CashPoint situation. "You have my appreciation for the way the check
cashing industry has come together to reassure the public and assist
my department in dealing with the CashPoint situation," Taylor said.

Some FSCNY members, like a number of supermarket chains, convenience
stores and municipal governments, contracted with CashPoint to provide
consumer bill payment services. FSCNY represents approximately 500
licensed financial service centers across New York. The group is the
leading voice for the financial service center industry with
government officials, provides training opportunities and regulatory
compliance support for member companies and their employees,
contributes to the quality of life in neighborhoods across the state
in a variety of ways including a college scholarship program, and acts
as an informational resource to help reduce check fraud and the
potential for money laundering across New York.

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