June 23, 2006

Carol Feind, Letters to the Editor
Buffalo News

Dear Editor:

Your recent article on “The High Cost of Being Poor – Check-cashing charges exceed legal rate” highlights an increasingly common – and disturbing – trend; the spread of unlicensed, illegal check cashers.

It is important to distinguish between licensed and unlicensed check cashers. Licensed check cashers, which are regulated by the New York State Banking Department (and whose fees are set by that department), provide invaluable financial services in addition to check cashing – such as money orders, bill paying, prepaid debit cards, a saving product and wire transfers – in communities long abandoned by traditional banks. Our customers use check cashers because they either don’t want to use a traditional bank or do not qualify to be a customer there. Unlicensed check cashers undermine the entire system of licensing by harming consumers, depleting volumes for licensees and soiling the hard-earned reputation of legitimate businesses.

New York’s licensed check-cashers understand the importance of this status.

Licensing ensures that check cashing businesses adhere to consumer protection laws, such as posting fee schedules and providing receipts. As important, licensed check cashers are limited in the fees we can charge for cashing a check, draft or money order at 1.64 percent or $1, which ever is greater.

Our industry recognizes the harm done by illegal check cashers; to consumers and to legitimate businesses. That is why we support legislation currently pending (but stalled) in the state legislature that would increase the penalties for unlicensed check cashing.  The bill would also permit licensees to pursue unlicensed check cashers in a civil action for injunctive relief and damages in those instances where, after notice, the Department of Banking elects not to pursue the matter. Unfortunately, we have been told that this legislation will not pass this year, due to the objections of certain legislators, thus ensuring the continued rip-off of consumers by unlicensed operators.

The illegal activity pointed out by the Buffalo News is exactly what needs to be addressed, and the legislation pending in Albany would help provide the tools to win that fight. It should be enacted immediately.

Respectfully,

Henry F. Shyne, Executive Director
Financial Service Centers of New York
201.487.0412