Iowa House Bill HF2474

Iowa 2023-2024 Regular Session

• Introduced: 2/13/24
• Refer: 2/13/24

Caption

A bill for an act relating to financial institution acceptance of negotiable instruments, and providing penalties.

Impact

The bill introduces significant legal standards governing the operation of financial institutions concerning negotiable instruments. If enacted, financial institutions can impose a fee for the services related to the acceptance of such instruments, but this fee is capped at $20 or 1% of the lesser of the instrument’s face amount or proceeds received. Furthermore, it ensures that no financial institution can compel an individual to open an account or present identification when tendering a negotiable instrument, thereby simplifying access for users and improving consumer protections.

Summary

House File 2474 concerns the acceptance of negotiable instruments by financial institutions in Iowa. The bill mandates that financial institutions such as banks, credit unions, and savings and loan associations must accept any negotiable instrument presented to them. In return, they are required to issue a conditional credit and make a good-faith effort to obtain payment from the original issuer of the instrument within a stipulated time frame. This piece of legislation aims to streamline the process for individuals and businesses that rely on negotiable instruments as a means of transaction.

Contention

One notable point of contention in discussions surrounding HF2474 is the issue of accountability for financial institutions. The bill includes provisions allowing individuals who have suffered due to violations to recover damages up to five times the amount of the negotiable instrument, along with attorney fees. Additionally, financial institutions that deny acceptance of a negotiable instrument three times may incur civil penalties ranging from $10,000 to $25,000, adding a layer of regulatory oversight. Critics might raise concerns about how these penalties could impact smaller financial institutions or lead to unintended consequences, particularly for consumer access to banking services.