House File 475 - Introduced HOUSE FILE 475 BY THOMSON A BILL FOR An Act relating to financial institution acceptance of 1 negotiable instruments, and providing penalties. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 2349HH (1) 91 nls/ko
H.F. 475 Section 1. NEW SECTION . 525.1 Definitions. 1 As used in this chapter, unless the context otherwise 2 requires: 3 1. Financial institution means and includes any bank 4 incorporated under the provisions of any state or federal 5 law, any savings and loan association incorporated under the 6 provisions of federal law, any credit union organized under 7 the provisions of any state or federal law, any corporation 8 licensed as an industrial loan company under chapter 536A, and 9 any affiliate of a bank, savings and loan association, credit 10 union, or industrial loan company. 11 2. Negotiable instrument means the same as defined in 12 section 554.3104. 13 Sec. 2. NEW SECTION . 525.2 Financial institutions 14 negotiable instruments. 15 1. A financial institution in the state shall do all of the 16 following: 17 a. Accept tender of any negotiable instrument in exchange 18 for issuance of a conditional credit to the tendering party. 19 b. Make a good-faith effort to obtain payment from the 20 original issuer of the negotiable instrument. 21 c. Remit cash to the original issuer from the payment of the 22 negotiable instrument within two days following the receipt of 23 the payment. 24 2. A financial institution receiving the tender of a 25 negotiable instrument may impose a fee for related services. 26 The fee for the services shall not exceed the greater of twenty 27 dollars, or one percent of the lesser of any of the following: 28 a. The face amount of the tendered negotiable instrument. 29 b. The amount of proceeds received by the financial 30 institution. 31 3. The financial institution shall not require the party 32 tendering a negotiable instrument to open an account with the 33 financial institution. 34 4. The financial institution shall not require the party 35 -1- LSB 2349HH (1) 91 nls/ko 1/ 3
H.F. 475 tendering a negotiable instrument to present identification. 1 Sec. 3. NEW SECTION . 525.3 Remedies. 2 1. A person who suffers a violation of this chapter may 3 bring an action to recover damages in an amount up to five 4 times the amount of the negotiable instrument and attorney 5 fees. 6 2. If a financial institution has denied acceptance of 7 a negotiable instrument three or more times, the financial 8 institution shall be assessed a civil penalty in the amount of 9 not less than ten thousand dollars, not to exceed twenty-five 10 thousand dollars, as determined by the court. 11 EXPLANATION 12 The inclusion of this explanation does not constitute agreement with 13 the explanations substance by the members of the general assembly. 14 This bill relates to a financial institutions acceptance of 15 negotiable instruments. 16 The bill defines financial institution to mean any bank 17 incorporated under the provisions of any state or federal 18 law, any savings and loan association incorporated under the 19 provisions of federal law, any credit union organized under 20 the provisions of any state or federal law, any corporation 21 licensed as an industrial loan company under chapter 536A, 22 and any affiliate of a bank, savings and loan association, 23 credit union, or industrial loan company. The bill defines 24 negotiable instrument to mean an unconditional promise or 25 order to pay a fixed amount of money, with or without interest 26 or other charges described in the promise or order, as defined 27 in Code section 554.3104. 28 The bill provides that a financial institution in the state 29 shall accept tender of any negotiable instrument in exchange 30 for issuance of a conditional credit to the tendering party, 31 make a good-faith effort to obtain payment from the original 32 issuer of the negotiable instrument, and remit cash to the 33 original issuer from the payment of the negotiable instrument 34 within two days following the receipt of the payment. 35 -2- LSB 2349HH (1) 91 nls/ko 2/ 3
H.F. 475 The bill provides that a financial institution receiving the 1 tender of a negotiable instrument may impose a fee for related 2 services. The fee for the services shall not exceed the 3 greater of $20, or 1 percent of the lesser of the face amount of 4 the tendered negotiable instrument or the amount of proceeds 5 received by the financial institution. 6 The bill provides that a financial institution shall 7 not require the party tendering a negotiable instrument to 8 open an account with the financial institution or present 9 identification. 10 The bill provides that a person who suffers a violation 11 of the provisions of the bill may bring an action to recover 12 damages in an amount up to five times the amount of the 13 negotiable instrument and attorney fees. If a financial 14 institution has denied acceptance of a negotiable instrument 15 three or more times, the financial institution shall pay a 16 civil penalty of between $10,000 and $25,000, as determined by 17 the court. 18 -3- LSB 2349HH (1) 91 nls/ko 3/ 3