UNOFFICIAL COPY 23 RS HB 433/GA
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AN ACT relating to financial institutions. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 286.9-080 is amended to read as follows: 3
(1) Each license may be renewed for the ensuing twelve (12) month[months] period 4
upon the timely submission of a completed renewal application and payment to the 5
commissioner annually on or before December 31[June 20] of each year of the 6
following fees[a license fee of]: 7
(a) Five hundred dollars ($500) for the first location; and 8
(b) Five hundred dollars ($500) for each additional location. 9
(2) The commissioner may reinstate a license that has expired within thirty-one (31) 10
days of the expiration of the license if the licensee pays: 11
1. A late fee[ in the amount] of one hundred dollars ($100); and 12
2. A reinstatement fee of five hundred dollars ($500). 13
(3) A license shall not be reinstated when[where] the renewal application, fees, or any 14
required information is received [on or ]after January 31[August 1] of the 15
following year that the application was due. 16
(4) The commissioner may, by promulgation of an administrative regulation 17
pursuant to KRS Chapter 13A, modify the dates for submissions under this 18
section when necessary to: 19
(a) Implement uniform national licensing procedures; or 20
(a) Facilitate common practices and procedures among the states. 21
Section 2. KRS 286.9-010 is amended to read as follows: 22
As used in this subtitle, unless the context requires otherwise: 23
(1) "Affiliate" means a person who directly or indirectly through one (1) or more 24
intermediaries controls or is controlled by, or is under common control with, a 25
licensee; 26
(2) "Applicant" means a person filing an application or renewal application for a 27 UNOFFICIAL COPY 23 RS HB 433/GA
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license in accordance with this subtitle; 1
(3) "Archive" means to copy data to a long-term storage mechanism apart from the 2
database; 3
(4) "Cashing" means providing currency for a payment instrument; 4
(5) "Check" means any check, draft, money order, personal money order, travelers' 5
check, or other demand instrument for the transmission or payment of money; 6
(6) "Check cashing license" means a license issued pursuant to this subtitle by the 7
commissioner to conduct the business of cashing checks in this Commonwealth; 8
(7) "Closed" or "close" means that one (1) of the following has occurred in connection 9
with a deferred deposit service transaction concerning the customer's payment 10
instrument: 11
(a) The payment instrument is redeemed by the customer by payment to the 12
licensee of the face amount of the payment instrument in cash; 13
(b) The payment instrument is exchanged by the licensee for a cashier's check or 14
cash from the customer's financial institution; 15
(c) The payment instrument is deposited, or submitted as an electronic check 16
pursuant to federal law and with specific customer authorization to do so, 17
by the licensee, and the licensee has evidence that the person has satisfied the 18
obligation; 19
(d) The payment instrument is collected by the licensee or its agent through any 20
civil remedy available under the laws of this state; or 21
(e) Any other reason that the commissioner may deem to be proper under this 22
subtitle; 23
(8) "Consideration" means any premium or fee charged of any kind for the sale of 24
goods or services in excess of the cash price of the goods or services; 25
(9) "Control" means: 26
(a) Ownership of, or the power to vote, directly or indirectly, twenty-five percent 27 UNOFFICIAL COPY 23 RS HB 433/GA
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(25%) or more of a class of voting securities or voting interests of a licensee 1
or applicant, or the person in control of a licensee or applicant; 2
(b) The power to elect a majority of executive officers, managers, directors, 3
trustees, or other persons exercising managerial authority over a licensee or 4
applicant, or the person in control of a licensee or applicant; or 5
(c) The power to exercise, directly or indirectly, a controlling influence over the 6
management or policies of a licensee or applicant, or the person in control of a 7
licensee or applicant; 8
(10) "Customer" means a person who inquires into the availability of or applies for a 9
deferred presentment service transaction or a person who enters into a deferred 10
presentment service transaction; 11
(11) "Customer transaction data" means all data reported to the database pertinent to a 12
particular customer transaction, including the date of the transaction, identification 13
of the licensee and location, the sum of money involved, the time payment is 14
deferred, fees charged, any alleged violations of this subtitle, and any identifying 15
customer information; 16
(12) "Database" means the database described in KRS 286.9-140; 17
(13) "Database provider" means one (1) of the following: 18
(a) A third-party provider selected by the commissioner in accordance with KRS 19
286.9-140 to operate the statewide database described in that section; or 20
(b) The commissioner, if the commissioner has not selected a third-party provider 21
in accordance with KRS 286.9-140; 22
(14) "Deferred deposit service business" means a person who engages in deferred 23
deposit transactions; 24
(15) "Deferred deposit service business license" means a license issued in accordance 25
with this subtitle by the commissioner to conduct check cashing and deferred 26
deposit service business in this Commonwealth; 27 UNOFFICIAL COPY 23 RS HB 433/GA
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(16) "Deferred deposit transaction" or "deferred presentment service transaction" means, 1
for consideration, accepting a payment instrument, and holding the payment 2
instrument for a period of time prior to deposit or presentment in accordance with 3
an agreement with or any representation made to the customer whether express or 4
implied; 5
(17) "Delete" means to erase data by overwriting the data; 6
(18) "Identifying customer information" means the name of the customer, his or her 7
Social Security number, driver license number, or other state-issued identification 8
number, address, any account numbers or information specific to a payment 9
instrument provided by a customer to a licensee, a bank, savings bank, savings and 10
loan association, or credit union, and any other nonpublic, personal financial 11
information of a customer entered into the database or that comes into the 12
possession of the database provider through customer or licensee inquiry or report; 13
(19) "Licensee" means a person who has been issued either a check cashing license or a 14
deferred deposit service business license by the commissioner in accordance with 15
this subtitle to conduct check cashing or deferred deposit service business in the 16
Commonwealth; 17
(20) "Maturity date" means the date on which a payment instrument is authorized to be 18
redeemed or presented for payment; and 19
(21) "Payment instrument" means a check, draft, money order, or traveler's check, for 20
the transmission or payment of money sold or issued to one (1) or more persons, 21
whether or not such instrument is negotiable. 22
Section 3. KRS 286.9-100 is amended to read as follows: 23
(1) Any fee charged by a licensee for cashing a check or entering into a deferred 24
deposit transaction shall be disclosed in writing to the bearer of the check prior to 25
cashing the check or entering into a deferred deposit transaction, and the fee shall 26
be deemed a service fee and not interest. A licensee shall not charge a service fee in 27 UNOFFICIAL COPY 23 RS HB 433/GA
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excess of fifteen dollars ($15) per one hundred dollars ($100) on the face amount of 1
the deferred deposit check. A licensee shall prorate any fee, based upon the 2
maximum fee of fifteen dollars ($15) per one hundred dollars ($100). This service 3
fee shall be for a period of at least fourteen (14) days. 4
(2) Before a licensee shall deposit with any bank or other depository institution a check 5
cashed by the licensee, the check shall be endorsed with the actual name under 6
which the licensee is doing business. 7
(3) No licensee shall cash a check payable to a payee other than a natural person unless 8
the licensee has previously obtained appropriate documentation from the board of 9
directors or similar governing body of the payee clearly indicating the authority of 10
the natural person or persons cashing the check, draft, or money order on behalf of 11
the payee. 12
(4) No licensee shall indicate through advertising, signs, billhead, or otherwise that 13
checks may be cashed without identification of the bearer of the check; and any 14
person seeking to cash a check shall be required to submit reasonable identification 15
as prescribed by the commissioner. The provisions of this subsection shall not 16
prohibit a licensee from cashing a check simultaneously with the verification and 17
establishment of the identity of the presenter by means other than the presentation 18
of identification. 19
(5) Within two (2) business days after being advised by a financial institution that a 20
payment instrument has been altered, forged, stolen, obtained through fraudulent or 21
illegal means, negotiated without proper legal authority, or otherwise represents the 22
proceeds of illegal activity, the licensee shall notify the commissioner and the 23
prosecutor or law enforcement authority in the county in which the check was 24
received. If a payment instrument is returned to the licensee by a financial 25
institution for any of these reasons, the licensee shall not release the payment 26
instrument without the written consent of the prosecutor or law enforcement 27 UNOFFICIAL COPY 23 RS HB 433/GA
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authority, or a court order. 1
(6) No licensee shall alter or delete the date on any payment instrument accepted by the 2
licensee. 3
(7) No licensee shall engage in unfair or deceptive acts, practices, or advertising in the 4
conduct of the licensed business. 5
(8) No licensee shall require a customer to provide security for the transaction or 6
require the customer to provide a guaranty from another person. 7
(9) A licensee shall not have more than two (2) deferred deposit transactions from any 8
one (1) customer at any one time. The total proceeds received by the customer from 9
all of the deferred deposit transactions shall not exceed five hundred dollars ($500). 10
(10) (a) Prior to the establishment of the common database of deferred deposit 11
transactions established by KRS 286.9-140, each licensee shall inquire of any 12
customer seeking to present a deferred deposit transaction, whether the 13
customer has any outstanding deferred deposit transactions from any licensee. 14
(b) If the customer represents in writing that the customer has no more than one 15
(1) deferred deposit transaction outstanding to any licensee and that the total 16
proceeds received by the customer from the outstanding deferred deposit 17
transaction issued by the customer does not equal or exceed five hundred 18
dollars ($500), a licensee may accept a deferred deposit transaction in an 19
amount that, when combined with the customer's other outstanding deferred 20
deposit transaction, does not exceed five hundred dollars ($500) of total 21
proceeds received by the customer. 22
(c) If the customer represents in writing that the customer has more than one (1) 23
deferred deposit transaction outstanding to licensees or if the total proceeds 24
received by the customer from the deferred deposit transactions equal or 25
exceed five hundred dollars ($500), a licensee shall not enter into another 26
deferred deposit transaction with that customer until the customer represents 27 UNOFFICIAL COPY 23 RS HB 433/GA
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to the licensee in writing that the customer qualifies to enter into a new 1
deferred deposit transaction under the requirements set forth in this subtitle. 2
(d) If the database described in KRS 286.9-140 is unavailable due to technical 3
difficulties with the database, as determined by the commissioner, the licensee 4
shall utilize the process established in this subsection to verify deferred 5
deposit transactions. 6
(11) A licensee shall not use any device or agreement, including agreements with an 7
affiliate of a licensee, with the intent to obtain greater charges than are authorized in 8
this subtitle. 9
(12) No licensee shall agree to hold a deferred deposit transaction for more than sixty 10
(60) days. 11
(13) (a) Each deferred deposit transaction shall be made according to a written 12
agreement that shall be dated and signed by the customer and the licensee or 13
an authorized agent of the licensee at the licensed location, and made 14
available to the commissioner upon request. The customer shall receive a 15
copy of this agreement. 16
(b) A licensee shall not require a customer to provide authorization for the 17
licensee to submit an original payment instrument electronically before 18
entering into a deferred deposit transaction. 19
(14) A licensee or its affiliate shall not for a fee renew, roll over, or otherwise 20
consolidate a deferred deposit transaction for a customer. 21
(15) No individual who enters into a deferred deposit transaction with a licensee shall be 22
convicted under the provisions of KRS 514.040. 23
(16) No licensee who enters into a deferred deposit transaction with an individual shall 24
prosecute or threaten to prosecute an individual under the provisions of KRS 25
514.040. 26
(17) Each licensee shall conspicuously display in each of its deferred deposit business 27 UNOFFICIAL COPY 23 RS HB 433/GA
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locations a sign supplied by the commissioner that gives the following notice: "No 1
person who enters into a post-dated or deferred deposit transaction with this 2
business establishment will be prosecuted for or convicted of writing cold checks or 3
of theft by deception under the provisions of KRS 514.040." 4
(18) A licensee may not enter into a deferred deposit transaction with a customer who 5
has two (2) open deferred deposit transactions. 6
(19) A licensee shall verify a customer's eligibility to enter into a deferred presentment 7
service transaction by doing one (1) of the following, as applicable: 8
(a) If the commissioner has not implemented a database under KRS 286.9-140 or 9
the database described in KRS 286.9-140 is not fully operational, as 10
determined by the commissioner, the licensee shall verify that the customer 11
meets the eligibility requirements for a deferred presentment service 12
transaction under this subtitle. The licensee shall maintain a database of all of 13
the licensee's transactions at all of its locations and search that database to 14
meet its obligation under this subtitle. 15
(b) If the commissioner has implemented a database under KRS 286.9-140 and 16
the database described in that section is fully operational, as determined by 17
the commissioner, the licensee shall promptly and accurately access the 18
database through an Internet real-time connection, and verify that the 19
customer meets the eligibility requirements for a deferred presentment service 20
transaction under this subtitle. 21