BILL NUMBER: S7973A

SPONSOR: MARCHIONE
 
TITLE OF BILL:  An act to amend the banking law, in relation to
prohibiting certain check cashing fees

 
PURPOSE OR GENERAL IDEA OF BILL:

This bill would amend the banking law, to prohibit any banking organiza-
tion from imposing, or seeking to impose, any service charge, or from
collecting any fee, for the cashing of a check or draft drawn on an
account at such banking organization, from a person to whom such check
or draft is payable, regardless of whether or not such person is a
customer of such banking organization.

 
SUMMARY OF SPECIFIC PROVISIONS:

This bill would amend section 9 -h of the banking law to:

*Prohibit any banking organization from imposing, or seeking to impose,
any service charge, or from collecting any fee, for the cashing of a
              

check or draft drawn on an account at such banking organization, from a
person to whom such check or draft is payable, regardless of whether or
not such person is a customer of such banking organization;

*Expressly provide that nothing in this bill would:

o Require a banking organization to cash a check or a draft where the
account from which such check or draft is payable does not maintain
sufficient funds to pay such check or draft;
o Prohibit any banking organization from charging any account holder any
service charge for the cashing of a check or a draft; and/or
o Be deemed to prevent any banking organization from requesting to exam-
ine from any person seeking to cash a check or a draft drawn on such
banking organization, for sufficient identification necessary to proper-
ly identify such person as the person to whom the check or draft is
payable, and that for purposes of this bill, a valid and up to date
driver's license, non-driver's identification card, or United States
passport shall be deemed to constitute sufficient identification.

 
JUSTIFICATION:

In a period spanning roughly the last decade, banks have devised various
fees, of which some are intended by the banks to improve the in-building
experience of their own customers. The most notable example of this is
the imposition of a fee on non-customers who are cashing checks at a
bank, even if the check in question is being drawn from an account at
that bank. According to the Los Angeles Times in 2017, Bank of America
is among the most recent of banks to increase their fee on non-customers
to eight dollars per transaction.

It has been the policy of this State through the banking law to limit,
where possible, excessive fees for taking part in simple financial tran-
sactions. It does not follow, therefore, that an individual who attempts
to draw on an account at a bank for which they have a check should be
charged a fee for doing so, even if they are not a customer. This is
especially the case since the bank's customer themselves wrote the check
to such person. Accordingly, not only does this create an unnecessary
financial burden on the person cashing the check, but in some instances
it essentially creates a principle of imposing two fees on the same
account if the person holding the account also pays an annual account
fee.

This bill would make it so that banking organizations can no longer
impose a non-customer check cashing fee on checks being drawn from an
account at that particular bank, thereby ensuring the State's policy
against excessive fees be maintained.

 
PRIOR LEGISLATIVE HISTORY:

This is a new bill.

 
FISCAL IMPLICATIONS:

None noted.

 
EFFECTIVE DATE:
Immediately