By Bob Katzen
The Committee on Consumer Protection and Professional Licensure is considering legislation that would set a cap on the fees check-cashing stores and outlets are allowed to charge. The maximum charge would be 5 percent of the value of a personal check or $5, whichever is greater, plus a $1 service charge; 1.5 percent of a government check plus a $1 service charge; 3 percent of a payroll check of $100 or less; 2.25 percent of a payroll check of more than $100; and 3 percent of all other checks including traveler’s check, cashier’s check and certified check plus a $1 service charge.
Supporters said of the 34 states that regulate check cashing, Massachusetts is one of eight that do not regulate the fees that may be charged. They argued these check-cashing “stores” are often located in low-income neighborhoods and take advantage of vulnerable residents.
The bill’s sponsor, Rep. Kay Khan (D-Newton) said the proposal will provide protections for the “unbanked” — people who do not have a checking, savings or money market account anywhere. “As a consequence of not participating in mainstream banking institutions, such consumers rely heavily on alternative financial services and are charged exorbitant fees that substantially reduce their net annual income in the long-term,” said Khan.