On February 27, 2020, the House gave initial approval to a bill 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; 2.5 percent of a government check plus a $1 service charge; 2.25 percent of a payroll check and 3 percent of all other checks including traveler’s check, cashier’s check and certified check and money order plus a $1 service charge. The bill is stuck in the House Committee on Bills in Third Reading.
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.