By Bob Katzen
The Committee on Consumer Protection and Professional Licensure held a hearing on a measure 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 plus a $1 service charge; 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.
They noted the bill would provide greater consumer protections for individuals who are “unbanked” — folks who don’t have a checking, savings or money market account or who are “underbanked” — folks who may have a bank account, but also rely regularly on alternative financial services outside of the mainstream banking system. Lower-income households, less educated households, Black households, Hispanic households, working-age households with a disability and single-mother households are most vulnerable to being unbanked or underbanked.
“This bill aims to tear down financial barriers that create situational and generational cycles of poverty by fostering a fair and responsible market in which low-income families can more easily save and protect their money,” said sponsor Rep. Kay Khan (D-Newton). “Passage of this bill will allow people to keep more of their hard-earned income, improving their ability to build assets, create wealth and promote overall stability in the economy of the commonwealth.”