By Bob Katzen

Awaiting further action by the House is a bill that would set a cap on the fees check-cashing stores and outlets are allowed to charge. The bill was given initial approval by the House on July 26 and is now in the Bills in Third Reading Committee.

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 say that of the 34 states that regulate check cashing, Massachusetts is one of eight that do not regulate the fees that may be charged. They argue these check-cashing “stores” are often located in low-income neighborhoods and take advantage of vulnerable residents.

They note 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 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.

“It’s great to see that my colleagues in the Legislature are supportive of it moving forward,” says sponsor Rep. Kay Khan (D-Newton). “The bill will regulate the amount of money consumers can be charged to cash a check, which is particularly beneficial for many who do not have bank accounts but are working hard to support their families.”

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