2013 Kentucky Revised Statutes CHAPTER 286 - KENTUCKY FINANCIAL SERVICES CODE Subtitle 9 - Deferred Deposit Service Business and Check Cashing 9.9-100 Procedures to be followed by licensees.
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286.9-100 Procedures to be followed by licensees.
(1)
Any fee charged by a licensee for cashing a check or entering into a deferred
deposit transaction shall be disclosed in writing to the bearer of the check prior
to cashing the check or entering into a deferred deposit transaction, and the
fee shall be deemed a service fee and not interest. A licensee shall not charge
a service fee in excess of fifteen dollars ($15) per one hundred dollars ($100)
on the face amount of the deferred deposit check. A licensee shall prorate any
fee, based upon the maximum fee of fifteen dollars ($15) per one hundred
dollars ($100). This service fee shall be for a period of at least fourteen (14)
days.
(2) Before a licensee shall deposit with any bank or other depository institution a
check cashed by the licensee, the check shall be endorsed with the actual
name under which the licensee is doing business.
(3) No licensee shall cash a check payable to a payee other than a natural person
unless the licensee has previously obtained appropriate documentation from
the board of directors or similar governing body of the payee clearly indicating
the authority of the natural person or persons cashing the check, draft, or
money order on behalf of the payee.
(4) No licensee shall indicate through advertising, signs, billhead, or otherwise that
checks may be cashed without identification of the bearer of the check; and
any person seeking to cash a check shall be required to submit reasonable
identification as prescribed by the commissioner. The provisions of this
subsection shall not prohibit a licensee from cashing a check simultaneously
with the verification and establishment of the identity of the presenter by means
other than the presentation of identification.
(5) Within two (2) business days after being advised by a financial institution that a
payment instrument has been altered, forged, stolen, obtained through
fraudulent or illegal means, negotiated without proper legal authority, or
otherwise represents the proceeds of illegal activity, the licensee shall notify
the commissioner and the prosecutor or law enforcement authority in the
county in which the check was received. If a payment instrument is returned to
the licensee by a financial institution for any of these reasons, the licensee
shall not release the payment instrument without the written consent of the
prosecutor or law enforcement authority, or a court order.
(6) No licensee shall alter or delete the date on any payment instrument accepted
by the licensee.
(7) No licensee shall engage in unfair or deceptive acts, practices, or advertising in
the conduct of the licensed business.
(8) No licensee shall require a customer to provide security for the transaction or
require the customer to provide a guaranty from another person.
(9) A licensee shall not have more than two (2) deferred deposit transactions from
any one (1) customer at any one time. The total proceeds received by the
customer from all of the deferred deposit transactions shall not exceed five
hundred dollars ($500).
(10) (a) Prior to the establishment of the common database of deferred deposit
transactions established by KRS 286.9-140, each licensee shall inquire of
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any customer seeking to present a deferred deposit transaction, whether
the customer has any outstanding deferred deposit transactions from any
licensee.
(b) If the customer represents in writing that the customer has no more than
one (1) deferred deposit transaction outstanding to any licensee and that
the total proceeds received by the customer from the outstanding
deferred deposit transaction issued by the customer does not equal or
exceed five hundred dollars ($500), a licensee may accept a deferred
deposit transaction in an amount that, when combined with the
customer's other outstanding deferred deposit transaction, does not
exceed five hundred dollars ($500) of total proceeds received by the
customer.
(c) If the customer represents in writing that the customer has more than one
(1) deferred deposit transaction outstanding to licensees or if the total
proceeds received by the customer from the deferred deposit transactions
equal or exceed five hundred dollars ($500), a licensee shall not enter
into another deferred deposit transaction with that customer until the
customer represents to the licensee in writing that the customer qualifies
to enter into a new deferred deposit transaction under the requirements
set forth in this subtitle.
(d) If the database described in KRS 286.9-140 is unavailable due to
technical difficulties with the database, as determined by the
commissioner, the licensee shall utilize the process established in this
subsection to verify deferred deposit transactions.
A licensee shall not use any device or agreement, including agreements with
an affiliate of a licensee, with the intent to obtain greater charges than are
authorized in this subtitle.
No licensee shall agree to hold a deferred deposit transaction for more than
sixty (60) days.
Each deferred deposit transaction shall be made according to a written
agreement that shall be dated and signed by the customer and the licensee or
an authorized agent of the licensee at the licensed location, and made
available to the commissioner upon request. The customer shall receive a copy
of this agreement.
A licensee or its affiliate shall not for a fee renew, roll over, or otherwise
consolidate a deferred deposit transaction for a customer.
No individual who enters into a deferred deposit transaction with a licensee
shall be convicted under the provisions of KRS 514.040.
No licensee who enters into a deferred deposit transaction with an individual
shall prosecute or threaten to prosecute an individual under the provisions of
KRS 514.040.
Each licensee shall conspicuously display in each of its deferred deposit
business locations a sign supplied by the commissioner that gives the following
notice: "No person who enters into a post-dated or deferred deposit transaction
with this business establishment will be prosecuted for or convicted of writing
cold checks or of theft by deception under the provisions of KRS 514.040."
(18) A licensee may not enter into a deferred deposit transaction with a customer
who has two (2) open deferred deposit transactions.
(19) A licensee shall verify a customer's eligibility to enter into a deferred
presentment service transaction by doing one (1) of the following, as
applicable:
(a) If the commissioner has not implemented a database under KRS
286.9-140 or the database described in KRS 286.9-140 is not fully
operational, as determined by the commissioner, the licensee shall verify
that the customer meets the eligibility requirements for a deferred
presentment service transaction under this subtitle. The licensee shall
maintain a database of all of the licensee's transactions at all of its
locations and search that database to meet its obligation under this
subtitle.
(b) If the commissioner has implemented a database under KRS 286.9-140
and the database described in that section is fully operational, as
determined by the commissioner, the licensee shall promptly and
accurately access the database through an Internet real-time connection,
and verify that the customer meets the eligibility requirements for a
deferred presentment service transaction under this subtitle.
Effective:July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 810, effective July 15, 2010. -Amended 2009 Ky. Acts ch. 98, sec. 4, effective January 1, 2010. -- Amended
1998 Ky. Acts ch. 601, sec. 9, effective April 14, 1998. -- Created 1992 Ky. Acts
ch. 213, sec. 10, effective July 14, 1992; and ch. 341, sec. 10, effective July 14,
1992.
Formerly codified as KRS 368.100.
Legislative Research Commission Note (7/12/2006). In accordance with 2006
Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a
section of the Kentucky Financial Services Code, KRS Chapter 286, and KRS
references within this statute have been adjusted to conform with the 2006
renumbering of that code.
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