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Check cashing fee changes more tightly regulated under new law

Collins080318Collins’ new law requires consideration for consumers

SPRINGFIELD – Regulators will be required to consider the impact on consumers and protected classes of citizens whenever making future rate changes to check cashing services under a new law by State Senator Jacqueline Collins which was signed today.

Check cashing services are often the only option available to the unbanked – those who don’t have access to a bank account due to factors like poverty or unstable work. For people living paycheck to paycheck, an initial deposit for a bank account might not be possible, or even physically reaching a banking institution might not be plausible. For them, the only option is often a check cashing service, which draws a fee. The check cashing industry had called for an increase in those fees.

Earlier this year, State Senator Jacqueline Collins (D-Chicago) worked alongside consumer advocates to reach a regulatory compromise in the wake of a proposal from the Illinois Department of Financial and Professional Regulation (IDFPR) which prevented an across-the-board increase in the rates of check cashing services and lowered the rate on cashing government assistance checks.

The new law signed today mandates that regulators must consider the potential impact on protected classes of citizens in the event they set new rates going forward.

“This is a service used almost exclusively by those who don’t have access to a bank account for a variety of reasons, and whose income has been virtually stagnant since the recession,” Collins said. “These changes fall the hardest on those with the least. After seeing this pass the Senate without opposition, I’m gratified to see it become law.”

The legislation was Senate Bill 2433. It takes effect June 1, 2019.