Banking Interpretations

NYBL 373

July 28, 2010


Subject: Loan Brokerage by Check Cashers

As per your telephone request yesterday, I am responding to your inquiry re licensed check cashers referring prospective customers to you for the purpose of obtaining pre-settlement cash advances on their lawsuits, as described in your E-Mails of July 3, 2010 and July 6, 2010 to Deputy and Counsel Gross.  According to your E-Mails, the check cashers would not themselves be making any cash advances on lawsuits but would receive a fee for referring customers to you in your capacity as a "legal funding consultant".

Although the check cashers would not be making any loans here, the Banking Department would still view their role as being prohibited by the Banking Law, Specifically, Section 373.1 of such law not only states that check cashers may not make loans but also indicates that no "loan business" may be conducted on the premises of a licensee.  Under the rules of statutory construction, the term "loan business" must be construed to mean more than just making loans. Therefore, the Banking Department is of the opinion that check cashers may not engage in any loan brokerage activities at check cashing locations, as would be the case in your scenario.

I trust that the above is responsive to your inquiry.

Steven Barras
First Assistant Counsel