June 15, 2022
DFS SUPERINTENDENT ADRIENNE A. HARRIS ANNOUNCES NEW PROPOSED CHECK CASHING REGULATION
The Proposed Regulation Sets Forth a New Methodology for Calculating Check Cashing Fees
New Methodology Creates Two-Tier Fee Structure Creating a Lower Fee for All Public Assistance Checks
The Department Seeks Comments on the Proposed Regulation During the Next 60 Days
Superintendent of Financial Services Adrienne A. Harris announced today that the New York State Department of Financial Services (DFS) promulgated a proposed check cashing regulation following the emergency regulation announced in February. The proposed regulation sets forth a new fee methodology which evaluates the needs of licensees and consumers who use check cashing services.
Furthermore, the proposed regulation recommends two tiers of fees for check cashers, similar to the approach that many other states take. The maximum fee that any check casher can charge for a public assistance check issued by a federal or state agency is 1.5%. This includes checks for social security, unemployment, emergency relief, veteran’s benefits, and the like. For all other checks, the maximum fee that any check casher can charge is 2.2% or $1, whichever is greater.
Beginning in January 2027 and every five years thereafter, the industry may request an increase in the maximum fees established.
“As our world evolves, so must our approach to regulation. DFS undertook a data-driven review of the check cashing fee methodology and current maximum fees to understand the impacts of fees on both the industry and New Yorkers, particularly members of immigrant communities and people of color, who depend on check cashers as an essential service to fulfill their financial service's needs,” said Superintendent Harris. “We are continually working to promote access to affordable and safe financial products to all communities, while also ensuring the safety and soundness of institutions.”
The issuance of the proposed regulation follows the emergency regulation published in February 2022, which maintained the 2021 maximum check casher fee while the Department reexamined the methodology to determine such fee.
Over the course of the past few of months, the Department has conducted extensive research, and met with industry, academics, and consumer advocates to inform the new methodology and maximum fees.
The proposed regulation is subject to a 60-day comment period beginning today upon publication in the State Register. DFS looks forward to and appreciates receiving feedback to the proposed regulation during the comment period. The Department of Financial Services will then review all received comments and issue a revised proposal or a notice of adoption of the final regulation.
As the check cashing industry evolves, DFS will closely monitor the stability of the check cashing industry to understand the impact of the updated regulation once it is finalized. Examples of key indices include branch closures, license surrender, employee count, and access to services in underserved areas of New York state. Based on these and other factors, DFS may revisit the set rate at any time under its own discretion.
Please find a copy of the proposed regulation on the DFS website.