SENATE BILL REPORT

HB 2615

BYRepresentatives Dellwo, Chandler, Nutley, Zellinsky, Inslee and Anderson

Excluding commercial paper from "personal property" held by a pawnbroker or second-hand dealer.

House Committe on Financial Institutions & Insurance

Senate Committee on Financial Institutions & Insurance

Senate Hearing Date(s):February 22, 1990; February 23, 1990

Majority Report:  Do pass as amended.

      Signed by Senators von Reichbauer, Chairman; Johnson, Vice Chairman; Fleming, Moore, Rasmussen, Smitherman, West.

Senate Staff:Benson Porter (786-7470)

                  February 26, 1990

AS REPORTED BY COMMITTEE ON FINANCIAL INSTITUTIONS & INSURANCE, FEBRUARY 23, 1990

BACKGROUND:

A new business has developed in Washington devoted exclusively to the cashing of checks and other commercial paper.  In addition to cashing checks, some of these companies lend money.

Some check cashing companies lend money by purchasing post-dated checks for a discount and later deposit the checks and receive the check's face amount.  If these services are considered the lending of money, the amount charged for the services often exceeds the interest rates permitted under the state usury limits.  However, some check cashing companies contend that the discounting of checks or cashing of post-dated checks are similar to pawnbrokering and that the fees and interest rates authorized under the pawnbrokering statute are permitted.

SUMMARY:

The pawnbroker statute is amended to specifically exclude checks, drafts, money orders, or other commercial paper serving the same purpose from the definition of personal property.  Thus, pawnbrokers would be precluded from making loans secured by checks, and check cashing companies would be precluded from relying upon the pawnbroker statute to justify loans with rates exceeding the state usury limits.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested

Effective Date:January 1, 1991

SUMMARY OF PROPOSED SENATE AMENDEMENTS:

The pawnbroker statute is amended to specifically exclude checks, drafts, money orders, or other commercial paper that exceed a face value of $250 from the definition of personal property.

This amendment would allow pawnbrokers to lend money on these smaller instruments pursuant to the rate structure set forth in the pawnbrokers statute.

Senate Committee - Testified: Pat Agnew, Checkpoint (con); J. D. Miller, Checkpoint (con); Darrel Wells, Paycheck (con)