A Slap to Consumers, Rauner Plows Ahead with Check-cashing Rate Hike

Collins, Ford Introduce Check Cashing Fairness Act

 

FOR IMMEDIATE RELEASE: JANUARY 24, 2018

CONTACT: Jenna Severson (jseverson@woodstockinst.org) (616)914-2844

 

A Slap to Consumers, Rauner Plows Ahead with Check-cashing Rate Hike

Collins, Ford Introduce Check Cashing Fairness Act

 

CHICAGO, IL – Governor Rauner’s agency, the Department of Financial and Professional Regulation (IDFPR), took a major step forward Monday in advancing his proposed double-digit increase in the maximum allowable rates on check cashing at currency exchanges. Despite consumers’ and advocates’ strong and vocal opposition to the rate hike, Rauner now seeks approval by the Joint Committee on Administrative Rules (JCAR),  a committee comprised of 12 legislators (six Democrats and six Republicans), which will consider the rate hike at its February 13 meeting. The rate hike will take effect in March, unless the advocates can postpone JCAR’s vote or at least eight members vote to block it.

 

The current versus the proposed rates are as follows:     

Former Rate

Rauner Rate

Check Amount

Percent Increase

1.4%+$1.00

2.5% + $1.00

$100 or less

46%

2.25%

2.5%

$100.01-$1250.00

11%

2.25%

3.0%

$1250.01 or more

33%

 

The rate hike, which was initially proposed in June 2017, mirrored the industry’s February 2017 request. IDFPR received over 66 requests for a public hearing, including a request from the Attorney General’s Office. As a result, IDFPR was required— by law— to hold the hearing. Consumers and advocates testified about the hardship that would be caused by the rate hike at the September 13, 2017, hearing. Under the new rates, it could cost as much as $45 to cash a $1500 check.

 

State Senator Jacqueline Collins, Chair of the Senate Financial Institutions Committee, promised to introduce legislation to remedy the situation if Governor Rauner did not back down, and today, she unveiled the Check Cashing Fairness Act, which would cut and cap rates on certain types of checks such as public assistance and government checks.  Senator Collins said that the rate hike would target lower-income folks and communities of color “with almost surgical precision” because of the high number of unbanked people in those communities.

 

State Representative La Shawn Ford, Chair of the House Financial Institutions Committee and lead sponsor of the Check Cashing Fairness Act in the House, pointed to data showing that over 25 percent of Black households in Chicago don’t have a bank account compared to only 1.1 percent of White households. Rep. Ford said, “The Governor is either blind to these disparities or doesn’t care about them.”

 

Hard-working mother and POWER PAC leader Tara Williams said, “My family is already skimping on basic necessities like prescription medication for my child. This rate hike will endanger my family.”

 

The co-chairs of JCAR are Sen. Don Harmon and Rep. Keith Wheeler.