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Consumer Banking and Payments Law: 4.7.4.2 State Labor Law May Limit Charges When Employees Cash Pay Checks at Employer’s Bank

In California, employers are required to pay their workers with checks which can be cashed at the drawee bank without paying a fee.418 This statutory requirement has led to lawsuits by both employers against banks that charge a check-cashing fee and by employees against their employers. Employers have alleged that their drawee banks have, by charging a fee, forced them to violate California law. Employees also have alleged that their employer violated this statute when the employer’s bank charged the employee a fee.

Consumer Banking and Payments Law: 4.8.4 The Indorser’s Obligation

Most checks start out as order paper, that is payable to an identified payee.450 Because the check is payable to the order of the payee, the payee will have to “indorse” (sign) the check before passing it along to the next party.451 This signature is what is required for the payee to pass good title to the check to the next party.452 The only exception to this rule is that a bank customer can deposit a check in their bank account without indorsing

Consumer Banking and Payments Law: 4.8.6.1 How Deposit Scams Work

Various check scams cause serious consumer harm because the consumers as payees may be liable to later parties under chargeback rules, on their indorser’s obligation, or under transfer warranties. Payment scams involving electronic payments or mobile applications are also starting to appear.498

Consumer Banking and Payments Law: 4.8.7.1 Introduction

If a check bounces, it is returned to the payee, either through chargeback by a depository bank515 or through the indorser’s obligation.516 The payee can then enforce the check against the drawer on the drawer’s obligation, or can pursue the drawer on the underlying obligation.

Consumer Banking and Payments Law: 4.9.1 Introduction

Once a check is finally paid by the drawee bank538 the life of the check is essentially over. The drawee bank cannot change its mind, dishonor the check, or return it. All obligations of the parties to the check, including the indorser’s obligation, are discharged and there is not a holder any more.539 All provisional settlements by the banks for the check become final.540

Consumer Banking and Payments Law: 4.9.2 Breach of Presentment Warranties to Drawee Bank

As discussed above, a transferee of a check receives six transfer warranties from the transferor and, sometimes, from remote transferors.542 In similar fashion, the drawee bank that accepts or pays a check receives four warranties—called presentment warranties—from the presenting party and from all prior transferors of the check.543 These presentment warranties are made by “(i) the person obtaining

Consumer Banking and Payments Law: 4.10.1 Accord and Satisfaction

The UCC’s accord and satisfaction rules govern situations where the drawer of the check attempts to condition the check on the payee’s acceptance of the check in satisfaction of a claim. The consumer may be the drawer of the check—i.e., attempting to require the payee to accept it as payment in full—or the payee, and may unwittingly relinquish legal rights by cashing the check.

Consumer Banking and Payments Law: 4.11.1 General

Check-cashing companies are very popular with consumers, especially low-income consumers who do not have accounts at banks. They also are used by many consumers with bank accounts because of their convenience. For example, many companies that cash checks also offer other financial services and products such as money orders, wire transfers, and short-term loans. Convenience stores also install ATMs at which consumers can cash checks.

Consumer Banking and Payments Law: 4.11.2.1 Types of Regulation

Many states require check-cashers to obtain a license.606 For example, the Uniform Laws Commission (ULC) has adopted a Uniform Money Services Act, which requires most check-cashers to be licensed.607 Under most state statutes, to obtain a license, the check-casher must file an application fee and meet minimum requirements for competency, integrity, and financial wherewithal. Applicants with felony convictions are often disqualified.

Consumer Banking and Payments Law: 4.11.2.3 Substantive Requirements

To provide consumers with basic information, some statutes require check-cashers to prominently post the fees they charge for the service. The law may require the notice to be in Spanish as well as English. The notice may also require information about how to file a complaint against the check-casher. Some statutes also require the check-casher to post a copy of its license or registration certificate.

Consumer Banking and Payments Law: 4.11.2.4 Private Remedies for Violation of Check-Cashing Statutes

States impose both civil fines and criminal penalties for violation of the statutory requirements governing check-cashers, but often provide no private right of action. On the other hand a few statutes explicitly authorize a private right of action for consumers.618 Even if a statute does not contain an explicit right of action, consumers may be able to sue based on a violation of the state UDAP law.

Consumer Banking and Payments Law: 4.11.3 Gramm-Leach-Bliley and USA Patriot Acts

The privacy provisions of the Gramm-Leach-Bliley Act620 require financial institutions to have a privacy policy that is disclosed to consumers with whom the institutions have established customer relationships. In addition, if the institutions share non-public personal information with non-affiliates, they must provide consumers with an opportunity to opt out, thereby preventing the institutions from sharing the information.

Consumer Banking and Payments Law: 5.1.1 Topics Covered in This Chapter

This chapter examines electronic transfers from and into the consumer’s bank account, generally covered by the Electronic Fund Transfer Act (EFTA) and Regulation E, including rules on the issuance of ATM and debit cards and other access devices, disclosure requirements, authorizations for transfers, consumer liability for unauthorized transfers, procedures to resolve errors, other requirements for electronic fund transfers, and consumer remedies.

Automobile Fraud: 2.3.3 AutoCheck

The credit reporting agency Experian offers a vehicle history service called AutoCheck.136 Its data comes from automobile auctions, consumer protection agencies, automobile dealers, U.S. and Canadian motor vehicle departments, and other state agencies. It claims to receive data from most of the automobile auctions in the country.

Automobile Fraud: 2.3.4 The National Motor Vehicle Title Information System

The National Motor Vehicle Title Information System (NMVTIS) is an important vehicle information database, particularly concerning a vehicle’s salvage or insurance total-loss history. The Anti-Car Theft Improvements Act of 1996 mandated that a system be in place by December 31, 1997.137 But limited progress was made until a 2008 court order required the Department of Justice to proceed.

Automobile Fraud: 2.3.5 Information Sources for Canadian Vehicles

One of the larger vehicle history providers in Canada was CarProof. In 2018 CarProof changed its name to Carfax Canada.142 Both Carfax and the former CarProof are owned by IHS Markit. Another company, A Plus Registry Services, retrieves title and registration documents in Alberta for a fee.143

Automobile Fraud: 2.3.6 Insurance Databases

A great deal of prior wreck damage will not be revealed by a summary title report, especially if the amount of damage fell below the threshold required for a salvage title. Insurance companies, however, keep detailed records of all claims, and pool this information in a database maintained by ISO (Insurance Services Office, Inc.).144