New York Department of Financial Services (NYDFS) Superintendent Adrienne A. Harris has hailed a Thursday (Dec. 7) court decision that upholds the state’s new check cashing regulation announced in January.
“Today’s decision is a win for New Yorkers who depend on check cashers to access their money,” Harris said in a Thursday press release.
Harris added that the department’s updated check cashing regulation replaced an “outdated methodology” that granted annual, automatic, Consumer Price Index (CPI)-based fee increases to check cashers.
“The new methodology which has been upheld in court today takes into account the needs of consumers who use check cashing services, creating a fairer fee setting process,” Harris said.
The check cashing regulation updates methods that had been in place since 2005, PYMNTS reported when the new rules were announced in January.
When outlining the new rules, the NYDFS maintained that the previous approach did not take into account the “disproportionate impact inflation has” on state residents using check cashing services. If wages were stagnant but the CPI rose, customers would be hit by the higher fees and higher cost of living.
Now, a two-tiered system will be set up: 1.5% fees will be assessed on public assistance checks issued by government agencies. Other checks will be subject to a fee of $1 or a 2.2% fee, whichever is greater.
The agency disclosed that the regulation does not apply to commercial checks, “which are not subject to statutory fee limits, or fees generated from other services that check cashers often provide” including wire transfers and bill payments.
The fees will be the same for both in-person and mobile check cashing.
The New York Post reported in March that the check-cashing rate had been 2.27% and that the check-cashing centers that were the plaintiffs in a suit filed against the new rules said the changes were “arbitrary and capricious.”
A 2022 assessment conducted for the industry said that the lower fees would make check-cashing companies “unprofitable” and force their closures, according to the report.
In Thursday’s press release lauding the court decision, Harris said: “I will continue to advance policies that support opportunity and access to quality financial services for all New Yorkers.”