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New York Post
NY check-cashing centers sue Kathy Hochul administration over fee limits
By Carl Campanile, Priscilla DeGregory,
The Hochul administration’s new regulations that slash the income of check-cashing centers are “business-killing,’’ according to a lawsuit by an industry group.
The money businesses gripe the changed rules limit the fees they can charge customers, a potential death blow as they struggle to stay afloat during record-high inflation .
State Department of Financial Services Superintendent Adrienne Harris imposed new regulations in January that slashed the existing 2.27% check-cashing rate to a 1.5% maximum for certain government benefit checks and 2.2% for all other checks, a move that the lawsuit says is “arbitrary and capricious.”
The plaintiffs in the suit filed in Manhattan state Supreme Court include the Financial Services of New York, the Baychester Payment Center, Challenger Check Cashing Corp, and David’s Check Cashing Inc.
Andrew Siegel, who owns and operates Check Changers NY, said he already closed two of his six check-cashing centers last year and will likely close a third in the Gravesend section of Brooklyn, arguing he can no longer make a profit with the lower rates.
Check-cashing companies operate in many low-income areas that don’t have access to banks.
“Closing this location will be difficult for me, but even more so for each of its employees who will need to be laid off and for the many customers who rely on them,” Siegel said of his Brooklyn shop. “The store, located in a financial desert, has been in operation for more than 50 years.
“Customers who will have no local financial service options after this location is shuttered have relied on our store’s services, including dozens of customers who use that store every month to cash Social Security and Supplemental Security Income checks and to pay their rent and other bills.”
The lawsuit includes affidavits from Siegel’s customers.
“I’ve been using the same check cashing store since 1981. I have always viewed the store as an important part of the community. Even during the pandemic, Check Changers did its best to work with the community to remain open and accessible,” said Margie Simmons, a longtime customer at the Check Changers Gravesend.
“I have limited mobility and there are no other check cashers in the area,” she said. “When this location closes it will be devastating to me and others in the community. The government might think it is doing what is best for me, but it is wrong.”
A 2022 assessment conducted for the check-cashing industry by the accounting firm Ernst & Young claimed the decline in revenues from the limitation in fees would make the check cashiers “unprofitable” and force closures.
Hochul and the Department of Financial Services declined comment on the suit.
But DFS Superintendent Harris defended the new fee structure when she implemented it in January, saying the old rules that provided check cashiers automatic cost-of-living increases were outdated and burdened lower-income customers.
“Check cashers are frequently the only way that many underserved New Yorkers — particularly members of immigrant communities and people of color — can access their money,” Harris said at the time.
“When I became Superintendent, it was clear that the existing fee methodology wasn’t just outdated but inappropriate and punitive to consumers. Check cashers should not be entitled to automatic, annual fee increases just because their services are essential to many New Yorkers.”
She said rules issued back in 2005 made New York the only state in the nation to grant annual, automatic increases ib check-cashing fees, pegging hikes to a measure of inflation by way of the Consumer Price Index, which broadly tracks changes in cost of living for consumers.
Before Harris took over the department when Hochul became governor, check cashers received three increases — in December 2019, March 2020 and February 2021.
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