808 KAR 9:010. Administration and enforcement of KRS
286.9-140 to ensure that check cashers do not violate the law against multiple
transactions in excessive amounts by a customer.
RELATES TO: KRS 286.9-010(6), 286.9-075,
286.9-100(1), (7), (9), (10), (18), (19), 286.9-140
STATUTORY AUTHORITY: KRS 286.9-090(1), 286.9-100,
286.9-140(1)
NECESSITY, FUNCTION, AND CONFORMITY: KRS
286.9-100(9) prohibits licensees from having more than two (2) deferred deposit
transactions from a customer at a time. The total proceeds received by a customer from all deferred deposit transactions from all
licensees shall not exceed $500 at any one (1) time. KRS 286.9-140(1) directs
the commissioner to implement a common database with real-time access through
an internet connection accessible to the department and a licensee to verify
whether any deferred deposit transactions are outstanding for a particular
person and, which in addition to the general grant of authority in KRS
286.9-090(1), authorizes the commissioner to promulgate an administrative regulation
to enforce KRS 286.9-140. This administrative regulation establishes
requirements for a licensee to ensure that the database established pursuant to
KRS 286.9-140 is used by licensees in accordance with KRS Chapter 286.9.
Section 1. Definitions. The following
shall be additional definitions of "closed" or "close"
under KRS 286.9-010(6)(e):
(1) The customer’s payment instrument was
unpaid and the licensee has sold the underlying debt to a non-affiliated third
party without recourse;
(2) The underlying debt represented by
the customer’s payment instrument has been discharged in bankruptcy;
(3) The database provider has designated
the deferred deposit transaction concerning the customer’s payment instrument
as closed pursuant to KRS 286.9-140(7); or
(4) The licensee has reported to the
database provider that the deferred deposit transaction concerning the
customer’s payment instrument is closed following being held open pursuant to KRS
286.9-140(7).
Section 2. Deferred Deposit Database Requirements.
(1) A licensee shall institute procedures and maintain an accounting system
that is designed to:
(a) Prevent the licensee from entering
into transactions with a customer in violation of KRS 286.9-100(9), including
procedures for:
1. Maintaining a record of all current
transactions with the licensee; and
2. Checking the record of current
transactions with the database prior to issuance of a new transaction; and
(b) Generate reports that will readily
permit examination and verification of compliance with KRS 286.9-100(9), KRS
286.9-140, and this section by department examiners.
(2) In addition to the data listed in KRS
286.9-140(1), licensees shall submit the following data to the database for
each deferred deposit transaction:
(a) The customer’s date of birth;
(b) The check number of the payment
instrument;
(c) The database verification fee charged
to the customer, if any;
(d) The service fee charged to the
customer; and
(e) The date the payment instrument was
deposited or otherwise presented for payment.
(3) A licensee shall not cause a closed
deferred deposit transaction to be reopened in the database unless all of the
following conditions are satisfied:
(a) The deferred deposit transaction was
closed by reason of clerical error by the licensee;
(b) The licensee causes the deferred
deposit transaction to be reopened on or before the close of business on the business
day after the transaction was closed; and
(c) Reopening the transaction would not
cause the consumer to exceed the transaction limits set forth in KRS
286.9-100(9).
(4) A licensee shall not accept, collect,
or seek payment on a deferred deposit transaction that is designated as closed
in the database.
(5) A licensee that has reported to the
database provider that a deferred deposit transaction is open beyond the
maturity date pursuant to KRS 286.9-140(7) shall immediately notify the
database provider when the transaction becomes closed.
(6)(a) Except as provided in paragraph
(b) of this subsection, each licensee shall achieve compliance with this
administrative regulation within sixty (60) days of the effective date of this
administrative regulation.
(b) After the sixty (60) day period established
in paragraph (a) of this subsection, a new licensee or an existing licensee
applying for an additional location, shall demonstrate the ability to
immediately comply with this administrative regulation at the time of application.
(27 Ky.R. 1707; Am. 2788; eff. 4-9-2001; TAm eff. 5-2-2007; 41 Ky.R. 2634; 42
Ky.R. 686; eff. 9-22-2015.)