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Bill targets outlets for check-cashing

Tony LaRussa
| Wednesday, Dec. 15, 2004, 12:00 p.m.

Pittsburgh City Council today will consider enacting legislation sponsored by Councilman Bill Peduto to restrict the location, hours and, to some degree, the appearance of check-cashing businesses in the city.

"We can't get rid of them, but we can regulate where they are located," said Peduto, who characterized check-cashing outlets as "pariahs on our neighborhood business districts. We want to avoid what has happened in other cities, where they end up on every corner."

Peduto announced his legislation at a news conference Tuesday in front of the Payday Advance store on Highland Avenue in East Liberty. He was joined by Allegheny County Recorder of Deeds Valerie McDonald Roberts and representatives of several community organizations.

McDonald Roberts, who called check-cashing outlets "the ultimate pimp of our communities," said local regulations are needed to encourage people to use banks and other financial institutions that promote sound fiscal practices.

"We have to separate what good banking is and bad banking is. Check-cashing places are bad banking. People should be encouraged to go to places that will help them build wealth. These places are here to take their money."

Peduto's measure, which is slated for a preliminary vote today, would prohibit check-cashing services from:

  • Being open for more than nine hours a day or on Sundays.

  • Locating within 500 feet of a residence or 1,000 feet of another check-cashing facility or pawn shop.

  • Using bars and chains visible from the street or sidewalk.

    Representatives of the check-cashing industry say they are being unfairly targeted and already are regulated heavily.

    "One of the biggest misconceptions about our industry is who our customers are," said Rick Lyke, of the Financial Service Centers of America Inc., a trade organization representing 5,000 of the estimated 14,000 check-cashing businesses in the United States.

    "Most of our customers used regular banks but left because of the high fees," Lyke said. "For them, using a check-cashing business is a personal choice based on convenience and other factors."

    Since 1998, Pennsylvania has regulated the rates check-cashing outlets can charge. The maximum amount for a government-issued check is 2.5 percent of the face value, and the top rate for a payroll check is 3 percent, Lyke said.

    Lyke said most check-cashing outlets will not cash personal checks unless the individual has a checking account because of the possibility of fraud. The maximum that can be charged for a personal check under state law is 10 percent of the face value, Lyke said.

    So-called "payday loans" -- advances on paychecks -- are set at $15 for every $100 borrowed for a two-week period.

    Lyke said the trade group's Pennsylvania chapter likely would challenge any law that attempts to further regulate the industry.

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