Tuesday, March 18, 1997 | 11:59 a.m.
CARSON CITY -- A bill calling for regulation of the check-cashing industry "would not only hurt us, it would kill us," an industry executive from Las Vegas told an Assembly committee.
Robert Frimet, of Continental Currency Service, who said his company is now holding $40,000 in bad checks, opposed the measure Monday, calling his industry "risky business."
But another check-cashing business owner in Las Vegas said Nevada needs to regulate the industry.
John Kitchen, president of Nationwide Check Service Inc., said state regulation "would vastly improve our business. It would contribute to the stability of the check cashing business."
The Assembly Commerce Committee heard the pros and cons of Assembly Bill 211 which would impose limits on the fees charged for cashing checks.
"Many companies tell you they are providing a service and they do," said Assemblyman Wendell Williams, D-Las Vegas, the bill sponsor. "But that's no reason to overcharge. ... They have no right to take advantage."
Some check-cashing businesses charge as much as 20 percent interest, Williams complained, and some even increase the rate on Sundays.
Frimet denied exorbitant fees are charged. He said his customers who need money between paychecks need help, but they can't get loans from banks or other lending institutions.
His business collects 1 percent on government checks; 2.5 percent on payroll checks; 3 percent on checks up to $1,000 and 3.5 percent on checks above that. On post-dated checks, the fee for a $100 check is $12.50 a week; on $100-$200, $16 a week and for $200-$300, $20 a week.
"I'm the first to admit there are a lot of bad apples in the industry," Frimet said. "Some charge 20 percent. People from out of state want money for gambling. That's risky."
Frimet asked that the legislation be tabled so amendments can be worked out.
But Kitchen suggested the loss ratio was lower than others asserted. He praised District Attorney Stewart Bell for starting a separate unit to collect on bad checks.
"It should have been started several years ago," Kitchen said, adding that this benefits not only the check-cashing services but casinos and other businesses.
Kitchen said after the hearing he charges 2 percent on a government checks and 20 percent on a personal check.
The bill would require the businesses to be licensed by the state; maintain $25,000 in assets and impose limits on fees: 3 percent for a government check and 8 percent for any others.
Dick Morgan, representing the Nevada Trial Lawyers Association, urged passage of what he called a "consumer protection" bill.
"Nevada does not need to countenance a scam or an appearance of a scam," Morgan said.
Williams said a 1993 U.S. Senate investigation found the check-cashing business was a "major vehicle for money laundering." He said other states license the industry because there is a "feeling of outrage" at the practices.
The committee, which did not take action, was urged to separate check-cashing services from businesses that take post-dated checks.
"Most people live from paycheck to paycheck," said David Alhtabowski of Check Exchange in Reno said, and when an emergency arises, they need money. In the case of a Social Security recipient, he said he charges $10 for holding a $100 post-dated check for a week.
Alhtabowski and others urged a special provision be written into the bill to cover their needs.
Kitchen said he doesn't take post-dated checks any more. He said the "post-dated check business belongs to the Mafia." That's where it grew up, he said, and the Mafia used broken arms, legs and heads to collect.
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