The Cherokee Code: Published by Order of the Tribal Council of the Eastern Band of Cherokee Indians

Chapter 53 - Consumer Credit

Article I - General Provisions
Article II - Check Cashing Services
Article III - Remedies

ARTICLE I. GENERAL PROVISIONS

Sec. 53-1. Definitions.

As used in this Chapter, the term:

Cashing means providing currency for payment instruments, but does not include the bona fide sale or exchange of travelers checks and foreign denomination payment instruments.

Check-cashing service means any person engaged in the business of cashing checks, drafts, or money orders for a fee, service charge, or other consideration, or offering deferred deposit loans, except as provided in section 53-11.

Credit means a loan or advance of funds, or a deferred payment for merchandise purchased, in exchange for an agreement to pay an additional amount whether denominated as interest, fees, or simply a higher price for the goods purchased. The term shall not include a loan by family or friends with no interest or other charge to the borrower.

Deferred deposit loan includes any arrangement in which a person accepts a check dated on the date it was written and agrees to hold it for a period of days prior to deposit or presentment, or accepts a check dated subsequent to the date it was written, and agrees to hold the check for deposit until the date written on the check.

Person means an individual, partnership, association, or corporation, or other business entity of any type.

(Ord. No. 22, 11-24-1999)

Sec. 53-2. Usury.

Except as specifically allowed by this chapter, within the territory of the Eastern Band of Cherokee Indians, no person shall:

(1) Extend credit to another person at an effective annual percentage rate exceeding 36 percent, if the credit is unsecured.

(2) Extend credit to another person at an effective annual percentage rate exceeding 24 percent, if the credit is secured.

(3) Extend credit to another person without disclosing the annual percentage rate, finance charge, amount financed, and total of payments as provided by Regulation Z of the Federal Truth in Lending Act, regardless of whether that Act would otherwise apply to the transaction.

(Ord. No. 22, 11-24-1999)

Sec. 53-3. Trader's permit.

No person shall extend credit on the territory of the Eastern Band of Cherokee Indians, or secured by any property held in trust for the Eastern Band, without a valid trader's permit approved by the Bureau of Indian Affairs.

(Ord. No. 22, 11-24-1999)

Sec. 53-4. Business Committee rules.

The Business Committee may adopt rules necessary to carry out the purposes of this chapter, to provide for the protection of the public, and to assist the public in interpreting and complying with this article.

(Ord. No. 22, 11-24-1999)

Secs. 53-5--53-9. Reserved.

ARTICLE II. CHECK CASHING SERVICES

Sec. 53-10. License and trader's permit required.

No person or other entity may engage in the business of cashing checks, drafts, or money orders for consideration without obtaining and maintaining a license from the North Carolina State Banking Commission under N.C.G.S. § 53-276, and a valid trader's permit to operate on the Cherokee Indian Reservation. No person or other entity providing a check-cashing service may avoid the requirements of this article by providing a check or other currency equivalent instead of currency when cashing payment instruments.

(Ord. No. 22, 11-24-1999)

Sec. 53-11. Exemptions.

(a) This article shall not apply to:

(1) A bank, savings institution, credit union, or farm credit system organized under the laws of the United States or any state; or

(2) Any person or entity principally engaged in the bona fide retail sale of goods or services with a valid trader's permit, who not holding itself out to be a check-cashing service, from time to time cashes checks, drafts, or money orders for a fee or other consideration, where not more than two dollars is charged for the service.

(Ord. No. 22, 11-24-1999)

Sec. 53-12. Maximum fees for service; fees posted; endorsement of checks cashed.

(a) Notwithstanding any other provision of law, no check-cashing service shall directly or indirectly charge or collect fees or other consideration for check-cashing services in excess of the following:

(1) Two percent of the face amount of the check or five dollars, whichever is greater, for checks issued by the federal government, Eastern Band of Cherokee Indians, State of North Carolina, or any agency of the state or federal government, or any county or municipality of North Carolina.

(2) Five percent of the face amount of the check or five dollars, whichever is greater, for personal checks, other checks, or money orders.

(b) A check cashing service may not advance monies on the security of any check unless the account from which the check being presented is drawn is legitimate, open, and active. Except as provided by section 53-13, any check cashing service that cashes a check for a fee shall deposit the check no later than three business days from the date the check is cashed.

(c) A check cashing service shall ensure that in every location it conducts business, there is conspicuously posted and at all times displayed a notice stating the fees charged for cashing checks, drafts, and money orders. A check cashing service shall further ensure that notice of the fees currently charged at every location shall be filed with the Business Committee.

(d) A check cashing service shall endorse every check, draft, or money order presented by the check cashing service for payment in the name of the check cashing service.

(Ord. No. 22, 11-24-1999)

Sec. 53-13. Deferred deposit loans.

(a) A check cashing service may provide a deferred deposit loan and defer the deposit of a personal check cashed for a customer for up to 31 days pursuant to the provisions of this section.

(b) The face amount of any postdated or delayed deposit check accepted pursuant to this section shall not exceed $300.00.

(c) Each deferred deposit loan made on the security of a postdated or delayed deposit check shall be documented by a written agreement that has been signed by the customer and the check cashing service. The written agreement shall state the annual percentage rate, finance charge, amount financed, and total of payments as provided by Regulation Z of the Federal Truth in Lending Act. The written agreement shall authorize the check cashing service to defer deposit of the personal check until a specific date no later than 31 days from the date the check is issued.

(d) A check cashing service shall not directly or indirectly charge any fee or other consideration for a deferred deposit loan, except as follows:

(1) The check cashing service may charge an administrative fee not to exceed five dollars.

(2) In addition to the administrative fee, the check cashing service may charge interest on the amount of cash delivered to the customer at an annual percentage rate (APR) no greater than 36 per annum. The rate charged on the outstanding balance after maturity shall not be greater than the rate charged during the loan term. Charges on loans shall be computed and paid only as a percentage of the unpaid principal balance or portion thereof. Principal balance means the balance due and owing exclusive of any interest, service or other loan-related charges.

(3) If there are insufficient funds to pay the check on the date of presentment, a check cashing service may charge a fee in the amount of $15.00, or the fee imposed on the check cashing service by the financial institution, whichever is lower. Only one such fee may be collected with respect to a particular check even if it has been redeposited and returned more than once. A fee charged under this subsection is the only charge allowed for late payment.

(e) No check cashed under the provisions of this section shall be repaid by the proceeds of another check cashed by the same check cashing service or any affiliate of the check cashing service. A check cashing service shall not, for any consideration, renew or otherwise extend any postdated or delayed check or withhold such check from deposit for any period beyond the time set forth in the written agreement with the customer.

(f) No check cashing service may extend another deferred deposit loan or any other form of credit to a customer if that customer has a loan outstanding with that check cashing service.

(g) No deferred deposit loan made under this section may be secured by an assignment of any per capita distribution or a pledge of any property other than the deferred deposit check.

(h) No person may threaten to use or use the criminal process in the Cherokee Court or any other court to collect a check that was tendered in exchange for a deferred deposit loan.

(Ord. No. 22, 11-24-1999)

Sec. 53-14. Record keeping; receipt requirements.

(a) Every check cashing service shall maintain books, accounts, and records separate from any other business in which the person is engaged, and such records shall be retained for a period of at least five years.

(b) Every check cashing service shall ensure that each customer cashing a check is provided a receipt showing the name or trade name of the check cashing service, the transaction date, amount of the check, and the fee charged.

(c) The Business Committee may examine the books, accounts, and records in order to determine whether the person is complying with this article, upon receipt of a complaint from a customer of the check cashing service.

(Ord. No. 22, 11-24-1999)

Sec. 53-15. Prohibited practices.

No check cashing service may do any of the following:

(1) Charge fees in excess of those authorized under this article.

(2) Use or cause to be published or disseminated any advertising communication which contains any false, misleading, or deceptive statement or representation.

(3) Conduct business at premises or locations other than locations provided in a valid trader's permit and lease.

(4) Engage in unfair, deceptive, or fraudulent practices.

(5) Cash a check, draft, or money order made payable to a payee other than a natural person unless the check cashing service has previously obtained appropriate documentation from the executive entity of the payee clearly indicating the authority of the natural person or persons cashing the check, draft, or money order on behalf of the payee.

(Ord. No. 22, 11-24-1999)

Secs. 53-16--53-19. Reserved.

ARTICLE III. REMEDIES

Sec. 53-20. Cease and desist orders.

If the Business Committee determines that a person has violated this chapter, then the Business Committee may, after notice and opportunity for hearing, order the person to cease and desist from the violations and to comply with this chapter. The Business Committee may enforce compliance with an order issued pursuant to this section by imposing and collecting civil penalties as authorized under this article.

(Ord. No. 22, 11-24-1999)

Sec. 53-21. Civil penalties and restitution.

The Business Committee may order and impose civil penalties upon any person for violations of this chapter. Civil penalties shall not exceed $1,000.00 per violation. All civil money penalties collected under this chapter shall be paid to the Eastern Band of Cherokee Indians. The Business Committee may also order restitution of unlawful or excessive fees charged to customers. If a civil penalty or restitution is not paid within 30 days, then, in addition to other remedies provided by this chapter, the Eastern Band of Cherokee Indians may seek enforcement of the Business Committee's order in the Cherokee Court.

(Ord. No. 22, 11-24-1999)

Sec. 53-22. Suspension and revocation of trader's permit or business lease; grounds; procedure.

(a) The Business Committee may suspend or revoke any person's trader's permit and/or business lease if, after notice and opportunity for hearing, the Business Committee issues written findings that the check cashing service has engaged in any of the following conduct:

(1) Violated this chapter or applicable state or federal law or rules on more than one occasion.

(2) Made a false statement on the application for a trader's permit.

(3) Refused to permit investigation by the Business Committee.

(4) Failed to comply with an order of the Business Committee under this chapter.

(5) Demonstrated incompetency or untrustworthiness to engage in the business of extending credit or check cashing.

(6) Been convicted of a felony or misdemeanor involving fraud, misrepresentation, or deceit.

(b) The Business Committee may not suspend or revoke any trader's permit or business lease unless the person has been given 30-days' notice and an opportunity for hearing.

(Ord. No. 22, 11-24-1999)

Sec. 53-23. Criminal penalties.

A violation of this chapter is a misdemeanor, punishable in the Cherokee Court by imprisonment of not more than one year and fine of not more than $5,000.00. Each transaction involving the unlawful extension of credit or cashing of a check, draft, or money order constitutes a separate offense.

(Ord. No. 22, 11-24-1999)

Sec. 53-24. Civil action.

Any person who suffered actual damages as a result of a violation of this chapter shall have a right of action in the Cherokee Court against a person who has violated this chapter for actual damages. An party found liable for violation of this chapter may also be ordered to pay the injured party a statutory penalty of $1,000.00 for each violation.

(Ord. No. 22, 11-24-1999)

Sec. 53-25. Obligation void.

In addition to any other remedies provided by law, any transaction that violates the terms of this chapter shall be void and unenforceable, and the person extending the credit shall have no right to recover any of the funds advanced or loaned as part of that transaction.

(Ord. No. 22, 11-24-1999)

Sec. 53-26. Sovereign immunity.

Nothing in this chapter shall be deemed a waiver of the sovereign immunity of the Eastern Band of Cherokee Indians.

(Ord. No. 22, 11-24-1999)

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