San Francisco to Regulate Check-Cashing Businesses

Plans are underway to regulate check-cashing and payday lending businesses in San Francisco.

In January, a 45-day moratorium was put into effect. The moratorium was approved unanimously by the San Francisco Board of Supervisors and signed by Mayor Gavin Newsom.

During this period, no new check-cashing or payday lending businesses can open in San Francisco, and no existing business can convert to a check-casher or payday lender.

These businesses cash payroll, government and personal checks for a fee that ranges between two and ten percent. They also offer short-term personal loans with what many consumer groups call extremely high interest rates.

The moratorium, sponsored by San Francisco Treasurer José Cisneros and Supervisor Tom Ammiano, also gives time for the Planning Department to submit a report to the Board recommending permanent controls.

“We’ve seen check-cashing and payday lending businesses grow by 1,000 percent over the last ten years. This is horrible. We need to find a way to limit this,” said Treasurer Cisneros.

Fernando Peña, of California Financial Service Providers (Cash America), on the other hand, says it is a free market and that the check cashers and payday lenders wouldn’t be there if the need wasn’t there. “We respect our customers. We believe they make intelligent choices when they do look at the marketplace. Our member companies provide consumers with choices.”

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