Changes at the Currency Exchange

How Illinois Consumers Lessened the Blow of a Check-Cashing Rate Hike

A coalition of consumer advocates and the Illinois currency exchange industry reached an agreement on the maximum allowable rates for check-cashing fees on March 13, 2018. The new rates are substantially lower than those sought by the industry. A legislative committee called the Joint Committee on Administration Rules (JCAR) was set to decide whether to raise rates at its March 13 hearing. Months of consumer outcry and organizing from a coalition of consumers and advocates created the context for a successful agreement that will lessen the blow to the State’s most financially vulnerable and will actually lower the rates for consumers receiving public assistance.

The agreement brought the industry’s proposed 2.50 percent rate down to 2.33 percent on payroll checks between $100.01 and $1250, which represent the majority of checks cashed at currency exchanges (by our estimates, over 70 percent of checks). Also under the new structure, those cashing any value public assistance check will see a rate cut from 2.25 percent to 1.50 percent.

The newly agreed stratified rate schedule, as compared to current rates and the industry’s proposal, is reflected below. The final column (“Results”) compares the newly agreed rates to the industry’s proposed rate hike: ▲ (red up arrow) reflects a rate increase from the initial proposal, ▬ (yellow line) reflects no change from the initial proposal, ▼ (blue down arrow) reflects a decrease from the initial proposal, and ▼ (green down arrow) reflects a rate cut from both the initial proposal and current rate.

The majority of checks cashed qualify within the following table. The industry reports the average check amount is $463.83.

The fewest amount of checks cashed qualify within the following table. The industry reports only 7 percent of checks cashed at currency exchanges are larger than $1250.

The new maximum rates could go into effect as early as July 2018 if a currency exchange owner chooses to alter its current fee schedule after the new caps take effect.

The broad consumer and advocate coalition that joined together to fight to protect consumers includes members from Woodstock Institute, Chicago Urban League, AARP Illinois, Heartland Alliance, Illinois Asset Building Group, North Lawndale Employment Network, Community Organizing and Family Issues, Illinois PIRG, Citizen Action/Illinois, Chicago Jobs Council, and others. They are supported by Illinois legislative champions Senator Jacqueline Collins, Representative La Shawn Ford, Representative Andre Thapedi, and others.

“We did not come to the bargaining table with money to spare. Our bargaining power has been the voice of consumers.” said Woodstock Institute Senior Vice President of Policy and Communication Brent Adams of the coalition’s effort.

“This coalition had the simple goal of keeping the highest amount of dollars in the pockets of all Illinois consumers, especially those who have the hardest time putting those dollars in their pockets to begin with,” added Conner Kerrigan, Business Solutions Manager at North Lawndale Employment Network. “That goal was made difficult by the fact that, by design, currency exchanges are built in low-income and primarily minority neighborhoods throughout the state.”

In fact, the individuals who rely on currency exchanges are predominantly folks from low-income areas and communities of color who are the least equipped economically to absorb a rate hike, according to Woodstock’s research.

“We will continue working with Senator Collins, all the legislative co-sponsors, and the coalition of consumer advocates created around this issue to ensure this legislation passes both chambers and is signed into law,” said Andre Jordan, Associate State Director for Advocacy and Outreach with AARP Illinois on behalf of their 1.7 million members.