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Survey finds large banks charge non-customer check-cashing fees

October 12, 2001

Survey Finds Large Banks Charge Non-Customer Check-Cashing Fees

AUSTIN, TX – A recent Consumers Union survey of 50 national and regional banks in three Texas cities (Austin, Dallas and Houston) revealed that the banks charging non-customer check-cashing fees are among the state’s biggest banks, while most smaller and regional banks surveyed do not charge this fee.
The survey evolved in the wake of an August federal court injunction to block a new law requiring banks to cash their own checks at face value (the “par value” law.) The law passed by the 2001 Texas Legislature prohibited a bank from charging a fee to cash a check drawn on that bank.
The state’s five largest banks teamed up to seek the injunction.
Not surprisingly, three of these five – Bank One, Chase Manhattan Bank, and Comerica Bank-Texas – currently charge non-accountholder check-cashing fees, according to CU’s survey. Bank of America, the nation’s largest bank and another complainant in the lawsuit, charges such fees in other states and stated in its court complaint that it intends to charge such fees in Texas as soon as possible. The fifth complainant is Wells Fargo Bank, whose branches did not report non-customer check-cashing fees.
Rob Schneider, senior staff attorney for CU’s Southwest Regional Office in Austin, said the fees impose an unnecessary financial burden on low-income individuals who either cannot afford or cannot obtain their own bank accounts.
“These banks have the ability to verify that the check is good and avoid fraud by verifying the check casher’s identification,” Schneider said. “Charging a fee is just another way for banks to make more money and push away people they don’t find desirable.”
The banks counter that non-customers can avoid such fees by opening an account with them. But for many low-income families, the minimum balance required for a free checking account makes it impossible to open one. Research also points to a dearth of bank branches in low-income and minority areas – another factor keeping many Texans “unbanked.”
Among the key findings of the CU survey:

  • Four out of 15 Austin-area banks surveyed charge non-customer check-cashing fees. Bank One charges $3; Comerica, $5; and Guarantee Federal Bank, $5 for checks larger than $100. A customer service representative for Chase Manhattan Bank declined to provide the fee amount.
  • Of 18 banks surveyed in Houston, two – Comerica Bank and The First Bank of Texas – charge non-account holders $5 to cash a check. One bank, World Savings Bank, said it does not cash checks for non-customers.
  • Three out of 17 Dallas banks surveyed said they charge fees for non-customer check cashing. Bank One charges $3; Comerica, $5; and Chase Manhattan Bank, $5 or 1.5 percent of the check’s value, whichever is larger.

Even at banks that don’t charge fees, non-accountholders may need two forms of identification and/or a thumbprint to cash a check. Bank of America branches require all three of these items to cash a non-customer’s check.
Applauded by consumer advocates as a key victory for consumers in the 2001 legislative session, the provision was included by Rep. Joseph Deshotel, D-Port Arthur, as an amendment to SB 314, the banking Sunset bill. The contested law was enacted in June and would have taken effect September 1, but the five-bank team blocked it in August, claiming the regulation falls outside state jurisdiction.

(512) 477-4431
Consumers Union South West Office