HF 475 (LSB 2349HH (1) 91)

HOUSE FILE 475

BY  THOMSON

A BILL FOR

An Act relating to financial institution acceptance of negotiable instruments, and providing penalties.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  525.1  Definitions.
   As used in this chapter, unless the context otherwise requires:
   1.  “Financial institution” means and includes any bank incorporated under the provisions of any state or federal law, any savings and loan association incorporated under the provisions of federal law, any credit union organized under the provisions of any state or federal law, any corporation licensed as an industrial loan company under chapter 536A, and any affiliate of a bank, savings and loan association, credit union, or industrial loan company.
   2.  “Negotiable instrument” means the same as defined in section 554.3104.
    Sec. 2.  NEW SECTION.  525.2  Financial institutions —— negotiable instruments.
   1.  A financial institution in the state shall do all of the following:
   a.  Accept tender of any negotiable instrument in exchange for issuance of a conditional credit to the tendering party.
   b.  Make a good-faith effort to obtain payment from the original issuer of the negotiable instrument.
   c.  Remit cash to the original issuer from the payment of the negotiable instrument within two days following the receipt of the payment.
   2.  A financial institution receiving the tender of a negotiable instrument may impose a fee for related services. The fee for the services shall not exceed the greater of twenty dollars, or one percent of the lesser of any of the following:
   a.  The face amount of the tendered negotiable instrument.
   b.  The amount of proceeds received by the financial institution.
   3.  The financial institution shall not require the party tendering a negotiable instrument to open an account with the financial institution.
   4.  The financial institution shall not require the party tendering a negotiable instrument to present identification.
    Sec. 3.  NEW SECTION.  525.3  Remedies.
   1.  A person who suffers a violation of this chapter may bring an action to recover damages in an amount up to five times the amount of the negotiable instrument and attorney fees.
   2.  If a financial institution has denied acceptance of a negotiable instrument three or more times, the financial institution shall be assessed a civil penalty in the amount of not less than ten thousand dollars, not to exceed twenty-five thousand dollars, as determined by the court.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to a financial institution’s acceptance of negotiable instruments.
   The bill defines “financial institution” to mean any bank incorporated under the provisions of any state or federal law, any savings and loan association incorporated under the provisions of federal law, any credit union organized under the provisions of any state or federal law, any corporation licensed as an industrial loan company under chapter 536A, and any affiliate of a bank, savings and loan association, credit union, or industrial loan company. The bill defines “negotiable instrument” to mean an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, as defined in Code section 554.3104.
   The bill provides that a financial institution in the state shall accept tender of any negotiable instrument in exchange for issuance of a conditional credit to the tendering party, make a good-faith effort to obtain payment from the original issuer of the negotiable instrument, and remit cash to the original issuer from the payment of the negotiable instrument within two days following the receipt of the payment.
   The bill provides that a financial institution receiving the tender of a negotiable instrument may impose a fee for related services. The fee for the services shall not exceed the greater of $20, or 1 percent of the lesser of the face amount of the tendered negotiable instrument or the amount of proceeds received by the financial institution.
   The bill provides that a financial institution shall not require the party tendering a negotiable instrument to open an account with the financial institution or present identification.
   The bill provides that a person who suffers a violation of the provisions of the bill may bring an action to recover damages in an amount up to five times the amount of the negotiable instrument and attorney fees. If a financial institution has denied acceptance of a negotiable instrument three or more times, the financial institution shall pay a civil penalty of between $10,000 and $25,000, as determined by the court.