OHIO CHECK CASHING ACT RULE FOUND TO BE UNENFORCEABLE

The Franklin County Court of Common Pleas has permanently enjoined enforcement of Rule 1301:8-8-04(C)(5) issued under the Ohio Check Cashing statute by the Division of Financial Institutions. Fast Cash of Am., Inc. v Ohio Dept. of Comm., Case No. 10CVH04- 6308 (C.P. Franklin County, Mar. 10, 2011). The provision of the rule at issue would have prohibited licensed check cashing businesses from charging or collecting a fee to cash a check issued by the check cashing business or an affiliate of the check cashing business in connection with a loan.

The Court found that by adopting Rule 1301:8-8-04, the Division is adding to the legislative enactment of Section 1315.26 of the Check Cashing Businesses Act. The court explained that through the Rule, the Division has added another category of checks (loan proceeds checks) and created a limit by prohibiting fees for those checks when no category or limitation was provided for in the statute.

The Court also found that the Division’s prohibition of fees by check-cashing businesses for cashing loan-proceeds checks, in light of the General Assembly’s failure to enact such a prohibition, is evidence of policymaking which is beyond the rulemaking authority of an agency.

The Court held that Rule 1301:8-8-04(c)(5) conflicts with the Ohio Check Cashing Businesses Act and is therefore unlawful, invalid, and unenforceable, and constitutes an unconstitutional usurpation of the legislative function.

  • Elizabeth Anstaett and Darrell Dreher