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Dreher Tomkies LLP
Attorneys at Law
2750 Huntington Center
41 South High Street
Columbus, Ohio 43215
Telephone: 614-628-8000
Fax: 614-628-1600

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The Fifth Circuit Court of Appeals held that national banks are authorized by federal regulation 12 C.F.R. § 7.4002(a) to charge non‑account holding payees a check‑cashing fee. Wells Fargo Bank of Texas, N.A. v. James, No. 01‑51298, 2003 WL 245633 (5th Cir. Feb. 5, 2003). The case involved a Texas Par Value statute that prohibits banks from charging a fee to non‑account holding payees who present a check to the bank which holds the account that the check is drawn against. Wells Fargo Bank of Texas, a national bank, sought a permanent injunction and declaration that the Par Value statute was null and void based on federal preemption, relying on 12 C.F.R. § 7.4002(a). The court found that the Office of the Comptroller of the Currency (“OCC”) was operating within its power in promulgating Section 7.4002. Section 7.4002 provides that national banks may charge “customers” non‑interest charges and fees for authorized services. The OCC interprets “customers” to include any person who presents a check for payment. Although the court acknowledged that such an interpretation of customer is not the only reasonable interpretation, the court concluded that the OCC’s interpretation that customer includes payees who present a check to a drawee bank for payment due is controlling. The court held that because the Par Value statute prohibits the exercise of a power which federal law expressly grants to national banks, the Par Value statute is in irreconcilable conflict with the federal regulatory scheme and it is preempted by operation of the Supremacy Clause.

Jeff Langer and Elizabeth Anstaett