Rhode Island Check Cashing Bond: A Comprehensive Guide

August 23, 2021

This guide provides information for insurance agents to help their customers obtain Rhode Island Check Cashing Bonds

At a Glance:

• Average Cost: Between 1.5% to 7.5% of the bond amount per year based on the applicant’s credit
• Bond Amount: 
  • $50,000 for check cashers with 1 – 3 office locations
  • $60,000 for check cashers with 4 – 7 branch locations
  • $75,000 for check cashers with 8 or more branch locations
• Who Needs it: All Rhode Island check cashers who engage in payday lending
• Purpose: To ensure the public will receive compensation for any damages should the check casher violate licensing law
• Who Regulates Check Cashers In Rhode Island: The Rhode Island Department of Business Regulation

Background

Rhode Island statute 19-14-2 requires all check cashers operating in the state to obtain a license with the Department of Business and Regulation. The Rhode Island legislature enacted the licensing laws and regulations to ensure that check cashers engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, check cashers must purchase and maintain a surety bond to be eligible for licensure.

Do all Check Cashers Need to Purchase a Bond?

No, only check cashers who accept checks for collection through deferred payment (payday lending) are required to purchase a bond. Check cashers who do not accept checks through deferred payment are exempt from the bonding requirement.

What is the Purpose of the Rhode Island Check Cashing Bond?

Rhode Island requires check cashers who engage in payday lending to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that the public will receive compensation for financial harm if the check casher fails to comply with the regulations set forth in the Rhode Island Currency Transmissions Act. Specifically, the bond protects the public in the event the check casher engages in any acts of fraud or fails to properly compensate consumers. In short, the bond is a type of insurance that protects the public if the check casher breaks licensing laws.

How Can an Insurance Agent Obtain a Rhode Island Check Cashing Surety Bond?

BondExchange makes obtaining a Rhode Island Check Cashing Bond easy. Simply login to your account and use our keyword search to find the “check” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.

At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

Is a Credit Check Required for the Rhode Island Check Cashing Bond?

Surety companies will run a credit check on the owners of the check cashing company to determine eligibility and pricing for the Rhode Island Check Cashing bond. Owners with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.

How Much Does the Rhode Island Check Cashing Bond Cost?

The Rhode Island Check Cashing Bond can cost anywhere between 1.5% to 7.5% of the bond amount per year. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on a $50,000 bond requirement.

$50,000 Rhode Island Check Cashing Bond Cost

How Does Rhode Island Define “Check Casher?”

Rhode Island statute 19-14-1 defines a check casher as any business entity who cashes checks for consumers.

How Do Check Cashers Apply for a License in Rhode Island

Check cashers in Rhode Island must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the NMLS’s application guidelines for details on the process.

License Period – The Rhode Island Check Casher License expires on December 31 of each year and must be renewed before the expiration date

Step 1 – Purchase a Surety Bond

Check cashers who engage in payday lending must purchase a surety bond with the following limit:

• • $50,000 for check cashers with 1 – 3 office locations
  • $60,000 for check cashers with 4 – 7 branch locations
  • $75,000 for check cashers with 8 or more branch locations

Step 2 – Purchase Insurance

Check cashers must purchase insurance protecting themselves against theft in an amount that mirrors their total liquid assets. The insurance coverage must be a minimum of $10,000 and not exceed $100,000.

Step 3 – Meet the Net Worth Requirements

Applicants for the Rhode Island Check Casher License must have a minimum company net worth (assets – liabilities) and available liquid assets of at least $10,000. Applicants must submit company financial statements verifying their net worth when submitting their license application.

Step 4 – Issue a Notice of Application

Check cashers must issue a notice of application for licensure in a generally circulated newspaper, which in Rhode Island is the Providence Journal. Any business or person has 10 days, from the publication of the notice, to object to the check casher becoming licensed.

Step 5 – Meet the Security Requirements

Check cashers in Rhode Island must ensure that their business locations have all of the following security measures in place:

• • Bulletproof glass
  • Alarms with direct lines to the police or a security company
  • Vaults
  • Steel partitions
  • Security cameras

Step 6 – Request a NMLS Account

The Rhode Island Check Casher License application is submitted electronically through the Nationwide Multistate Licensing System (NMLS). To submit a license application, applicants must first request to obtain an NMLS account.

Step 7 – Complete the Application

All Rhode Island Check Cashing License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:

• • Company financial statements indicating a minimum net worth and available liquid assets of at least $10,000
  • Certificate of good standing
  • Statement describing the geographic location of the business and why the community will benefit from having a check casher in the vicinity

Check cashers must pay a $540 fee when submitting their license application

How Do Rhode Island Check Cashers Renew Their License?

Check cashers can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The Rhode Island Check Casher License expires on December 31 of each year and must be renewed before the expiration date.

What Are the Insurance Requirements for the Rhode Island Check Casher License?

Check cashers must purchase insurance protecting themselves against theft in an amount that mirrors their total liquid assets. The insurance coverage must be a minimum of $10,000 and not exceed $100,000. Check cashers who engage in payday lending must purchase a surety bond with the following limit:

• $50,000 for check cashers with 1 – 3 office locations
• $60,000 for check cashers with 4 – 7 branch locations
• $75,000 for check cashers with 8 or more branch locations

How Do Rhode Island Check Cashers File Their Bond?

Check cashers should submit the completed bond form, including the power of attorney, electronically through the NMLS. The surety bond requires signatures from both the surety company that issues the bond and a representative from the check cashing company. The surety company should include the following information on the bond form:

• Name and address of entity/individual(s) buying the bond
• Surety company’s name and address
• Bond amount
• Date the bond goes into effect
• Date the bond is signed

What Can Rhode Island Check Cashers Do to Avoid Claims Against Their Bond?

To avoid claims on their bond, check cashers in Rhode Island must ensure that they follow all license regulations in the state, including some of the most important issues below that tend to cause claims:

• Do not engage in any acts of fraud
• Properly compensate all consumers

What Other Insurance Products Can Agents Offer Check Cashers in Rhode Island?

Rhode Island requires check cashers to purchase insurance protecting themselves against theft as a prerequisite to obtaining a business license. Bonds are our only business at BondExchange, so we do not issue other types of insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.

How Can Insurance Agents Prospect for Rhode Island Check Casher Customers?

The NMLS conveniently provides a public database to search for active check cashers in Rhode Island. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.