Check Sellers, Bill Payers and Proraters Law
The Check Sellers, Bill Payers and Proraters Law (the Law) is contained in Division 3 of the California Financial Code, commencing with Section 12000. The regulations are contained in Subchapter 10 of Chapter 3, Title 10 of the California Code of Regulations, commencing with Section 1770 (10 C.C.R. § 1770, et seq.).
The Law, originally named the Check Sellers and Cashers Law, was enacted in 1947. As enacted, it provided for the licensing and regulatory review of companies and individuals who sold checks, cashed checks, or paid bills on behalf of others. In 1983, the law was amended to no longer require the licensure of check cashers by the Department. Now check cashers are required by law to obtain a permit from the Department of Justice.
Currently, there are four different types of businesses licensed under the Check Sellers, Bill Payers and Proraters Law.
A check seller sells checks, money orders, or drafts to be used by others for the payment of obligations and the transfer of money. Most checks and money orders are sold by agents who split the check fee with the licensee. The checks are sold through a network of agents such as small markets and check cashing businesses. A check or money order is usually purchased to pay rent, utilities, or some other obligation that must be sent through the mail. In addition, checks are purchased to send money back to a foreign country.
A bill payer receives money as an agent of an obligor to pay bills. For this service, it receives a fee from the obligor.
General proraters are persons who, for compensation, engage in the business of receiving money or something of value from a debtor for the purpose of distributing the money or something of value among creditors in payment or partial payment of the debtor’s obligations.
Special proraters pay customers’ bills as part of their management of customers’ affairs, and generally are business agents or managers.
How to reach us:
Department of Financial Protection and Innovation
320 W. 4th Street, Suite 750
Los Angeles, CA 90013
Phone: (866) ASK-CORP (275-2677)
Who is required to Obtain a License?
Any individual or corporation who wishes to engage in the business of selling checks, drafts or money orders, or of receiving money as agent of an obligor for the purpose of paying bills, invoices or accounts of such obligor or to accept money in payment of utility bills except as an authorized agent for a utility company must obtain a license from the Department of Financial Protection and Innovation.
Application For License and Requirements for Maintaining a Check Sellers, Bill Payors or Proraters License
The license requirements are set forth in Section 12000, et seq. of the law. The law requires that applicants for Check Sellers licenses maintain a minimum net worth of $500,000 and a $500,000 license bond. Bill Payers and General Proraters must maintain a minimum of $10,000 net worth and a surety bond of $25,000. For those licensees who use agents, the requirements are considerably higher. In addition to the financial and bonding requirements, applicants must demonstrate that they have experience in this type of business, and that they do not have a criminal history or a history of noncompliance with regulatory requirements.
- Check Sellers, Bill Payers and Proraters – Forms
- Check Sellers, Bill Payers and Proraters – Publications
Laws and Regulations
Check Sellers, Bill Payers and Proraters Law Forms
- DFPI CSCL 104 – Application for a Check Seller, Bill Payer, General Prorater or Special Prorater License (PDF)
- DFPI CSCL 105 – Bond of Check Sellers (PDF)
- DFPI CSCL 109 – Application for Deposit of Security in Accordance with Section 12223 of the Financial Code of the State of California (PDF)
- DFPI CSCL 110 – Application for Withdrawal of Security in Accordance with Section 12223 of the Financial Code of the State of California (PDF)
- DFPI CSCL 118 – Nonprofit Community Service Organization Notice and Written Consent(PDF)
- DFPI CSCL 119 – Nonprofit Community Service Organization Audit Report and Declaration (PDF)
- DFPI CSCL 120 – Notice of Dissolution or Termination of Engaging in the Activities of a Prorater (PDF)