"I asked them what it was used for, and the girl that took it said, ‘That’s for us,’" Harkins said.

Harkins said she asked the girl twice and was told again that it was for the company. After a 45-minute wait, Harkins completed the transaction but later said she would never go back again.

When asked later about the photos, employees at Any Kind said the pictures were required for the mandatory "membership."

Jim Higgens, spokesman for Dollar Financial which owns Any Kind, refused to discuss the company’s operations. "Our company’s policy is not to talk to the media," he said.

Given stories like Harkins’, it may seem hard to believe that some D.C. residents use such stores routinely as a substitute for banks.

But stand outside one of these places any day of the week — even holidays — and you’ll witness people rushing in and out paying phone bills, receiving money transfers and, of course, cashing checks. Most check-cashing outlets are located in low-income neighborhoods.

Many people who use them say they are convenient, but it can also be expensive if you read the small print.

One company in Tidewater Virginia charges 456 percent annual interest on its payday loans made through check-cashing outlets, according to the Consumer Federation of America (CFA), a national consumer advocacy group based in the District. "Payday loans" give borrowers an advance on future paychecks.

In the District, the typical fees for cashing payroll and government-issued checks are between 2 and 3 percent, while 10 percent is charged on personal checks.

"It’s a very expensive way to live," said Jean Ann Fox, CFA’s director of consumer protection. Fox, who described these places as "a bit risky," said consumers should opt for low-cost banking instead.

The risks for the check-cashing stores themselves are also high.

Although some consumers may look upon check-cashing places as risky, the photos and fingerprinting have deterred many people from trying to cash stolen or counterfeit checks, D.C. police said.

"Lately the stores have gotten a better hold of the situation," said Sgt. Albert Young of the Metropolitan Police Department’s Financial Crimes and Fraud Unit.

Young said, until recently, his office received about five or 10 reports of stolen and counterfeit checks each month from local check-cashing outlets. He said he is unaware of any complaints from customers about the companies themselves.

Consumer rights attorney Carl Messineo of Partnership for Civil Justice said some local outlets overcharge people to cash checks. He said he blames high fees charged by banks for making D.C. consumers patronize check-cashing places with such frequency.

"The people who use check-cashing places are economically vulnerable," Messineo said. "Bank fees should be accessible for everyone."

He also noted some D.C. banks recently began requiring customers to be fingerprinted at their employer’s bank when they cash payroll checks, if they don’t have an account with the bank.

"It’s very insulting and kind of intimidating for people," he said.

But check cashers see their role quite differently.

"I’ve seen employees cash their paychecks at these places and then go right across the street to deposit the money in their bank account," said Hank Shyne, executive director of the National Check Cashers Association, a New Jersey-based group representing 36,000 check-cashing outlets across the country. "This way they’re getting money immediately."

He said check-cashing places originated in the 1930s for employees to cash their payroll checks at local bars and stores.

There are about 6,000 check-cashing outlets in the District, Fox said, including about 300 liquor stores that offer check cashing services. ACE and Any Kind, which both operate multiple outlets in the District, are among the nation’s largest chains of check-cashing outlets.

Most chain-owned check-cashing places require customers to provide at least one form of identification for a mandatory "membership." Customers at both ACE and Any Kind must become members to cash a check for the first time. With each successive visit, "members" accumulate points good for prizes such as $5 in cash or free phone cards. Harkins said she never received a membership card from Any Kind, although the company did cash her check.

There are no laws regulating forms of identification required for check cashing.

"We can’t tell them if they should require an ID or not," said Anthony Romero, supervisor of the D.C. Office of Banking and Finance. "That’s the risk the stores take."

Industry spokesman Shyne said many companies are "mom and pop" stores that don’t ask for identification because they recognize their customers and know their neighborhood.

According to D.C. law, check-cashing outlets must pay a $300 license fee, be bonded, and supply financial information to the Office of Banking and Finance. They also must abide by regulations to limit service charges to between 2 and 3 percent for payroll and government checks and 10 percent for personal checks. They also must have a minimum of $25,000 in assets and their license must be displayed at all times.

Romero said 150 new licenses were approved this year and about 200 are expected to be renewed.

According to the CFA, 12 million American households do not have bank accounts. A report released last summer by CFA found the average fees check cashers charged on Social Security checks rose 37 percent between 1987 and 1997. It also said fees to cash paychecks went up 44 percent, and personal check fees increased by more than 100 percent in that time. Only 12 states have passed laws to cap fees levied by check cashers. Maryland and Virginia are not among them.

Other than cashing checks, most chain outlets offer other services such as money orders, phone payments, phone cards, Western Union, D.C. Lottery, and payday loans.

Payday loan customers usually write a check payable to the lender for the amount they wish to borrow plus the fee. The lender agrees to hold the check until the next payday when the borrower can allow the check to be sent to the bank, redeem it with full payment or roll it over to extend the loan for another two weeks. Fees for payday loans are typically a percentage of the face value of the check or a fee per $100 loaned.

Following a recent investigation of payday loans, CFA called on states to curb high-cost credit and protect consumers. The federation wants states to enforce small loan rate caps and usury laws.

Under the federal Truth in Lending Act, the cost of loans must be disclosed as an annual percentage rate, the standard cost of credit to the borrower on an annual basis. The maximum term for payday loans is 31 days.

The National Check Cashers Association is working on a model legislative proposal for states that have not authorized payday lending. Shyne said the association is in the process of releasing a response to the Consumer Federation’s findings, which he described as misleading. He said payday loans are a good way to provide short-term financing for people in emergency situations and allow them two weeks for repayment.

Copyright 1998, The Common Denominator