The protection of consumers from closely targeted ad campaigns by financial institutions seems to be at the heart of a number of bills currently before the state Committee on Banks and Banking.

Most notably, bills to toughen regulations regarding “live checks,” credit cards for college-age consumers and limitation of the amounts of interest on credit cards were put before the committee during a public hearing last week.

Also visited during the public hearing were several bills aimed at easing the strain community banks face in regard to complying with federal and state regulations which sometimes are at odds which each other.

Of major concern to Sen. Cheryl Jacques, D-Needham, is the plethora of “live checks” people receive in the mail.

Senate bill 7, sponsored by Jacques and Rep. Jarrett T. Barrios, D-Cambridge, would allow consumers the right to cancel the loan up to 10 days after it is signed.

“This protects the seniors who mistakenly cash it,” said Jacques. Supporters of the bill cite numerous instances in which checks were mistakenly cashed by senior citizens, the mentally ill and others who didn’t realize the check was actually a loan.

Consumer watchdog groups list a variety of reasons why such loans should be carefully regulated.

“Live checks know no respectful boundary,” said Marie Kelly, founder of Taking Heart. Kelly said after the hearing that she originally founded the organization to help the mentally ill but it expanded over time to include helping the elderly “find their voice,” particularly in consumer affairs. The consumer group, recently disbanded, was comprised of 60- to 90-year-olds, she said.

“The generation I’m working with oftentimes haven’t had any experience with [live checks]. Some never wrote a check until their husbands passed,” she said.

Kelly told the banking committee about one case in which a 90-year-old widow signed such a check: “She spent the money and had no idea she was entering into an agreement with almost 25 percent interest.” The woman “was filled with shame,” said Kelly, at the thought of having to accept the help of her children to straighten out the consequences and remove the debt.

“All it takes is a signature to make a grave financial error. I deal with the aftermath,” she said.

The bill came after an investigation by Jacques which resulted in the report “Cashing In … but Losing Out?” by the Senate Post Audit and Oversight Bureau.

“Seniors are particularly plagued by this issue,” Jacques told the committee. “We are finding checks that intentionally look like benefit checks.”

In addition to the 10-day reversal policy, Jacques’ bill proposes that the negotiability of the checks be limited to 30 days in an effort to protect consumers from identity fraud. “If someone else cashes it, it’s your headache,” she said. “Right now, they can float around out there [indefinitely]. Let’s put a limit on that.”

Kevin F. Kiley, executive vice president and chief executive officer of the Massachusetts Bankers Association said, “We think the basic premise … is a very reasonable approach to what has been a problem.” He added, however, that the MBA is concerned about what “unintended consequences” the bill may have and stated his willingness to work with the committee to ensure the legislation is fair to consumers and business as well.

Also speaking in support of the bill was Deirdre Cummings of the Massachusetts Public Interests Research Group.

“It dangles quick money at high rates,” she told the committee. The fraudulent deposit of such loans is easy to perpetrate because consumers don’t expect them and will not look for them in the mail, she said. Additionally, MassPIRG supports any measure which would strengthen the bill, including not only printing the amount of the loan on the check but the total cost over the life of the loan.

Cummings said that in recent years, the number of such loans has “skyrocketed.” In 1995, she said, Fleet Bank issued 50,000 live checks; just two years later, it issued 2.2 million.

While FleetBoston Financial spokesman James W. Schepker said that program was very successful, he noted that Fleet chose to discontinue it in the fall of 2000 because officials felt market demand within the company’s footprint had been “fully satisfied.”

“We have no plans to do any mailings during this calendar year, 2001. Beyond that, I couldn’t predict what our determinations might be. But certainly for this year, we would not reintroduce that program,” said Schepker.

When questioned by Andrea F. Nuciforo Jr., D-Pittsfield, as to how many banks in Massachusetts participate in such a program, Kiley replied that he only knew of Fleet’s program.

Jacques pointed out that Fleet deserved credit for informing consumers very clearly on the face of the check that it was a loan. Schepker said in addition, it also printed other detailed information about the loan agreement.

“It was, in our estimation, impossible to misunderstand the program. It repeatedly said that these were authorizations of a loan. It was very explicit about the interest rates, the APR, even calculating to the penny what the loan would cost if repaid over the term given,” said Schepker.

Changes Proposed
Several other bills were heard before the Committee on Banks and Banking last week. Among them was House bill 1722, which proposes several changes to existing banking law.

Robert F. Verdonck, president of the $570 million-asset East Boston Savings Bank, spoke in favor of the bill and on behalf of the MBA.

The bill includes several provisions, including the proposal to bring state Truth in Lending requirements to parity with federal regulations. Among the provisions are changes to the so-called 18/65 law. The original intent of the law was to provide an account for those who probably would have low-balance accounts, such as senior citizens and adolescents. Over the years, however, many more services have come to be included in such accounts without regard to the customer’s ability to pay for them, said Verdonck.

“We strongly believe, however, that a bank should be entitled to assess these customers its normal schedule of fees and charges for other ancillary charges such as cashier’s checks, treasurer’s checks, wire transfers, stop payments, money orders and check certification or account reconciliation. Each of these services generates an expense and a liability to the bank and are not really connected to the checking account,” said Verdonck before the committee.

If passed, the bill would allow truncating of checks. Instead of returning the physical check to the customer, a statement with the check number, date paid and amount is supplied, much like a credit card statement where purchases are reflected but not the actual image of the receipt. According to Verdonck, about 52 percent of his current clients prefer that method. “Some of the newer consumers don’t feel the need to see the check,” he said. The customer would still be able to request to see the check itself, and it would be made available to him, said Verdonck.

Lastly, the bill seeks to repeal the 1986 law which requires that banks maintain a telephone service to provide information on customer accounts and other products.

But Banking Committee Chairman Rep. John F. Quinn, D-Dartmouth, quickly pointed out he thinks some bank telephone services don’t quite go far enough.

“That’s one of my pet peeves, when you try to call a bank and you’re put into orbit,” he said.

Verdonck pointed out that many other services are now available to consumers, including the Internet and ATMs, to help ferret out information.

“Most of the banks have that now, and it’s [telephone servicing] redundant,” he said.

However, FleetBoston Financial, while not having an official position on the bill, has had a “call center” available to customers 24 hours a day, seven days a week and will continue to do so, said Schepker.

The next committee hearing will take place Tuesday, April 24, at 11 a.m. in Room 437 of the State House.