Could a South Carolina deferred presentment lender accept a debit card to redeem a customer check?

Plain-English summary

In 2015, the South Carolina Attorney General concluded that a licensed deferred presentment lender could accept a debit card payment to redeem a customer’s check. The Deferred Presentment Services Act treated an item as paid in full when the customer redeemed the check with a “cash payment in full,” but did not define “cash.” The opinion read that phrase in its ordinary sense to include money or its equivalent, including funds transferred directly from the customer’s bank account through a debit card.

The conclusion rested on the debit card’s direct link to available funds in a checking account. The office contrasted that with a credit card’s line of credit and found no provision in the Act expressly barring debit card payments. It answered the payment method question presented, without purporting to resolve every other requirement of a deferred presentment transaction.

Currency note

This opinion was issued in 2015. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Did “cash payment in full” mean physical bills and coins only?
A: The Attorney General said no. It interpreted the phrase to include a debit card transaction that drew money directly from the customer’s account.

Q: Why did the opinion distinguish debit cards from credit cards?
A: It treated a debit card as drawing existing checking account funds, while a credit card relied on credit. That distinction supported its interpretation of “cash.”

Q: Did the Act expressly prohibit debit card payment?
A: The office reported finding no such prohibition and concluded that the payment method was acceptable under the Act as it stood in 2015.

Background and legal framework

A legislator asked whether a lender could accept debit card payments under the Act’s redemption provision. The office used ordinary meaning and statutory construction, quoting the provision that required the lender to mark a transaction closed when paid in full and provided for redemption of the customer’s check through a cash payment. It reasoned that reading “cash” to exclude a direct electronic debit would be too narrow.

Citations and references

The opinion quoted S.C. Code Ann. Section 34-29-270(f) and discussed the meaning of “cash” in the Deferred Presentment Services Act.

Official title

On whether a licensed presentment lender may legally accept debit card payments for deferred presentment transactions under the Deferred Presentment Services Act.

Requester

The Honorable Edward R. Tallon, Sr., Member, South Carolina House of Representatives.

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/may-20-2015-1/
• Original PDF: https://www.scag.gov/wp-content/uploads/2015/05/Tallon-E.-OS-9920-FINAL-Opinion-5-20-2015-00653591xD2C78.pdf

Original opinion text

S,1

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Alan Wilson
ATTORNEY GENERA1.

May 20. 2015

The Honorable Edward R. Tallon. Sr.
House of Representatives. District 33
402-A Blatt Building

Columbia, SC 2921^1
Dear Representative Tallon:
You have requested a "formal opinion regarding whether a licensed deferred presentment lender may legally accept debit card payments for deferred presentment transactions under the

Deferred

Presentment Services Act." You note that S.C. Code Ann. § 34-49-270(0 provides in pertinent pail that

"an item is paid in full when . . . the customer has redeemed the check with a cash payment in full." (emphasis in original). The Act does not define the term "cash".

By way of background, you state the

following:

Black's Law Dictionary 208 (9,h ed. 2009), defines cash as "1. Money or its equivalent. 2. Currency or coins, negotiable checks, and balances in bank accounts."

The word "cash" follows the Black's Law Dictionary definition in other sections of the South Carolina Code. For instance, the secured transactions section of the Commercial Code defines "cash proceeds" as "proceeds that are money, checks, deposit accounts, or the like." S.C. Code Ann. § 36-9-102(9). The South Carolina

Family Independence Act allows the provision of "cash" assistance which is distributed by a SC epay Debit Card.

also

South

Carolina

See S.C. Code Ann. § 43-5-1 1 10, et al.; see

Department

of

hltps://dss.sc.uov/conlcnl/conlenl/custonicrs/fiiiancc/l"i.aspx

2015).

Social

Services.

(last visited.

April 30.

In addition. Title 38 of the South Carolina Code discusses cash for the

purpose of disbursing insurance policies, where checks are commonly issued to pay

out policies. See S.C. Code Ann. § 38-1-10. et al. Reading Black's Law Dictionary in tandem with the Deferred Presentment Services Act and the above-mentioned sections of the South Carolina Code, it appears that debit card payments are encompassed within the meaning of "cash."

With the above analysis in mind. I respectfully request that your office render a formal opinion regarding whether a debit card payment is an acceptable "cash" payment method under the Deferred Presentment Services Act. Law/Analysis

As we have recognized many times, the fundamental principles of statutory construction may be summarized as follows:

Rewbert C. Dennis Building

. Post Office Box 11549 . Columbia. SC 2921 1-1549 . Telefmone 803-734-3970 . Facsimile 803-253-6283

The Honorable Edward R. Tallon, Sr.
Page 2

May 20, 20 1 5

"[t]he cardinal rule of statutory construction is to ascertain and effectuate the intent of

the legislature." Hodges v. Rainev. 341 S.C. 79, 86, 533 S.E.2d 578, 581 (2000) . . . "CJourts will reject a statutory interpretation that would lead to an absurd result not

intended by the legislature or that would defeat plain legislative intention." State v. Johnson. 396 S.C. 182, 189, 720 S.E.2d 516, 520 (Ct. App. 201 1). . . . Op. S.C. Att'v. Gen.. September 18, 2013 (2013 WL 5494616).

Moreover, our Supreme Court has

recognized that the "true aim and intention of the legislature will be deemed controlling " Greenville Baseball Club v. Bearden. 200 S.C. 363, 20 S.E.2d 813 (1942). Further, where terms in a statute are not defined, "[t]he legislature is presumed to have fully understood the meaning of the words used

in a statute, and unless this meaning is vague or indefinite, [it is presumed] ... it intended to use them in their ordinary and common meaning or in their well defined legal sense." Rorrerv. PJ. Club. Inc.. 347 S.C. 560, 569, 556 S.E.2d 726, 73 1 (Ct. App. 2001).

As you point out, the word "cash" in its ordinary sense, includes "money or its equivalent," such

as a check. Merriam-Webster Dictionaiy (online). The word "debit card" is defined at Dictionaiy.com, as

A plastic card that resembles a credit card but functions like a check and through which payments for purchases or services are made electronically to the bank

accounts of participating retail establishments directly from those of card holders. Black's Law Dictionary further provides that "cash" may be defined as: "1. Money or its equivalent. 2. Currency or coins, negotiable checks, and balances in bank accounts." (emphasis added). Thus, under ordinary principles of statutory construction, the word "cash" would include a "debit card" because the funds in the cardholder's bank account are "debited" for the amount purchased with the card.

In State v. Castillo. 252 P.3d 760, 764 (N.M. 201 1), the Court concluded that a "debit card" was not a "credit card." In Castillo, it was stated as follows:
[i]n this case, evidence was presented that debit cards are tied to individual checking

accounts, as opposed to lines of credit or guarantee of payment by the issuing bank. Sherry DeFoor, the banking manager at Bank of America, testified that a "debit card" is different from a "credit card" because a "credit card" relies on a line of credit. In contrast, a "debit card" is tied to the individual cardholder's checking account, and when the debit card is used, the money is taken directly out of that checking account. DeFoor further testified that the unauthorized use of Sando's "debit card" resulted in a direct deduction from Sando's available funds in her checking account. It is our understanding that, for purposes of a debit card, there must be sufficient funds in the checking account to cover a purchase or the debit card transaction will be denied.

The Honorable Edward R. Tallon, Sr.
Page 3
May 20, 2015

Another court has emphasized that the definition of "cash" may not be limited to having a

tangible possessory interest. As long ago as 1986, the Texas Court of Criminal Appeals noted that:
[t]he Court of Appeals reasoned that the "nature of cash money denies any possible nonpossessory interest."

However, in this advanced electronic era, money is

frequently transferred without passing from the actual possession of one individual to another. Thus, we believe that cash money can in fact be appropriated by "transfer or

purported transfer of title to or other nonpossessory interest in property." Coats v. State. 712 S.W.2d 520, 521 (Tex. Cr. App. 1986) (emphasis in original).

We do not see any provision in the Deferred Presentment Services Act specifying that payment may not be accepted through use of a debit card. S.C. Code Ann. Section 34-29-270(f) provides as follows:
[a] licensee shall notify the database provider immediately when the licensee enters into a deferred presentment transaction with a person. The licensee shall submit to the database provider such information as the board requires. When the transaction is

paid in full, the licensee shall designate the transaction is closed and immediately notify the database provider. When the database provider receives notification that the transaction is paid in full, the database provider immediately shall designate the

transaction as paid in full in the database. For purposes of this subsection, an item is paid in full when the payor bank makes final payment on the customer's check pursuant to Section 36-4-215 or the customer has redeemed the check with a cash payment in full. While there is reference in this provision to a "cash payment in full," we believe that, based upon the ordinaiy meaning of the term "cash," payment through a debit card — withdrawing funds directly from the borrower's checking account — would constitute a "cash payment in full." It would, in our opinion, be unreasonable to restrict the statute entirely to currency or cash money in the traditional sense, inasmuch as a debit card is tied directly to funds in the cardholder's checking account. Conclusion

Based upon the foregoing, well-recognized principles of statutory construction, it is our opinion that a debit card payment is an acceptable "cash" payment method under the Deferred Presentment Services Act. The statute must be given a common sense reading, rather than one limited entirely to currency or "cash money" in its traditional sense. The debit card is the equivalent of and meets the common and ordinary definition of "cash" in that it is tied to "balances in bank accounts." Thus, payment made by use of a debit card would meet the requirements of the Act.

Robert D. Cook
Solicitor General