State suspends CashPoint’s license, shuts down its NYS centers

ALBANY, N.Y. (AP) – State banking officials temporarily suspended the license for CashPoint Network Services, Inc., a national payment service, and shut down its more than 700 locations in New York state pending the results of an investigation.

The state Banking Department suspended the New York City-based company’s license for 30 days after CashPoint failed to pay about $13 million owed to a New York state-chartered bank and $50 million owed to creditors, agency spokeswoman Bethany Blankley said Thursday. The company also failed to properly maintain its books and records and was likely to default on its financial obligations, she said.

In Maine, state regulators warned that stores should stop accepting utility bill payments transmitted through CashPoint by walk-in customers at supermarkets, drugstores and other places of business.

An investigation by the state Office of Consumer Credit Regulation determined that many such payments made during the past week have not been remitted to utilities such as Central Maine Power, said William Lund, the agency’s director.

Hannaford, the largest supermarket chain in Maine, stopped accepting CMP payments as of Thursday afternoon, Lund said.

CMP said it has suspended its payment agent service, which is used by about 70,000 customers, or about 13 percent of its total.

“We are working to resolve this matter and find a new vendor as quickly as possible,” said utility spokesman John Carroll. He said customers can rest assured that payments made Thursday at agencies around CMP’s service area will be applied to their accounts.

CashPoint’s creditors on Thursday filed an involuntary petition under Chapter 7 of the bankruptcy code for U.S. Bankruptcy Court in New York’s Southern District, Blankley said. Chapter 7 allows assets to be liquidated and credit-card balances to be dismissed.

Verizon, one of CashPoint’s clients, ended its agreement with the company Thursday, affecting customers of the communications giant in New York and New England.

“We have a number if viable options for those customers to use over the next several weeks so that they can pay their bills while we establish new payment agent agreements in the area,” said Joan Simpson, Verizon’s vice president of finance operations.

Verizon is working to set up in-person bill payment centers and expects to begin using another payment provider in a few weeks.

A call to CashPoint was not immediately returned Thursday.

CashPoint, along with licensed check-cashing services, allowed New York customers to pay bills for housing, utilities, municipal water and other services. CashPoint processes more than $2.5 billion in consumer and business payments annually for utilities, government agencies and retail outlets nationwide. The company has been licensed by the state since 1996.

“We are working with law enforcement and working with creditors to make sure people’s bills are paid,” Blankley said.

Officials urge consumers to stop using CashPoint services immediately, alert their utilities or other creditors if they’ve used the service to pay their bills in the last week and keep all their receipts and payment documents.

Consumers with questions about their utility bills can call the state Public Service Commission at 800-342-3377. Other concerns can be directed to the Banking Department at 877-BANKNYS.

—

On the Net:

CashPoint http://www.cashpoint.net/

Banking Department www.banking.state.ny.us

AP-ES-04-23-04 1034EDT

Copy the Story Link