PHILADELPHIA -- The acting chief of the state's Banking Department authorized an investigation into Pennsylvania's check-cashing companies, after an advocacy group reported that agencies charge illegally high fees and offer services for which they are not licensed.

"We have an investigative arm which is currently hard at work looking for answers," said A. William Schenck III, acting secretary of banking.

The probe was initiated after an advocacy group's report concluded that Philadelphia's largest check-cashing chain, Currency One Inc., flouted a 1998 state law that was supposed to regulate the agencies and their rates.

The state chapter of the Association of Community Organizations for Reform Now sent undercover investigators to 25 of Currency One's 52 stores, and said it found a series of violations.

Among them, according to the report: Consumers were charged more than 12 percent on some loans, above the state's legal limit of 10 percent; services such as ATMs and direct deposit were offered, even though they are not permitted by their license; and fees weren't posted and often varied by store. The report also said the stores made so-called payday loans: cash advances that use a customer's next paycheck as security and are illegal in Pennsylvania.

"They should not be allowed to operate if they are in fact running a loan sharking business," said state Rep. Louise Williams Bishop, D-Philadelphia, one of the 23 members of Philadelphia's delegation calling for an investigation and stepped-up enforcement. "Paying an exorbitant amount [to cash a check] is just that: It's loan-sharking."

The people who suffer the most are poor, as check cashers have replaced banks for people in impoverished neighborhoods that commercial banks have abandoned, said Irv Ackelsberg, a lawyer with Community Legal Services and author of the ACORN report released last week. He also said the problems were not limited to the chain targeted by the study.

"We just decided to look at the biggest player in the Philadelphia market; there absolutely are others out there doing this," he said Monday. "It's the idea of just trying to take as much as they can from customers."

There was no telephone listing for Currency One headquarters or for Michael J. Corlone, who is listed in state incorporation documents as the company's owner, and he could not be reached for comment.

Schenck said he would address complaints by lawmakers and in ACORN's report that charge that the Banking Department has been "asleep at the wheel," allowing check cashers to operate virtually unregulated.

"I'm brand new [but] I come to the Banking Department with an agenda that includes a substantial increase in the department's activity in protecting the consumer," Schenck said. "We're going to be a far more aggressive agency than we have been in the past."

Other states have taken action against check-cashing companies.

In July 2001, Colorado sued ACE Cash Express Inc., the nation's largest check-cashing chain, accusing it of violating state law and charging steep interest rates to poor clients. In November 2002, Georgia's insurance commissioner ordered Cash in Advance's locations to stop making loans of $3,000 or less, saying the company was unlicensed and has been charging usurious interest rates.

Schenck, who has been serving as acting banking secretary since his nomination by Gov. Ed Rendell in January, declined to comment on the nature of the investigation other than to say it was under way.

"Charging someone 400 bucks to cash a $4,000 tax refund check is simply unconscionable," said Schenck, who still must be confirmed by the Senate. "If these are the kinds of things going on across the state in these places, we're going to be doing something about it."