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South Carolina · H.5538 / Act 257

Guarantee Banking Act (H.5538, Act 257): new rules for the biggest banks and payment companies when they close or refuse South Carolina accounts, starting Dec. 30

Signed June 30, 2026 · Takes effect Dec. 30, 2026

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The short version

  • Starting December 30, 2026, the Guarantee Banking Act (Act No. 257, H.5538) bars the largest banks and payment companies from refusing, ending or restricting South Carolina customers’ accounts, payments or credit based on protected religious exercise, protected speech or association, or factors that are not quantitative, impartial and risk-based.
  • It covers banks with more than $100 billion in total assets and payment processors, card companies, card and payment networks, and payment gateways that processed more than $100 billion in transactions in the last calendar year, plus their affiliates.
  • A customer facing an adverse action can ask for a specific statement of reasons within 90 days; the company must respond within 30 days. Saying the decision was based on internal policies or a credit score alone is not enough.
  • Good-faith decisions based on default or inactivity, legal requirements, services the company doesn’t offer, profitability or safety and soundness are allowed. Violations are treated as unfair or deceptive acts or practices, and the Attorney General may pursue other remedies.
Status
Law. Signed by the Governor June 30, 2026; ratified as R274, Act No. 257. Takes effect December 30, 2026.
Official source
SC Legislature, 2025-2026 Bill 5538 (Act No. 257), Guarantee Banking Act
SC Legislature: 2026 list of acts

What it does

The act adds Chapter 47, “Guarantee Banking,” to Title 34 of the S.C. Code. Its title says it provides “for fairness and transparency in banking.” (Act No. 257, title; Section 2)

  • Which companies are covered. A “financial institution” under the act is a bank with total assets over $100 billion, or a payment processor, credit card company, credit card network, payment network, payment service provider or payment gateway that processed more than $100 billion in transactions in the last calendar year. Parent, holding, affiliate and subsidiary companies are included. (§ 34-47-10(3))
  • Which services. Deposit accounts (checking, savings, NOW accounts), money transmission (such as payment services, ACH and credit card networks) and credit (such as personal loans, mortgages, business loans and credit cards). Insurance and the underwriting of or investment in securities are not covered. (§ 34-47-10(4))
  • Who is protected. A “person” is an individual, business, nonprofit or other entity that is a resident of South Carolina or has its principal place of business in the state. (§ 34-47-10(5))
  • What is an “adverse action.” Refusing to provide, ending or restricting a covered service. A temporary suspension or restriction while the company investigates, reviews possible fraud or verifies identity is not an adverse action. (§ 34-47-10(1))

What is prohibited

  • Discrimination in services. A covered institution may not take an adverse action against a customer on the basis of: the person’s exercise of religion protected by the U.S. or S.C. Constitution or federal or state law; the person’s protected speech, expression, opinions or association, including lawfully keeping private contributions or political activity beyond what law requires; “any factor if it is not a quantitative, impartial, and risk-based standard, including any such factor related to the person’s business sector”; animus based on those factors; or a desire to gain a benefit or avoid a loss imposed by someone else who is pushing the institution to act on those factors. (§§ 34-47-10(2), 34-47-30(1))
  • What is still allowed. The act says it does not prohibit declining services to a person engaged in fraud, criminal conduct or incitement to unlawful actions, or who creates obscenity or other expression not protected by the U.S. or S.C. Constitution. (§ 34-47-10(2)(b))
  • Coordination. An institution may not agree, conspire or coordinate with others, directly or through a third party, to do what the act prohibits. (§ 34-47-30(2))
  • False statements. An institution may not fail to provide, or give false or intentionally misleading information in, the statement of reasons described below. (§ 34-47-30(3))

Asking for a statement of reasons

  • A person who receives notice that a covered institution refused, restricted or ended service may request a statement of specific reasons within 90 days, from a customer service or designated account representative, by phone, U.S. mail or email. (§ 34-47-20(A)–(B))
  • The request must specifically describe the adverse action, including which of the act’s listed criteria the person believes was the basis. (§ 34-47-20(C))
  • Unless federal law prohibits or requires otherwise, the institution must send the statement by mail or email within 30 days of the request. It must be specific and give the principal reason. Saying the decision was based on internal standards or policies, or that the person did not reach a qualifying score on the institution’s credit scoring system, is not enough. If any of the act’s listed criteria factored into the decision, the statement must say so. (§ 34-47-20(D)–(E))
  • An adverse action notice already required by the federal Equal Credit Opportunity Act or Fair Credit Reporting Act satisfies the requirement, as long as any of the act’s listed criteria that factored into the decision are described in it, in a supplement or in a separate statement provided at the same time. The section does not require anything that would conflict with federal law, regulation or supervisory guidance. (§ 34-47-20(F)–(G))

Exceptions

It is not a violation for an institution to take the following actions in good faith and not motivated by animus or a desire to discriminate: (§ 34-47-40)

  • changing account terms the customer expressly agreed to;
  • actions related to an account’s inactivity, default or delinquency;
  • refusing a service that federal or state law prohibits it from providing, or a type of service it does not offer;
  • decisions based solely on valid business factors made impartially and in good faith: maximizing profitability or shareholder value (if not based on a desire to get a benefit or avoid a harm imposed by someone else because the institution served a customer), complying with legitimate legal or regulatory requirements, or maintaining the safety and soundness of the institution or its employees.

Enforcement and other provisions

  • Any violation is an unfair or deceptive act or practice, and in addition to the act’s own remedies, the Attorney General may pursue any other remedies provided by law. (§ 34-47-50)
  • The state and local governments may not impose identical or substantially similar restrictions, obligations or penalties on financial institutions the chapter does not cover, unless federal or state law requires it. (§ 34-47-80)
  • The chapter must be construed in favor of broad protection of the conduct, opinions and beliefs protected by the U.S. Constitution, federal law, the S.C. Constitution and state law. (§ 34-47-90)

Who it affects

  • South Carolina residents, businesses and nonprofits that bank, borrow or process payments with a covered institution. (§ 34-47-10(3)–(5))
  • Banks with more than $100 billion in assets and large payment companies and networks. Banks at or below that size, and payment companies at or below the $100 billion transaction threshold, are outside the act’s definition unless they are part of a covered company’s corporate family. (§ 34-47-10(3))

Current status

H.5538 was introduced in the House April 15, 2026. The House passed it 109–0 on second reading April 23 and gave it third reading April 24. The Senate amended it and passed it 38–2 on second reading May 13 and gave it third reading May 14. The House agreed to the Senate’s changes 99–0 on June 25. It was ratified June 29 (R274) and signed by the Governor on June 30, 2026, as Act No. 257. (Bill history)

What happens next

The act takes effect six months after the Governor’s signature, which the official bill page and list of acts give as December 30, 2026. (Act Section 3; bill history; 2026 list of acts)

Sources

Legislators connected to this bill

Current members listed as sponsors on the official bill page, or with a sourced public statement about it. Details and sources are on each member page.

SC House

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Every statement above is drawn from the official source text linked here; section references are shown in grey. This is a plain-English summary, not legal advice. Spot an error? Tell us.