[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 1203 Introduced in Senate (IS)]







105th CONGRESS
  1st Session
                                S. 1203

 To amend the Electronic Fund Transfer Act to limit consumer liability 
   for the unauthorized use of a debit card, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 23, 1997

    Mr. D'Amato (for himself, Mr. Bennett, Mr. Dodd, and Mr. Bryan) 
introduced the following bill; which was read twice and referred to the 
            Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
 To amend the Electronic Fund Transfer Act to limit consumer liability 
   for the unauthorized use of a debit card, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Debit Card Consumer Protection Act 
of 1997''.

SEC. 2. CONSUMER LIABILITY FOR UNAUTHORIZED DEBIT CARD TRANSACTIONS.

    Section 909 of the Electronic Fund Transfer Act (15 U.S.C. 1693g) 
is amended by striking subsection (a) and inserting the following:
    ``(a) Limitation on Liability.--
            ``(1) In general.--A consumer shall be liable for an 
        unauthorized electronic fund transfer only if--
                    ``(A) the card or other means of access used to 
                make the unauthorized electronic fund transfer was an 
                accepted card or other means of access;
                    ``(B) the liability, including any overdraft or 
                other fee imposed by the financial institution in 
                connection with or as a result of the unauthorized 
                electronic fund transfer, is not in excess of the 
                lesser of--
                            ``(i) $50; or
                            ``(ii) the amount of money or value of 
                        property or services obtained in such 
                        unauthorized electronic fund transfer prior to 
                        the time at which the financial institution is 
                        notified of, or otherwise becomes aware of, 
                        circumstances which lead to the reasonable 
                        belief that an unauthorized electronic fund 
                        transfer involving the consumer's account has 
                        been or may be effected;
                    ``(C) the financial institution that issued the 
                card or other means of access gave adequate notice to 
                the cardholder of the potential liability;
                    ``(D) such financial institution provided the 
                consumer with a description of a means by which the 
                institution may be notified of loss or theft of the 
                card or other means of access, which description may be 
                provided on the face or reverse side of the statement 
                required by section 906(c) or on a separate notice 
                accompanying such statement;
                    ``(E) the unauthorized electronic fund transfer 
                occurred before the financial institution was notified 
                of such unauthorized transfer, or that such 
                unauthorized transfer may occur as the result of loss, 
                theft, or otherwise; and
                    ``(F) the financial institution has provided a 
                method whereby the consumer to whom the card or other 
                means of access was issued can be identified as the 
                person authorized to use it.
            ``(2) Sufficiency of notice.--For purposes of paragraph 
        (1), the financial institution has been notified when such 
        steps have been taken as may be reasonably required in the 
        ordinary course of business to provide the financial 
        institution with the pertinent information, whether or not any 
        particular officer, employee, or agent of the financial 
        institution does in fact receive such information.''.

SEC. 3. AMENDMENTS TO DEFINITIONS.

    Section 903 of the Electronic Fund Transfer Act (15 U.S.C. 1693a) 
is amended--
            (1) in paragraph (1), by striking ``and received'' and all 
        that follows through ``services'' and inserting ``or renewed 
        and received such card or other means of access (including a 
        non-protected access card and a protected access card)'';
            (2) by redesignating paragraphs (9) through (11) as 
        paragraphs (11) through (13), respectively; and
            (3) by inserting after paragraph (8) the following new 
        paragraphs:
            ``(9) the term `protected access card' means an accepted 
        card or other means of access that requires use of a 
        personalized code or other unique identifier (other than a 
        signature) to initiate access to the account of a consumer;
            ``(10) the term `non-protected access card' means an 
        accepted card or other means of access that does not require 
        the use of a unique identifier to initiate access to the 
        account of a consumer, except that for purposes of this 
        paragraph, a signature shall not be considered to be a 
personalized code or other unique identifier;''.

SEC. 4. TIMING OF ERROR RESOLUTION.

    Section 908 of the Electronic Fund Transfer Act (15 U.S.C. 1693f) 
is amended--
            (1) in subsection (a)--
                    (A) by redesignating paragraphs (1) through (3) as 
                subparagraphs (A) through (C), respectively, and 
                indenting accordingly;
                    (B) by striking ``(a) If a financial'' and 
                inserting the following:
    ``(a) In General.--
            ``(1) Notice to institution.--If a financial'';
                    (C) in the first sentence, by striking ``ten 
                business'' and inserting ``5 business''; and
                    (D) in the second sentence, by striking ``The 
                financial'' and inserting the following:
            ``(2) Written confirmation of oral notification.--The 
        financial''; and
                    (E) by striking ``the previous sentence'' each 
                place it appears and inserting ``this paragraph'';
            (2) in subsection (c), by striking ``ten business'' and 
        inserting ``5 business''; and
            (3) in subsection (f)(1), by inserting before the semicolon 
        ``, including such unauthorized transfer by use of a protected 
        access card or a non-protected access card''.

SEC. 5. ISSUANCE OF CARDS.

    (a) Limitations on Issuance.--Section 911 of the Electronic Fund 
Transfer Act (15 U.S.C. 1693i) is amended--
            (1) in subsection (a)--
                    (A) by redesignating paragraphs (1) and (2) as 
                subparagraphs (A) and (B), respectively, and indenting 
                accordingly;
                    (B) by striking ``(a) No'' and inserting the 
                following:
    ``(a) Limitations on Issuance.--
            ``(1) In general.--No''; and
                    (C) by adding at the end the following:
            ``(2) Renewals; substitutions.--For purposes of paragraph 
        (1), a non-protected access card may only be issued in response 
        to a request or application for, or as a renewal of or 
        substitution for, a non-protected access card.'';
            (2) in subsection (b)--
                    (A) by striking ``(b) Notwithstanding'' and all 
                that follows through ``basis'' and inserting the 
                following:
    ``(b) Criteria for Issuance.--A person may only issue to a 
consumer'';
                    (B) by striking ``distribution'' each place it 
                appears and inserting ``issuance''; and
                    (C) by striking ``distribute'' and inserting 
                ``issue''.
            (3) in subsection (c), by striking ``(c) For'' and 
        inserting the following:
    ``(d) Definition.--For''; and
            (4) by inserting after subsection (b) the following new 
        subsection:
    ``(c) Disclosure of Non-Protected Access Capability.--In any case 
in which a non-protected access card is issued to a consumer, such 
issuance shall be accompanied by a clear and conspicuous printed 
disclosure designated as a warning that--
            ``(1) the card does not require a personalized code or 
        other unique identifier (other than a signature) to initiate 
        access to the consumer's account; and
            ``(2) loss or theft of the card could result in 
        unauthorized access to the consumer's account.''.
    (b) Form of Disclosure.--Section 904(b) of the Electronic Fund 
Transfer Act (15 U.S.C. 1693b(b)) is amended by striking ``section 
905'' and inserting ``sections 905 and 911''.

SEC. 6. NOTIFICATION TO CONSUMERS OF RESTITUTION POLICY.

    Section 905 of the Electronic Fund Transfer Act (15 U.S.C. 1693c) 
is amended--
            (1) in paragraph (2), by striking ``than an'' and inserting 
        ``that an'';
            (2) in paragraph (7), by striking ``. The financial 
        institution'' and all that follows through ``year'' and 
        inserting ``, which summary shall be transmitted to the 
        consumer thereafter not less frequently than annually'';
            (3) by redesignating paragraphs (8) and (9) as paragraphs 
        (9) and (10), respectively; and
            (4) by inserting after paragraph (7) the following new 
        paragraph:
            ``(8) the policy of the financial institution regarding 
        restitution to the consumer of any fees imposed by a person 
        other than the financial institution as a result of an 
        unauthorized electronic fund transfer, including returned check 
        fees, late charges, and other fees;''.
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