[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1825 Introduced in House (IH)]
107th CONGRESS
1st Session
H. R. 1825
To amend the Electronic Fund Transfer Act to safeguard consumers in
connection with the utilization of certain debit cards.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 14, 2001
Mr. Barrett of Wisconsin introduced the following bill; which was
referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
To amend the Electronic Fund Transfer Act to safeguard consumers in
connection with the utilization of certain debit cards.
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 ``Consumer Debit Card Protection
Act''.
SEC. 2. CONGRESSIONAL FINDINGS.
The Congress finds the following:
(1) There has been a recent trend toward issuing debit
cards which can be used like credit cards, largely as
replacements for debit cards which could be used only with a
personal identification number at automated teller machines and
a limited number of retail establishments.
(2) Many times, debit cards that can be used like credit
cards have been issued without providing adequate disclosure
that--
(A) the card may be used to initiate an electronic
fund transfer without the use of a personal
identification number or similar code or means of
access; and
(B) even though the card may carry a logo
associated with credit cards, the card is not a credit
card and the consumer may bear a significantly larger
liability for an unauthorized transaction involving
such debit card than would be the case for a similar
unauthorized transaction involving a credit card.
(3) Thus, millions of Americans are--
(A) receiving cards in a form they didn't request;
and
(B) are carrying such cards around with them--
(i) without realizing that the cards have
an expanded capability without the protections
against unauthorized transfers which are
typical of cards issued to make cash
withdrawals from automated teller machines; and
(ii) without fully appreciating the risks
associated with such cards.
(4) Economic stimulation would be enhanced and competition
among the various financial institutions and other companies
which issue debit cards would be strengthened by the informed
use of debit cards by consumers.
SEC. 3. DEFINITIONS.
Section 903 of the Electronic Fund Transfer Act (15 U.S.C. 1693a)
is amended--
(1) by striking ``and'' at the end of paragraph (10);
(2) by striking the period at the end of paragraph (11) and
inserting a semicolon; and
(3) by adding at the end the following new paragraphs:
``(12) ATM card.--The term `ATM card' means any card issued
by a financial institution for use in initiating electronic
fund transfers at automated teller machines and other
electronic terminals which requires a code or other unique form
of identification (other than a signature) in order to access
the account of the consumer; and
``(13) Check card.--The term `check card' means any card
issued by a financial institution for use in initiating
electronic fund transfers from the account of a consumer which
does not require the protection of a code or other means of
access that uniquely identifies the consumer (and for purposes
of this paragraph, a signature shall not be treated as a means
of access which uniquely identifies the consumer).''.
SEC. 4. CHECK CARD REQUIREMENT.
Section 911 of the Electronic Fund Transfer Act (15 U.S.C. 1693i)
is amended by adding at the end the following new subsection:
``(e) Check Card Requirement.--Any check card issued by any
financial institution to any consumer shall bear the legend `Check
Card' in a prominent typeface and in a conspicuous place on the face of
the check card.''.
SEC. 5. DUAL-USE DEBIT CARD.
(a) Consumer Liability.--
(1) In general.--Section 909 of the Electronic Fund
Transfer Act (15 U.S.C. 1693g) is amended--
(A) by redesignating subsections (b) through (e) as
subsections (d) through (g), respectively;
(B) in subsection (a)--
(i) by redesignating paragraphs (1) and (2)
as subparagraphs (A) and (B), respectively, and
indenting appropriately;
(ii) by inserting ``Cards Necessitating
Unique Identifier.--
``(1) In general.--'' after ``(a)'';
(iii) by striking ``other means of access
can be identified as the person authorized to
use it, such as by signature, photograph,'' and
inserting ``other means of access can be
identified as the person authorized to use it
by a unique identifier, such as a photograph,
retina scan,''; and
(iv) by striking ``Notwithstanding the
foregoing,'' and inserting the following:
``(2) Notification.--Notwithstanding paragraph (1),''; and
(C) by inserting before subsection (d), as so
designated by this section, the following new
subsections:
``(b) Cards Not Necessitating Unique Identifier.--A consumer shall
be liable for an unauthorized electronic fund transfer only if--
``(1) the liability is not in excess of $50;
``(2) the unauthorized electronic fund transfer is
initiated by the use of a card that has been properly issued to
a consumer other than the person making the unauthorized
transfer as a means of access to the account of that consumer
for the purpose of initiating an electronic fund transfer;
``(3) the unauthorized electronic fund transfer occurs
before the card issuer has been notified that an unauthorized
use of the card has occurred or may occur as the result of
loss, theft, or otherwise; and
``(4) such unauthorized electronic fund transfer did not
require the use of a code or other unique identifier (other
than a signature), such as a photograph, fingerprint, or retina
scan.
``(c) Notice of Liability and Responsibility To Report Loss of
Card, Code, or Other Means of Access.--No consumer shall be liable
under this title for any unauthorized electronic fund transfer unless
the consumer has received in a timely manner the notice required under
section 905(a)(1), and any subsequent notice required under section
905(b) with regard to any change in the information which is the
subject of the notice required under section 905(a)(1).''.
(2) Conforming amendment.--Section 905(a)(1) of the
Electronic Fund Transfer Act (15 U.S.C. 1693c(a)(1)) is amended
to read as follows:
``(1) the liability of the consumer for any unauthorized
electronic fund transfer and the requirement for promptly
reporting any loss, theft, or unauthorized use of a card, code,
or other means of access in order to limit the liability of the
consumer for any such unauthorized transfer;''.
(b) Validation Requirement for Dual-Use Debit Cards.--
(1) In general.--Section 911 of the Electronic Fund
Transfer Act (15 U.S.C. 1693i) is amended--
(A) by redesignating subsection (c) as subsection
(d); and
(B) by inserting after subsection (b) the following
new subsection:
``(c) Validation Requirement.--No person may issue a card described
in subsection (a), the use of which to initiate an electronic fund
transfer does not require the use of a code or other unique identifier
other than a signature (such as a fingerprint or retina scan), unless--
``(1) the requirements of paragraphs (1) through (4) of
subsection (b) are met; and
``(2) the issuer has provided to the consumer a clear and
conspicuous disclosure that use of the card may not require the
use of such code or other unique identifier.''.
(2) Technical and conforming amendment.--Section 911(d) of
the Electronic Fund Transfer Act (15 U.S.C. 1993i(d)) (as
redesignated by subsection (a)(1) of this section) is amended
by striking ``For the purpose of subsection (b)'' and inserting
``For purposes of subsections (b) and (c)''.
SEC. 6. MANAGEMENT PRACTICES RELATING TO THE ISSUANCE OF CHECK CARDS.
Section 911 of the Electronic Fund Transfer Act (15 U.S.C. 1693i)
is amended by inserting after subsection (e) (as added by section 4 of
this Act) the following new subsection:
``(f) Preference of Consumer.--
``(1) In general.--If--
``(A) in response to a request or application by a
consumer for an ATM card, a financial institution
issues a check card; and
``(B) the consumer refuses to accept a check card,
the issuer shall promptly issue such consumer an ATM card.
``(2) Definitions.--For purposes of paragraph (1), the
following definitions shall apply:''.
SEC. 7. TOLL-FREE TELEPHONE NUMBER FOR REPORTING LOST OR STOLEN CHECK
CARDS OR UNAUTHORIZED WITHDRAWALS.
(a) In General.--Section 906 of the Electronic Fund Transfer Act
(15 U.S.C. 1693d) is amended by adding at the end the following new
subsection:
``(g) 24-Hour, Toll-Free, Notification System.--A financial
institution which issues a check card to any consumer shall establish
and maintain a 24-hour notification system, including a toll-free
telephone number at which personnel are continuously accessible, which
permits the consumer to immediately report the loss or theft of the
check card or any unauthorized use or suspected unauthorized use of the
card.''.
(b) Technical and Conforming Amendment.--Section 906(c)(4) of the
Electronic Fund Transfer Act (15 U.S.C. 1693d(c)(4)) is amended by
inserting after the period at the end the following new sentence: ``In
the case of a periodic statement for an account from which withdrawals
may be initiated by a check card (as defined in subsection (g)(2)), the
notice required under this paragraph shall appear in a conspicuous and
prominent location on the periodic statement under a heading indicating
that the telephone number is a 24-hour, toll-free telephone number and
the notice shall inform the consumer of the importance of promptly
reporting any loss or theft of such card or any unauthorized use or
suspected unauthorized use of the card.''.
SEC. 8. PROHIBITION ON FEES FOR INSUFFICIENT FUNDS IN CASE OF CERTAIN
UNAUTHORIZED TRANSFERS.
Section 909 of the Electronic Fund Transfer Act (15 U.S.C. 1693g)
(as amended by section 5 of this Act) is amended by adding at the end
the following new subsection:
``(h) Prohibition on Certain Fees.--
``(1) In general.--A consumer shall not be liable for any
fee imposed by a financial institution for insufficient funds
in the account of the consumer if the lack of sufficient funds
in such account is due to an unauthorized electronic fund
transfer (from such account) initiated by the use of a card
without the protection of a code or other means of access which
uniquely identifies the consumer.
``(2) Prompt recredit of prior fees.--Upon receiving notice
from a consumer of an alleged unauthorized transaction, a
financial institution shall promptly credit the account of a
consumer for any fee described in paragraph (1) which was
imposed before such notice was received.''.
SEC. 9. PROVISIONAL RECREDIT OF UNAUTHORIZED TRANSFERS AFTER 5 BUSINESS
DAYS.
Section 908(c) of the Electronic Fund Transfer Act (15 U.S.C.
1693f(c)) is amended by striking ``ten business days'' and inserting
``5 business days''.
SEC. 10. EFFECTIVE DATE.
The amendments made by this Act shall apply after the end of the 1-
year period beginning on the date of the enactment of this Act.
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