II 109th CONGRESS 2d Session S. 3978 IN THE SENATE OF THE UNITED STATES September 28, 2006 Mrs. Clinton introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To provide consumer protections for lost or stolen check cards and debit cards similar to those provided with respect to credit cards, and for other purposes.

1.

Short title

This Act may be cited as the Debit and Check Card Consumer Protection Act of 2006.

2.

Findings

Congress finds that— (1)debit and check card use has experienced double digit growth for longer than a decade, and more than 80 percent of American consumer households now posses a debit or check card; (2)between 2001 and 2003, consumers made 42,500,000,000 transactions with debit cards, eclipsing credit card transactions by 2,300,000,000; (3)as of 2003, debit cards accounted for 1/3 of all purchases in stores; (4)in addition to the rise in debit and check card use, debit and check card fraud increasingly challenges American consumers; (5)in 2005, debit card and ATM fraud accounted for losses of $2,750,000,000; (6)despite that growth, statutory debit and check card consumer liability protections remain substandard, as compared to credit cards; (7)the debit and check card industry has, in some instances, instituted liability protections that often exceed the requirements set forth under the provisions of law; and (8)the law should be changed to ensure a continued level of liability protection.

3.

Cap on debit card liability

Section 909(a) of the Electronic Funds Transfer Act (15 U.S.C. 1693g(a)) is amended— (1)by striking Notwithstanding the foregoing and all that follows through whichever is less.; and (2)by striking meana and inserting means.

4.

Debit card error resolution

Section 908(f) of the Electronic Funds Transfer Act (15 U.S.C. 1693f(f)) is amended— (1)by redesignating paragraphs (6) and (7) as paragraphs (7) and (8), respectively; and (2)by inserting after paragraph (5) the following: (6)a charge for goods or services not accepted by the consumer or the designee thereof, or not delivered to the consumer or the designee thereof, in accordance with the agreement made at the time of a transaction; .

5.

Consumer rights

Section 908 of the Electronic Funds Transfer Act (15 U.S.C. 1693f) is amended by adding at the end the following: (g)

Rights of consumers with respect to accepted cards

(1)

In general

Subject to the limitation contained in paragraph (2), the issuer of an accepted card to a consumer shall be subject to all claims (other than tort claims) and defenses arising out of any transaction in which the accepted card is used as a method of payment, if— (A)the consumer has made a good faith attempt to obtain satisfactory resolution of a disagreement or problem relative to the transaction from the person honoring the accepted card; (B)the amount of the initial transaction exceeds $50; and (C)the transaction was initiated by the consumer in the same State as the mailing address previously provided by the consumer, or within 100 miles from such address, except that the limitations set forth in subparagraphs (A) and (B) with respect to the right of a consumer to assert claims and defenses against the issuer of the card shall not be applicable to any transaction in which the person honoring the accepted card— (i)is the same person as the card issuer; (ii)is controlled by the card issuer; (iii)is under direct or indirect common control with the card issuer; (iv)is a franchised dealer in the products or services of the card issuer; or (v)has obtained the order for such transaction through a mail solicitation made by or participated in by the card issuer in which the cardholder is solicited to enter into such transaction by using the accepted card issued by the card issuer. (2)

Limitation

The amount of claims or defenses asserted by the cardholder under this subsection may not exceed the amount paid by the cardholder with respect to the subject transaction at the time at which the cardholder first notifies the card issuer or the person honoring the accepted card of such claim or defense. .

6.

Regulations

Not later than 90 days after the date of enactment of this Act, the Board of Governors of the Federal Reserve System shall issue final regulations to carry out the amendments made by this Act, which regulations shall be consistent, to the extent practicable, with regulations issued to carry out similar provisions under the Truth in Lending Act.