Protection for consumers who have government benefit cards

(a)

Government payment accounts included in definition of account

Section 903 of the Electronic Fund Transfer Act (15 U.S.C. 1693a) is amended— (1)in paragraph (2), by inserting and includes a government payment account, before but; (2)by redesignating paragraphs (9) and (10) as paragraphs (10) and (11), respectively; and (3)by inserting after paragraph (8) the following:

(9)the term government payment account means an account that is directly or indirectly established through a government agency and to which electronic fund transfers are made by or on behalf of a government agency on a recurring basis;

(b)

Elimination of exemption for government electronic benefit transfer systems

(1)

In general

Section 904(d) of such Act (15 U.S.C. 1693b(d)) is amended by striking paragraph (2) and redesignating paragraph (3) as paragraph (2). (2)

Conforming amendments

(A)Section 905(a)(10)(A) of such Act (15 U.S.C. 1693c(a)(10)(A)) is amended by striking 903(d)(3)(D)(i) and inserting 903(d)(2)(D)(i). (B)Section 910(d) of such Act (15 U.S.C. 1693h(d)) is amended by striking 903(d)(3)(B)(i) each place it appears and inserting 903(d)(2)(B)(i). (c)

Consumer protection

The Electronic Fund Transfer Act (15 U.S.C. 1693–1693r) is amended by adding at the end the following:

922.

Government payment accounts

(a)

In general

A financial institution shall not offer a government payment account except in compliance with this section. (b)

Consumer choice

An electronic fund transfer on behalf of a consumer may not be made automatically to a government payment account, unless— (1)the consumer has first been offered and has declined the choice of direct deposit to an existing account chosen by the consumer; (2)the consumer has, when offered the choice of direct deposit to an existing account, been provided a clear and conspicuous list of the types and amounts of all fees and charges associated with the government payment account; and (3)the consumer has the opportunity, in case of hardship, to opt out of electronic transfer of payments to the consumer and elect to receive payments in the form of a check. (c)

Access to account balance and transaction history

(1)A financial institution shall provide the means for the consumer to access the balance of a government payment account through a telephone line, online, and at a terminal (such as by providing balance information, routinely or on request, on a screen or on a receipt from an automated teller machine). (2)A financial institution shall either provide periodic statements pursuant to section 906(c), or make available to a consumer at a consumer’s option all of the following without a fee, except for the fee permitted in subparagraph (E): (A)A written history of the consumer’s account transactions that is provided promptly in response to an oral or written request and that is available for transactions at least 24-months preceding the date of the request by the consumer. (B)An electronic history of the consumer’s account transactions, such as through an Internet Web site, that covers at least 60 days preceding the date the consumer electronically accesses the account. (C)An electronic periodic statement. (D)Electronic mail notification of the availability of an electronic history or an electronic periodic statement at least once each period, unless the consumer has declined to provide an electronic mail address. (E)The choice of receiving a written periodic statement upon payment of a nominal fee, not to exceed $1 per statement. (3)A history of account transactions provided under subparagraphs (A) and (B) of paragraph (1) of this subsection shall include the information required by section 906(c). (d)

Fees

(1)

In general

A fee or charge may not be assessed on a government payment account except as authorized by this section. (2)

Prohibited fees

A fee or charge may not be charged on a government payment account for any of the following: (A)The first withdrawal from an in-network automated teller machine and the first withdrawal from a bank teller, after each deposit. (B)An application. (C)Participation, whether on a one-time or periodic basis. (D)An overdraft, including a shortage of funds or a transaction processed for an amount exceeding the account balance. (E)A purchase. (F)A declined transaction. (G)Inactivity. (H)An inquiry, or balance or transaction information, at an automated teller machine or through the Internet or an automated system. (I)Customer service. (J)An ad hoc request for a statement. (K)An extension of credit. (L)1 replacement card each year. (M)Anything for which a fee is not permitted by or under paragraph (3). (3)

Permitted fees

(A)

Nominal fee for written periodic statements

The consumer may be charged a nominal fee not to exceed $1 for written periodic statements if the fee is designed solely to cover the costs of printing and mailing the statements, and if other account information is made available in accordance with this section. (B)

Transaction fees

Subject to subparagraph (C), a consumer may be charged a fee for only the following transactions in connection with a government payment account: (i)The second or any subsequent withdrawal from an in-network automated teller machine and the second or any subsequent withdrawal from a bank teller, after each deposit. (ii)A surcharge imposed by a non-network automated teller machine in compliance with section 904(d)(3). (iii)A transfer to another account. (iv)Bill payment. (v)A replacement card after the first one each year. (vi)Expedited delivery of a replacement card. (vii)International automated teller machine withdrawal. (viii)A purchase or withdrawal in an international currency. (C)

Authority to permit other fees

The Board may by regulation authorize other permissible fees for specific services beyond ordinary use of the account. (e)

Disclosures

(1)

In general

A financial institution shall disclose the following: (A)

Means to obtain account balance

The means by which the consumer may obtain information without a fee concerning the account balance, including a telephone number and Web site. (B)

Written account history

A summary of the consumer’s right to receive a written account history on request and other means to obtain transaction information. (C)

Fee information

(i)Any fee or charge associated with the account shall be disclosed in a prominent location on or in conjunction with any application or solicitation, or other applicable document, and in the form of a table with headings, content, and format substantially similar to the tables required pursuant to section 127(c)(1)(A) of the Truth in Lending Act and regulations under that section. (ii)The card or device used to access the account shall display a toll-free number and Web site at which a clear and conspicuous list of fees and charges may be obtained. (iii)The initial disclosure of fees and charges shall include a wallet-sized summary of the fees and charges, the Web site where fee information can be found, and the telephone number for customer service. (2)

Modified requirements

The following requirements shall apply to financial institutions that do not furnish periodic statements for the transfers referred to in subsection (c): (A)

Error resolution

The financial institution shall provide a notice to consumers concerning error resolution as prescribed in regulations of the Board. (B)

Limitations on liability

For purposes of section 909(a), the 60-day period for reporting an unauthorized transfer that appears on a periodic statement shall begin with transmittal of a written account history or other account information, provided to or accessed by the consumer under subsection (c) of this section, in which the unauthorized transfer is first reflected. (C)

Error resolution

If a financial institution receives oral or written notice of an error from the consumer within 60 days after the consumer, under subsection (c) of this section, obtains a written account history or other account information in which the error is first reflected, the financial institution shall comply with section 908. (f)

FDIC insurance

A financial institution shall not offer electronic fund transfer services in connection with a government payment account unless the account complies with requirements of the Federal Deposit Insurance Corporation for the provision of insurance by the Federal Deposit Insurance Corporation to the consumer on either a direct or pass-through basis. (g)

Standard state contracts

The Secretary of the Treasury, in consultation with the Secretary of Labor and the Secretary of Health and Human Services, shall promulgate a request for proposals from financial institutions for a standard contract into which a State or local government agency may enter for government payment account services in compliance with this section. (h)

Definition of financial institution

In this section, the term financial institution means any provider of a government payment account.

(d)

Effective date

(1)

In general

Except as provided in paragraph (2), the amendments made by this section shall take effect 1 year after the date of the enactment of this Act. (2)

Inapplicability to services provided under contracts entered into before enactment

The amendments made by this section shall not apply with respect to the provision of goods or services under a contract entered into before the date of the enactment of this Act.