[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 4041 Introduced in Senate (IS)]

111th CONGRESS
  2d Session
                                S. 4041

  To amend the Electronic Fund Transfer Act to provide protection for 
       consumers who have prepaid cards, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           December 17, 2010

Mr. Menendez (for himself, Mr. Durbin, and Mr. Merkley) 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 provide protection for 
       consumers who have prepaid cards, 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 ``Prepaid Card Consumer Protection Act 
of 2010''.

SEC. 2. DEFINITIONS.

    (a) Definition of ``Account''.--Section 903 of the Electronic Fund 
Transfer Act (15 U.S.C. 1693a) is amended by striking paragraph (2) and 
inserting the following:
            ``(2) the term `account'--
                    ``(A) means--
                            ``(i) a demand deposit, savings deposit, or 
                        other asset account (other than an occasional 
                        or incidental credit balance in an open end 
                        credit plan as defined in section 103(i) of 
                        this Act), as described in regulations of the 
                        Bureau, established primarily for personal, 
                        family, or household purposes, including a 
                        payroll card account, as defined by the Bureau 
                        by rule; and
                            ``(ii) a spending card account, as defined 
                        in section 924(a); and
                    ``(B) does not include an account held by a 
                financial institution pursuant to a bona fide trust 
                agreement;''.
    (b) Definition of ``Financial Institution''.--Section 903(9) of the 
Electronic Fund Transfer Act (15 U.S.C. 1693a(9)) is amended by 
striking ``holds an account'' and inserting ``provides or holds an 
account containing funds''.
    (c) Technical and Conforming Amendments.--Section 903 of the 
Electronic Fund Transfer Act (15 U.S.C. 1693a) is amended--
            (1) by redesignating paragraph (4) (relating to the Board 
        of Governors of the Federal Reserve System), as so designated 
        by section 1084(2)(A) of the Dodd-Frank Wall Street Reform and 
        Consumer Protection Act (Public Law 111-203; 124 Stat. 2081), 
        as paragraph (3); and
            (2) in paragraph (3), as so redesignated by paragraph (1) 
        of this subsection, by striking ``term `Bureau' means the 
        Bureau of Governors'' and inserting ``term `Board' means the 
        Board of Governors''.

SEC. 3. SPENDING CARD ACCOUNTS.

    (a) Spending Card Accounts.--The Electronic Fund Transfer Act (15 
U.S.C. 1693 et seq.) is amended--
            (1) by redesignating section 923 (15 U.S.C. 1693 note), 
        relating to the effective date of the Electronic Fund Transfer 
        Act, as so designated by section 1073 of the Dodd-Frank Wall 
        Street Reform and Consumer Protection Act (Public Law 111-203; 
        124 Stat. 2060), as section 925;
            (2) by redesignating section 922 (15 U.S.C. 1693r), 
        relating to exemptions for State regulation, as so designated 
        by section 1073 of the Dodd-Frank Wall Street Reform and 
        Consumer Protection Act (Public Law 111-203; 124 Stat. 2060), 
        as section 923; and
            (3) by inserting after section 923, as redesignated by 
        paragraph (2), the following:
``Sec. 924. Spending card accounts
    ``(a) Definition.--For purposes of this section, the term `spending 
card account'--
            ``(1) means an asset account, other than as defined in 
        subparagraph (A)(i) or (B) of section 903(2)--
                    ``(A) that is established by a consumer or on 
                behalf of a consumer;
                    ``(B) that contains the funds of a consumer;
                    ``(C) to which payments are to be made by a 
                consumer, or at the direction of a consumer;
                    ``(D) to which recurring electronic fund transfers 
                may be made, at the direction of a consumer; or
                    ``(E) from which payments may be made at the 
                direction of a consumer through the use of a card, 
                code, or device;
            ``(2) includes an asset account described in paragraph 
        (1)--
                    ``(A) that is operated or managed by a financial 
                institution, or any other person; and
                    ``(B) the funds of which are--
                            ``(i) pooled with the funds of a person 
                        other than the person who established the 
                        account; or
                            ``(ii) held in a name other than that of 
                        the person who established the account; and
            ``(3) does not include--
                    ``(A) a nonreloadable general-use prepaid card, as 
                defined in section 915(a)(2)(A), in an amount that does 
                not exceed $250;
                    ``(B) a general-use prepaid card, as defined in 
                section 915(a)(2)(A), that is solely associated with--
                            ``(i) a health plan to which section 105 of 
                        the Internal Revenue Code of 1986 applies;
                            ``(ii) a qualified transportation fringe, 
                        as defined in section 132(f) of the Internal 
                        Revenue Code of 1986;
                            ``(iii) a health savings account, as 
                        defined in section 223(d) of the Internal 
                        Revenue Code of 1986; or
                            ``(iv) any other healthcare benefit 
                        account, including a healthcare account 
                        relating to Medicare or Medicaid benefits;
                    ``(C) a gift certificate, as defined in section 
                915(a)(2)(B);
                    ``(D) a store gift card, as defined in section 
                915(a)(2)(C);
                    ``(E) an electronic promise, plastic card, or 
                payment code or device described in clause (i), (v), or 
                (vi) of section 915(a)(2)(D);
                    ``(F) a nonreloadable card labeled as a gift card 
                and marketed solely as a gift card; or
                    ``(G) a nonreloadable loyalty, rebate or 
                promotional card.
    ``(b) FDIC Insurance.--
            ``(1) Insurance required.--A financial institution may only 
        offer electronic fund transfer services in connection with a 
        spending card account if the account is insured under, and 
        complies with the requirements for pass-through deposit 
        insurance under, section 11 of the Federal Deposit Insurance 
        Act (12 U.S.C. 1821).
            ``(2) Transfer of funds.--Any person that accepts funds in 
        connection with an electronic fund transfer to a spending card 
        account shall promptly, and in no event later than 24 hours 
        after the person accepts the funds--
                    ``(A) transfer such funds to an account at an 
                insured depository institution (as defined in section 
                3(c) of the Federal Deposit Insurance Act (12 U.S.C. 
                1813(c))); or
                    ``(B) credit the spending card account an amount 
                equal to the amount of such funds.
    ``(c) Alternative to Periodic Statement.--
            ``(1) Periodic statement not required.--In the case of an 
        electronic fund transfer from a spending card account, a 
        financial institution shall not be subject to the requirement 
        under section 906(c) to provide a periodic statement to a 
        consumer, if--
                    ``(A) the financial institution provides to the 
                consumer--
                            ``(i) access to the account balance of the 
                        consumer--
                                    ``(I) through a readily available 
                                telephone line;
                                    ``(II) through the Internet; and
                                    ``(III) at an electronic terminal 
                                or other device that allows the 
                                consumer to make a balance inquiry, by 
                                providing balance information or, 
                                routinely or upon request, on a receipt 
                                provided at the electronic terminal at 
                                the time of an electronic fund 
                                transfer;
                            ``(ii) notice of the means by which the 
                        consumer may access the account balance of the 
                        consumer, including any telephone number;
                            ``(iii) in response to an oral or written 
                        request of the consumer, a written record of 
                        the account transactions of the consumer during 
                        the 2-year period ending on the date of the 
                        request that includes the information required 
                        to be provided to the consumer under section 
                        906(c);
                            ``(iv) an electronic record, such as a 
                        record available on the Internet, of the 
                        account transactions of the consumer during the 
                        60-day period ending on the date on which the 
                        consumer accesses the electronic record that 
                        includes the information required to be 
                        provided to the consumer under section 906(c);
                            ``(v) with at least the same frequency as a 
                        written periodic statement that would otherwise 
                        be required under section 906, notification by 
                        email of the availability of an electronic 
                        history or an electronic periodic statement, 
                        unless the consumer has declined to provide an 
                        email address;
                            ``(vi) the option to receive a written 
                        periodic statement and notice of such option;
                            ``(vii) annual notice of the error 
                        resolution procedure for the spending card 
                        account, as prescribed in regulations of the 
                        Bureau; and
                            ``(viii) any other transaction information 
                        that the financial institution elects to make 
                        available and that the consumer elects to 
                        receive, such as messages or alerts concerning 
                        balance levels or account activity; or
                    ``(B) the consumer does not provide a valid address 
                to the card issuer.
            ``(2) Fees prohibited.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), a financial institution may not 
                charge a fee for any service provided under paragraph 
                (1).
                    ``(B) Fee for written periodic statement.--A 
                financial institution may charge a fee of not more than 
                $1 for each written periodic statement provided under 
                paragraph (1)(A)(vi).
            ``(3) No election by consumer.--If a consumer does not 
        provide an email address to a financial institution and does 
        not elect to receive written periodic statements under 
        paragraph (1)(A)(vi), the financial institution shall provide a 
        written statement to the consumer at least once each year, at 
        no cost to the consumer, that contains the date, source, and 
        amount of each transaction made or fee charged, together with 
        such additional information as the Bureau may require.
    ``(d) Limitations on Liability.--For purposes of section 909(a), 
reimbursement need not be made to a consumer for a loss relating to a 
spending card account that a financial institution establishes would 
not have occurred but for the failure of the consumer to report any 
unauthorized electronic fund transfer or account error--
            ``(1) not later than 60 days after the earlier of--
                    ``(A) the receipt by the consumer of a written 
                account record under subsection (c)(1) that includes 
                the unauthorized electronic fund transfer or account 
                error; or
                    ``(B) the date on which account information that 
                includes the unauthorized electronic fund transfer or 
                account error is provided to or accessed by the 
                consumer under subsection (c); or
            ``(2) in extenuating circumstances, such as extended travel 
        or hospitalization, within a longer time that is reasonable 
        under the circumstances.
    ``(e) Fees.--
            ``(1) Fees prohibited.--Except as provided in paragraph 
        (2), a financial institution may not charge in connection with 
        a spending card account--
                    ``(A) an annual fee;
                    ``(B) an overdraft fee, including a fee for 
                shortage or nonsufficient funds, or any other fee for a 
                transaction processed for amounts exceeding the account 
                balance;
                    ``(C) a usage fee for use at the point of sale;
                    ``(D) a fee for a declined transaction;
                    ``(E) a fee for the use of an electronic terminal 
                that is in the network of the issuer;
                    ``(F) an inactivity or dormancy fee;
                    ``(G) a fee for a balance inquiry or access to 
                transaction information;
                    ``(H) a fee for an inquiry to customer service;
                    ``(I) a finance charge or other fee imposed in 
                connection with an extension of credit;
                    ``(J) an account closing fee or a fee to obtain the 
                remaining balance in the spending card account; or
                    ``(K) a fee for any activity not described in 
                paragraph (2).
            ``(2) Fees permitted.--A financial institution may charge 
        in connection with a spending card account--
                    ``(A) a fee for a replacement card--
                            ``(i) of not more than $5 for the first 
                        replacement card requested by a consumer during 
                        any 12-month period; and
                            ``(ii) that is in addition to the 
                        replacement card described in clause (i);
                    ``(B) a fee for expedited delivery of a replacement 
                card;
                    ``(C) a periodic fee, not more frequently than 
                monthly;
                    ``(D) a reload fee, or any other fee for adding 
                value to the spending card account, if the financial 
                institution provides an alternate method for adding 
                value to the spending card account without a fee;
                    ``(E) a fee for a transfer from the spending card 
                account to another account;
                    ``(F) a fee for bill payment by check;
                    ``(G) a fee for a withdrawal by the consumer from 
                an electronic terminal that is--
                            ``(i) located outside the United States;
                            ``(ii) not in the network of the financial 
                        institution, including a fee to cover the costs 
                        of any charge to the financial institution by 
                        the owner of the electronic terminal relating 
                        to the use of the electronic terminal by the 
                        consumer;
                    ``(H) a fee for a purchase or a withdrawal in a 
                foreign currency; and
                    ``(I) an activation, initiation, or enrollment fee.
            ``(3) Disclosure of fee information.--
                    ``(A) Disclosure required.--Each financial 
                institution that offers a spending card account shall 
                provide to a consumer--
                            ``(i) together with any application, offer, 
                        or solicitation for a spending card account--
                                    ``(I) a table of any fees that may 
                                be charged in connection with the 
                                spending card account that--
                                            ``(aa) can be easily 
                                        understood by the consumer;
                                            ``(bb) is conspicuously 
                                        displayed to the consumer 
                                        before purchase; and
                                            ``(cc) includes, at a 
                                        minimum, the amount and a 
                                        description of each fee that 
                                        may be charged by the financial 
                                        institution under paragraph 
                                        (2); and
                                    ``(II) an estimate of the average 
                                total monthly cost to a typical 
                                consumer for using the spending card 
                                account;
                            ``(ii) on the card or other means of 
                        access, a toll-free telephone number and 
                        website at which the consumer may access a 
                        clear and conspicuous disclosure of the fees 
                        that may be charged in connection with the 
                        spending card account; and
                            ``(iii) a wallet-sized summary of any fees 
                        that may be charged in connection with the 
                        spending card account and a toll-free telephone 
                        number for customer service relating to the 
                        spending card account.
                    ``(B) Regulations.--Not later than 9 months after 
                the date of enactment of the Prepaid Card Consumer 
                Protection Act of 2010, the Bureau shall establish, by 
                regulation--
                            ``(i) the headings, content, and format of 
                        the fee table, estimate, and wallet-sized fee 
                        summary required under subparagraph (A); and
                            ``(ii) a profile of the typical consumer 
                        for purposes of subparagraph (A)(i)(II).''.
    (b) Technical and Conforming Amendments.--
            (1) Written periodic statements.--Section 906(c) of the 
        Electronic Fund Transfer Act (15 U.S.C. 1693d(c)) is amended, 
        in the first sentence of the matter preceding paragraph (1), by 
        striking ``A financial'' and inserting ``Except as provided in 
        section 923(c), a financial''.
            (2) Error resolution.--Section 908(a) of the Electronic 
        Fund Transfer Act (15 U.S.C. 1693f(a)) is amended by striking 
        ``or notification pursuant to section 906(b)'' and inserting 
        ``, notification pursuant to section 906(b), or written or 
        electronic documentation pursuant to section 923(c)''.

SEC. 4. EFFECTIVE DATE.

    This Act, and the amendments made by this Act, shall take effect on 
the date that is 6 months after the date of enactment of this Act.
                                 <all>