[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 2030 Introduced in Senate (IS)]

112th CONGRESS
  1st Session
                                S. 2030

  To provide protection for consumers who have prepaid cards, and for 
                            other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           December 17, 2011

 Mr. Menendez introduced the following bill; which was read twice and 
    referred to the Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
  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 2011''.

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)), as 
                        described in regulations of the Bureau, 
                        established primarily for personal, family, or 
                        household purposes, as defined by the Bureau, 
                        by rule; and
                            ``(ii) a spending 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 ``manages, 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 striking 
        ``term `Bureau' means the Bureau of Governors'' and inserting 
        ``term `Board' means the Board of Governors''.

SEC. 3. SPENDING ACCOUNTS.

    (a) Spending 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 so redesignated, the 
        following:
``Sec. 924. Spending accounts
    ``(a) Definition.--For purposes of this section, the term `spending 
account'--
            ``(1) means a deposit 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 at an insured depository 
                institution (as defined in section 3(c) of the Federal 
                Deposit Insurance Act (12 U.S.C. 1813(c));
                    ``(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 a deposit 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.--Spending accounts shall be 
        structured to provide and maintain separate deposit insurance 
        coverage for the funds of each consumer under the applicable 
        regulations of the Federal Deposit Insurance Corporation.
            ``(2) Transfer of funds.--Any person that receives funds in 
        connection with an electronic fund transfer to a spending 
        account shall promptly, and in no event later than 1 business 
        day after the funds are activated--
                    ``(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 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 account, a financial 
        institution shall not be subject to the requirement under 
        section 906(c) to provide a periodic statement to a consumer, 
        if the financial institution provides to the consumer--
                    ``(A) access to the account balance of the 
                consumer--
                            ``(i) through a readily available telephone 
                        line;
                            ``(ii) through the Internet;
                            ``(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; and
                            ``(iv) through text messaging;
                    ``(B) notice of the means by which the consumer may 
                access the account balance of the consumer, including 
                any telephone number;
                    ``(C) 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);
                    ``(D) an electronic record, such as a record 
                available on the Internet, of the account transactions 
                of the consumer during the 2-year 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);
                    ``(E) 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;
                    ``(F) the option to receive a written periodic 
                statement, either a one-time paper statement or 
                continuous regular monthly paper statements with a 
                single request, and clear and conspicuous notice of 
                such option at the time of enrollment and on the 
                website of the financial institution;
                    ``(G) annual notice of the error resolution 
                procedure for the spending account, as prescribed in 
                regulations of the Bureau; and
                    ``(H) 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 other balance or transaction 
                information.
            ``(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 the consumer has not 
        elected to receive written periodic or annual statements, has 
        not elected to receive another regular form of transaction 
        information that the Bureau has determined, by rule, to be 
        equivalent to periodic statements, and has not accessed the 
        account online in the preceding 12-month period, the financial 
        institution shall provide an annual notice to the consumer at 
        least annually of the means by which the consumer may access 
        transaction information and the option to enroll in written 
        periodic or annual statements.
    ``(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 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 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 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) any fee during periods of inactivity or 
                dormancy, including a periodic fee charged after more 
                than 6 months of inactivity;
                    ``(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 account;
                    ``(K) a fee for any activity not described in 
                paragraph (2);
                    ``(L) any fee prohibited by applicable State law; 
                or
                    ``(M) any fee of any kind that would cause the 
                balance to become negative.
            ``(2) Fees permitted.--A financial institution may charge 
        in connection with a spending 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, provided that no periodic fee may be assessed 
                if there has been no deposit or transaction activity in 
                the account during the preceding 3 months;
                    ``(D) a reload fee, or any other fee for adding 
                value to the spending account, if the financial 
                institution provides a reasonable alternate method for 
                adding value to the spending account without a fee;
                    ``(E) a fee for a transfer from the spending 
                account to another account;
                    ``(F) a fee for bill payment;
                    ``(G) a fee for a withdrawal by the consumer from 
                an electronic terminal that is--
                            ``(i) located outside the United States; or
                            ``(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 account shall 
                provide to a consumer--
                            ``(i) together with any application, offer, 
                        or solicitation for a spending account--
                                    ``(I) a table of any fees that may 
                                be charged in connection with the 
                                spending account that--
                                            ``(aa) can be easily 
                                        understood by the consumer;
                                            ``(bb) is clearly and 
                                        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 
                                account, based on a profile of the 
                                typical consumer established by the 
                                Bureau;
                            ``(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 account; and
                            ``(iii) a wallet-sized summary of any fees 
                        that may be charged in connection with the 
                        spending account and a toll-free telephone 
                        number for customer service relating to the 
                        spending account.
                    ``(B) Rules.--Not later than 9 months after the 
                date of enactment of the Prepaid Card Consumer 
                Protection Act of 2011, the Bureau shall establish, by 
                rule, the headings, content, and format of the fee 
                table, estimate, and wallet-sized fee summary required 
                under subparagraph (A).
    ``(f) Credit Features.--
            ``(1) In general.--No person may offer or provide a 
        spending account that has a credit feature or that can be 
        linked to a credit account that is automatically repaid from 
        the spending account.
            ``(2) Exceptions.--Nothing in this subsection prohibits--
                    ``(A) a consumer from making an electronic fund 
                transfer from a spending account to pay a credit 
                account or from setting up preauthorized electronic 
                fund transfers to pay a credit account; or
                    ``(B) a financial institution from offsetting an 
                inadvertent negative balance in a spending account 
                against the next deposit to that account, provided that 
                the consumer is not charged a fee or finance charge.
    ``(g) Closure of Dormant Accounts.--A financial institution or 
other person that provides, holds, or manages a spending account shall 
close the account and refund any remaining funds to the consumer--
            ``(1) once the account has been inactive for 12 months, or 
        such other period as the Bureau shall establish, by regulation; 
        and
            ``(2) upon request of the consumer to the financial 
        institution or other person using an easily accessible method 
        of contact, that the account be closed.''.
    (b) Study.--The Bureau shall establish an implementation plan and 
timeline for a prepaid card research study to be completed not later 
than 1 year after the date of enactment of this Act, to determine what, 
if any, differences there are for both the short- and long-term 
economic well being of consumers at different income levels who use 
spending accounts versus those who use traditional bank accounts for 
their primary means of making financial transactions.
    (c) 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 924(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 924(c)''.

SEC. 4. EFFECTIVE DATE.

    This Act and the amendments made by this Act shall become effective 
9 months after the date of enactment of this Act.
                                 <all>