[Congressional Record Volume 141, Number 150 (Monday, September 25, 1995)]
[Senate]
[Pages S14203-S14204]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BENNETT:
  S. 1270. A bill to exempt stored value cards from the Electronic Fund 
Transfer Act, and for other purposes; to the Committee on Banking, 
Housing, and Urban Affairs.


            the exemption for stored value cards act of 1995

  Mr. BENNETT. Mr. President, I thank you for the opportunity to 
address this assembly today.
  We live in a time of great progress; a time when technology is 
growing exponentially. Just a few years ago, it would take an ordinary 
citizen days to send a document from Utah to Washington; today, thanks 
to the fax machine and cyberspace, it takes a matter of seconds. Not 
that long ago, in order to speak with constituents face to face, we 
would have no choice but to travel back to our States; now, due to 
satellite technology, we can participate in electronic town meetings 
and interact with voters 2,500 miles away.
  Technology also necessitates changes in society in order to deep up 
and reach maximum efficiency. For example, often when using the 
telephone today, you might run across an automated directory. If you 
are using a digital phone, there is no problem; you can conduct your 
business easily. If, however, you are using an analog line, you 

[[Page S 14204]]
might meet with some difficulty in concluding your affairs.
  So it is with Federal regulations. We find the need in today's world 
to guard society from potential abuses through the process of 
regulation. However, technology can make existing regulations obsolete, 
or at least uneconomical to enforce. As the world changes around us, we 
must be willing and able to adapt.
  The Electronic Fund Transfer Act, or EFTA, to which I am proposing 
changes today, regulates the use of debit cards and other so-called 
access devices to initiate electronic transfers to or from a consumer's 
deposit or other asset account. The EFTA imposes significant burdens on 
financial institutions that hold such accounts. For example, financial 
institutions must provide extensive disclosures to consumers before 
initial electronic fund transfers involving the account are made; they 
must provide periodic statements to consumers each month which detail 
every transfer made to or from an account; and they must provide 
receipts at electronic terminals for electronic fund transfers made by 
consumers.
  The EFTA is an important act, but one that requires change due to 
technological advancements. Therefore, I propose that we amend the EFTA 
to reflect the progress of the industry. This bill, entitled 
``Exemption for Stored Value Cards,'' modifies the definitions of 
``accepted card or other means of access'' and ``account'' to clarify 
that the regulatory burdens imposed under the EFTA do not apply to so-
called stored value cards. A stored value card is a card which can be 
used to pay for transactions by use of value which is stored on the 
card itself.
  Good examples of stored value cards include the Washington, DC metro 
fare-cards or cards which contain value that can be used at such 
devices as vending machines, parking meters, or bridge toll booths. 
When a stored value or prepaid card is used to pay for a transaction 
with value stored on the card itself, it does not access the consumer's 
account and typically does not utilize the systems which are used by 
financial institutions to generate receipt information, and other 
information needed to comply with the EFTA. As a result, it would be 
inappropriate to apply all of the EFTA regulatory requirements to such 
stored value cards. It is intended, however, that the EFTA would apply 
to such a card when the card is used to access the consumer's deposit, 
savings, or similar asset account to load value onto the card for use 
at such vending and other machines.

  In addition, application of the EFTA regulatory and procedural 
burdens to stored value cards would significantly impede the 
development of stored value programs, and in some instances may 
entirely preclude the development of such programs. Stored value card 
programs typically involve frequent, small dollar transactions with 
unsophisticated vending machines, parking meters, and similar 
equipment. Given the small dollar amount of these transactions, stored 
value card programs must be operated at a very low cost in order to be 
cost efficient for merchants, consumers, and card issuers alike. 
Applying the requirements of the EFTA to stored value card programs 
would significantly raise the cost of operating such programs and, in 
some instances, would make such programs economically unfeasible. This 
amendment also clarifies that the EFTA would not apply to value stored 
on other devices such as computers.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1270

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. EXEMPTION FOR STORED VALUE CARDS.

       Section 903 of the Electronic Fund Transfer Act (15 U.S.C. 
     1693a) is amended--
       (1) in paragraph (1)--
       (A) by striking ``(1) the term `accepted card or other 
     means of access' means a card'' and inserting the following:
       ``(1) the term `accepted card or other means of access' 
     means--
       ``(A) a card'';
       (B) by adding ``and'' after the semicolon at the end; and
       (C) by adding at the end the following new subparagraph:
       ``(B) does not include any card, device, or computer that 
     may be used by a person to pay for a transaction through the 
     use of value stored on, or assigned to, that card, device, or 
     computer;'' and
       (2) in paragraph (2)--
       (A) by striking ``(2) the term `account' means a demand'' 
     and inserting the following:
       ``(2) the term `account' means--
       ``(A) a demand'';
       (B) by adding ``and'' after the semicolon at the end; and
       (C) by adding at the end the following new subparagraph:
       ``(B) does not include any value that--
       ``(i) is stored on, or assigned to, a card, device, or 
     computer; and
       ``(ii) enables a person to pay for a transaction through 
     the use of that value;''.
                                 ______