II

105TH CONGRESS

1ST SESSION S. 1203

To amend the Electronic Fund Transfer Act to limit consumer liability

for the unauthorized use of a debit card, and for other purposes.

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 23, 1997

Mr. D’AMATO (for himself, Mr. BENNETT, Mr. DODD, and Mr. BRYAN) 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 limit

consumer liability for the unauthorized use of a debit

card, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Debit Card Consumer

5 Protection Act of 1997’’.
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1 SEC. 2. CONSUMER LIABILITY FOR UNAUTHORIZED DEBIT

2 CARD TRANSACTIONS.

3 Section 909 of the Electronic Fund Transfer Act (15

4 U.S.C. 1693g) is amended by striking subsection (a) and

5 inserting the following:

6 ‘‘(a) LIMITATION ON LIABILITY.—

7 ‘‘(1) IN GENERAL.—A consumer shall be liable

8 for an unauthorized electronic fund transfer only

9 if—

10 ‘‘(A) the card or other means of access

11 used to make the unauthorized electronic fund

12 transfer was an accepted card or other means

13 of access;

14 ‘‘(B) the liability, including any overdraft

15 or other fee imposed by the financial institution

16 in connection with or as a result of the unau17 thorized electronic fund transfer, is not in ex18 cess of the lesser of—

19 ‘‘(i) $50; or

20 ‘‘(ii) the amount of money or value of

21 property or services obtained in such unau22 thorized electronic fund transfer prior to

23 the time at which the financial institution

24 is notified of, or otherwise becomes aware

25 of, circumstances which lead to the reason26 able belief that an unauthorized electronic
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1 fund transfer involving the consumer’s ac2 count has been or may be effected;

3 ‘‘(C) the financial institution that issued

4 the card or other means of access gave ade5 quate notice to the cardholder of the potential

6 liability;

7 ‘‘(D) such financial institution provided

8 the consumer with a description of a means by

9 which the institution may be notified of loss or

10 theft of the card or other means of access,

11 which description may be provided on the face

12 or reverse side of the statement required by sec13 tion 906(c) or on a separate notice accompany14 ing such statement;

15 ‘‘(E) the unauthorized electronic fund

16 transfer occurred before the financial institution

17 was notified of such unauthorized transfer, or

18 that such unauthorized transfer may occur as

19 the result of loss, theft, or otherwise; and

20 ‘‘(F) the financial institution has provided

21 a method whereby the consumer to whom the

22 card or other means of access was issued can

23 be identified as the person authorized to use it.

24 ‘‘(2) SUFFICIENCY OF NOTICE.—For purposes

25 of paragraph (1), the financial institution has been
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1 notified when such steps have been taken as may be

2 reasonably required in the ordinary course of busi3 ness to provide the financial institution with the per4 tinent information, whether or not any particular of5 ficer, employee, or agent of the financial institution

6 does in fact receive such information.’’.

7 SEC. 3. AMENDMENTS TO DEFINITIONS.

8 Section 903 of the Electronic Fund Transfer Act (15

9 U.S.C. 1693a) is amended—

10 (1) in paragraph (1), by striking ‘‘and received’’

11 and all that follows through ‘‘services’’ and inserting

12 ‘‘or renewed and received such card or other means

13 of access (including a non-protected access card and

14 a protected access card)’’;

15 (2) by redesignating paragraphs (9) through

16 (11) as paragraphs (11) through (13), respectively;

17 and

18 (3) by inserting after paragraph (8) the follow19 ing new paragraphs:

20 ‘‘(9) the term ‘protected access card’ means an

21 accepted card or other means of access that requires

22 use of a personalized code or other unique identifier

23 (other than a signature) to initiate access to the ac24 count of a consumer;
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1 ‘‘(10) the term ‘non-protected access card’

2 means an accepted card or other means of access

3 that does not require the use of a unique identifier

4 to initiate access to the account of a consumer, ex5 cept that for purposes of this paragraph, a signature

6 shall not be considered to be a personalized code or

7 other unique identifier;’’.

8 SEC. 4. TIMING OF ERROR RESOLUTION.

9 Section 908 of the Electronic Fund Transfer Act (15

10 U.S.C. 1693f) is amended—

11 (1) in subsection (a)—

12 (A) by redesignating paragraphs (1)

13 through (3) as subparagraphs (A) through (C),

14 respectively, and indenting accordingly;

15 (B) by striking ‘‘(a) If a financial’’ and in16 serting the following:

17 ‘‘(a) IN GENERAL.—

18 ‘‘(1) NOTICE TO INSTITUTION.—If a financial’’;

19 (C) in the first sentence, by striking ‘‘ten

20 business’’ and inserting ‘‘5 business’’; and

21 (D) in the second sentence, by striking

22 ‘‘The financial’’ and inserting the following:

23 ‘‘(2) WRITTEN CONFIRMATION OF ORAL NOTI24 FICATION.—The financial’’; and
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1 (E) by striking ‘‘the previous sentence’’

2 each place it appears and inserting ‘‘this para3 graph’’;

4 (2) in subsection (c), by striking ‘‘ten business’’

5 and inserting ‘‘5 business’’; and

6 (3) in subsection (f)(1), by inserting before the

7 semicolon ‘‘, including such unauthorized transfer by

8 use of a protected access card or a non-protected ac9 cess card’’.

10 SEC. 5. ISSUANCE OF CARDS.

11 (a) LIMITATIONS ON ISSUANCE.—Section 911 of the

12 Electronic Fund Transfer Act (15 U.S.C. 1693i) is

13 amended—

14 (1) in subsection (a)—

15 (A) by redesignating paragraphs (1) and

16 (2) as subparagraphs (A) and (B), respectively,

17 and indenting accordingly;

18 (B) by striking ‘‘(a) No’’ and inserting the

19 following:

20 ‘‘(a) LIMITATIONS ON ISSUANCE.—

21 ‘‘(1) IN GENERAL.—No’’; and

22 (C) by adding at the end the following:

23 ‘‘(2) RENEWALS; SUBSTITUTIONS.—For pur24 poses of paragraph (1), a non-protected access card

25 may only be issued in response to a request or appli-
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1 cation for, or as a renewal of or substitution for, a

2 non-protected access card.’’;

3 (2) in subsection (b)—

4 (A) by striking ‘‘(b) Notwithstanding’’ and

5 all that follows through ‘‘basis’’ and inserting

6 the following:

7 ‘‘(b) CRITERIA FOR ISSUANCE.—A person may only

8 issue to a consumer’’;

9 (B) by striking ‘‘distribution’’ each place it

10 appears and inserting ‘‘issuance’’; and

11 (C) by striking ‘‘distribute’’ and inserting

12 ‘‘issue’’.

13 (3) in subsection (c), by striking ‘‘(c) For’’ and

14 inserting the following:

15 ‘‘(d) DEFINITION.—For’’; and

16 (4) by inserting after subsection (b) the follow17 ing new subsection:

18 ‘‘(c) DISCLOSURE OF NON-PROTECTED ACCESS CA19 PABILITY.—In any case in which a non-protected access

20 card is issued to a consumer, such issuance shall be ac21 companied by a clear and conspicuous printed disclosure

22 designated as a warning that—

23 ‘‘(1) the card does not require a personalized

24 code or other unique identifier (other than a signa-
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1 ture) to initiate access to the consumer’s account;

2 and

3 ‘‘(2) loss or theft of the card could result in un4 authorized access to the consumer’s account.’’.

5 (b) FORM OF DISCLOSURE.—Section 904(b) of the

6 Electronic Fund Transfer Act (15 U.S.C. 1693b(b)) is

7 amended by striking ‘‘section 905’’ and inserting ‘‘sections

8 905 and 911’’.

9 SEC. 6. NOTIFICATION TO CONSUMERS OF RESTITUTION

10 POLICY.

11 Section 905 of the Electronic Fund Transfer Act (15

12 U.S.C. 1693c) is amended—

13 (1) in paragraph (2), by striking ‘‘than an’’ and

14 inserting ‘‘that an’’;

15 (2) in paragraph (7), by striking ‘‘. The finan16 cial institution’’ and all that follows through ‘‘year’’

17 and inserting ‘‘, which summary shall be transmitted

18 to the consumer thereafter not less frequently than

19 annually’’;

20 (3) by redesignating paragraphs (8) and (9) as

21 paragraphs (9) and (10), respectively; and

22 (4) by inserting after paragraph (7) the follow23 ing new paragraph:

24 ‘‘(8) the policy of the financial institution re25 garding restitution to the consumer of any fees im-
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1 posed by a person other than the financial institu2 tion as a result of an unauthorized electronic fund

3 transfer, including returned check fees, late charges,

4 and other fees;’’.

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