II

105TH CONGRESS

1ST SESSION S. 1154

To amend the Electronic Fund Transfer Act to clarify consumer liability

for unauthorized transactions involving debit cards that can be used

like credit cards, and for other purposes.

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 9, 1997

Mr. REED 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 clarify

consumer liability for unauthorized transactions involving

debit cards that can be used like credit cards, 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 ‘‘Dual-Use Debit Card5 holder Protection Act of 1997’’.
2

•S 1154 IS

1 SEC. 2. CONSUMER LIABILITY FOR CERTAIN UNAUTHOR2 IZED USES OF A DUAL-USE DEBIT CARD.

3 (a) IN GENERAL.—Section 909 of the Electronic

4 Fund Transfer Act (15 U.S.C. 1693g) is amended—

5 (1) by redesignating subsections (b) through (e)

6 as subsections (d) through (g), respectively;

7 (2) in subsection (a)—

8 (A) by redesignating paragraphs (1) and

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

10 and indenting appropriately;

11 (B) by inserting ‘‘CARDS NECESSITATING

12 UNIQUE IDENTIFIER.—

13 ‘‘(1) IN GENERAL.—’’ after ‘‘(a)’’;

14 (C) by striking ‘‘other meana of access can

15 be identified as the person authorized to use it,

16 such as by signature, photograph,’’ and insert17 ing ‘‘other means of access can be identified as

18 the person authorized to use it by a unique

19 identifier, such as a photograph, retina scan,’’;

20 and

21 (D) by striking ‘‘Notwithstanding the fore22 going,’’ and inserting the following:

23 ‘‘(2) NOTIFICATION.—Notwithstanding para24 graph (1),’’;
3

•S 1154 IS

1 (3) by inserting before subsection (d), as so

2 designated by this section, the following new sub3 sections:

4 ‘‘(b) CARDS NOT NECESSITATING UNIQUE IDENTI5 FIER.—A consumer shall be liable for an unauthorized

6 electronic fund transfer only if—

7 ‘‘(1) the liability is not in excess of $50;

8 ‘‘(2) the unauthorized electronic fund transfer

9 is initiated by the use of a card that has been prop10 erly issued to a consumer other than the person

11 making the unauthorized transfer as a means of ac12 cess to the account of that consumer for the purpose

13 of initiating an electronic fund transfer;

14 ‘‘(3) the unauthorized electronic fund transfer

15 occurs before the card issuer has been notified that

16 an unauthorized use of the card has occurred or may

17 occur as the result of loss, theft, or otherwise; and

18 ‘‘(4) such unauthorized electronic fund transfer

19 did not require the use of a code or other unique

20 identifier (other than a signature), such as a photo21 graph, fingerprint, or retina scan.

22 ‘‘(c) NOTICE OF LIABILITY AND RESPONSIBILITY TO

23 REPORT LOSS OF CARD, CODE, OR OTHER MEANS OF AC24 CESS.—No consumer shall be liable under this title for any

25 unauthorized electronic fund transfer unless the consumer
4

•S 1154 IS

1 has received in a timely manner the notice required under

2 section 905(a)(1), and any subsequent notice required

3 under section 905(b) with regard to any change in the

4 information which is the subject of the notice required

5 under section 905(a)(1).’’.

6 (b) CONFORMING AMENDMENT.—Section 905(a)(1)

7 of the Electronic Fund Transfer Act (15 U.S.C.

8 1693c(a)(1)) is amended to read as follows:

9 ‘‘(1) the liability of the consumer for any unau10 thorized electronic fund transfer and the require11 ment for promptly reporting any loss, theft, or unau12 thorized use of a card, code, or other means of ac13 cess in order to limit the liability of the consumer

14 for any such unauthorized transfer;’’.

15 SEC. 3. VALIDATION REQUIREMENT FOR DUAL-USE DEBIT

16 CARDS.

17 (a) IN GENERAL.—Section 911 of the Electronic

18 Fund Transfer Act (15 U.S.C. 1693i) is amended—

19 (1) by redesignating subsection (c) as sub20 section (d); and

21 (2) by inserting after subsection (b) the follow22 ing new subsection:

23 ‘‘(c) VALIDATION REQUIREMENT.—No person may

24 issue a card described in subsection (a), the use of which

25 to initiate an electronic fund transfer does not require the
5

•S 1154 IS

1 use of a code or other unique identifier other than a signa2 ture (such as a fingerprint or retina scan), unless—

3 ‘‘(1) the requirements of paragraphs (1)

4 through (4) of subsection (b) are met; and

5 ‘‘(2) the issuer has provided to the consumer a

6 clear and conspicuous disclosure that use of the card

7 may not require the use of such code or other unique

8 identifier.’’.

9 (b) TECHNICAL AND CONFORMING AMENDMENT.—

10 Section 911(d) of the Electronic Fund Transfer Act (15

11 U.S.C. 1993i(d)) (as redesignated by subsection (a)(1) of

12 this section) is amended by striking ‘‘For the purpose of

13 subsection (b)’’ and inserting ‘‘For purposes of sub14 sections (b) and (c)’’.

Æ