I
105TH CONGRESS
1ST SESSION
H. R. 2319
To amend the Electronic Fund Transfer Act to safeguard consumers in
connection with the utilization of certain debit cards.
IN THE HOUSE OF REPRESENTATIVES
JULY 31, 1997
Mr. BARRETT of Wisconsin (for himself, Mr. FRANK of Massachusetts, Mr.
VENTO, Mr. LAFALCE, Mr. GUTIERREZ, Mr. HINCHEY, Ms. CARSON, Mr.
KIND of Wisconsin, Mr. KLECZKA, Mr. MCHUGH, Mr. TRAFICANT, and
Mr. MCHALE) introduced the following bill; which was referred to the
Committee on Banking and Financial Services
A BILL
To amend the Electronic Fund Transfer Act to safeguard
consumers in connection with the utilization of certain
debit cards.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Consumer Debit Card
Protection Act’’.
SEC. 2. CONGRESSIONAL FINDINGS.
The Congress finds the following:
(1) There has been a recent trend toward issu-
ing debit cards which can be used like credit cards,
largely as replacements for debit cards which could
be used only with a personal identification number
at automated teller machines and a limited number
of retail establishments.
(2) According to industry analysts, as many as
1,300,000 new debit cards which can be used like
credit cards are issued each month.
(3) If current trends continue, debit cards that
can be used like credit cards will soon rival the pop-
ularity of credit cards and some banking experts
predict that more than 2⁄3 of the households in the
United States will have such a card by the year
2000.
(4) Many times, debit cards that can be used
like credit cards have been issued without providing
adequate disclosure that—
(A) the card may be used to initiate an
electronic fund transfer without the use of a
personal identification number or similar code
or means of access; and
(B) even though the card may carry a logo
associated with credit cards, the card is not a
credit card and the consumer may bear a sig-
nificantly larger liability for an unauthorized
transaction involving such debit card than
would be the case for a similar unauthorized
transaction involving a credit card.
(5) Thus, millions of Americans are—
(A) receiving cards in a form they didn’t
request; and
(B) are carrying such cards around with
them—
(i) without realizing that the cards
have an expanded capability without the
protections against unauthorized transfers
which are typical of cards issued to make
cash withdrawals from automated teller
machines; and
(ii) without fully appreciating the
risks associated with such cards.
(5) Economic stimulation would be enhanced
and competition among the various financial institu-
tions and other companies which issue debit cards
would be strengthened by the informed use of debit
cards by consumers.
SEC. 3. DEBIT CARD CONSUMER PROTECTION.
(a) ISSUANCE OF DEBIT CARDS.—Section 911 of the
Electronic Fund Transfer Act (15 U.S.C. 1693i) is
amended by adding at the end the following new sub-
sections:
‘‘(d) WARNING TO CONSUMER.—
‘‘(1) IN GENERAL.—If, in response to a request
or application by a consumer for a card for use in
initiating electronic fund transfers at automated tell-
er machines and other electronic terminals which re-
quire a code or other unique form of identification
in order to access the account of the consumer, a fi-
nancial institution issues a card which can be used
to initiate electronic fund transfers from the account
of the consumer without the protection of a code or
other means of access which uniquely identifies the
consumer, the issuer of such card shall include a
statement in bold type in a prominent and conspicu-
ous location on such card, or on a notice accompany-
ing the card, which warns the consumer that such
card can be used without a code or means of access
which uniquely identifies the consumer and protects
the consumer from unauthorized transfers.
‘‘(2) REPLACEMENT
CARDS.—Paragraph (1)
shall not apply with respect to a card issued as a re-
placement for, or in renewal of, a card previously is-
sued to the consumer which can be used to initiate
electronic fund transfers from the account of the
consumer without the protection of a code or other
means of access which uniquely identifies the
consumer.
‘‘(3) SIGNATURE NOT TREATED AS MEANS OF
ACCESS WHICH UNIQUELY IDENTIFIES CONSUMER.—
A signature shall not be treated as a means of ac-
cess which uniquely identifies the consumer for pur-
poses of this section.
‘‘(e) PREFERENCE OF CONSUMER.—If—
‘‘(1) in response to a request or application by
a consumer for a card for use in initiating electronic
fund transfers at automated teller machines and
other electronic terminals which requires a code or
other unique form of identification in order to access
the account of the consumer, a financial institution
issues a card which can be used to initiate electronic
fund transfers from the account of the consumer
without the protection of a code or other means of
access which uniquely identifies the consumer; and
‘‘(2) the consumer refuses to accept the card as
issued,
the issuer shall promptly issue such consumer a card
which requires a code or other unique form of identifica-
tion in order to access the account of the consumer.’’.
(b) LIABILITY OF CONSUMER FOR UNAUTHORIZED
TRANSFERS.—
(1) CONSUMER LIABILITY LIMITED TO $50.—
Section 909(a) of the Electronic Fund Transfer Act
(15 U.S.C. 1693g(a)) is amended by striking the pe-
nultimate sentence and the last sentence.
(2) CONSUMER NOT LIABLE IF THE ONLY FORM
OF IDENTIFICATION REQUIRED IS A SIGNATURE.—
The 1st sentence of section 909(a) of the Electronic
Fund Transfer Act (15 U.S.C. 1693g(a)) is amend-
ed by striking ‘‘signature, photograph,’’ and insert-
ing ‘‘photograph’’.
(c) PROVISIONAL RECREDIT PROVISIONS.—
(1) PROVISIONAL RECREDIT AFTER 3 DAYS.—
Section 908(c) of the Electronic Fund Transfer Act
(15 U.S.C. 1693f(c)) is amended by striking ‘‘ten
business days’’ and inserting ‘‘3 business days’’.
(2) PROVISIONAL
RECREDIT
REQUIRED
UPON
NOTICE OF ERROR INVOLVING TRANSACTIONS INITI-
ATED WITHOUT CODE OR UNIQUE ACCESS.—
(A) IN GENERAL.—Section 908(c) of the
Electronic Fund Transfer Act (as amended by
paragraph (1) of this subsection) is amended—
(i) by striking ‘‘(c) If a financial insti-
tution’’ and inserting ‘‘(c) PROVISIONAL
RECREDIT IN CASE OF ERROR.—
‘‘(1) IN GENERAL.—If a financial institution’’;
and
(ii) by adding at the end the following
new paragraph:
‘‘(2) PROVISIONAL RECREDIT REQUIRED UPON
NOTICE OF ERROR INVOLVING TRANSACTIONS INITI-
ATED
WITHOUT
CODE
OR
UNIQUE
ACCESS.—Not-
withstanding any other provision of this section, if a
financial institution receives notice of an error in-
volving an electronic fund transfer initiated by the
use of a card without a code or means of access
which uniquely identifies the consumer—
‘‘(A) the financial institution shall provi-
sionally recredit the consumer’s account for the
amount alleged to be in error, subject to section
909, including interest where applicable, before
the end of the 3-business-day period beginning
on the date the institution receives such notice;
‘‘(B) the institution shall complete an in-
vestigation and make a determination of wheth-
er an error has occurred before the end of the
45-day period beginning on such date; and
‘‘(C) the consumer shall have full use of
the funds provisionally recredited until such de-
termination is made.’’.
(B) TECHNICAL AND CONFORMING AMEND-
MENT.—The last sentence of section 908(a) is
amended by striking ‘‘subsection (c), nor shall
the financial institution be’’ and inserting ‘‘sub-
section (c) until such written confirmation is re-
ceived, and the financial institution shall not
be’’.
(d) REQUIREMENT RELATING
TO CONSUMER IN-
QUIRIES AND NOTICES.—Section 906(c)(4) of the Elec-
tronic Fund Transfer Act (15 U.S.C. 1693d(c)(4)) is
amended by striking ‘‘the address and telephone number’’
and all that follows through the 1st period and inserting
‘‘the address and telephone number at which the financial
institution can be contacted directly by the consumer for
purposes of notifying the institution of an error (including
an unauthorized transaction) with regard to the consum-
er’s account, for purposes of notifying the institution of
the loss or theft of a card, code, or other means of access
to such account, or for purposes of making any inquiry
with regard to the statement or the account. The informa-
tion provided under this paragraph shall include a detailed
description of the procedures required to be followed by
the consumer in providing any such notice, any require-
ment that any such notice be in writing, any applicable
time limits for providing any such notice and the con-
sequences of any failure by the consumer to meet any such
time limit, and any other information the Board may re-
quire, by regulation, in order to ensure that the rights of
the consumer under this title are fully protected.’’.
(e) DISCLOSURES REQUIRED AS PRECONDITION FOR
CONSUMER
LIABILITY
FOR
UNAUTHORIZED
TRANS-
FERS.—The 1st sentence of section 909(a) of the Elec-
tronic Fund Transfer Act (15 U.S.C. 1693g(a)) (as
amended by subsection (b)(2) of this section) is amend-
ed—
(1) by striking ‘‘means of access and if the is-
suer’’ and inserting ‘‘means of access, if the issuer’’;
and
(2) by inserting ‘‘, if, in the most recent state-
ment of account, such issuer has provided the
consumer with the information required under sec-
tion 906(c)(4), and if, in the case of an unauthor-
ized transfer initiated by the use of a card without
the protection of a code or other means of access
which uniquely identifies the consumer, the issuer
complied with the requirements of section 911(d)(1)
at the time such card (or any card for which such
card is a replacement) was issued to the consumer’’
before the period at the end of such sentence.
(f) PROHIBITION
ON
FEES
FOR
INSUFFICIENT
FUNDS IN CASE OF CERTAIN UNAUTHORIZED TRANS-
FERS.—Section 909 of the Electronic Fund Transfer Act
(15 U.S.C. 1693g) is amended by adding at the end the
following new subsection:
‘‘(f) PROHIBITION ON CERTAIN FEES.—
‘‘(1) IN GENERAL.—A consumer shall not be
liable for any fee imposed by a financial institution
for insufficient funds in the account of the consumer
if the lack of sufficient funds in such account is due
to an unauthorized electronic fund transfer (from
such account) initiated by the use of a card without
the protection of a code or other means of access
which uniquely identifies the consumer.
‘‘(2) PROMPT
RECREDIT
OF
PRIOR
FEES.—
Upon receiving notice from a consumer of an alleged
unauthorized transaction, a financial institution
shall promptly credit the account of a consumer for
any fee described in paragraph (1) which was im-
posed before such notice was received.’’.
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