Consumer Debit Card Protection Act

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 issuing 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 popularity 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 significantly 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 institutions 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 subsections:
    ``(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 teller machines and 
        other electronic terminals which require 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, the issuer of 
        such card shall include a statement in bold type in a prominent 
        and conspicuous location on such card, or on a notice 
        accompanying 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 replacement for, or in 
        renewal of, a card previously issued 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 access which uniquely identifies the consumer for 
        purposes 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 identification 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 penultimate 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 
        amended by striking ``signature, photograph,'' and inserting 
        ``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 initiated 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 
                        institution'' 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 initiated without code or unique 
        access.--Notwithstanding any other provision of this section, 
        if a financial institution receives notice of an error 
        involving 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 provisionally 
                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 
                investigation and make a determination of whether 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 determination is 
                made.''.
                    (B) Technical and conforming amendment.--The last 
                sentence of section 908(a) is amended by striking 
                ``subsection (c), nor shall the financial institution 
                be'' and inserting ``subsection (c) until such written 
                confirmation is received, and the financial institution 
                shall not be''.
    (d) Requirement Relating to Consumer Inquiries and Notices.--
Section 906(c)(4) of the Electronic 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 consumer'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 information 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 requirement that any such notice be in writing, any applicable time 
limits for providing any such notice and the consequences of any 
failure by the consumer to meet any such time limit, and any other 
information the Board may require, 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 Transfers.--The 1st sentence of section 909(a) of the 
Electronic Fund Transfer Act (15 U.S.C. 1693g(a)) (as amended by 
subsection (b)(2) of this section) is amended--
            (1) by striking ``means of access and if the issuer'' and 
        inserting ``means of access, if the issuer''; and
            (2) by inserting ``, if, in the most recent statement of 
        account, such issuer has provided the consumer with the 
        information required under section 906(c)(4), and if, in the 
        case of an unauthorized 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 Transfers.--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 
        imposed before such notice was received.''.

Summary: Consumer Debit Card Protection Act - Amends the Electronic Fund Transfer Act with respect to a financial institution which issues electronic fund transfer cards for consumer accounts without a means of unique individual identification.  Requires such an institution to include on the card a prominent and conspicuous consumer protection warning that the card can be used without a code or unique identifier.  Provides that, if a consumer applies for a card requiring a code or other unique identifier, the institution issues a card without such an identifier, and the consumer refuses to accept it, the institution shall promptly issue the consumer a card which does require such a code or identifier to access a consumer account.  Declares that a signature shall not be treated as a unique identifier. 
Repeals guidelines governing consumer reimbursement and maximum liability for losses caused by the consumer's failure to timely report unauthorized electronic fund transfers.  Limits consumer liability to a $50 maximum in all circumstances. 
Excepts a consumer from liability for unauthorized electronic fund transfers if the only required form of identification is a signature. 
Reduces from ten to three business days the period within which a financial institution may provide a provisional recredit of a consumer's account upon timely notice of error.  Mandates provisional recredit of a consumer's account, including interest, upon receipt of notice of an error involving an electronic fund transfer initiated by the use of a card without a means of access which uniquely identifies the consumer. 
Modifies the loss or theft of card notification information required on monthly account statements as a precondition for consumer liability for unauthorized transfers. 
Precludes consumer liability for fees for insufficient funds due to an unauthorized electronic fund transfer executed by the use of a card lacking a protective device to serve as a unique identifier of the rightful consumer.  Requires prompt recrediting of the consumer's account for any fee imposed before receipt of the consumer's notice of an unauthorized electronic fund transfer.