HB2432 98TH GENERAL ASSEMBLY

LRB098 09008 MGM 39143 b

98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB2432

Introduced , by Rep. Elizabeth Hernandez

SYNOPSIS AS INTRODUCED:

205 ILCS 616/10
205 ILCS 616/46 new

Amends the Electronic Fund Transfer Act. Provides that a person who sells or issues general use reloadable cards shall disclose, prior to sale or issuance of the card, any fees imposed by the issuer. Provides certain requirements for the disclosures. Makes other changes. Effective January 1, 2014.

A BILL FOR

AN ACT concerning regulation.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Electronic Fund Transfer Act is amended by changing Section 10 and by adding Section 46 as follows:

(205 ILCS 616/10)

Sec. 10. Definitions. For purposes of this Act, the words and phrases defined in this Section shall have the meanings ascribed to them unless the context requires otherwise. Whenever the terms "network" and "switch" are used, they shall be deemed interchangeable unless, from the context and facts, the intention is plain to apply only to one type of entity.

"Access device" means a card, code, or other means of access to an account, or any combination thereof, that may be used by a customer to initiate an electronic fund transfer at a terminal.

"Account" means a demand deposit, savings deposit, share, member, or other customer asset account held by a financial institution.

An "affiliate" of, or a person "affiliated" with, a specified person, means a person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the person specified.

"Commissioner" means the Secretary of Financial and Professional Regulation or a person authorized by the Secretary, the Division of Banking Act, or this Act to act in the Secretary's stead.

"Division" means the Division of Banking within the Department of Financial and Professional Regulation.

"Electronic fund transfer" means a transfer of funds, other than a transaction originated by check, draft, or similar paper instrument, that is initiated through a terminal for the purpose of ordering, instructing, or authorizing a financial institution to debit or credit an account.

"Financial institution" means a bank established under the laws of this or any other state or established under the laws of the United States, a savings and loan association or savings bank established under the laws of this or any other state or established under the laws of the United States, a credit union established under the laws of this or any other state or established under the laws of the United States, or a licensee under the Consumer Installment Loan Act or the Sales Finance Agency Act.

"General use reloadable card" means a card, code, or other access device that is:

(1) issued on a prepaid basis primarily for personal, family, or household purposes to a consumer in a specified amount in exchange for payment;

(2) issued under an agreement containing terms and conditions that permit funds to be added to the card, code, or other device after the initial purchase or issuance, including a temporary non-reloadable card issued solely in connection with a general use reloadable card, code, or other device;

(3) not marketed or labeled as a gift card or gift certificate; and

(4) redeemable upon presentation at multiple, unaffiliated merchants for goods or services, or usable at automated teller machines.

"Interchange transaction" means an electronic fund transfer that results in exchange of data and settlement of funds between 2 or more unaffiliated financial institutions.

"Issuer" means a person that issues a general use reloadable card or that person's agent with respect to the card.

"Marketed or labeled as a gift card or gift certificate" means directly or indirectly offering, advertising, or otherwise suggesting the potential use of a card, code, or other device as a gift for another person.

"Network" means an electronic information communication and processing system that processes interchange transactions.

"Person" means a natural person, corporation, unit of government or governmental subdivision or agency, trust, estate, partnership, cooperative, or association.

"Seller of goods and services" means a business entity other than a financial institution.

"Switch" means an electronic information and communication processing facility that processes interchange transactions on behalf of a network. This term does not include an electronic information and communication processing company (1) that is owned by a bank holding company or an affiliate of a bank holding company and used solely for transmissions among affiliates of the bank holding company or (2) to the extent that the facility, by virtue of a contractual relationship, is used solely for transmissions among affiliates of a bank holding company, regardless of whether the facility is an affiliate of the bank holding company or operates as a switch with respect to one or more networks under an independent contractual relationship.

"Terminal" means an electronic device through which a consumer may initiate an interchange transaction. This term does not include (1) a telephone, (2) an electronic device located in a personal residence, (3) a personal computer or other electronic device used primarily for personal, family, or household purposes, (4) an electronic device owned or operated by a seller of goods and services unless the device is connected either directly or indirectly to a financial institution and is operated in a manner that provides access to an account by means of a personal and confidential code or other security mechanism (other than signature), (5) an electronic device that is not accessible to persons other than employees of a financial institution or affiliate of a financial institution, or (6) an electronic device that is established by a financial institution on a proprietary basis that is identified as such and that cannot be accessed by customers of other financial institutions. The Commissioner may issue a written rule that excludes additional electronic devices from the definition of the term "terminal".

(Source: P.A. 96-1365, eff. 7-28-10.)

(205 ILCS 616/46 new)

Sec. 46. Disclosure requirements for general use reloadable cards.

(a) A person who sells or issues general use reloadable cards shall disclose, prior to sale or issuance of the card, any fees imposed by the issuer. The disclosures shall be in writing and may be provided in electronic form, subject to compliance with the consumer consent and other applicable provisions of the Electronic Signatures in Global and National Commerce Act (E–Sign Act) (15 U.S.C. 7001 et seq.). The disclosure may be made on or with other documents. For joint accounts, only one set of the required disclosures must be provided and may be given to any of the account holders.

(b) The disclosure required under subsection (a) of this Section shall provide information regarding fees charged under the following fee categories, as applicable:

(i) total cost of setup fees (activation and cost of card fees);

(ii) maintenance fees (service and inactivity fees);

(iii) fees to spend money (signature purchases, point of sale transactions involving a personal identification number, and bill pay fees);

(iv) fees to get money (cash advance, cash back at merchant, international conversion, ATM balance inquiry, and ATM withdrawal fees);

(v) fees to add money (reload and direct deposit fees);

(vi) fees to obtain information (audio response unit, audio response unit opt-out to live operator, and audio response unit balance inquiry fees); and

(vii) other related fees (such as cash out, negative balance, replacement card, rush replacement card delivery, reissuing an expired card, and denied transaction fees).

The disclosure must also indicate when third party fees may apply.

(c) Accurate disclosure of all applicable fees in substantially similar form to that provided in this Section shall constitute compliance with the disclosure requirements under subsection (a) of this Section. Categories for which no fee is charged may be indicated as "free" or may be omitted.

(d) The standard disclosure form shall be organized as follows:

(e) A card, code, or other access device is not a general use reloadable card merely because the issuer or processor is technically able to add functionality that would otherwise enable the card, code, or other access device to be reloaded.

(f) Compliance with the federal Electronic Fund Transfer Act and any regulations issued under that Act regarding general use reloadable card disclosures shall constitute compliance with this Section.

Section 99. Effective date. This Act takes effect January 1, 2014.