|BILL AS INTRODUCED||2007-2008|
Introduced by Representatives Kitzmiller of Montpelier and Obuchowski of Rockingham
Subject: Banking and insurance; credit cards; disclosure to merchants
Statement of purpose: This bill proposes to require that credit card companies disclose all fees and charges and the methods for calculating such amounts to merchant customers.
AN ACT RELATING TO CREDIT CARD MERCHANT FEES
It is hereby enacted by the General Assembly of the State of Vermont:
Sec. 1. SHORT TITLE
This bill may be referred to as the Vermont Credit Card Disclosure Act of 2008.
Sec. 2. LEGISLATIVE FINDINGS
(a) Use of credit and debit cards for consumer purchases has become ubiquitous in American society.
(b) Credit card companies use a complex fee structure, making it difficult for merchants and consumers to understand the true costs of transactions made with credit and debit cards.
(c) Failure of credit card companies to disclose charges and fees, the way in which those amounts are calculated, and in what circumstances certain charges and fees apply makes it difficult for merchants to make sound business decisions when deciding whether to accept a certain type of credit or debit card.
(d) Merchants should be entitled to full disclosure of the terms of merchant contracts by which they are bound.
Sec. 3. 9 V.S.A. § 4041 is designated and amended to read:
Subchapter 1. General Provisions
§ 4041. DEFINITIONS
As used in this chapter:
(1) As used herein, the term “person” shall include a natural person, a firm, an association, and a corporation, and any officer, employee, or agent thereof.
(2) “Acquiring bank” means a financial institution licensed to do business in this state providing merchant accounts.
(3) “Adequate notice of loss” shall be an actual notice of loss, theft, or unauthorized use of a credit card to a designated office or issuer which may be by mail, telephone, in person, or by some other means of communication commonly used and relied upon by the cardholder and card issuer.
(4) “Authorized use” means a use of a credit card which the cardholder has signed or has used or has authorized another to use for the purpose of obtaining money, property, labor, services, or payment of delinquent taxes on credit, and also the term includes a credit card issued in replacement or renewal of an accepted credit card.
(5) “Cardholder” means any person to whom a credit card is issued and any person who has agreed with the card issuer to pay obligations arising from the issuance of a credit card to another person.
(3)(6) “Card issuer”
or “issuing bank” means any person who issues a credit card.
(7) “Chargeback” means a credit or debit card transaction that is either billed back to a merchant or deducted from a merchant’s account.
(4)(8) “Credit card”
means any instrument, whether known as a credit card, credit plate, charge
plate, or any other name, issued with or without a fee by a card issuer,
which purports to evidence an undertaking to pay for property, labor, services,
or delinquent taxes paid, delivered, or rendered to or upon the order of
persons designated or otherwise authorized as bearers of such card, and
includes bank credit cards as defined in subsection 1301(b) issued
pursuant to section 14303 of Title 8, and includes the number assigned
to an instrument or device described in this subdivision even if the physical
instrument or device is not used or presented. (5)(9) “Accepted
credit card” means any credit card which the cardholder has signed or has used,
or authorized another to use, for the purpose of obtaining money, property,
labor, services, or payment of delinquent taxes on credit, and also the
term includes a credit card issued in replacement or renewal of an accepted
credit card. (6) “Unauthorized use” means a
use of a credit card to obtain money, property, labor, services or payment of
delinquent taxes by a person other than the cardholder who does not have
actual, implied or apparent authority for such use.
(10) “Debit card” means:
(A) Any instrument or device whether known as a debit card or electronic benefit transfer card or any other access instrument or device other than a check that is signed by the holder or other authorized signatory on the deposit account that draws monies from a deposit account in order to obtain money, goods, services, or anything else of value;
(B) Any stored value card, smart card, or other instrument or device that enables a person to obtain goods, services, or anything else of value through the use of value stored on the instrument or device; and
(C) The number assigned to an instrument or device described in subdivision (A) or (B) of this subdivision (10) even if the physical instrument or device is not used or presented.
(11) “Financial institution” means any bank, savings association, savings bank, credit union, or industrial loan company.
(12) “Interchange fee” means a fee that an acquiring bank pays to an issuing bank when a cardholder uses a credit or debit card as payment during a retail transaction.
(13) “Merchant” means a person or entity licensed to do business in this state which offers goods or services for sale in this state.
(14) “Merchant account” means a bank account that allows a merchant to accept credit card or debit card payments.
(7)(15) “Notice of
loss instructions” shall be a separate slip or card, or a provision clearly
printed in bold type in a cardholder agreement or accompanying material which
shall apprise cardholder of the potential liability for unauthorized use, shall
designate the address and telephone number of an office or offices of issuer to
which adequate notice of loss may be given and which shall contain a blank
space for the cardholder to insert his or her account number, which
space shall be identified to invite such insertion. (8) “Adequate notice of loss” shall
be an actual notice of loss or theft or of unauthorized use of the card to a
designated office or issuer which may be by mail, telephone, telegraph, or in
(16) “Unauthorized use” means a use of a credit card by a person other than the cardholder who does not have actual, implied, or apparent authority for such use to obtain money, property, labor, or services or to pay delinquent taxes.
Sec. 4. 9 V.S.A. §§ 4042–4045 are designated as:
Subchapter 3. Prohibited Use and Possession
Sec. 5. 9 V.S.A. chapter 105, subchapter 5 is added to read:
Subchapter 5. Merchant Charges And Fees
§ 4046. Merchant Access To Rules And Rates
(a) Whenever a contract authorizing a merchant to accept a credit card or debit card specifies that the merchant is bound by the rules of a financial institution, the contracting financial institution shall:
(1) Give the merchant access in this state to a complete paper copy of the rules referenced in the contract, either individually or through an acquiring bank;
(2) Notify the merchant when a referenced rule has been changed or a new rule added prior to the effective date of the new or revised contract; and
(3) Provide a copy of the new or modified rule.
(b) A contract authorizing a merchant to accept a credit card shall contain:
(1) The contracting financial institution’s complete schedule of interchange fees, credit card and debit card transaction rates, and any other fees that the financial institution charges to merchants; and
(2) An explanation of which rates apply to the merchant and the situations in which those rates apply.
(c) A contract authorizing a merchant to accept a credit card or debit card shall not require a merchant to agree not to disclose the contracting financial institution’s rules or rates as a condition of receiving access to the rules or rates.
§ 4047. PENALTIES
(a) If an issuing bank or credit card company fails to give a merchant access to its rules or rates as required by this section:
(1) The merchant shall not be liable for any chargeback or fees associated with its credit card or debit card transactions from the time the contract was executed until the rules and rates are provided; and
(2) The issuing bank or credit card company will be liable for a civil penalty of $10,000.00 per charge levied prior to providing the rules.
(b) Any merchant whose rights under this section have been violated may maintain a civil action for damages or equitable relief as provided for in this section.
§ 4048. SEVERABILITY
If any provision of this act is declared unconstitutional or invalid by the courts, the unconstitutional or invalid section or provision does not affect the validity of this act as a whole or any part of this act other than the provision declared unconstitutional or invalid.
The Vermont General Assembly
115 State Street