NY State Senate Bill 2009-S3435

Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 06, 2010	referred to consumer protection
Mar 19, 2009	referred to consumer protection

2009-S3435 (ACTIVE) - Details

See other versions of this Bill:: A4994 ,; S7311 ,
Current Committee:: Senate Consumer Protection
Law Section:: General Business Law
Laws Affected:: Add §518-b, Gen Bus L

2009-S3435 (ACTIVE) - Summary

Relates to merchants access to credit card rules and rates; provides that issuing banks or credit card companies provide copies of rules and rates to merchants.

2009-S3435 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S3435

 TITLE OF BILL :
An act to amend the general business law, in relation to merchants
access to credit card rules and rates


 PURPOSE :
To require banks and other financial institutions which issue credit
and debit cards to make a complete copy of their rules available to
merchants and to require banks which process credit and debit card
transactions for merchants to disclose the complete schedule of
interchange fees, transaction rates and other fees imposed upon
merchants.

 SUMMARY OF PROVISIONS :
The bill provides that credit card associations, issuing banks and
acquirers facilitating the acceptance of credit or debit card
transactions shall:

* Give the merchant access to a complete copy of the credit or debit
card rules;

* Notify the merchant of any change to the rules prior to the
effective date and provide merchant with a copy of the new or modified
rule; and

* Provide a notice identifying which rates apply and in what
situations are the rates imposed.

 JUSTIFICATION :
Credit and debit card fees have increased precipitously over the past
ten years even though interest rates and fraud have gone down, and
transaction volume is up. In a competitive marketplace, when costs are
down, rates should fall. However, the lack of a competitive
marketplace has caused interchange fees to grow exponentially, both
with rates and volume increasing.

Credit card companies, along with other financial institutions issuing
credit and debit cards, force merchants to enter into agreements under
which the rates, rules and fees charged to the merchants are not fully
disclosed. Further, the agreements allow the credit and debit card
issuers to change the provisions of the contract at any time and
notify the merchant after the fact. Very often, the merchant is only
given access to a summary of the credit and/or debit card terms, but
never receives a full copy of the agreement.

The agreements frequently contain a provision preventing the merchant
from disclosing or discussing the rates and fees in its contracts with
third parties. This prevents the businesses from comparing the terms
with other merchants and serves only to insulate the credit/debit card
companies from competition. It also prevents merchants from utilizing
trade associations and other third parties to explain credit/debit
card terms.

As credit and debit card use continues to grow, the cost to merchants
has not decreased with the increased volume, but has actually risen
dramatically. Since merchant costs for credit and debit card
transactions have gone up, businesses have been forced to spread such
costs to all consumers, regardless of whether they use credit or debit
cards.

The first step to bringing these costs under control is to require
credit and debit card companies to disclose their rules, rates and
fees along with the situations in which the charges apply. Open
disclosure will serve to promote competition, guard against unfair and
unauthorized charges and benefit the public by ultimately lowering the
cost of goods and services.

 LEGISLATIVE HISTORY :
A.7775 (2007-2008)

 FISCAL IMPACT :
None.

 EFFECTIVE DATE :
This act shall take effect on the one hundred eightieth day after it
shall have become a law.

2009-S3435 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  3435

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                             March 19, 2009
                               ___________

Introduced  by  Sen.  MONSERRATE  -- read twice and ordered printed, and
  when printed to be committed to the Committee on Consumer Protection

AN ACT to amend the general  business  law,  in  relation  to  merchants
  access to credit card rules and rates

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The general business law is amended by adding a new section
518-b to read as follows:
  S 518-B. MERCHANTS ACCESS TO CREDIT CARD RULES AND RATES. 1.  AS  USED
IN THIS ARTICLE, THE FOLLOWING TERMS HAVE THE FOLLOWING MEANINGS:
  (A) "ACQUIRER" MEANS AN INSTITUTION DOING BUSINESS IN THIS STATE PROC-
ESSING MERCHANT ACCOUNTS;
  (B) "CREDIT CARD" MEANS A VALID CARD AUTHORIZING THE CARDHOLDER TO BUY
GOODS  OR  SERVICES  ON  CREDIT AND BEARING THE SERVICE MARK OF A CREDIT
CARD ASSOCIATION OR  NETWORK.    SUCH  TERM  SHALL  INCLUDE  THE  NUMBER
ASSIGNED  TO AN INSTRUMENT OR DEVICE DESCRIBED IN THIS PARAGRAPH EVEN IF
THE PHYSICAL INSTRUMENT OR DEVICE IS NOT USED OR PRESENTED;
  (C) "DEBIT CARD" MEANS: (I) ANY INSTRUMENT OR DEVICE WHETHER KNOWN  AS
A  DEBIT  CARD,  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; (II) 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  (III)  THE  NUMBER ASSIGNED TO AN INSTRUMENT OR DEVICE
DESCRIBED IN SUBPARAGRAPHS (I) OR (II) OF THIS  PARAGRAPH  EVEN  IF  THE
PHYSICAL INSTRUMENT OR DEVICE IS NOT USED OR PRESENTED;
  (D)  "FINANCIAL  INSTITUTION"  MEANS  ANY  BANK,  SAVINGS ASSOCIATION,
SAVINGS BANK, CREDIT UNION OR INDUSTRIAL LOAN COMPANY;

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08246-01-9

S. 3435                             2

  (E) "INTERCHANGE FEE" MEANS THE FEE THAT AN ACQUIRER PAYS TO AN  ISSU-
ING  BANK  WHEN A CARDHOLDER USES A CREDIT CARD OR DEBIT CARD AS PAYMENT
DURING A RETAIL TRANSACTION;
  (F)  "ISSUING  BANK" MEANS A FINANCIAL INSTITUTION WHICH ISSUES CREDIT
OR DEBIT CARDS TO CARDHOLDERS;
  (G) "MERCHANT ACCOUNT" MEANS A BANK ACCOUNT THAT ALLOWS A MERCHANT  TO
ACCEPT CREDIT CARD OR DEBIT CARD PAYMENTS;
  (H)  "MERCHANT"  MEANS A PERSON OR ENTITY AUTHORIZED TO DO BUSINESS IN
THIS STATE WHICH OFFERS GOODS OR SERVICES FOR SALE IN THIS STATE;
  (I) "CREDIT CARD ASSOCIATION" MEANS ANY ENTITY  FORMED  TO  ADMINISTER
AND PROMOTE CREDIT CARDS.
  2.  A  CREDIT  CARD ASSOCIATION, ISSUING BANK OR ACQUIRER FACILITATING
THE ACCEPTANCE OF CREDIT OR DEBIT CARD TRANSACTIONS IN THE STATE SHALL:
  (A) MAKE AVAILABLE TO A MERCHANT LOCATED  IN  THIS  STATE  A  COMPLETE
PAPER  COPY OF THE CONTRACT, RATES, INCLUDING THE APPLICABLE INTERCHANGE
FEES, AND RULES WHICH APPLY  TO  THAT  MERCHANT  AS  REFERENCED  IN  THE
CONTRACT, EITHER INDIVIDUALLY OR THROUGH AN ACQUIRER; AND
  (B)  NOTIFY A MERCHANT LOCATED IN THIS STATE WHEN A REFERENCED RATE OR
RULE HAS BEEN CHANGED OR A NEW RATE AND RULE ADDED WHICH APPLIES TO THAT
MERCHANT PRIOR TO THE EFFECTIVE DATE OF THE NEW OR REVISED RATE OR  RULE
AND  PROVIDE  A WRITTEN COPY OF THE NEW OR MODIFIED RATE OR RULE TO SUCH
MERCHANT. INSTEAD OF PROVIDING A PAPER  COPY  OF  THE  NOTICES  REQUIRED
HEREIN,  THE CONTRACTING ENTITY, ISSUING BANK OR CREDIT CARD ASSOCIATION
MAY PROVIDE THE MERCHANT WITH ACCESS TO THE RATES OR  RULES  IN  A  FORM
THAT  MAY  BE DOWNLOADED AND PRINTED BY THE MERCHANT PRIOR TO THE EFFEC-
TIVE DATE OF SUCH RATE OR RULE.
  3. A CONTRACT AUTHORIZING A MERCHANT TO ACCEPT A CREDIT OR DEBIT  CARD
SHALL CONTAIN:
  (A)  THE  COMPLETE SCHEDULE OF INTERCHANGE FEES, CREDIT CARD AND DEBIT
CARD TRANSACTION RATES AND ANY OTHER FEES THAT THE FINANCIAL INSTITUTION
OR ACQUIRER CHARGES TO MERCHANTS; AND
  (B) A NOTICE THAT IDENTIFIES  WHICH  RATES  AND  RULES  APPLY  TO  THE
MERCHANT  AND  THE  SITUATIONS  IN WHICH THOSE RATES AND RULES APPLY. AN
ISSUING BANK AND CREDIT CARD ASSOCIATION SHALL PROVIDE  TO  AN  ACQUIRER
ANY INFORMATION NECESSARY TO COMPLY WITH THE PROVISIONS OF THIS SECTION.
  4.  A  VIOLATION OF THIS SECTION SHALL BE DEEMED TO BE UNLAWFUL DECEP-
TIVE ACTS AND PRACTICES UNDER SECTION THREE HUNDRED FORTY-NINE  OF  THIS
CHAPTER. ALL OF THE REMEDIES, POWERS, DUTIES AND PENALTIES PERTAINING TO
UNLAWFUL  DECEPTIVE  ACTS  AND  PRACTICES  UNDER  SECTION  THREE HUNDRED
FORTY-NINE OF THIS CHAPTER SHALL APPLY TO VIOLATIONS OF THIS SECTION.
  S 2. If any section, subdivision, sentence, clause or phrase  of  this
legislation  is for any reason held to be invalid or unconstitutional by
a decision of any court of competent jurisdiction  such  decision  shall
not  affect  the validity of the remaining portions of this legislation.
The legislature hereby declares that it would have  passed  this  legis-
lation  and  each  section,  subdivision, sentence, clause or phrase not
declared invalid or  unconstitutional  without  regard  to  whether  any
portion  of  the  legislation  would subsequently be declared invalid or
unconstitutional.
  S 3. This act shall take effect on the one hundred eightieth day after
it shall have become a law.

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Senate Bill S3435

Sponsored By

Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

2009-S3435 (ACTIVE) - Details

2009-S3435 (ACTIVE) - Summary

2009-S3435 (ACTIVE) - Sponsor Memo

2009-S3435 (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S3435

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Sponsored By

Hiram Monserrate

Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

2009-S3435 (ACTIVE) - Details

2009-S3435 (ACTIVE) - Summary

2009-S3435 (ACTIVE) - Sponsor Memo

2009-S3435 (ACTIVE) - Bill Text download pdf

Comments