Bill Text: CA SB1351 | 2013-2014 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Payment cards.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2014-06-02 - Ordered to inactive file on request of Senator Hill. [SB1351 Detail]

Download: California-2013-SB1351-Amended.html

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BILL NUMBER: SB 1351	AMENDED
	BILL TEXT

	AMENDED IN SENATE  MARCH 26, 2014

INTRODUCED BY   Senator Hill

                        FEBRUARY 21, 2014

   An act to add  and repeal  Title 1.3E (commencing with
Section 1748.70)  to   of  Part 4 of
Division 3 of the Civil Code, relating to  credit and debit
  payment  cards.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1351, as amended, Hill.  Credit and debit 
 Payment  cards.
   Existing law generally provides for the regulation of credit and
debit cards, including, but not limited to, limitations on the
methods for offering and denying a credit card, requirements for
listing the name appearing on a credit card, and restrictions on a
person's liability for an unauthorized used of his or her credit or
debit card.
   This bill would require  , starting October 1, 2015, a
bank, credit union, or financial institution to issue a credit or
debit card with microchip technology, as specified. The bill would
also require, starting on the same date, a retailer to utilize a
credit or debit card scanner that accepts a credit or debit card with
either a magnetic stripe or microchip technology or any other
similar technology, as specified.   retailers, starting
October 1, 2015, except as specified, that accept a payment card, as
defined, to provide a means of processing card-present payment card
transactions involving payment cards equipped with embedded
microchips capable of storing a personal identification number or any
other technology that is generally accepted within the payments
industry as being more secure than microchip technology for
card-present fraud prevention. The bill would also require specified
contracts entered into between a financial institution and a payment
card network, as those terms are define   d, to include a
provision requiring that a new or replacement payment card issued to
a cardholder with a California mailing address have an embedded
microchip capable of storing a personal identification number or any
other   technology that is generally accepted within the
payments industry as being more secure than microchip technology for
card-present fraud prevention.  The bill would make legislative
findings and declarations in this  regard.  
regard and would repeal these requirements on or before January 1,
2020, unless a later enacted statute, that is enacted before January
1, 2020, deletes or extends that date. 
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature finds and declares all of the
following:
   (a) Over 80 countries utilize microchip technology for credit
cards, including, but not limited to, Canada, Mexico, Brazil, and
countries throughout Europe and Asia.
   (b) The United States is one of the few remaining countries that
relies almost exclusively on magnetic stripe technology for credit
and debit cards.
   (c) Credit and debit cards with microchip technology are preferred
to magnetic stripe cards because identifying information is
encrypted on an embedded microchip, which is more difficult to
counterfeit than a magnetic stripe.
   (d) Adoption of microchip technology in Britain has helped reduce
fraud from counterfeit cards by 70 percent from 2007 to 2012,
inclusive, according to the UK Card Association.
   (e) By contrast, breaches have more than doubled since 2007 at
retailers in the United States, affecting more than 5,000 records,
according to a survey by the Ponemon Institute,  a  research
firm located in Michigan.
   (f) In 2012, United States merchants and banks suffered losses of
$11.3 billion due to credit card fraud, or five cents ($0.05) on
every one hundred dollars ($100) spent, according to the Nilson
Report, a payment-industry newsletter based in California.
   (g) If credit and debit cards with microchip technology were used
in the United States, fraud losses could be reduced by 50 percent,
according to estimates by Aite Group, an independent research and
advisory firm focused on business, technology, and regulatory issues
and their impact on the financial services industry.
   (h) It has been widely reported that retailers, banks, financial
institutions, and credit unions are planning on voluntarily adopting
microchip technology beginning in October 2015.
  SEC. 2.  Title 1.3E (commencing with Section 1748.70) is added to
Part 4 of Division 3 of the Civil Code, to read:

      TITLE 1.3E.  Microchip  Credit And Debit  
Payment  Cards


   1748.70.  A bank, credit union, or financial institution shall
issue a credit or debit card with microchip technology, as follows:
   (a) To a new cardholder whenever issuing any credit or debit card.

   (b) To an existing cardholder only when issuing a new or
replacement credit or debit card in the ordinary course of business.
 
   1748.70.  (a) Except as specified in subdivision (b), on and after
January 1, 2015, any contract entered into between a financial
institution and a payment card network to govern the circumstances
under which the logo of the payment card network is displayed on a
payment card issued by that financial institution shall include a
provision requiring that any new or replacement payment card issued
on or after October 1, 2015, to a cardholder with a California
mailing address by that financial institution with that payment card
logo, have an embedded microchip capable of storing a personal
identification number or any other technology that is generally
accepted within the payments industry as being more secure than
microchip technology for card-present fraud prevention.
   (b) On and after January 1, 2017, any contract entered into
between a small financial institution and a payment card network to
govern the circumstances under which the logo of the payment card
network is displayed on a payment card issued by that financial
institution shall include a provision requiring that any new or
replacement payment card issued on or after October 1, 2017, to a
cardholder with a California mailing address by that financial
institution with that payment card logo, have an embedded microchip
capable of storing a personal identification number or any other
technology that is generally accepted within the payments industry as
being more secure than microchip technology for card-present fraud
prevention. 
   1748.75.   A   (a)    On
and after October 1 , 2015, a  retailer  shall utilize a
credit or debit card scanner that accepts a credit or debit card
with either a magnetic stripe or microchip technology or any other
technology that is generally accepted within the payments industry as
being equally or more secure than microchip technology for
card-present fraud prevention.   that accepts a payment
card shall   provide a means of processing card-present
payment card transactions involving payment cards equipped with an
embedded microchip capable of storing a personal identification
number or any other technology that is generally accepted within the
payments industry as being more secure than microchip technology for
card-present fraud prevention.  
   (b) The requirements of subdivision (a) shall apply to small
retailers and gas station pump payment terminals on and after October
1, 2017.  
   1748.80.  For purposes of this title, the following terms shall
have the following meanings:
   (a) "Payment card" means a credit or debit card.
   (b) "Payment card network" means an entity that facilitates the
payment process between credit or debit card users, retailers, and
credit or debit card issuers.
   (c) "Retailer" means a person or entity that furnishes money,
goods, services, or anything else of value upon the presentation of a
payment card by a cardholder. "Retailer" shall not mean the state, a
county, city, city and county, or any other political subdivision of
the state.
   (d) "Small financial institution" means a financial institution
with assets of $5 billion or less.
   (e) "Small retailer" means a retailer with 10 or less employees.
 
   1748.85.  It is the intent of the Legislature that this chapter
provide consumer protection consistent with federal law.  
   1748.90.  This title shall remain in effect only until January 1,
2020, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2020, deletes or extends
that date.  
   1748.80.  This title shall become operative on October 1, 2015.