New Jersey-2012-S1387-Introduced

An Act concerning prepaid debit accounts and supplementing Title 17 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. As used in this act:

"Financial institution" means a State or National bank, a State or Federal savings and loan association, a mutual savings bank, a State or Federal credit union, or any other person who, directly or indirectly, holds a prepaid debit account belonging to a consumer.

"Prepaid debit account" means an account that contains consumer funds, to which payments may be made and from which funds may be withdrawn by the consumer, and from which payments may be made by the consumer through use of an access device sold to a consumer in New Jersey on which is encoded a predetermined value. A prepaid debit account shall not include an account associated with a demand deposit, savings deposit, or other asset account other than described above, or an account held pursuant to a bona fide trust agreement or a prepaid telecommunications or technology card, rewards card, gift card, or gift certificate, as defined in section 1 of P.L.2002, c.14 (C.56:8-110).

2. a. A financial institution shall provide a consumer whose funds are contained in a prepaid debit account with a monthly account statement that clearly sets forth for each electronic fund transfer during the month:

(1) the amount involved and the date of the transfer;

(2) the type of the transfer;

(3) the identity of the consumer's account with the financial institution from which or to which funds are transferred;

(4) the identity of any third party to whom or from whom funds are transferred; and

(5) the location of the transaction or automated teller machine involved.

b. A financial institution shall not be subject to the requirements of subsection a. of this section if the financial institution provides to the consumer:

(1) access to the account balance of the consumer:

(a) through a readily available telephone line;

(b) through the Internet; and

(c) at an automated teller machine or other device that allows the consumer to make a balance inquiry, by providing balance information or, routinely or upon request, on a receipt provided at the automated teller machine at the time of an electronic fund transfer;

(2) notice of the means by which the consumer may access the account balance of the consumer, including any telephone number;

(3) in response to an oral or written request by the consumer, a written record of the electronic fund transfers of the consumer during the two-year period ending on the date of the request that includes the information required to be provided to the consumer under subsection a. of this section;

(4) an electronic record, such as on the Internet, of the electronic fund transfers of the consumer during the 60-day period ending on the date on which the consumer accesses the electronic record that includes the information required to be provided to the consumer in subsection a. of this section;

(5) monthly notification by email of the availability of an electronic record, unless the consumer has declined to provide an email address;

(6) the option to receive a monthly written statement and notice of that option;

(7) annual notice of the error resolution procedure for the prepaid debit account; and

(8) any other transaction information that the financial institution elects to make available and that the consumer elects to receive, such as messages or alerts concerning account balance levels or activity.

c. A financial institution may not charge a fee for any service provided under subsection b. of this section, except that a financial institution may charge a fee of not more than $1 for each monthly written statement provided pursuant to paragraph (6) of subsection b. of this section.

3. a. In connection with a prepaid debit account, a financial institution shall not charge:

(1) an annual fee;

(2) an overdraft fee, including a fee for shortage or nonsufficient funds, or any other fee for a transaction processed for amounts exceeding the account balance;

(3) a usage fee for use at the point of sale;

(4) a fee for a declined transaction;

(5) a fee for the use of an automated teller machine that is in the network of the issuer;

(6) an inactivity or dormancy fee;

(7) a fee for a balance inquiry or access to transaction information;

(8) a fee for an inquiry to customer service;

(9) a finance charge or other fee imposed in connection with an extension of credit;

(10) an account closing fee or a fee to obtain the remaining balance in the prepaid debit account;

(11) an activation, initiation, or enrollment fee; or

(12) a fee for any activity not described in subsection b. of this section.

b. A financial institution may charge:

(1) a fee for a replacement access device, not to exceed $5 for each replacement access device;

(2) a fee for expedited delivery of a replacement access device;

(3) a periodic fee, not more frequently than monthly;

(4) a reload fee, or any other fee for adding value to the prepaid debit account, if the financial institution provides an alternate method for adding value to the prepaid debit account without a fee;

(5) a fee for a transfer from the prepaid debit account to another account;

(6) a fee for bill payment by check;

(7) a fee for a withdrawal by the consumer from an automated teller machine that is:

(a) located outside the United States;

(b) not in the network of the financial institution, including a fee to cover the costs of any charge to the financial institution by the owner of the automated teller machine relating to the use of automated teller machine by the consumer; and

(8) a fee for a purchase or a withdrawal in a foreign currency.

c. A financial institution shall provide to a consumer:

(1) together with any application, offer, or solicitation for a prepaid debit account, an estimate of the average total monthly cost to a typical consumer for using a prepaid debit account and a table of any fees that may be charged in connection with the prepaid debit account. This estimate shall be in writing and shall:

(a) be conspicuously displayed to the consumer before purchase;

(b) be easily understood by the consumer; and

(2) on the access device, a toll-free telephone number and website at which the consumer may access a clear and conspicuous disclosure of the fees that may be charged in connection with the prepaid debit account; and

(3) a wallet-sized summary of any fees that may be charged in connection with the prepaid debit account and a toll-free telephone number for customer service relating to the prepaid debit account.

4. Any person found to be in violation of this act shall be subject to a civil penalty of not more than $1,000 per day for each day that the person is in violation of this act, which penalty may be collected by summary proceedings instituted by the Commissioner of Banking and Insurance in accordance with the "Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.).

5. The commissioner may promulgate, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations necessary to effectuate the purposes of this act.

6. This act shall take effect on the 120th day next following enactment.

STATEMENT

This bill regulates prepaid debit accounts by limiting the fees that may be charged in connection with the accounts and requiring financial institutions holding prepaid debit accounts to disclose certain information to consumers.

The bill requires financial institutions to provide a consumer whose funds are contained in a prepaid debit account with a monthly account statement that sets forth certain details for each electronic fund transfer during that month. A financial institution is exempted from this requirement if it provides consumers with certain information on an ongoing basis, such as access to the account balance through the Internet, telephone, and automated teller machines, as well as means to contact customer service and request an account statement.

The bill permits financial institutions to charge certain fees in connection with a prepaid debit account, which include:

(1) a fee for a replacement access device;

(2) a periodic fee, not more frequently than monthly;

(3) a reload fee;

(4) a transfer fee;

(5) a fee for bill payment by check;

(6) a fee for a withdrawal by the consumer from a foreign or out-of-network automated teller machine; and

(7) a fee for a purchase or a withdrawal in a foreign currency.

The bill prohibits a financial institution from charging any fee in connection with a prepaid debit account except those fees expressly permitted by the bill.

The bill also requires financial institutions to provide to a consumer an estimate of the average total monthly cost to a typical consumer for using a prepaid debit account and a table of any fees that may be charged in connection with the prepaid debit account together with any application, offer, or solicitation for a prepaid debit account. A financial institution must also provide a wallet-sized summary of any fees that may be charged in connection with the prepaid debit account and a toll-free telephone number for customer service relating to the prepaid debit account, and, on the access device, a toll-free telephone number and website at which the consumer may access a clear and conspicuous disclosure of the fees that may be charged in connection with the prepaid debit account.

Any person found to be in violation of the bill would be subject to a civil penalty of not more than $1,000 per day for each day that the person is in violation, which penalty may be collected by summary proceedings instituted by the Commissioner of Banking and Insurance.