HF 1386

as introduced - 87th Legislature (2011 - 2012) Posted on 04/06/2011 08:43am

A bill for an act
relating to commerce; preventing unfair business practices by credit and debit
card companies; proposing coding for new law as Minnesota Statutes, chapter
325O.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1. new text begin TITLE.
new text end

new text begin This act may be cited as the Minnesota Credit and Debit Card Fairness Act.
new text end

Sec. 2.

new text begin [325O.01] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Terms. new text end

new text begin For purposes of sections 2 to 8, the terms defined in this
section have the meanings given.
new text end

new text begin Subd. 2. new text end

new text begin Debit card. new text end

new text begin "Debit card" means a card or payment device issued by a
financial institution and containing a magnetic stripe, microprocessor chip, or other means
for storage of or access to information that allows the user to obtain, purchase, or receive
credit, money, a good, a service, or anything of value through the transfer of funds from
the transaction account associated with the device.
new text end

new text begin Subd. 3. new text end

new text begin Electronic payment system. new text end

new text begin "Electronic payment system" means an
entity that: (1) directly, or through licensed members, processors, or agents, provides
the proprietary services, infrastructure, and software that route information and data to
facilitate transaction authorization, clearance, and settlement; and (2) merchants access
in order to accept a specific brand of general purpose credit cards, charge cards, debits
cards, or store-value cards or devices as payment for goods or services. A merchant is
not an electronic payment system.
new text end

new text begin Subd. 4. new text end

new text begin Financial institution. new text end

new text begin "Financial institution" means an office of a bank,
bank and trust, trust company with banking powers, savings bank, industrial loan
company, savings association, credit union, or regulated lender.
new text end

new text begin Subd. 5. new text end

new text begin Merchant. new text end

new text begin "Merchant" means a person or entity doing business in this
state that offers goods or services for sale in this state.
new text end

new text begin Subd. 6. new text end

new text begin PIN. new text end

new text begin "PIN" means a personal identification code that identifies the
cardholder.
new text end

new text begin Subd. 7. new text end

new text begin PIN-enabled debit card. new text end

new text begin "PIN-enabled debit card" means a debit card
that enables a person or entity that accepts such cards in connection with a transaction
to prompt the cardholder to provide the PIN associated with the card when conducting a
transaction and to conduct the transaction as a PIN debit transaction. To comply with this
section, a PIN-enabled debit card must be physically and electronically identifiable as a
PIN-enabled debit card, and have the capability to access at least one regional PIN debit
network that is widely available statewide.
new text end

new text begin Subd. 8. new text end

new text begin Signature-enabled debit card. new text end

new text begin "Signature-enabled debit card" means a
debit card that: (1) enables a person or entity that accepts such cards in connection with a
transaction to authorize the transaction by means of an approved signature; (2) is physically
and electronically identifiable as a signature-enabled debit card; and (3) has the capability
to access at least one regional signature debit network that is widely available statewide.
new text end

Sec. 3.

new text begin [325O.02] PROTECTION OF RETAIL COMPETITION FROM CREDIT
AND DEBIT CARD UNFAIR PRACTICES.
new text end

new text begin With respect to transactions involving merchants in this state, no electronic payment
system may, directly or through any agent, acquirer, processor, or member of the system:
new text end

new text begin (1) impose a requirement, condition, penalty, or fine in a contract with a merchant
relating to the display of pricing for goods or services for sale by the merchant;
new text end

new text begin (2) inhibit the ability of a merchant to offer its customers discounts or in-kind
incentives for using, or to otherwise express a preference for or promote the use of, a
form of payment such as cash, check, debit card, or credit card or any other form of
payment device;
new text end

new text begin (3) inhibit the ability of a merchant to offer its customers discounts or in-kind
incentives for using, or to otherwise express a preference for or promote the use of, a
payment card of another electronic payment system;
new text end

new text begin (4) inhibit the ability of a merchant to offer its customers discounts or in-kind
incentives for using, or to otherwise express a preference for or promote the use of, a
particular product over another within the electronic payment system product suite, such
as a standard credit card as opposed to a rewards or platinum credit card;
new text end

new text begin (5) prevent a merchant from setting a minimum or maximum dollar value for its
acceptance of a payment card product;
new text end

new text begin (6) inhibit the ability of a merchant to decide not to accept the products of an
electronic payment system at one or more of its locations;
new text end

new text begin (7) prevent a merchant from deciding not to accept certain products of an electronic
payment system while still accepting other products of that electronic payment system;
new text end

new text begin (8) prevent a merchant from choosing how to route a transaction; or
new text end

new text begin (9) inhibit the ability of a merchant to communicate to consumers the cost incurred
by the merchant when a consumer uses a particular electronic payment system, type of
product within that electronic payment system, or other form of payment.
new text end

Sec. 4.

new text begin [325O.03] DEBIT CARDS; PIN-ENABLED AND
SIGNATURE-ENABLED REQUIREMENT.
new text end

new text begin (a) A financial institution shall not issue a debit card to a resident of this state unless
the card is both a PIN-enabled debit card and a signature-enabled debit card. Nothing
in this section prohibits an issuer from disabling the PIN functionality or the signature
functionality on a debit card at the cardholder's request.
new text end

new text begin (b) A financial institution shall not impose a surcharge, fee, or other penalty on
a cardholder in connection with a debit card transaction for the purchase of goods or
services that discriminates between PIN and signature transactions.
new text end

new text begin (c) A person or entity that accepts an access device in connection with a transaction
may choose to use either PIN or signature processing.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective 30 days after final enactment.
new text end

Sec. 5.

new text begin [325O.04] PENALTIES.
new text end

new text begin (a) An electronic payment system found to have violated section 325O.02 shall
reimburse all affected merchants for all fines related to the prohibitions described in
section 325O.02 which were collected from affected merchants directly or through
any agent, processor, or member of the system during the period of time in which the
electronic payment system was in violation, and is liable for a civil penalty of $10,000 per
fine levied in violation of section 325O.02.
new text end

new text begin (b) A financial institution found to have violated section 325O.03 is liable for a civil
penalty of $10,000 per debit card issued in violation of section 325O.03.
new text end

new text begin (c) A merchant whose rights under section 325O.02 have been violated may
maintain a civil action for damages or equitable relief as provided for in this section,
including the costs of the action, together with attorney fees, if any.
new text end

new text begin (d) A merchant or cardholder whose rights under section 325O.03 have been violated
may maintain a civil action for damages or equitable relief as provided for in this section,
including the costs of the action, together with attorney fees, if any.
new text end

new text begin (e) The attorney general may investigate any alleged violation of section 325O.02 or
325.03 and, having reasonable cause to believe that a violation is imminent, is occurring,
or has occurred, the attorney general may institute on behalf of the state, any of its
departments and agencies, or any of its political subdivisions a court action seeking
appropriate relief. The investigatory authority of the attorney general under section
325O.04 includes, but is not limited to, the authority provided for in section 8.31.
new text end

new text begin (f) In determining the amount of award in a class action, the court shall consider,
among other relevant factors, the amount of any actual damages awarded, the frequency
and persistence of failures of compliance by the issuer, the resources of the issuer, the
number of persons adversely affected, and the extent to which the issuer's failure of
compliance was intentional.
new text end

new text begin (g) The remedies under this section are cumulative and do not restrict any other right
or remedy otherwise available.
new text end