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History
- Substituted by A7689A
- Ordered to third reading cal.1516
- Referred to rules
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Imposes sanctions for credit card charge backs on motor vehicle fees
Signed by Governor · Sponsor David Gantt
Full text
The text isn't available here yet. Check nysenate.gov.
Sponsor's memo
BILL NUMBER:S5826
Title of bill
An act to amend the vehicle and traffic law, in relation to sanctions for credit card charge backs on motor vehicle fees
Purpose
To authorize the Department of Motor Vehicles to impose sanctions against persons who pay for fees with a credit card and thereafter use the card "charge back" system to avoid payment.
Summary of provisions
Bill section 1 would amend section 202-b of the Vehicle and Traffic Law by prohibiting to provide that when the fee for one's business or driver's license and/or registration was paid by credit card, the person subsequently contests the credit card charge and causes the fee to be charged back to the Department, any further transactions with DMV in the name of such person may be prohibited until payment is made in full.
The bill would take effect 120 days after receiving Executive approval.
Existing law
Currently, the Vehicle and Traffic Law only authorizes a civil penalty and sanctions for dishonored checks.
Justification
DMV has experienced an increase in a relatively new type of fraudulent activity associated with credit card transactions. A customer will pay a license or registration fee with a credit card and then illegitimately contest the charge with the customer's credit card company to obtain a "charge back." By requesting a charge back for a valid DMV charge, these customers are able to obtain a valid license or registration that they have not paid for.
While VTL § 202-b currently allows DMV to suspend the license or registration of a customer whose check is dishonored, there is no similar mechanism for those who defraud DMV by illegitimately requesting a charge back on their credit card transaction. The same safeguards applicable to dishonored checks would apply to charge backs. This proposal includes the ability to sanction a customer who pays a DMV fee via a credit card and then subsequently requests a 'charge back' with their credit card company by prohibiting any future transactions with DMV until full payment has been made.
Both the volume of charge backs and the dollar amount per charged back transaction have been increasing. DMV anticipates that this trend will continue as the range of transactions payable by credit card expands, and especially as additional internet transactions are offered. In fiscal. year 2010-11, DMV received an average of 100 chargeback requests per month from credit card issuers. DMV was able to recover only 50% of the unpaid fees associated with credit card charge backs ($158,457 out of $306,898). In addition to this lost revenue, DMV has incurred additional expenses because credit card companies may charge 510.00 per charge back.
Legislative history
Similar legislation was introduced as S. 4918 and passed the Senate in 2003 and 2004.
Fiscal implications
By imposing sanctions, this bill will increase revenue to the State by reducing the number of unpaid transaction fees for driver's licenses and registrations.
Effective date
On-hundred twentieth day after it shall have become law
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.