What's happening
This bill limits a New York debit cardholder’s liability for unauthorized use to $50, with added consumer protections.
Why it matters
Strengthens consumer protections by clarifying when a debit cardholder can be held liable. for unauthorized transactions—liability is only allowed if the cardholder requested, received, or used the card, and if the issuer has met specific notice and security requirements.
Limits cardholder liability to $50 for unauthorized debit card use,. offering clear legal boundaries and reducing potential financial risk compared to previous or less-defined standards.
Shifts the burden of proof to card issuers in disputes over unauthorized transactions,. meaning banks must prove the cardholder authorized the transaction or that all legal conditions for liability have been met, making it easier for consumers to contest fraudulent charges.
Mandates card issuers provide clear information about liability, loss/theft reporting, and identification methods,. ensuring consumers are better informed and equipped to protect themselves from unauthorized use.
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Who cares
Headline styles
Limit Debit Card Fraud Losses
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to consumer protection
- Referred to consumer protection
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
2466
2019-2020 Regular Sessions
IN SENATE
January 25, 2019
Introduced by Sen. SANDERS -- 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 limiting the liability of a debit cardholder for unauthorized use of a debit card
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Section 512 of the general business law, as amended by chapter 556 of the laws of 1987, is amended to read as follows:
§ 512. Limitation of liability for unauthorized use of a credit card or a debit card. 1. A provision which imposes liability upon a holder for a cash advance or loan or for the purchase or lease of property or services obtained by the unauthorized use of a credit card or a debit card shall not be enforceable to the extent that it imposes a greater liability upon the holder than is imposed upon the holder of a credit card under the provisions of the act of congress entitled "Truth in Lending Act" and the regulations thereunder, as such act and regulations may from time to time be amended.
2. (a) A cardholder shall be liable for the unauthorized use of a debit card only if:
(1) the card is a debit card which the cardholder has requested and received or has signed or has used, or authorized another to use, for the purpose of obtaining money, property, labor, or services;
(2) the liability is not in excess of fifty dollars;
(3) the card issuer gives adequate notice to the cardholder of the potential liability;
(4) the card issuer has provided the cardholder with a description of a means by which the card issuer may be notified of loss or theft of the card, which description may be provided on the face or reverse side of each monthly, quarterly or other periodic account statement issued to the cardholder by the card issuer, as applicable, or on a separate notice accompanying such statement;
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD08744-01-9
S. 2466 2
(5) the unauthorized use occurs before the card issuer has been notified that an unauthorized use of the debit card has occurred or may occur as the result of loss, theft, or otherwise; and
(6) the card issuer has provided a method whereby the user of such card can be identified as the person authorized to use it.
(b) For purposes of this section, a card issuer has been notified when such steps as may be reasonably required in the ordinary course of business to provide the card issuer with the pertinent information have been taken, whether or not any particular officer, employee, or agent of the card issuer does in fact receive such information.
(c) In any action by a card issuer to enforce liability for the use of a debit card, the burden of proof is upon the card issuer to show that the use was authorized or, if the use was unauthorized, then the burden of proof is upon the card issuer to show that the conditions of liability for the unauthorized use of a debit card, as set forth in paragraph (a) of this subdivision, have been met.
(d) Nothing in this subdivision imposes liability upon a cardholder for the unauthorized use of a debit card in excess of his or her liability for such use under other applicable law or under any agreement with the card issuer.
(e) Except as provided in this subdivision, a cardholder shall not incur any liability from the unauthorized use of a debit card.
§ 2. This act shall take effect on the ninetieth day after it shall have become a law and shall apply to all transactions occurring on and after such effective date.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the general business law, in relation to limiting the liability of a debit cardholder for unauthorized use of a debit card
Purpose
To limit the liability of a debit cardholder in the event an unauthor- ized use of the card occurs as a result of fraud or theft.
Summary of provisions
Amends Section 512 of the general business law as amended by chapter 556 of the laws of 1987 to require that a cardholder shall be liable for the unauthorized use of a debit card only if:
-the card is a debit card the holder has used, received, or requested, or authorized another to use.
-the liability of the cardholder does not exceed fifty dollars
-the card issuer gives the holder adequate notice of the potential liability
-the issuer has provided the holder with a means by which to inform the issuer of the loss or theft of the card
-the unauthorized use occurs before the issuer is informed of the loss or theft.
-the issuer has provided an accurate method by which to identify the cardholder as the person authorized to use it.
Existing law
Gasoline stations are not currently subject to this requirement. The department of state is not currently required to maintain a toll free number related to the retail sale of motor fuel.
Justification
In recent years debit cards have been gaining popularity as a great way of avoiding the excess spending that can be a result of credit card use, all the while allowing for an increase in self-accountability and disci- pline.
Like credit cards, debit cards have grown to be increasingly more acceptable worldwide. Unfortunately, the expansion of debit card accept- ability has not been accompanied by the same protections that apply to credit card holders worldwide.
Currently, there are no protections for a business whose debit card has been used fraudulently. By rounding out the law, a small business will be extended the same protections as an individual. This will be one more step in making New York a more business-friendly environment, which is one of the main components in the State's road to recovery.
Legislative history
02/17/15 REFERRED TO CONSUMER PROTECTION 01/06/16 REFERRED TO CONSUMER PROTECTION
Fiscal implications
None
Local fiscal implications
None
Effective date
This act shall take effect in 90 days after it shall have become a law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.