BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 933|
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THIRD READING
Bill No: SB 933
Author: Oropeza (D), et al
Amended: 5/3/10
Vote: 21
SENATE JUDICIARY COMMITTEE : 3-1, 4/27/10
AYES: Corbett, Hancock, Leno
NOES: Walters
NO VOTE RECORDED: Harman
SUBJECT : Debit cards: service fees
SOURCE : Consumers Union
DIGEST : This bill extends existing law which prohibits
retailers from imposing a surcharge on credit card
purchases to also include debit card purchases.
ANALYSIS : Existing law prohibits retailers from imposing
a surcharge on a cardholder who uses a credit card.
Existing law permits a retailer to offer a discount for the
purpose of inducing payment by means other than a credit
card as long as the discount is offered to all prospective
buyers. (Civ. Code Sec. 1748.1(a).)
Existing law provides that any retailer who willfully
violates these provisions and fails to pay the amount of
the surcharge back to the cardholder, after the
cardholder's written request to do so, is liable to the
cardholder for three times the amount of actual damages and
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reasonable attorney's fees and costs. (Civ. Code Sec.
1748.1(b).)
This bill would apply all of the above-described provisions
to debit card purchases.
Existing state law limits a debit cardholder's liability
for unauthorized use of a debit card. (Civ. Code Sec.
1748.31.)
This bill would revise the definition of "debit card" to
also include a prepaid card or other means of access to
prepaid funds that may be used for electronic funds
transfers and may be used without a personal identification
number (PIN) to access the funds.
This bill specifies that it is the intent of the
Legislature in enacting this bill to not remove the ability
of a cardholder to bring an action in small claims court,
or in any other appropriate court, under provision of this
bill.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 5/5/10)
Consumers Union (source)
AARP
California Labor Federation, AFL-CIO
Center for Responsible Lending
City of Lakewood
Coalition of California Welfare Rights Organizations, Inc.
Consumer Action
Consumer Federation of California
Greenlining Institute
National Employment Law Project
San Francisco Chamber of Commerce
San Jose Silicon Valley Chamber of Commerce
Visa Inc.
OPPOSITION : (Verified 5/5/10)
BP America, Inc.
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California Grocers Association
California Independent Grocers Association
California Independent Oil Marketers Association
California Restaurant Association
California Retailers Association
California Small Business Association
National Federation of Independent Business
Northern California Independent Book Sellers Association
Southern California Independent Book Sellers Association
ARGUMENTS IN SUPPORT : According to the author's office:
SB 933 prohibits retailers from imposing a surcharge
on consumers who elect to use their debit card when
making a purchase. Current law prohibits retailers
from imposing a surcharge on consumers who use their
credit card; SB 933 seeks to provide the same consumer
protection enjoyed by those who use their debit cards.
Presently and without SB 933, a consumer who elects
to pay with their debit card can actually pay more
than somebody who uses their credit card.
Furthermore, debit card usage has increased
exponentially over the years as we continue to move to
an increasingly cashless society. Since 2005, more
than half of total retail transactions nationwide have
been made with either a credit card or debit card.
Since 2006, more purchases have been made, in terms of
volume, with debit cards than credit cards. The
California Employment Development Department is
currently considering issuing unemployment insurance
payments through prepaid cards. Without the
protection provided under SB 933, those receiving
unemployment benefits could be charged a surcharge by
retailers on their newly issued EDD unemployment
prepaid card.
Lastly, many prepaid card products are being used by
younger consumers, underbanked, or unbanked consumers
who do not use or have bank accounts, consumers are
obtaining their pay through payroll cards or
government issued benefits on prepaid cards. The
prepaid cardholding population is expected to increase
even more rapidly; thus making it important to include
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prepaid cards within the surcharge prohibition.
ARGUMENTS IN OPPOSITION : BP America writes in
opposition:
?by prohibiting retailers from imposing a surcharge on
consumers that use debit cards, the bill would require
ARCO dealers and franchisees to incur the cost of
interchange fees that are imposed by credit card
companies and payment networks, thereby increasing the
cost on ARCO consumers who purchase other goods and
services at our stations. Indeed, SB 933 would
ultimately hurt ARCO and ampm consumers because ARCO
dealers and franchisees would be prevented from
passing some of the cost of the interchange fee to
consumers. By stopping this practice, our dealers and
franchisees would be unable to reduce the risk of the
escalating cost of interchange fees while continuing
to offer gasoline at a lower price.
The California Retailers Association (CRA) also opposes the
bill, writing that "[v]ery few retailers charge customers
for debit transactions even though we incur fees on every
card transaction. Those that impose a charge are smaller
merchants or retailers who are recognized for offering low
price products or services. If those retailers are
prohibited from imposing debit card surcharges, they will
ultimately be forced to raise their prices which will have
a negative impact on all customers - not just those paying
with debit cards."
CRA also states that it would not oppose the bill if it
"mandated disclosure of any surcharge on debit transactions
and required an opt-out for consumers that elect not to pay
the additional cost." The author is not supportive of
taking this amendment, arguing the proposed amendment does
not sufficiently protect consumers.
RJG:nl 5/5/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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