BILL NUMBER: SB 1351	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Hill

                        FEBRUARY 21, 2014

   An act to add Title 1.3E (commencing with Section 1748.70) to Part
4 of Division 3 of the Civil Code, relating to credit and debit
cards.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1351, as introduced, Hill. Credit and debit cards.
   Existing law generally provides for the regulation of credit and
debit cards, including, but not limited to, limitations on the
methods for offering and denying a credit card, requirements for
listing the name appearing on a credit card, and restrictions on a
person's liability for an unauthorized used of his or her credit or
debit card.
   This bill would require, starting October 1, 2015, a bank, credit
union, or financial institution to issue a credit or debit card with
microchip technology, as specified. The bill would also require,
starting on the same date, a retailer to utilize a credit or debit
card scanner that accepts a credit or debit card with either a
magnetic stripe or microchip technology or any other similar
technology, as specified. The bill would make legislative findings
and declarations in this regard.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature finds and declares all of the
following:
   (a) Over 80 countries utilize microchip technology for credit
cards, including, but not limited to, Canada, Mexico, Brazil, and
countries throughout Europe and Asia.
   (b) The United States is one of the few remaining countries that
relies almost exclusively on magnetic stripe technology for credit
and debit cards.
   (c) Credit and debit cards with microchip technology are preferred
to magnetic stripe cards because identifying information is
encrypted on an embedded microchip, which is more difficult to
counterfeit than a magnetic stripe.
   (d) Adoption of microchip technology in Britain has helped reduce
fraud from counterfeit cards by 70 percent from 2007 to 2012,
inclusive, according to the UK Card Association.
   (e) By contrast, breaches have more than doubled since 2007 at
retailers in the United States, affecting more than 5,000 records,
according to a survey by the Ponemon Institute, research firm located
in Michigan.
   (f) In 2012, United States merchants and banks suffered losses of
$11.3 billion due to credit card fraud, or five cents ($0.05) on
every one hundred dollars ($100) spent, according to the Nilson
Report, a payment-industry newsletter based in California.
   (g) If credit and debit cards with microchip technology were used
in the United States, fraud losses could be reduced by 50 percent,
according to estimates by Aite Group, an independent research and
advisory firm focused on business, technology, and regulatory issues
and their impact on the financial services industry.
   (h) It has been widely reported that retailers, banks, financial
institutions, and credit unions are planning on voluntarily adopting
microchip technology beginning in October 2015.
  SEC. 2.  Title 1.3E (commencing with Section 1748.70) is added to
Part 4 of Division 3 of the Civil Code, to read:

      TITLE 1.3E.  Microchip Credit And Debit Cards


   1748.70.  A bank, credit union, or financial institution shall
issue a credit or debit card with microchip technology, as follows:
   (a) To a new cardholder whenever issuing any credit or debit card.

   (b) To an existing cardholder only when issuing a new or
replacement credit or debit card in the ordinary course of business.
   1748.75.  A retailer shall utilize a credit or debit card scanner
that accepts a credit or debit card with either a magnetic stripe or
microchip technology or any other technology that is generally
accepted within the payments industry as being equally or more secure
than microchip technology for card-present fraud prevention.
   1748.80.  This title shall become operative on October 1, 2015.