State of Illinois
92nd General Assembly

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[ Senate Amendment 002 ]



 1        AN ACT concerning liability for debit card use.

 2        Be it enacted by the People of  the  State  of  Illinois,
 3    represented in the General Assembly:

 4        Section  1.  Short  title.  This  Act may be cited as the
 5    Debit Card Liability Act.

 6        Section 5. Definition. For  purposes  of  this  Act,  the
 7    following definitions apply:
 8        "Accepted  debit  card" means a debit card that the debit
 9    cardholder has requested and received, or has  signed,  used,
10    or  authorized  another  person  to  use,  for the purpose of
11    obtaining money, property, labor, or services. A  debit  card
12    issued  in  renewal  of,  or in substitution for, an accepted
13    debit card becomes an accepted debit card  when  received  by
14    the debit cardholder, whether the debit card is issued by the
15    same or by a successor card issuer.
16        "Account"  means a demand deposit (checking), savings, or
17    other consumer asset account, other  than  an  occasional  or
18    incidental  credit  balance  in  a  credit  plan, established
19    primarily for personal, family, or household purposes.
20        "Adequate notice" means a printed notice to a  cardholder
21    that sets forth the pertinent facts clearly and conspicuously
22    so  that  a  person  against  whom  it  is  to  operate could
23    reasonably be expected to have noticed it and understood  its
24    meaning.
25        "Debit  card"  has the same meaning found in Section 2.15
26    of the Illinois Credit Card and Debit Card Act.
27        "Debit card issuer" means any person who issues  a  debit
28    card or the agent of that person for that purpose.
29        "Debit cardholder" means a natural person to whom a debit
30    card is issued.
31        "Unauthorized  use"  means  the  use of a debit card by a
                            -2-                LRB9204197JStm
 1    person, other than  the  debit  cardholder,  to  initiate  an
 2    electronic  fund transfer from the debit cardholder's account
 3    without actual authority to initiate the  transfer  and  from
 4    which the debit cardholder receives no benefit. The term does
 5    not  include  an electronic fund transfer initiated in any of
 6    the following manners:
 7             (1)  By a person who was furnished the debit card to
 8        the debit cardholder's account by the  debit  cardholder,
 9        unless  the  debit cardholder has notified the debit card
10        issuer that  transfers  by  that  person  are  no  longer
11        authorized.
12             (2)  With  fraudulent intent by the debit cardholder
13        or  any  person  acting  in  concert   with   the   debit
14        cardholder.
15             (3)  By the debit card issuer or its employee.

16        Section  10.  Liability  for  unauthorized use of a debit
17    card.
18        (a)  A debit cardholder is liable for an unauthorized use
19    of a debit card only if all of the following  conditions  are
20    met:
21             (1)  The card is an accepted debit card.
22             (2)  Except  as  provided  in  subsection  (b),  the
23        liability is not in excess of $50.
24             (3)  The debit card issuer has given adequate notice
25        to the debit cardholder of the potential liability.
26             (4)  The  debit  card  issuer has provided the debit
27        cardholder with a description of the means by  which  the
28        debit card issuer may be notified of loss or theft of the
29        card.
30             (5)  The  unauthorized  use  occurs before the debit
31        card issuer has been notified  by  the  debit  cardholder
32        that  an  unauthorized use of the debit card has occurred
33        or may occur as a result of loss, theft, or otherwise.
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 1             (6)  The debit card issuer has provided a  means  to
 2        identify  the debit cardholder to whom the debit card was
 3        issued.
 4        (b)  Notwithstanding  subsection  (a),   if   the   debit
 5    cardholder  fails  to report an unauthorized use that appears
 6    on a periodic statement within 60 days after the  debit  card
 7    issuer's  transmittal  of  the  statement,  and if the issuer
 8    establishes that an unauthorized use would not have  occurred
 9    had  the  debit  cardholder  notified  the  issuer within the
10    60-day period, the debit cardholder shall be liable  for  the
11    amount  of  each  unauthorized transfer that occurs after the
12    close of the 60 days and before notice to the issuer.  If the
13    debit cardholder's delay in notifying the debit  card  issuer
14    was   due  to  extenuating  circumstances  beyond  the  debit
15    cardholder's reasonable control,  the  time  specified  above
16    shall be extended by a reasonable period. For the purposes of
17    this   subsection,   examples  of  extenuating  circumstances
18    include, but are not limited to, extended travel,  the  death
19    or serious illness of the debit cardholder or a member of the
20    debit  cardholder's family, hospitalization, permanent mental
21    impairment,  or  serious  physical  impairment,  unless   the
22    circumstance   did   not   reasonably   contribute   to   the
23    cardholder's  delay in notifying the debit card 1ssuer within
24    the 60-day period.
25        (c)  A debit  cardholder  shall  have  no  liability  for
26    erroneous  or  fraudulent transfers initiated by a debit card
27    issuer, its agent, or employee.

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