Senate Bill No. 474
(By Senator Hunter)
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[Introduced March 7, 2005; referred to the Committee on the
Judiciary.]
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A BILL to amend the Code of West Virginia, 1931, as amended, by
adding thereto a new article, designated §39A-4-1, §39A-4-2,
§39A-4-3, §39A-4-4 and §39A-4-5, all relating to card-not-
present credit or debit transactions; defining terms;
requiring merchant's access to terms of credit or debit card
issuers' rules and regulations; limiting liability for fees;
limiting merchant's liability for fees where credit or debit
card issuer fails to assist merchant in investigating
fraudulent transactions; limiting merchant's liability for
fraudulent credit or debit transactions where bank fails to
notify merchant of credit or debit chargeback within specified
time; and limiting merchant's liability for card-not-present
credit or debit transactions repudiated by customer.
Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended
by adding thereto a new article, designated §39A-4-1, §39A-4-2,
§39A-4-3, §39A-4-4 and §39A-4-5, all to read as follows:
ARTICLE 4. CARD-NOT-PRESENT Credit or debit TRANSACTIONS.
§39A-4-1. Definitions.
As used in this article, the following terms have the
following meanings:
(1) "Acquiring bank" means a financial institution licensed to
do business in this state providing merchant accounts.
(2) "Authorization" means notification that an issuing bank or
credit or debit card company has approved a card-not-present credit
or debit transaction.
(3) "Cardholder" means the person or entity to whom a credit
or debit card is issued and who is authorized to use the card to
purchase goods or services.
(4) "Card-not-present credit or debit transaction" means a
credit or debit sale of goods or services by a merchant by
telephone, mail order, internet or other means that does not
require the cardholder's signature or physical presentation of the
credit or debit card to the merchant.
(5) "Chargeback" means a reversal of a disputed purchase at
the request of the issuing bank, the credit or debit card company,
or the cardholder.
(6) "Credit or debit card" means an arrangement by which an issuing bank or credit or debit card company extends to a
cardholder the privilege of using a credit or debit card to
purchase goods or services from at least one hundred persons not
related to the issuing bank or credit or debit card company.
(7) "Credit or debit card company" means any business entity
other than a bank which issues or processes credit or debit cards.
(8) "Issuing bank" means a financial institution which issues
credit or debit cards to cardholders.
(9) "Merchant account" means a bank account that allows a
merchant to accept card-not-present card payments.
(10) "Merchant" means a person or entity licensed to do
business and having its principal place of business in this state
which offers goods or services for sale in this state by telephone,
mail order, internet or other means that do nor require the
physical presence of the customer.
§39A-4-2. Merchant access to credit or debit card issuers' rules
and regulations; liability for fees.
(a) Whenever a contract authorizing a merchant to accept card-
not-present credit or debit transactions specifies that the
merchant is bound by the rules and regulations of the issuing bank
or credit or debit card company, the issuing bank or credit or
debit card company must give the merchant access in this state to
the rules and regulations, either individually or through an
acquiring bank.
(b) If an issuing bank or credit or debit card company fails
to give the merchant access to its rules and regulations as
required by subsection (a) of this section, the merchant shall not
be liable for any chargeback.
§39A-4-3. Failure to assist merchant in mitigating damages;
liability for fees.
No merchant who is the victim of a fraudulent card-not-present
credit or debit transaction or acquiring bank is liable for any
chargeback if the issuing bank or credit or debit card company
refuses a request to assist the merchant in mitigating its damages
by providing the merchant, acquiring bank or state law enforcement
officials with information in its possession which can legally be
disclosed as to cardholder or the transaction resulting in the
chargeback.
§39A-4-4. Failure of acquiring bank to notify merchant of
chargeback; liability for fees.
(a) An acquiring bank must notify a merchant within twenty-
four hours if an issuing bank or credit or debit card company has
issued a chargeback for a card-not-present transaction.
(b) An acquiring bank may not deduct funds from a merchant
account until it has provided the notice required in subsection (a)
of this section.
(c) If an acquiring bank fails to comply with the provisions
of this section, the merchant is not liable for any fees associated with the chargeback.
§39A-4-5. Merchant liability for repudiated card-not-present credit
or debit transactions.
A merchant is not liable for any chargeback or fees resulting
from a card-not-present transaction which has been repudiated by
the cardholder if:
(1) The cardholder name and account information given to the
merchant at the time of sale matches the cardholder name and
account information in the records of the issuing bank or credit or
debit card company;
(2) The goods purchased as a result of the card-not-present
transaction were delivered to the billing address contained in the
records of the issuing bank or credit or debit card company; and
(3) The merchant has received a return receipt, signed by the
cardholder, showing delivery of the goods purchased.
The purpose of this bill is to limit a West Virginia
merchant's liability for fraudulent card-not-present credit or
debit transactions and for fees resulting therefrom by providing
the merchant access to the terms of credit or debit card issuers'
rules and regulations by which the merchant is bound and by
limiting liability and fees where the credit or debit card issuer
fails to assist merchant in mitigating damages, where the bank
fails to give timely notice to the merchant that a fraud has
occurred and where transactions are fraudulently repudiated by the
customer.
This article is new; therefore, strike-throughs and
underscoring have been omitted.
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