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Introduced Version Senate Bill 474 History

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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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