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Legislation Document
SPONSOR:
Rep. K. Williams & Sen. Brown & Sen. Hocker
Reps. Berry, Bush, Dukes, Gorman, Gray, Griffith, Harris, Hensley, Minor-Brown, Ortega, Osienski, Romer, Ross Levin, Michael Smith, Snyder-Hall, Spiegelman, Vanderwende, Cooke, Carson, Chukwuocha, Heffernan, Jones Giltner, K. Johnson; Sens. Cruce, Hansen, Hoffner, Huxtable, Lockman, Paradee, Pinkney, Poore, Seigfried, Sokola, Townsend, Walsh
HOUSE OF REPRESENTATIVES
153rd GENERAL ASSEMBLY
HOUSE BILL NO. 315
AN ACT TO AMEND TITLE 6 OF THE DELAWARE CODE RELATING TO CREDIT CARD FEES.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:
Section 1. Amend Subchapter IV, Chapter 25, Title 6 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows and redesignate accordingly:
Subchapter IV.
Distribution of
Credit Cards
§ 2541. Definitions.
As used in this subchapter:
“Credit card” means any card or document entitling its holder to obtain any goods or services by the production of the card or document, and entitling its holder to tender payment for such goods and services at a later date
(1) “Authorization” means the process through which a merchant requests approval for an electronic payment transaction from the issuer.
(2) “Clearance” means the process of transmitting final transaction data from a merchant to an issuer for posting to the cardholder's account and the calculation of fees and charges, including interchange fees, that apply to the issuer and the merchant.
(3) “Credit card” means as defined in § 103 of the Truth in Lending Act [15 U.S.C. § 1602].
(4) “Debit card” means any card or device issued by a financial institution to a consumer for use in initiating an electronic fund transfer from the account holding assets of the consumer at the financial institution, for the purpose of transferring money between accounts or obtaining money, property, labor, or services.
(5) “Electronic payment transaction” means a transaction in which a person uses a debit card, credit card, or other payment code or device, issued or approved through a payment card network to debit a deposit account or use a line of credit, whether authorization is based on a signature, personal identification number, or other means.
(6) “Gratuity” means money voluntarily given to an employee from a guest, patron, or customer in connection with services rendered.
(7) “Interchange fee” means a fee established, charged, or received by a payment card network for the purpose of compensating the issuer for the issuer’s involvement in an electronic payment transaction.
(8) “Issuer” means any person, or that person’s agent, who issues a credit card or debit card.
(9) “Merchant” means a person that accepts electronic payment transactions.
(10) “Payment card network” means an entity that does all of the following:
a. Directly or through licensed members, processors, or agents, provides the proprietary services, infrastructure, and software that routes information and data to conduct debit card or credit card transaction authorization, clearance, and settlement.
b. Enables a merchant or seller to accept as a form of payment a debit card, credit card, or other device that may be used to carry out debit or credit transactions.
(11) “Processor” means an entity that facilitates, services, processes, or manages a debit or credit authorization, billing, transfer, payment procedures, or settlement of an electronic payment transaction.
(12) “Settlement” means the transfer of funds from a customer's account to a seller or merchant upon electronic submission of finalized sales transactions to the payment card network.
(13) “Surcharge” means any means of increasing the regular price to a cardholder that is not imposed upon customers paying by cash, check, or similar means.
§ 2543.
Penalty
Penalties.
(a)
Whoever violates § 2542 of this title
shall
will
be fined not less than $100 nor more than $500 for each offense.
(b) A payment card network that violates § 2545 of this title is subject to a civil penalty of $1,000 per electronic payment transaction, and the payment card network must refund to the merchant the interchange fee calculated on the gratuity amount relative to the electronic payment transaction.
§ 2545. Surcharge fees; prohibitions.
(a) A payment card network may not establish, receive, or charge any interchange fee on the gratuity amount of an electronic payment transaction, provided the merchant transmits the gratuity amount as part of the authorization or settlement process for the electronic payment transaction.
(b) A merchant that does not transmit the gratuity amount data in accordance with subsection (a) of this section may submit gratuity data for the electronic payment transaction to the payment card network or its designee no later than 180 days after the date of the electronic payment transaction and, within 30 days after the merchant submits the necessary documentation, the payment card network must credit to the merchant the amount of interchange fees charged on the gratuity amount of the electronic payment transaction.
(c) A payment card network may not alter or manipulate the computation and imposition of interchange fees by increasing the rate or amount of the fees applicable to or imposed upon the portion of a credit or debit card transaction not attributable to the gratuity amount or other fees charged to the retailer to circumvent the effect of this section.
(d) This section does not create liability for a payment card network regarding accuracy of the gratuity data reported by the merchant.
Section 2. This Act is severable. If a provision of this Act or the application of this Act to a person or circumstance is held invalid, the invalidity does not affect the provisions or applications of this Act that can be given effect without the invalid provision or application.
SYNOPSIS
This Act prohibits payment card networks from establishing or charging transaction fees on tips on credit card transactions. Violations are punishable by a penalty of $1,000 per electronic transaction and the wrongful fees must be refunded.