SENATE BILL / HOUSE BILL
(By Senators/Delegates)

[Introduced.]
A BILL to amend the code of West Virginia, 1931, as amended, by adding thereto a new article, designated §31A-8G-1, §31A-8G-2, §31A-8G-3, §31A-8G-4, and §31A-8G-5, all relating to card-not-present credit transactions; defining terms; specifying duties of merchants, issuing banks, credit card companies and acquiring banks; specifying which party bears the burden of loss as a result of fraudulent card-not-present credit transaction; prohibiting assessment of fees associated with fraudulent card-not-present transactions

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 §31A-8G-1, §31A-8G-2, §31A-8G-3, §31A-8G-4, and §31A-8G-5, to read as follows:

CHAPTER 31A. BANKS AND BANKING.

ARTICLE 8G. CREDIT CARD TRANSACTIONS.

§31A-8G-1. Definitions.

a. As used in this article, the following terms shall have the following definitions:

1. “Acquiring bank” means a financial institution licensed to do business in this state providing merchant accounts which enable merchants to accept card-not-present credit transactions.

2. “Authorization” means notification that an issuing bank or credit card company has approved a card-not-present credit transaction.

3. “Cardholder” means the person or entity to whom a credit card is issued and who is authorized to use the card to purchase goods or services;

4. “Card-not-present credit transaction” means a sale of goods or services to a cardholder by telephone, mail order, internet or other means by a merchant licensed to do business in this state that does not require the cardholder's signature or physical presentation of the credit card to the merchant.

5. “Credit card” means an arrangement by which an issuing bank or credit card company extends to a cardholder the privilege of using a credit card to purchase goods or services from at least one hundred persons not related to the issuing bank or credit card company.

6. “Credit card company” means any business entity licensed to do business in this state other than a bank which provides credit cards and other products for banks;

7. “Issuing bank” means a financial institution licensed to do business in this state which issues credit cards to cardholders;

8. “Merchant account” means a bank account that allows a merchant to accept card-not-present card payments;

9. “Merchant” means a person or entity licensed to do 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 cardholder's signature or physical presentation of a credit card.

§31A-8G-2. Duties of merchant in card-not present credit transactions.

a. Prior to submitting a card-not-present credit transaction to a issuing bank or credit card company for authorization, the merchant has an obligation to collect the following information:

1. The name of the cardholder;

2. The billing address of the cardholder;

3. The number of the credit card account;

4. The expiration date of the credit card account;

5. The address to which the goods and/or services are to be provided;

6. The authorization code, if any, provided for the credit card.

b. A merchant who fails to obtain and provide to the issuing bank or credit card company the information contained in subsection (a) of this section is liable for any loss resulting from subsequent rejection of a card-not-present credit transaction due to fraudulent use of the credit card number or disavowal of the transaction by the cardholder.

§31A-8G-3. Duties of issuing bank or credit card company in card-not present credit transactions.

a. Prior to authorizing a card-not-present credit transaction, a issuing bank or credit card company has an obligation to notify the merchant if:

1. The submitted credit card number does not correspond to a valid or open credit card;

2. The submitted credit card number corresponds to a credit card that has been reported lost or stolen;

3. The expiration date given does not match the expiration date for the submitted credit card number;

4. The amount of the purchase exceeds the credit limit on the submitted credit card number;

5. The billing address provided with the submitted credit card number does not correspond to the billing address listed for that account in the records of the issuing bank or credit card company;

6. The cardholder name provided with the submitted credit card number does not match the cardholder name listed for that account in the records of the issuing bank or credit card company;

7. The authentication code provided with the submitted credit card number does not match the authentication code listed for that account in the records of the issuing bank or credit card company.

b. An issuing bank or credit card company which does not notify a merchant of the circumstances listed in subsection (a) of this section prior to authorizing a card-not-present transaction is liable for any loss resulting from subsequent rejection of the transaction due to fraudulent use of the credit card number or disavowal of the transaction by the cardholder.

c. A merchant who accepts and completes a card-not-present credit transaction after having been notified by the issuing bank or credit card company of any of the circumstances listed in subsection (a) of this section is liable for any loss resulting from subsequent rejection of the transaction due to fraudulent use of the credit card number or disavowal of the transaction by the cardholder.

d. If, at the time a request for authorization is submitted, none of the circumstances listed in subsection (a) exist, and the issuing bank or credit card company authorizes the card-not-present transaction, the merchant is liable for any loss resulting from subsequent rejection of the transaction due to fraudulent use of the credit card number or disavowal of the transaction by the cardholder. Provided, That if the issuing bank or credit card company subsequently becomes aware of the fraudulent use of the credit card number or disavowal of the transaction by the cardholder, it must notify the merchant that the transaction is being voided and the reasons for rejecting the transaction before issuing a chargeback to the merchant account. If the issuing bank or credit card company fails to notify the merchant of the rejection of the card-not-present transaction, the merchant is liable for only one-half of the loss resulting from the fraudulent use of the credit card number or disavowal of the transaction by the cardholder.

§31A-8G-4. Duties of acquiring bank in card-not present credit transactions.

a. An acquiring bank must notify a merchant within twenty-four hours if an issuing bank or credit card company has issued a chargeback for a card-not present transaction.

b. An acquiring bank may not deduct funds from the merchant’s merchant account until it has provided the notice required in subsection (a) of this section.

c. An acquiring bank which fails to comply with the provisions of this section is prohibited from charging the merchant any fees in association with the chargeback.

§31A-8G-5. Duty to assist merchant in mitigating damages.

a. Issuing banks, credit card companies and acquiring banks have a duty to assist a merchant who is the victim of a fraudulent card-not-present credit transaction to mitigate damages resulting from the transaction by providing the merchant with information as to the manner in which the fraud was accomplished and the identity of the individual responsible for the fraud.

b. An issuing bank, credit card company or acquiring bank which fails or refuses to assist the merchant in mitigating damages resulting from and prosecuting the perpetrator of a fraudulent card-not-present credit transaction is prohibited from charging the merchant any fees in association with the fraudulent transaction.

If you you support this bill....

You can also contact the Govorner:

Governor Bob Wise
1900 Kanawha Boulevard, E.,
Charleston, WV 25305

Toll-Free: 1-888-438-2731

E-mail: Governor@WVGov.org