Bill Summary for Bill Number SB10-188

Date: 04/14/2010

Final
BILL SUMMARY for SB10-188

SENATE COMMITTEE ON BUSINESS, LABOR AND TECHNOLOGY

Votes: View-->	Action Taken:
Refer Senate Bill 10-188 to the Committee of the W	PASS

02:23 PM -- Senate Bill 10-188

Senator Penry and Senator Morse, co-prime sponsors of Senate Bill 10-188, presented the bill. The bill amends the Consumer Credit Code by adding debit cards to the provisions prohibiting retailers from assessing a surcharge on any credit card transaction. Senator Penry described the types of situations that sometimes arise when consumers use debit cards. He talked about two types of fees that may be charged -- fees to the consumer and fees to the retailers (interchange fees). Retailers are paying more credit card fees, he said, only because more consumers are using credit cards. He said the bill is sensible consumer protection.

02:29 PM

Senator Morse spoke to the bill. He said the bill treats debit cards the same way credit cards are treated. He said the implications of the bill are simple and the bill does not address or cause the issues that will be raised by the industry in testimony.

02:32 PM

The following persons testified:

02:32 PM -- Laura Udis, representing the Attorney General's Office, testified in support of the bill. Ms. Udis described the prohibition in law against a merchant charging fees for the use of a credit card or charge card. She said the bill levels the paying field with regard to debit cards. She commented that there were no debit cards when the law was passed 25 years ago.

02:34 PM -- Janet Sanders, representing Incom Direct, testified in opposition to the bill. Ms. Sanders talked about the two ways debit cards can be used -- with a PIN or without. She said the bill addresses PIN transactions. She said there is no way for merchants to pass along the cost of debit card fees to consumers, because merchants do not know what the fee is. She stated that the fee depends upon the system on which the debit card is run. She said VISA and MasterCard keep raising fees, and the merchants have no control over that. Ms. Sanders explained that there are 353 rate categories that effect the amount of the fee paid by the merchant. She said 80 percent of retail money moves electronically and there needs to be a better understanding of how the industry works. Ms. Sanders talked about new fee structures for debit cards.

02:45 PM

Ms. Sanders responded to committee comments and questions. Senator Williams commented that the bill does not address or impact many of the issues raised by Ms. Sanders. Ms. Sanders responded to Senator Williams' comments, speaking again about the fee structure. Senator Penry responded to the testimony. Senator Foster commented that the bill provides consumer protection and said the bill does not tackle the much larger problems identified by Ms. Sanders. Ms. Sanders responded to Senator Foster's comments.

02:54 PM

Committee conversation continued, with Senator Foster asking whether businesses can refuse to take a credit card for purchases below a certain dollar amount. Ms. Sanders responded.

02:56 PM -- Chris Howes, representing the Colorado Retail Council, testified in opposition to the bill. He provided a letter from the National Retail Federation outlining their reasons for opposing the bill (Attachment E). He said the bill is very bad for businesses and said a number of other states are considering similar legislation.

02:59 PM -- Tony Gagliardi, representing the National Federation of Independent Business, testified in opposition to the bill. He said over 64 percent of his membership opposes the bill. He echoed comments made by earlier witnesses. He said a similar bill was recently defeated in California.

03:01 PM -- Jeanne McEvoy, representing the Colorado Licensed Beverage Association, testified in opposition to the bill. Ms. McEvoy provided an example of the charges and fees assessed to a merchant when a consumer uses a debit card. She said credit and debit card charges are the second highest cost of doing business after salaries. She talked about other fees that are attached to debit card transactions.

03:08 PM

Ms. McEvoy responded to committee questions. She responded to a question from Senator Tochtrop, who asked about fees related to credit card transactions. Senator Foster commented, saying the example provided is a tax, not a fee. Senator Williams asked for further information about the differences in fees for debit cards and credit cards. Ms. McEvoy responded.

03:11 PM -- Mary Lou Chapman, representing the Rocky Mountain Food Industry Association, testified in opposition to the bill. She said the previous witnesses eloquently stated the opposition to the bill. She said she knows of no grocer in the state that charges a fee for debit transactions.

03:13 PM -- Grier Bailey, representing the Colorado Wyoming Petroleum Marketers Association, testified in opposition to the bill. He spoke to Senator Penry's earlier comments about gas stations charging a fee at the pump. He commented on the reason banks are not here to testify in opposition to the bill. He suggested reasons that VISA would push the legislation.

Senator Scheffel asked for clarification of Mr. Bailey's comments regarding gas stations. Mr. Bailey responded. Senator Penry commented on the gas station issue and Mr. Bailey responded.

03:20 PM -- Steve Rauschenberger, representing VISA, testified in support of the bill. Mr. Rauschenberger said that debit cards are a growing part of the industry. He talked about the credit card industry and its complexities. Mr. Rauschenberger said the bill accords debit card transactions the same protections as credit card transactions. He explained that debit card transactions now exceed the volume of credit card transactions. He talked about efforts by retailers to undo regulations that currently exist at the federal level. He discussed the regulation of credit cards in Australia, where merchants were successful in persuading the national government to regulate interchange and to repeal network rules. He said the bill extends credit card protections to debit cards.

03:30 PM -- Brad Young, representing RxPlus Pharmacies, testified in opposition to the bill. He discussed health savings accounts and debit cards that are used under those accounts. Mr. Young expressed concern about how the bill might impact those cards.

03:33 PM -- Tim Dore, representing the Credit Union Association of Colorado, testified in support of the bill. He said the legislation levels the playing field. Mr. Dore mentioned issues that might arise if amendments are made to the bill.

03:35 PM -- Jennifer Waller, representing the Colorado Bankers Association and the Independent Bankers Association, testified in support of the bill. She said many of the issues raised in testimony need to be addressed at the federal level. She said the bill puts debit cards on the same level playing field as credit cards.

Senator Johnston asked whether debit cards carry a higher transaction cost than credit cards. Ms. Waller responded and Senator Penry provided further clarification.

03:37 PM

Senator Morse provided a letter of support signed by the Colorado Coalition for the Homeless, 9 to 5 Colorado, Colorado Catholic Conference, and All Families Deserve a Chance Coalition (Attachment F).

Senator Morse made closing comments to the bill.


BILL:	SB10-188
TIME:	03:38:56 PM
MOVED:	Williams
MOTION:	Refer Senate Bill 10-188 to the Committee of the Whole. The motion passed on a 5-1-1 vote.
SECONDED:
		VOTE
	Foster	Yes
	Harvey	Yes
	Johnston	Yes
	Mitchell	Excused
	Scheffel	No
	Williams	Yes
	Tochtrop	Yes

Final YES: 5 NO: 1 EXC: 1 ABS: 0 FINAL ACTION: PASS

03:39 PM

The committee adjourned.