State lawmakers on Monday called for greater consumer protections on debit cards, unveiling legislation that would cap cardholders' liability for unauthorized use at $50.
The bill, AB 1638 by Assembly Speaker Antonio Villaraigosa (D-Los Angeles) and Assemblywoman Valerie Brown (D-Kenwood), would also require banks to replace stolen funds due to fraudulent use within two business days.
Debit cards, also called check cards, have proliferated recently because banks have generated increasing fees from their use and found them far cheaper to process than checks.
But unlike ATM cards, debit cards do not require a personal identification number to access, leaving owners at greater risk if their cards are stolen, consumer advocates say.
Visa and MasterCard have already voluntarily imposed a $50 liability cap on stolen or lost debit cards, similar to credit card caps, and major banks such as Wells Fargo and Bank of America have voluntarily agreed to repay customer accounts when debit card fraud occurs. But Brown and consumer advocates want that voluntary agreement locked into law, given the growing popularity of debit card use.
Although six other states have already passed laws on liability, representatives of California's banking industry oppose the proposal, saying their voluntary policies are adequate.
The Assembly's Banking and Finance Committee is scheduled to take up the bill later this spring.