Page images
PDF
EPUB

4.B 22°:El23 ELECTRONIC FUND TRANSFER CONSUMER

PROTECTION ACT

Sa

HEARINGS

BEFORE THE

SUBCOMMITTEE ON CONSUMER AFFAIRS

OF THE

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

UNITED STATES SENATE

NINETY-FIFTH CONGRESS

FIRST SESSION

ON

S. 2065

TO AMEND THE CONSUMER CREDIT PROTECTION ACT TO PRO-
VIDE CONSUMER RIGHTS AND REMEDIES IN ELECTRONIC

FUND TRANSFER SYSTEMS.

OCTOBER 3, 4, AND 5, 1977

Printed for the use of the
Committee on Banking, Housing, and Urban Affairs

UNIVERSITY

STANFORD

[blocks in formation]

DEPARTMENT

DOCUMENT

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 1977

99-379 O

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

WILLIAM PROXMIRE, Wisconsin, Chairman JOHN SPARKMAN, Alabama

EDWARD W. BROOKE, Massachusetts HARRISON A. WILLIAMS, JR., New Jersey JOHN TOWER, Texas THOMAS J. MCINTYRE, New Hampshire JAKE GARN, Utah ALAN CRANSTON, California

H. JOHN HEINZ III, Pennsylvania ADLAI E. STEVENSON, Illinois

RICHARD G. LUGAR, Indiana ROBERT MORGAN, North Carolina

HARRISON SCHMITT, New Mexico
DONALD W. RIEGLE, JR., Michigan
PAUL S. SARBANES, Maryland

KENNETH A. McLEAN, Staff Director
JEREMIAH S. BUCKLEY, Minority Staff Director

SUBCOMMITTEE ON CONSUMER AFFAIRS

DONALD W. RIEGLE, JR., Michigan, Chairman
WILLIAM PROXMIRE, Wisconsin

HARRISON SCHMITT, New Mexico
LEWIS M. TAFFER, Counsel
PHILIP A. SAMPSON, Minority Professional Member

[merged small][ocr errors]

CONTENTS

Page

96

119

LIST OF WITNESSES

3

TUESDAY, OCTOBER 6

Stephen S. Gardner, Vice Chairman, Member of the Board of Governors,

Federal Reserve System

150

Lewis Goldfarb, Acting Assistant Director for Special Statutes, Federal Trade

Commission

173

Richard J. Francis, commissioner, Financial institutions Bureau, State of

Michigan

196

WEDNESDAY, OCTOBER 5

Roy G. Green, on behalf of the U.S. League of Savings Associations.

217

J. Frederic Ruf, vice president, Marshall & Isley Bank, Milwaukee, Wis..

223

Eugene M. Tangney, on behalf of the American Bankers Association.

237

Hank E. Koehn, vice president of operations planning, Security Pacific Na-

tional Bank, Los Angeles, Calif

247

Maurice W. Gregg, on behalf of the National Retail Merchants Association ......

282

Karen H. Brown, director of consumer affairs, Food Marketing Institute

291

Milton W. Schober, special credit counsel, American Retail Federation

303

David A. Huemer, senior vice president, VISA U.S.A., Inc., Washington, D.C .. 305

ADDITIONAL STATEMENTS AND DATA

American Bankers Association, response to subsequent questions of Senator

Schmitt

280

Associated Credit Bureaus, Inc., letter from John L. Spafford, president

328

Brown, James L., answers to questions of Senator Riegle received subsequent
to the hearing

143

Citicorp, comments received for the record

346

Consumer Federation of America, answers of Linda Hudak, legislative director,
to questions from Senator Schmitt received subsequent to the hearing

43

Dunkelberg, William C., summary of paper titled “Banks' Lending Response
to Restricted Creditor Remedies"

273

Federal Reserve Board:

Answers to subsequent questions from members of the committee 166, 214

Memorandum of technical issues arising under S. 2065 presented in a

staff analysis

162

(III)

Page
194
297

331

Federal Trade Commission, Bureau of Consumer Protection, answers to sub-

sequent questions of Senator Schmitt
Food Marketing Institute, comments on S. 2065
Guggenheimer, Elinor C., Commissioner, New York City Department of Con-

sumer Affairs, reprint of paper titled "Survey of Banking Services and

Electronic Fund Transfers”

National Automated Clearing House Association, letter from Virgil M. Diss-

meyer, executive vice president

National Commission on Electronic Fund Transfers, excerpt from part 1 of final

report ........

National Consumer Law Center, answers to questions from Senator Schmitt

received subsequent to the hearing
National Savings and Loan League, statement received for the record
Science News, reprint of article titled "Insulin Gene Researchers Admit

Breach of Rules'
Wisconsin Banking Commission, letter from Robert A. Patrick, attorney

144
321

146
373

31

30

32

34

27

28

33

26

29

ELECTRONIC FUND TRANSFER CONSUMER

PROTECTION ACT

MONDAY, OCTOBER 3, 1977

U.S. SENATE, COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS, SUBCOMMITTEE ON CONSUMER AFFAIRS,

Washington, D.C. The subcommittee met at 10:15 a.m., in room 5302, Dirksen Senate Office Building, Senator Donald W. Riegle, Jr. (chairman of the subcommittee) presiding.

Present: Senators Riegle, Proxmire, Heinz, and Schmitt. .
Senator PROXMIRE. The subcommittee will come to order.

The chairman of the subcommittee is Senator Don Riegle. Senator Riegle is delayed and I'm going to go ahead and open the hearings in his absence and, of course, when he comes he will take over the chairmanship. In his absence I'm going to read Senator Riegle's opening statement.

Before I do that, I might point out that this is really an unusual kind of a problem that we have before us. In the last 40 years we have had some dramatic technological changes in our society. We had television that dramatically changed our lives. We have in electronic fund transfer systems something that will change it in quite a different way and does constitute a considerable revolution. It can also have a very remarkable effect on consumer legislation because it's outside of much consumer legislation and it may be that we will all of a sudden have a technological development that will present us with a situation which escapes the protections that we have tried to write into the law for consumers. So for that reason we want to give it consideration as to what kind of legislation would be appropriate in view of the potential effect this may have on consumers.

This legislation would establish a framework of consumer rights and remedies in EFT systems.

EFT is in its infancy, but it is already with us. Twenty-four-hour teller machines, pay-by-phone accounts, direct deposit of payroll and social security, and preauthorized debits-all are EFT systems now available to the consumer. In the near future we will see point-of-sale systems in which a consumer, by use of a special card or code, may instantly transfer money from his or her account to a merchant's. Sylvia Porter has characterized this as the beginning of the "checkless society.'

The EFT systems have a potential—and I emphasize the word "potential"—to be of great benefit to consumers. These systems could provide greater convenience to the consumer, more control

[merged small][merged small][ocr errors][merged small]
« PreviousContinue »