| Last Version Text |
<?xml version="1.0" ?>
<ns0:MeasureDoc xmlns:html="http://www.w3.org/1999/xhtml" xmlns:ns0="http://lc.ca.gov/legalservices/schemas/caml.1#" xmlns:ns3="http://www.w3.org/1999/xlink" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance" version="1.0" xsi:schemaLocation="http://lc.ca.gov/legalservices/schemas/caml.1# xca.1.xsd">
<ns0:Description>
<ns0:Id>20250AB__106596AMD</ns0:Id>
<ns0:VersionNum>96</ns0:VersionNum>
<ns0:History>
<ns0:Action>
<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2025-02-20</ns0:ActionDate>
</ns0:Action>
<ns0:Action>
<ns0:ActionText>AMENDED_ASSEMBLY</ns0:ActionText>
<ns0:ActionDate>2025-04-02</ns0:ActionDate>
</ns0:Action>
<ns0:Action>
<ns0:ActionText>AMENDED_ASSEMBLY</ns0:ActionText>
<ns0:ActionDate>2025-04-09</ns0:ActionDate>
</ns0:Action>
<ns0:Action>
<ns0:ActionText>AMENDED_ASSEMBLY</ns0:ActionText>
<ns0:ActionDate>2025-04-21</ns0:ActionDate>
</ns0:Action>
</ns0:History>
<ns0:LegislativeInfo>
<ns0:SessionYear>2025</ns0:SessionYear>
<ns0:SessionNum>0</ns0:SessionNum>
<ns0:MeasureType>AB</ns0:MeasureType>
<ns0:MeasureNum>1065</ns0:MeasureNum>
<ns0:MeasureState>AMD</ns0:MeasureState>
</ns0:LegislativeInfo>
<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Assembly Member Ortega</ns0:AuthorText>
<ns0:AuthorText authorType="COAUTHOR_ORIGINATING">(Coauthors: Assembly Members Garcia, Jackson, and Ward)</ns0:AuthorText>
<ns0:AuthorText authorType="COAUTHOR_OPPOSITE">(Coauthor: Senator Cortese)</ns0:AuthorText>
<ns0:Authors>
<ns0:Legislator>
<ns0:Contribution>LEAD_AUTHOR</ns0:Contribution>
<ns0:House>ASSEMBLY</ns0:House>
<ns0:Name>Ortega</ns0:Name>
</ns0:Legislator>
<ns0:Legislator>
<ns0:Contribution>COAUTHOR</ns0:Contribution>
<ns0:House>ASSEMBLY</ns0:House>
<ns0:Name>Garcia</ns0:Name>
</ns0:Legislator>
<ns0:Legislator>
<ns0:Contribution>COAUTHOR</ns0:Contribution>
<ns0:House>ASSEMBLY</ns0:House>
<ns0:Name>Jackson</ns0:Name>
</ns0:Legislator>
<ns0:Legislator>
<ns0:Contribution>COAUTHOR</ns0:Contribution>
<ns0:House>ASSEMBLY</ns0:House>
<ns0:Name>Ward</ns0:Name>
</ns0:Legislator>
<ns0:Legislator>
<ns0:Contribution>COAUTHOR</ns0:Contribution>
<ns0:House>SENATE</ns0:House>
<ns0:Name>Cortese</ns0:Name>
</ns0:Legislator>
</ns0:Authors>
<ns0:Title> An act to add Division 25.5 (commencing with Section 100050) to the Financial Code, relating to service fees. </ns0:Title>
<ns0:RelatingClause>service fees</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Credit card transaction fees: tax payments: Consumer Inflation Reduction and Tax Fairness Act.</ns0:Subject>
</ns0:GeneralSubject>
<ns0:DigestText>
<html:p>Existing law, the Financial Code, provides for the licensure and regulation of various types of financial institutions and transactions. Existing law, the Song-Beverly Credit Card Act of 1971, regulates the issuance, use, and processing of credit cards and credit card transactions. </html:p>
<html:p>This bill would enact the Consumer Inflation Reduction and Tax Fairness Act, within the Financial Code, to require that the calculation of interchange fees charged by an issuer, a payment card network, an acquirer bank, or a processor not take into account certain state and local taxes and fees, as specified. The bill would define various terms for these purposes. The bill would prohibit a payment card network, an acquirer bank, or a processor from altering the computation of interchange fees, either by increasing the rate
or the amount of fees applicable, to circumvent the effects of the act.</html:p>
<html:p>Existing law, the Unfair Competition Law, makes various practices unlawful and provides that a person who engages, has engaged, or proposes to engage in unfair competition is liable for a civil penalty, as specified. </html:p>
<html:p>This bill would provide a violation of its provisions is enforceable pursuant to the Unfair Competition Law, as provided.</html:p>
</ns0:DigestText>
<ns0:DigestKey>
<ns0:VoteRequired>MAJORITY</ns0:VoteRequired>
<ns0:Appropriation>NO</ns0:Appropriation>
<ns0:FiscalCommittee>NO</ns0:FiscalCommittee>
<ns0:LocalProgram>NO</ns0:LocalProgram>
</ns0:DigestKey>
<ns0:MeasureIndicators>
<ns0:ImmediateEffect>NO</ns0:ImmediateEffect>
<ns0:ImmediateEffectFlags>
<ns0:Urgency>NO</ns0:Urgency>
<ns0:TaxLevy>NO</ns0:TaxLevy>
<ns0:Election>NO</ns0:Election>
<ns0:UsualCurrentExpenses>NO</ns0:UsualCurrentExpenses>
<ns0:BudgetBill>NO</ns0:BudgetBill>
<ns0:Prop25TrailerBill>NO</ns0:Prop25TrailerBill>
</ns0:ImmediateEffectFlags>
</ns0:MeasureIndicators>
</ns0:Description>
<ns0:Bill id="bill">
<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
<ns0:BillSection id="id_D2E8E953-D309-44FA-AF96-66BEE0B86AEC">
<ns0:Num>SECTION 1.</ns0:Num>
<ns0:ActionLine action="IS_ADDED" ns3:href="urn:caml:codes:FIN:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'25.5.'%5D)" ns3:label="fractionType: LAW_SPREAD||commencingWith: 100050" ns3:type="locator">
Division 25.5 (commencing with Section 100050) is added to the
<ns0:DocName>Financial Code</ns0:DocName>
, to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawHeading id="id_205CCC80-04CE-458E-AF49-E4B8DBE6A101" type="DIVISION">
<ns0:Num>25.5.</ns0:Num>
<ns0:LawHeadingVersion id="id_34CF4457-98A1-4E32-ADF0-986646ABDC8E">
<ns0:LawHeadingText>Consumer Inflation Reduction and Tax Fairness Act</ns0:LawHeadingText>
</ns0:LawHeadingVersion>
<ns0:LawSection id="id_67F34402-FD06-4B7B-8485-27659A8DC626">
<ns0:Num>100050.</ns0:Num>
<ns0:LawSectionVersion id="id_293E7665-BFD9-4ECB-A067-8E4E43E92D24">
<ns0:Content>
<html:p>This division shall be known, and may be cited, as the Consumer Inflation Reduction and Tax Fairness Act.</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
<ns0:LawSection id="id_CF536EA2-205B-4B04-B297-201466DA877E">
<ns0:Num>100052.</ns0:Num>
<ns0:LawSectionVersion id="id_634D2155-FB01-4319-B5BD-33A0816005D1">
<ns0:Content>
<html:p>For purposes of this division:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
“Acquirer bank” means a member of a payment card network that contracts with a merchant for the settlement of electronic payment transactions. An acquirer bank may contract directly with merchants or indirectly through a processor to process electronic payment transactions.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
“Authorization” means the process through which a merchant requests approval for an electronic payment transaction from the issuer.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
“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.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
“Credit card” has the same meaning as defined in Section 1747.02 of the Civil Code.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
“Debit card” has the same meaning as defined in Section 1748.30 of the Civil Code.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
For purposes of this division, “debit card” includes a general use prepaid card, as that term is defined in Section 1693l-1 of Title 15 of the United States Code.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
“Debit card” shall not include paper checks.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
“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.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
“Interchange fee” means a fee established, charged, or received by a payment card network for the purpose of compensating the issuer for its involvement in an electronic payment transaction.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
“Issuer” means a person issuing a debit card or credit card, or the issuer’s agent.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
“Merchant” means a person that collects and remits a tax.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
“Payment card network” means an entity that
satisfies both of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Is used by a merchant or seller in order to accept as a form of payment a brand of debit card, credit card, or other device that may be used to carry out debit or credit transactions.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
“Person” means any individual, firm, public or private corporation, government, partnership, association, or any other organization or entity.
</html:p>
<html:p>
(l)
<html:span class="EnSpace"/>
“Processor” means an entity that
facilitates, services, processes, or manages the debit or credit authorization, billing, transfer, payment procedures, or settlement with respect to any electronic payment transaction.
</html:p>
<html:p>
(m)
<html:span class="EnSpace"/>
“Settlement” means the process of transmitting sales information to the issuing bank for collection and reimbursement of funds to the merchant and calculating and reporting the net transaction amount to the issuer and merchant for an electronic payment transaction that is cleared.
</html:p>
<html:p>
(n)
<html:span class="EnSpace"/>
“Tax” means the
following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Sales and Use Tax Law (Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code).
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code).
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code).
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Cigarette and Tobacco Products Tax Law (Part 13 (commencing with Section 30001) of Division 2 of the Revenue and Taxation Code).
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
Alcoholic Beverage Tax Law (Part 14 (commencing with Section 32001) of
Division 2 of the Revenue and Taxation Code).
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
Cannabis Tax Law (Part 14.5 (commencing with Section 34010) of Division 2 of the Revenue and Taxation Code).
</html:p>
<html:p>
(o)
<html:span class="EnSpace"/>
“Tax documentation” means documentation sufficient for the payment card network to determine the total amount of the electronic payment transaction and the tax amount of the transaction. Tax documentation may be related to a single electronic payment transaction or multiple electronic payment transactions aggregated over a period of time. Examples of tax documentation include, but are not limited to, invoices, receipts, journals, ledgers, and tax returns filed with the Internal Revenue Service, the California Department of Tax and Fee Administration, or any other state or local taxing
authority.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
<ns0:LawSection id="id_94A9D143-9B1E-48A8-A247-0E84BCCD468F">
<ns0:Num>100054.</ns0:Num>
<ns0:LawSectionVersion id="id_F0060116-D7CD-4D4B-8515-4897B7926D9E">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
An issuer, a payment card network, an acquirer bank, or a processor shall not receive or charge a merchant any interchange fee on the tax amount of an electronic payment transaction if the merchant informs the acquirer bank or its designee of the tax amount as part of the authorization or settlement process for the electronic payment transaction. The merchant shall transmit the tax amount data as part of the authorization or settlement process to avoid being charged interchange fees on the tax amount of an electronic payment transaction.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
A merchant that does not transmit the tax amount data in accordance with this section may submit tax documentation for
the electronic payment transaction to the acquirer bank or its designee no later than 180 days after the date of the electronic payment transaction, and the issuer shall credit to the merchant the amount of interchange fees charged on the tax amount of the electronic payment transaction within 30 days after the merchant submits any necessary tax documentation.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
This section does not create liability for a payment card network regarding the accuracy of the tax data reported by the merchant.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
A payment card network, an acquirer bank, or a processor shall 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 card or debit card transaction not attributable to
taxes or other fees charged to the retailer to circumvent the effects of this section.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
<ns0:LawSection id="id_C5812F36-2F19-4E0C-85EB-D79F2503CB47">
<ns0:Num>100056.</ns0:Num>
<ns0:LawSectionVersion id="id_4A7308B5-1B96-4DEC-B512-01DDF1A55FEF">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
A person or entity that knowingly engages in a pattern or practice of assessing interchange fees on the tax portion of an electronic payment transaction in violation of this division may be subject to enforcement under Chapter 5 (commencing with Section 17200) of Part 2 of Division 7 of the Business and Professions Code.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
In determining liability under this section, the court shall consider all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Whether the person or entity had control over or access to the tax amount data.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Whether the person or entity
took reasonable steps to implement and enforce compliant processes for authorization, settlement, and fee computation.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Whether any violation was the result of merchant or point-of-sale vendor error, or a failure to transmit sufficient or accurate tax data.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
Nothing in this section shall impose liability on a payment card network, acquirer bank, issuer, or processor for any errors, omissions, or misstatements in tax data provided by a merchant or its point-of-sale vendor, provided the entity did not knowingly disregard reliable information regarding such errors.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:LawHeading>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_3FD11656-3C82-431A-97AA-068EB753FAE2">
<ns0:Num>SEC. 2.</ns0:Num>
<ns0:Content>
<html:p>The provisions of this act are severable. If any provision of this act or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.</html:p>
</ns0:Content>
</ns0:BillSection>
</ns0:Bill>
</ns0:MeasureDoc>
|