Bill S5826-2013

Imposes sanctions for credit card charge backs on motor vehicle fees

Imposes sanctions for credit card charge backs on motor vehicle fees.



  • Jun 20, 2013: SUBSTITUTED BY A7689A
  • Jun 20, 2013: ORDERED TO THIRD READING CAL.1516
  • Jun 17, 2013: REFERRED TO RULES




TITLE OF BILL: An act to amend the vehicle and traffic law, in relation to sanctions for credit card charge backs on motor vehicle fees

PURPOSE: To authorize the Department of Motor Vehicles to impose sanctions against persons who pay for fees with a credit card and thereafter use the card "charge back" system to avoid payment.

SUMMARY OF PROVISIONS: Bill section 1 would amend section 202-b of the Vehicle and Traffic Law by prohibiting to provide that when the fee for one's business or driver's license and/or registration was paid by credit card, the person subsequently contests the credit card charge and causes the fee to be charged back to the Department, any further transactions with DMV in the name of such person may be prohibited until payment is made in full.

The bill would take effect 120 days after receiving Executive approval.

EXISTING LAW: Currently, the Vehicle and Traffic Law only authorizes a civil penalty and sanctions for dishonored checks.

JUSTIFICATION: DMV has experienced an increase in a relatively new type of fraudulent activity associated with credit card transactions. A customer will pay a license or registration fee with a credit card and then illegitimately contest the charge with the customer's credit card company to obtain a "charge back." By requesting a charge back for a valid DMV charge, these customers are able to obtain a valid license or registration that they have not paid for.

While VTL § 202-b currently allows DMV to suspend the license or registration of a customer whose check is dishonored, there is no similar mechanism for those who defraud DMV by illegitimately requesting a charge back on their credit card transaction. The same safeguards applicable to dishonored checks would apply to charge backs. This proposal includes the ability to sanction a customer who pays a DMV fee via a credit card and then subsequently requests a 'charge back' with their credit card company by prohibiting any future transactions with DMV until full payment has been made.

Both the volume of charge backs and the dollar amount per charged back transaction have been increasing. DMV anticipates that this trend will continue as the range of transactions payable by credit card expands, and especially as additional internet transactions are offered. In fiscal. year 2010-11, DMV received an average of 100 chargeback requests per month from credit card issuers. DMV was able to recover only 50% of the unpaid fees associated with credit card charge backs ($158,457 out of $306,898). In addition to this lost revenue, DMV has incurred additional expenses because credit card companies may charge 510.00 per charge back.

LEGISLATIVE HISTORY: Similar legislation was introduced as S. 4918 and passed the Senate in 2003 and 2004.

FISCAL IMPLICATIONS: By imposing sanctions, this bill will increase revenue to the State by reducing the number of unpaid transaction fees for driver's licenses and registrations.

EFFECTIVE DATE: On-hundred twentieth day after it shall have become law


STATE OF NEW YORK ________________________________________________________________________ 5826 2013-2014 Regular Sessions IN SENATE June 17, 2013 ___________
Introduced by Sen. FUSCHILLO -- read twice and ordered printed, and when printed to be committed to the Committee on Rules AN ACT to amend the vehicle and traffic law, in relation to sanctions for credit card charge backs on motor vehicle fees THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Section 202-b of the vehicle and traffic law, as added by chapter 190 of the laws of 1990, is amended to read as follows: S 202-b. Penalties for submission of dishonored checks AND CREDIT CARD PAYMENTS. (A) A thirty-five dollar penalty fee shall be charged to any person who has submitted a check to the commissioner or his or her agent as payment for any license, permit or registration or any other type of fee for any type of transaction as required by this chapter and such check has been dishonored. Such thirty-five dollar penalty shall be added to the amount due to the commissioner. In addition, any or all licenses, permits or registrations issued in the name of such person may be suspended and, if a suspension has been issued, any other transaction in the name of such person with this department may be prohibited until full satisfaction of the amount due to the commissioner and the thirty- five dollar penalty fee is paid to the commissioner. No such suspension shall be issued until thirty days after notification that the check has been dishonored is mailed to such person. If satisfaction is made within thirty days from the date of mailing of such notification, no suspension shall be issued. (B) IN ANY CASE WHERE A PERSON HAS MADE A CREDIT CARD PAYMENT TO THE COMMISSIONER OR HIS OR HER AGENT AS PAYMENT FOR ANY LICENSE, PERMIT OR REGISTRATION OR ANY OTHER TYPE OF FEE FOR ANY TYPE OF TRANSACTION AS REQUIRED BY THIS CHAPTER, AND SUCH CREDIT CARD PAYMENT IS CONTESTED AND IS NOT HONORED BY THE CREDIT CARD COMPANY, ANY OTHER TRAN- SACTION IN THE NAME OF SUCH PERSON WITH THE DEPARTMENT MAY BE PROHIBIT- ED, UPON AT LEAST THIRTY DAYS NOTICE, UNTIL FULL SATISFACTION OF THE AMOUNT DUE TO THE COMMISSIONER HAS BEEN PAID. S 2. This act shall take effect on the one hundred twentieth day after it shall have become a law and shall apply to all payments received on or after such date.


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