Bill Text


PDF |Add To My Favorites |Track Bill | print page

AB-274 Unemployment benefits: chip-enabled cards.(2021-2022)

SHARE THIS:share this bill in Facebookshare this bill in Twitter
Date Published: 01/19/2021 09:00 PM
AB274:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 274


Introduced by Assembly Member Davies

January 19, 2021


An act to amend Section 1339.1 of the Unemployment Insurance Code, relating to unemployment insurance, and declaring the urgency thereof, to take effect immediately.


LEGISLATIVE COUNSEL'S DIGEST


AB 274, as introduced, Davies. Unemployment benefits: chip-enabled cards.
Existing law provides for unemployment compensation benefits to eligible persons who are unemployed through no fault of their own. Under existing law, these provisions are generally administered by the Employment Development Department. Existing law requires unemployment compensation benefits that are directly deposited to an account of the recipient’s choice to be deposited to a qualifying account, which includes a prepaid card account that meets certain requirements. Existing law includes in the definition of prepaid card or prepaid card account a card, code, or other means of access to funds of a recipient that is usable at multiple, unaffiliated merchants for goods or services, or usable at automated teller machines.
This bill would revise the definition of prepaid card or prepaid card account by requiring cards to be chip-enabled, as defined.
This bill would declare that it is to take effect immediately as an urgency statute.
Vote: 2/3   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 1339.1 of the Unemployment Insurance Code is amended to read:

1339.1.
 (a) (1) Notwithstanding any other provisions of this part, if unemployment compensation benefit payments are directly deposited to an account of the recipient’s choice, as authorized under the federal Electronic Fund Transfer Act (EFTA) (15 U.S.C. Sec. 1693 et seq.), the payments may only be deposited to an account that meets the requirements of a qualifying account, as defined in paragraph (2), for deposit of public assistance payments, including unemployment compensation benefits.
(2) For purposes of this section, a “qualifying account” is one of the following:
(A) A demand deposit or savings account at an insured financial institution in the name of the person entitled to receipt of public assistance payments.
(B) A prepaid card account that meets all of the following:
(i) The account is held at an insured financial institution.
(ii) The account is set up to meet the requirements for passthrough deposit or share insurance so that the funds accessible through the account are eligible for insurance for the benefit of the person entitled to the receipt of public assistance payments by the Federal Deposit Insurance Corporation in accordance with Part 330 of Title 12 of the Code of Federal Regulations, or the National Credit Union Share Insurance Fund in accordance with Part 745 of Title 12 of the Code of Federal Regulations.
(iii) The account is not attached to any credit or overdraft feature that is automatically repaid from the account after delivery of the payment.
(iv) The issuer of the card complies with all of the requirements, and provides the holder of the card with all of the consumer protections, that apply to a payroll card account under the rules implementing the EFTA or other rules subsequently adopted under the EFTA that apply to prepaid card accounts.
(3) A person or entity that issues a prepaid card or maintains or manages a prepaid card account that does not comply with paragraph (2) shall not accept or facilitate the direct deposit of unemployment compensation benefit payments to the prepaid card account.
(b) The department has no obligation to determine whether an account at the financial institution of the recipient’s choice is a qualifying account, as described in subdivision (a). For purposes of this section, the department shall not be held liable for authorizing a direct deposit of unemployment compensation benefit payments into a prepaid card account designated by the recipient that does not comply with paragraph (2) of subdivision (a).
(c) For the purposes of this section, the following definitions shall apply:
(1) “Chip-enabled card” means a card that contains a microchip, with memory capabilities, and embedded secure integrated circuits for authentication purposes.

(1)

(2) “Financial institution” means a state or national bank, a state or federal savings and loan association, a mutual savings bank, or a state or federal credit union.

(2)

(3) “Issuer” means a person or entity that issues a prepaid card.

(3)

(4) “Payroll card account” shall have the same meaning as that term is defined in the regulations implementing the EFTA.

(4)

(5) “Prepaid card” or “prepaid card account” means either of the following:
(A) A chip-enabled card, code, or other means of access to funds of a recipient that is usable at multiple, unaffiliated merchants for goods or services, or usable at automated teller machines.
(B) The same as those terms or related terms are defined in the regulations adopted under the EFTA regarding general use reloadable cards.

SEC. 2.

 This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to protect, as soon as possible, the state and business from fraudulent claims of unemployment assistance that hinder the preservation of the public peace, health, and safety and the state’s economic security during the ongoing COVID-19 pandemic, it is necessary for this measure to go into immediate effect.