MONTPELIER, Vt. (4/29/10)--The Vermont Legislature’s House Commerce Committee voted out a version of a credit card bill that could endanger card programs at Vermont credit unions. The bill, S. 138, was voted out of an 11-member committee Tuesday, 10-1-0, according to the Association of Vermont Credit Unions (AVCU). The bill will go to the House floor for initial reading later this week, and then be sent back to the Senate Judiciary Committee for review. If senators support the House version, the bill will be sent to the Senate floor for approval. If not, it will go to a conference committee. “We’ve been working very hard for many weeks to minimize several negative unintended consequences of S. 138 as introduced in the Senate,” said AVCU President/CEO Joe Bergeron. “Originally S.138 was mostly a consumer protection effort, but just before the legislature’s crossover date, the Senate Judiciary Committee removed the consumer protection provisions, and replaced them with ‘merchant protection’ provisions proposed by grocer and retailer associations. “We would have preferred no bill at all, but given deep support among legislators for laws to address claims by small business, complaints of increasing card processing costs and so-called abuses by credit card companies, there has been little doubt that some kind of legislation would ultimately pass. Our challenge, and that of banks, credit card networks, and processors, has been to insure against unintended ramifications--particularly for credit unions, from our perspective,” Bergeron said in an update to Vermont credit union CEOs Tuesday night. He also noted some key changes made in the House bill:
* Verbiage that AVCU believes would have allowed surcharging by merchants for use of plastic has been removed/altered. Although the wording allows merchants to provide discounts, or other benefits for other forms of payment, AVCU was told by the networks this was already allowed. * Merchants have been limited to setting an allowable minimum plastic card transaction of no more than $10, which many small merchants already do in technical violation of network rules. Previously, merchants had sought a limitless minimum of their choosing. The bill requires merchants to disclose the minimum prominently at the point of sale. * Although merchants will not be required to accept plastic at all of their locations, this was already allowed under network regulations. * Statutory penalties for violations by networks of provisions regarding locations, minimums and discounts, have been limited to offenses in those areas only, as opposed to prior language that opened the door for penalties against other possible violations. * A confusing definition of “processor” that could have unintentionally included credit union card processors--as opposed to merchant processors or credit unions as processors--has been eliminated. * The bill’s provisions are available only to merchants with a physical presence in Vermont.