ASSEMBLY, No. 2000

STATE OF NEW JERSEY

INTRODUCED MAY 13, 1996

By Assemblywoman HECK

An Act concerning certain banking services and charges and amending and supplementing various parts of the statutory law.

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

    1. (New section) As used in sections 1 through 8 of this act:

    "Account" means a demand deposit account, a negotiable order of withdrawal account, a share draft account, an automatic transfer account or any other transaction account described in 12 C.F.R.§204.2(e).

    "Depository institution" means a State chartered bank, savings bank or savings and loan association.

    "Funds" means the dollar amount in a customer account with a depository institution that is available for withdrawal as collected funds.

    "Insufficient funds" means that an account of a customer with a depository institution does not contain funds sufficient to cover an amount presented to the depository insitution for collection.

    "Uncollected balances" means those amounts deposited in a customers account by check or other written instrument which have not been collected.

    2. (New section) The maximum fee which may be imposed by a depository institution in connection with a check or other written instrument drawn upon insufficient funds or uncollected balances with respect to a customer's account, irrespective of whether the instrument is paid, accepted or returned by the depository institution, shall be established by the Commissioner of Banking by regulation adopted pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).

    3. (New section) If the payee is other than the person into whose account a deposit is made, no depository institution shall impose any fee in connection with a check or other written instrument received by it for deposit or collection and which is subsequently dishonored and returned for any reason by the drawee.

    4. (New section) No depository institution shall, in connection with the payment, acceptance or return of a check or order, impose any fee, fine, commission or other charge, however, designated, in addition to the maximum charge established by section 2 of this act, except that nothing in this act shall prohibit a depository institution from taking, receiving, reserving or charging interest, as authorized by law in connection with the payment of the check or order, or from imposing any charge in accordance with a written agreement as provided pursuant to "The Advance Loan Law of 1968," P.L.1968, c.64 (C.17:9A-59.1 et seq.) and subsection L. of section 155 of P.L.1963, c.144 (C.17:12B-155).

    5. (New section) A depository institution may as an accommodation to its customers, pay, accept or return a check or other written instrument without charge or at a lesser charge than the maximum charge permitted under section 2 of this act.

    6. (New section) a. Each depository institution shall disclose its fees in a manner and content that is uniform as to form and meaning. The form and terms to be used shall be established by regulation adopted pursuant to the the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), by the Commissioner of Banking after consultation with the banking advisory board and the Division of Consumer Affairs in the Department of Law and Public Safety.

    b. If a depository institution charges a fee for a customer transaction, however made, including, but not limited to, withdrawals, deposits, transfers or inquiries, the depository institution shall clearly and conspicuously inform the customer of the charge and the amount of the charge at the time of the transaction and provide the customer the alternative of ending the transaction without a charge being imposed or continuing the transaction with a charge imposed.

    7. (New section) No depository institution shall charge a fee for a customer inquiry made in person to an employee of the depository institution about the balance in a customer's account with the depository institution

    8. (New section) a. No depository institution shall increase the fees it charges for use of an automated teller machine (ATM) until such time as the Commissioner of Banking has conducted an investigation into fees charged with respect to the use of an ATM and determined what constitutes reasonable fees.

    b. The Commissioner of Banking shall investigate the use of ATMs and the fees associated with their use, including, but not limited to, the cost to and savings for depository institutions. Upon completion of this investigation, the commissioner, by regulation adopted pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), shall establish reasonable fees for the use of an ATM by a depository institution customer.

    9. N.J.S.12A:3-406 is amended to read as follows:

    12A:3-406. Negligence Contributing to Forged Signature or Alteration of Instrument.

    a. A person whose failure to exercise ordinary care substantially contributes to an alteration of an instrument or to the making of a forged signature on an instrument is precluded from asserting the alteration or the forgery against a person who, in good faith, pays the instrument or takes it for value or for collection. A bank which pays a check on a forged signature without an examination of the signature which would have revealed the forgery may not assert this preclusion against a person who complies with 12A:4-406.

    b. Under subsection a. of this section, if the person asserting the preclusion fails to exercise ordinary care in paying or taking the instrument and that failure substantially contributes to loss, the loss is allocated between the person precluded and the person asserting the preclusion according to the extent to which the failure of each to exercise ordinary care contributed to the loss.

    c. Under subsection a. of this section, the burden of proving failure to exercise ordinary care is on the person asserting the preclusion. The burden of proving that an examination of the check would have revealed a forged signature is on the person claiming that the preclusion does not apply. Under subsection b. of this section, the burden of proving failure to exercise ordinary care is on the person precluded.

(cf: N.J.S.12A:3-406)  

    10. N.J.S.12A:4-402 is amended to read as follows:

    12A:4-402. Bank's Liability to Customer for Wrongful Dishonor; Time of Determing Insufficiency of Account.

    a. Except as otherwise provided in this chapter, a payor bank wrongfully dishonors an item if it dishonors an item that is properly payable, but a bank may dishonor an item that would create an overdraft unless it has agreed to pay the overdraft.

    b. A payor bank is liable to its customer for damages proximately caused by the wrongful dishonor of an item. Liability is limited to actual damages proved and may include damages for an arrest or prosecution of the customer or other consequential damages. Whether any consequential damages are proximately caused by the wrongful dishonor is a question of fact to be determined in each case.

    c. A payor bank's determination of the customer's account balance on which a decision to dishonor for insufficiency of available funds is based [may be made at any time between the time the item is received by the payor bank and the time that the payor bank returns the item or gives notice in lieu of return, and no more than one determination need be made] shall be made after crediting the customer's account for deposits made on the day of presentment which represent funds available for withdrawal as of right. If, at the election of the payor bank, a subsequent balance determination is made for the purpose of reevaluating the bank's decision to dishonor the item, the account balance at that time is determinative of whether a dishonor for insufficiency of available funds is wrongful.

(cf: N.J.S.12A:4-402)

    11. N.J.S.12A:4-406 is amended to read as follows:

    12A:4-406. Customer's Duty to Discover and Report Unauthorized Signature or Alteration.

    a. A bank that sends or makes available to a customer a statement of account showing payment of items for the account shall either return or make available to the customer the items paid or provide information in the statement of account sufficient to allow the customer reasonably to identify the items paid. If a bank does not return the items, it shall provide in the statement of account the telephone number that the customer may call to request an item or a legible copy thereof pursuant to subsection b. of this section.

    The statement of account provides sufficient information if the item is described by item number, amount, and date of payment.

    b. If the items are not returned to the customer, the person retaining the items shall either retain the items or, if the items are destroyed, maintain the capacity to furnish legible copies of the items until the expiration of seven years after receipt of the items. A customer may request an item from the bank that paid the item, and that bank must provide in a reasonable time either the item or, if the item has been destroyed or is not otherwise obtainable, a legible copy of the item. A bank shall provide, upon request and without charge to the customer, at least two items or legible copies thereof with respect to each statement of account sent to the customer. A bank shall not charge a fee in excess of $.10 per item or legible copy thereof for each item requested by and provided to a customer beyond the two provided without charge. "Reasonable time" means within five business days of receipt of a request from a customer.

    c. If a bank sends or makes available a statement of account or items pursuant to subsection a. of this section, the customer must exercise reasonable promptness in examining the statement or the items to determine whether any payment was not authorized because of an alteration of an item or because a purported signature by or on behalf of the customer was not authorized. If, based on the statement or items provided, the customer should reasonably have discovered the unauthorized payment, the customer must promptly notify the bank of the relevant facts.

    d. If the bank proves that the customer failed, with respect to an item, to comply with the duties imposed on the customer by subsection c. of this section, the customer is precluded from asserting against the bank:

    (1) the customer's unauthorized signature or any alteration on the item, if the bank also proves that it suffered a loss by reason of the failure; and

    (2) the customer's unauthorized signature or alteration by the same wrongdoer on any other item paid in good faith by the bank if the payment was made before the bank received notice from the customer of the unauthorized signature or alteration and after the customer had been afforded a reasonable period of time, not exceeding 30 days, in which to examine the item or statement of account and notify the bank.

    e. If subsection d. of this section applies and the customer proves that the bank failed to exercise ordinary care in paying the item and that the failure [substantially] contributed to loss, the loss is allocated between the customer precluded and the bank asserting the preclusion according to the extent to which the failure of the customer to comply with subsection c. of this section and the failure of the bank to exercise ordinary care contributed to the loss. If the customer proves that the bank did not pay the item in good faith, the preclusion under subsection d. of this section does not apply.

    f. Without regard to care or lack of care of either the customer or the bank, a customer who does not within one year after the statement or items are made available to the customer (subsection a. of this section) discover and report the customer's unauthorized signature on or any alteration on the item is precluded from asserting against the bank the unauthorized signature or alteration. If there is a preclusion under this subsection, the payor bank may not recover for breach of warranty under 12A:4-208 with respect to the unauthorized signature or alteration to which the preclusion applies.

(cf: N.J.S.12A:4-406)

    12. (New section) a. An unconscionable provision in any contract between a bank and a consumer shall be unenforceable. If an unconscionable provision is found in such a contract, a court of competent jurisdiction may refuse to enforce the contract, may enforce the remainder of the contract without the unconscionable provision, may limit the application of the unconscionable provision so as to avoid an unconscionable result, or may award damages or such other relief to the parties as it may deem appropriate.

    b. A bank shall perform and enforce its contracts with consumers in good faith.

    13. This act shall take effect on the 180th day following enactment, except that the provisions of subsection a. of section 8 shall take effect immediately.

STATEMENT

    This bill places certain restrictions on State chartered banks, savings banks and savings and loan associations with respect to fees they may charge for overdrafts, returned deposited items and in person inquiries made to employees of depository institutions. In addition, the bill requires these depository institutions to disclose their fees in a uniform manner as to terms used and format. The bill requires the Commissioner of Banking to develop the terms and format in consultation with the Banking Advisory Board and the Division of Consumer Affairs and promulgate these as regulations. The bill further imposes a moratorium on any increase in the fees these institutions may charge for the use of an ATM, requires the Commissioner of Banking to study the fees charged for use of an ATM and upon completion of the study, to promulgate regulations that establish reasonable fees.

    The bill amends certain sections of the Uniform Commercial Code to:

    (1) require banks which do not return items with the periodic statement to list on the statement a telephone number which can be called by the customer to receive either up to two items or legible copies thereof, free of charge, with a maximum of $.10 per item as a charge for any item requested in excess of the two provided free of charge. A depository institution is to provide a customer the item or a copy of it within five business days of receiving the request.

    (2) prohibit a bank which pays a check on a forged signature without an examination of the signature which would have revealed the forgery from asserting the preclusion provided in subsection a. of 12A:3-406 against a person who complies with 12A:4-406.

    (3) require a payor bank which makes a determination of a customer's account on which it makes its decision to dishonor for insufficiency of available funds, to make that determination after crediting a customer's account for deposits made on the day of presentment, which deposits represent funds available for withdrawal as of right.

    (4) make unenforceable an unconscionable provision in any contract between a bank and a consumer and to require that a bank perform and enforce its contracts with consumers in good faith.

Concerns bank services and fees.