ARIZONA STATE SENATE

ALANNA BENDEL

ASSISTANT RESEARCH ANALYST

MOLLY GRAVER

LEGISLATIVE RESEARCH ANALYST

FINANCE AND COMMERCE COMMITTEE

Telephone: (602) 926-3171

RESEARCH STAFF

TO:                  MEMBERS OF THE SENATE

FINANCE AND COMMERCE                    

DATE:            February 8, 2024

SUBJECT:      Strike everything amendment to S.B. 1034, relating to money transmission; notice

Purpose

Requires a person who engages in the business of money transmission to display consumer fraud warnings as outlined and establishes civil penalties.

Background

The Department of Insurance and Financial Institutes (DIFI) governs management of money transmission licensure and regulations. Money transmission is the act of: 1) selling or issuing payment instruments to a person located in Arizona; 2) selling or issuing stored value to a person located in Arizona; or 3) receiving money for transmission from a person located in Arizona. Money transmission does not include the act of providing solely online telecommunications services or network access (A.R.S. § 6-1201).

The Attorney General (AG) enforces the Consumer Fraud Act (Act) by investigating consumer complaints, filing enforcement actions against persons who have violated the Act and providing consumer fraud education programs intended to rectify violations or alleged violations of the Act. In an enforcement action, the AG may obtain from a person found in violation of the Act civil penalties, restitution payments and court orders to prevent the person from continuing the fraud (A.R.S. §§ 44-1524; 44-1527; 44-1530 and 44-1531.02).

There is no anticipated fiscal impact to the state General Fund associated with this legislation.

Provisions

1. Requires a person who engages in the business of money transmission to clearly and prominently display consumer fraud warnings that include:

a) the risks of consumer fraud and how to find additional information about consumer fraud regarding money transmission;

b) information about the dangers of transmitting money to unknown persons or to persons whom the sender cannot verify;

c) information about how to stop a money transmission, if an option is available; and

d) information that warns the sender that monies may not be returned once the money transmission is complete.

2. Requires the consumer fraud warnings to be:

a) communicated directly to the consumer in person;

b) displayed prominently in the place of business using a font size that is large enough to read in a type that contrasts with the background; or

c) displayed prominently in any electronic notice using a font that is large enough to read in a type that contrasts with the background.

3. Specifies that the consumer fraud warning requirements do not apply to:

a) an electronic funds transfer where monies are not transferred directly to another person and are not available for immediate use; or

b) an electronic funds transfer that is made with a gift certificate.

4. Imposes a civil penalty of up to $250 for each violation of the prescribed consumer fraud warning requirements.

5. Becomes effective on the general effective date.