Senate File 2238 - Introduced SENATE FILE 2238 BY COMMITTEE ON JUDICIARY (SUCCESSOR TO SSB 3018) A BILL FOR An Act relating to the criminal offenses of the illegal use of 1 a scanning device or encoding machine and criminal mischief 2 in the third degree, and providing penalties. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5497SV (3) 87 gh/rn

S.F. 2238 Section 1. Section 715A.10, Code 2018, is amended to read 1 as follows: 2 715A.10 Illegal use of scanning device or reencoder encoding 3 machine . 4 1. A person commits a class “D” felony if the person does 5 any of the following: 6 a. Uses Directly or indirectly uses a scanning device 7 to access, read, obtain, memorize, or store, temporarily 8 or permanently, information encoded on the magnetic strip 9 or stripe of a payment card without the permission of the 10 authorized user of the payment card, and with the intent to 11 defraud the authorized user, the issuer of the authorized 12 user’s payment card, or a merchant. 13 b. Possesses a scanning device with the intent to use such 14 device to obtain information encoded on a payment card without 15 the permission of the authorized user of the payment card, the 16 issuer of the authorized user’s payment card, or a merchant, or 17 possesses a scanning device with knowledge that a person other 18 than the authorized user, the issuer of the authorized user’s 19 payment card, or a merchant intends to use the scanning device 20 to obtain information encoded on a payment card without the 21 permission of the authorized user, the issuer of the authorized 22 user’s payment card, or a merchant. 23 b. c. Uses a reencoder Directly or indirectly uses an 24 encoding machine to place information encoded on the magnetic 25 strip or stripe of a payment card onto the magnetic strip 26 or stripe of a different payment card without the permission 27 of the authorized user of the payment card from which the 28 information is being reencoded was obtained , and with the 29 intent to defraud the authorized user, the issuer of the 30 authorized user’s payment card, or a merchant. 31 2. A second or subsequent violation of this section is a 32 class “C” felony. 33 3. As used in this section : 34 a. “Encoding machine” means an electronic device that is 35 -1- LSB 5497SV (3) 87 gh/rn 1/ 4

S.F. 2238 used to encode information onto a payment card. 1 a. b. “Merchant” means an owner or operator of a retail 2 mercantile establishment or an agent, employee, lessee, 3 consignee, officer, director, franchisee, or independent 4 contractor of such owner or operator. A “merchant” also means 5 includes an establishing financial institution referred to 6 in section 527.5, a person who receives from an authorized 7 user of a payment card, or someone the person believes to 8 be an authorized user, a payment card or information from a 9 payment card, or what the person believes to be a payment card 10 or information from a payment card, as the instrument for 11 obtaining, purchasing, or receiving goods, services, money, or 12 anything else of value from the person. 13 b. c. “Payment card” means a credit card, charge card, 14 debit card, access device as defined in section 527.2, or 15 any other card that is issued to an authorized card user and 16 that allows the user to obtain, purchase, or receive goods, 17 services, money, or anything else of value from a merchant. 18 c. “Reencoder” means an electronic device that places 19 encoded information from the magnetic strip or stripe of a 20 payment card onto the magnetic strip or stripe of a different 21 payment card. 22 d. “Scanning device” means a scanner, reader, wireless 23 access device, radio frequency identification scanner, an 24 electronic device that utilizes near field communications 25 technology, or any other electronic device that is used to 26 access, read, scan, obtain, memorize, or store, temporarily 27 or permanently, information encoded on the magnetic strip or 28 stripe of a payment card. 29 Sec. 2. Section 716.5, subsection 1, Code 2018, is amended 30 by adding the following new paragraph: 31 NEW PARAGRAPH . f. The act is committed upon real or 32 personal property that has the ability to process a payment 33 card as defined in section 715A.10. 34 EXPLANATION 35 -2- LSB 5497SV (3) 87 gh/rn 2/ 4

S.F. 2238 The inclusion of this explanation does not constitute agreement with 1 the explanation’s substance by the members of the general assembly. 2 This bill modifies certain criminal acts that involve 3 payment cards. 4 Current Code section 715A.10 prohibits a person from 5 using a scanning device to access information encoded on 6 the magnetic strip or stripe of a payment card without the 7 permission of the authorized user of the payment card, and with 8 the intent to defraud the authorized user, the issuer of the 9 authorized user’s payment card, or a merchant. A person is 10 also prohibited from using a reencoder to place information 11 encoded on the magnetic strip or stripe of a payment card 12 onto the magnetic strip or stripe of another card without the 13 permission of the authorized user of the card from which the 14 information is being reencoded, and with the intent to defraud 15 the authorized user, the issuer of the authorized user’s 16 payment card, or a merchant. 17 The bill makes several changes to terminology in Code 18 section 715A.10. The bill replaces the term “reencoder” with 19 “encoding machine”, defined as an electronic device that is 20 used to encode information onto a payment card. The bill 21 expands the definition of “merchant” to include an establishing 22 financial institution as referred to in Code section 527.5. 23 The bill expands the definition of “payment card” to include 24 an access device as defined in Code section 527.2. The 25 bill expands the definition of “scanning device” to include 26 a wireless access device, radio frequency identification 27 scanner, and an electronic device that utilizes near-field 28 communications technology. The bill removes any references to 29 the magnetic strip or stripes of payment cards in Code section 30 715A.10. 31 The bill broadens the prohibitions against using a scanning 32 device or encoding machine to commit fraud by prohibiting the 33 direct or indirect use of such a device or machine. The bill 34 also removes the requirement that a person have intent to 35 -3- LSB 5497SV (3) 87 gh/rn 3/ 4

S.F. 2238 defraud for the prohibitions against using a scanning device or 1 encoding machine to commit fraud. 2 The bill makes it a criminal act to possess a scanning 3 device with the intent to use such device to obtain information 4 encoded on a payment card without permission from the 5 authorized user of the payment card, the issuer of such card, 6 or a merchant, or to possess a scanning device with knowledge 7 that another person intends to use the device to obtain 8 information encoded on a payment card without permission from 9 the authorized user of the payment card, the issuer of such 10 card, or a merchant. 11 A person who commits a violation of Code section 715A.10 12 commits a class “D” felony. A class “D” felony is punishable 13 by confinement for no more than five years and a fine of at 14 least $750 but not more than $7,500. A second or subsequent 15 violation of Code section 715A.10 is a class “C” felony. A 16 class “C” felony is punishable by confinement for no more 17 than 10 years and a fine of at least $1,000 but not more than 18 $10,000. 19 Current law defines “criminal mischief” as the intentional 20 damage, defacement, alteration, or destruction of property 21 by a person who has no right to do so. The bill provides 22 that a person commits criminal mischief in the third degree 23 if the act is committed upon real or personal property that 24 has the ability to process a payment card as defined in Code 25 section 715A.10. Criminal mischief in the third degree is 26 an aggravated misdemeanor. An aggravated misdemeanor is 27 punishable by confinement for no more than two years and a fine 28 of at least $625 but not more than $6,250. 29 -4- LSB 5497SV (3) 87 gh/rn 4/ 4