S.F. _____ 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 another person 18 intends to use such device to obtain information encoded on a 19 payment card without the permission of the authorized user of 20 the payment card, the issuer of the authorized user’s payment 21 card, or a merchant. 22 b. c. Uses a reencoder Directly or indirectly uses an 23 encoding machine to place information encoded on the magnetic 24 strip or stripe of a payment card onto the magnetic strip 25 or stripe of a different card without the permission of the 26 authorized user of the payment card from which the information 27 is being reencoded, and with the intent to defraud the 28 authorized user is obtained , the issuer of the authorized 29 user’s payment card, or a merchant. 30 d. Possesses an encoding machine with the intent to use such 31 machine to obtain information encoded on a payment card onto a 32 different card without the permission of the authorized user of 33 the payment card from which the information is obtained, the 34 issuer of the authorized user’s payment card, or a merchant, 35 -1- LSB 5497XC (2) 87 gh/rn 1/ 5

S.F. _____ or possesses an encoding machine with knowledge that another 1 person intends to use such device to obtain information encoded 2 on a payment card onto a different card without the permission 3 of the authorized user of the payment card from which the 4 information is obtained, the issuer of the authorized user’s 5 payment card, or a merchant. 6 2. A second or subsequent violation of this section is a 7 class “C” felony. 8 3. As used in this section : 9 a. “Encoding machine” means an electronic device that is 10 used to encode information onto a payment card. 11 a. b. “Merchant” means an owner or operator of a retail 12 mercantile establishment or an agent, employee, lessee, 13 consignee, officer, director, franchisee, or independent 14 contractor of such owner or operator. A “merchant” also means 15 a financial institution that establishes a satellite terminal, 16 as those terms are defined in section 527.2, a person who 17 receives from an authorized user of a payment card, or someone 18 the person believes to be an authorized user, a payment card or 19 information from a payment card, or what the person believes 20 to be a payment card or information from a payment card, as 21 the instrument for obtaining, purchasing, or receiving goods, 22 services, money, or anything else of value from the person. 23 b. c. “Payment card” means a credit card, charge card, 24 debit card, access device as defined in section 527.2, or 25 any other card that is issued to an authorized card user and 26 that allows the user to obtain, purchase, or receive goods, 27 services, money, or anything else of value from a merchant. 28 c. “Reencoder” means an electronic device that places 29 encoded information from the magnetic strip or stripe of a 30 payment card onto the magnetic strip or stripe of a different 31 payment card. 32 d. “Scanning device” means a scanner, reader, wireless 33 access device, radio frequency identification scanner, 34 near-field communications technology, or any other electronic 35 -2- LSB 5497XC (2) 87 gh/rn 2/ 5

S.F. _____ device that is used to access, read, scan, obtain, memorize, or 1 store, temporarily or permanently, information encoded on the 2 magnetic strip or stripe of a payment card. 3 Sec. 2. Section 716.5, subsection 1, Code 2018, is amended 4 by adding the following new paragraph: 5 NEW PARAGRAPH . f. The act is committed upon real or 6 personal property that has the ability to process a payment 7 card as defined in section 715A.10. 8 EXPLANATION 9 The inclusion of this explanation does not constitute agreement with 10 the explanation’s substance by the members of the general assembly. 11 This bill modifies certain criminal acts that involve 12 payment cards. 13 Current Code section 715A.10 prohibits a person from 14 using a scanning device to access information encoded on 15 the magnetic strip or stripe of a payment card without the 16 permission of the authorized user of the payment card, and with 17 the intent to defraud the authorized user, the issuer of the 18 authorized user’s payment card, or a merchant. A person is 19 also prohibited from using a reencoder to place information 20 encoded on the magnetic strip or stripe of a payment card 21 onto the magnetic strip or stripe of another card without the 22 permission of the authorized user of the card from which the 23 information is being reencoded, and with the intent to defraud 24 the authorized user, the issuer of the authorized user’s 25 payment card, or a merchant. 26 The bill makes several changes to terminology in Code 27 section 715A.10. The bill replaces the term “reencoder” with 28 “encoding machine”, defined as an electronic device that is 29 used to encode information onto a payment card. The bill 30 expands the definition of “merchant” to include a financial 31 institution that establishes a satellite terminal, as those 32 terms are defined in Code section 527.2. The bill expands the 33 definition of “payment card” to include an access device as 34 defined in Code section 527.2. The bill expands the definition 35 -3- LSB 5497XC (2) 87 gh/rn 3/ 5

S.F. _____ of “scanning device” to include a wireless access device, radio 1 frequency identification scanner, and near-field communications 2 technology. The bill removes any references to the magnetic 3 strip or stripes of payment cards in Code section 715A.10. 4 The bill broadens the prohibitions against using a scanning 5 device or encoding machine to commit fraud by prohibiting the 6 direct or indirect use of such a device or machine. The bill 7 also removes the requirement that a person have intent to 8 defraud for the prohibitions against using a scanning device or 9 encoding machine to commit fraud. 10 The bill makes it a criminal act to possess a scanning 11 device with the intent to use such device to obtain information 12 encoded on a payment card without permission from the 13 authorized user of the payment card, the issuer of such card, 14 or a merchant, or to possess a scanning device with knowledge 15 that another person intends to use the device to obtain 16 information encoded on a payment card without permission from 17 the authorized user of the payment card, the issuer of such 18 card, or a merchant. The bill also makes it a criminal act 19 to possess an encoding machine with the intent to use the 20 machine to obtain information encoded on a payment card onto a 21 different card without permission from the authorized user of 22 the payment card from which the information is obtained, the 23 issuer of such card, or a merchant, or to possess an encoding 24 machine with knowledge that another person intends to use the 25 machine to obtain information encoded on a payment card on to a 26 different card without permission from the authorized user of 27 the payment card from which the information is obtained, the 28 issuer of such card, or a merchant. 29 A person who commits a violation of Code section 715A.10 30 commits a class “D” felony. A class “D” felony is punishable 31 by confinement for no more than five years and a fine of at 32 least $750 but not more than $7,500. A second or subsequent 33 violation of Code section 715A.10 is a class “C” felony. A 34 class “C” felony is punishable by confinement for no more 35 -4- LSB 5497XC (2) 87 gh/rn 4/ 5

S.F. _____ than 10 years and a fine of at least $1,000 but not more than 1 $10,000. 2 Current law defines “criminal mischief” as the intentional 3 damage, defacement, alteration, or destruction of property 4 by a person who has no right to do so. The bill provides 5 that a person commits criminal mischief in the third degree 6 if the act is committed upon real or personal property that 7 has the ability to process a payment card as defined in Code 8 section 715A.10. Criminal mischief in the third degree is 9 an aggravated misdemeanor. An aggravated misdemeanor is 10 punishable by confinement for no more than two years and a fine 11 of at least $625 but not more than $6,250. 12 -5- LSB 5497XC (2) 87 gh/rn 5/ 5