Senate Study Bill 3024 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON JUDICIARY BILL BY CHAIRPERSON ZAUN) 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 5352XC (1) 87 jm/rh

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 obtain 14 information encoded on a payment card without the permission 15 of the authorized user of the payment card, the issuer of the 16 authorized user’s payment card, or a merchant, or possesses a 17 scanning device with knowledge that a person other than the 18 authorized user, the issuer of the authorized user’s payment 19 card, or a merchant intends to use the scanning device to 20 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 5352XC (1) 87 jm/rh 1/ 4

S.F. _____ 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 property has the ability to process a 32 payment card as defined in section 715A.10. 33 EXPLANATION 34 The inclusion of this explanation does not constitute agreement with 35 -2- LSB 5352XC (1) 87 jm/rh 2/ 4

S.F. _____ the explanation’s substance by the members of the general assembly. 1 This bill relates to the illegal use of a scanning device or 2 encoding machine. 3 ILLEGAL USE OF SCANNING DEVICE OR ENCODING MACHINE. The bill 4 replaces the term “reencoder” with the term “encoding machine”. 5 The bill defines “encoding machine” to mean an electronic 6 device that is used to encode information to a payment card. 7 The bill also expands the definition of “merchant” to 8 include an establishing financial institution referred to in 9 Code section 524.5. 10 The bill modifies the definition of “payment card” to 11 include an access device as defined in Code section 527.2. 12 The bill also modifies the term “scanning device” to include 13 a wireless access device, a radio frequency identification 14 scanner, and an electronic device that utilizes near field 15 communications technology. 16 A person commits a class “D” felony under the bill if the 17 person directly or indirectly uses a scanning device to access, 18 read, obtain, memorize, or store, temporarily or permanently, 19 information encoded on a payment card without the permission 20 of the authorized user, the issuer of the authorized user’s 21 payment card, or a merchant. In order to commit this offense 22 currently, a person must use a scanning device to access, 23 read, obtain, memorize, or store, temporarily or permanently, 24 information encoded on the magnetic strip or stripe of a 25 payment card without the permission of the authorized user of 26 the payment card, and with the intent to defraud the authorized 27 user, the issuer of the authorized user’s payment card, or a 28 merchant. 29 The bill creates a new criminal offense. Under the bill, a 30 person shall not possess a scanning device with the intent to 31 obtain information encoded on a payment card without permission 32 of the authorized user, the issuer of the authorized user’s 33 payment card, or a merchant, or possess a scanning device with 34 knowledge that a person other than the authorized user, the 35 -3- LSB 5352XC (1) 87 jm/rh 3/ 4

S.F. _____ issuer of the authorized user’s payment card, or a merchant 1 intends to use the scanning device to obtain information 2 encoded on a payment card without permission from the 3 authorized user, the issuer of the authorized user’s payment 4 card, or a merchant. A person who violates this provision 5 commits a class “D” felony. 6 A person commits a class “D” felony under the bill if the 7 person directly or indirectly uses an encoding machine to place 8 information encoded on a payment card onto a different payment 9 card without the permission of the authorized user, the issuer 10 of the authorized user’s payment card, or a merchant. In order 11 to commit this offense currently, a person must use a reencoder 12 to place information encoded on the magnetic strip or stripe of 13 a payment card onto the magnetic strip or stripe of a different 14 card without the permission of the authorized user of the 15 card from which the information is being reencoded, and with 16 the intent to defraud the authorized user, the issuer of the 17 authorized user’s payment card, or a merchant. 18 A class “D” felony is punishable by confinement for no more 19 than five years and a fine of at least $750 but not more than 20 $7,500. 21 CRIMINAL MISCHIEF IN THE THIRD DEGREE. If a person 22 intentionally damages, defaces, alters, or destroys property 23 that has the ability to process a payment card as defined in 24 Code section 715A.10 in the bill, with no right to do such 25 an act, that person commits criminal mischief in the third 26 degree. Criminal mischief in the third degree is an aggravated 27 misdemeanor. 28 An aggravated misdemeanor is punishable by confinement for 29 no more than two years and a fine of at least $625 but not more 30 than $6,250. 31 -4- LSB 5352XC (1) 87 jm/rh 4/ 4