ASSEMBLY CONSUMER AFFAIRS COMMITTEE
STATEMENT TO
ASSEMBLY, No. 5354
with committee amendments
STATE OF NEW JERSEY
DATED: MAY 8, 2023
The Assembly Consumer Affairs Committee reports favorably and
with committee amendments Assembly Bill No. 5354.
As amended and reported by the committee, Assembly Bill No.
5354 upgrades the criminal penalties for the use and possession of a
scanning device and requires merchants to take reasonable safety
measures to prevent payment card scanning.
A “scanning device” is any scanner, skimmer, reader, or any other
electronic device, such as a reencoder, that is used to access, read,
scan, obtain, memorize, or store, temporarily or permanently,
information encoded on the magnetic strip or stripe of a payment card.
Under current law, it is a crime of the third degree for any person, with
intent to defraud an authorized user of a payment card, the issuer of the
authorized user’s payment card, or a merchant, to use a scanning
device to access, read, obtain, memorize or store, temporarily or
permanently, any information encoded on the magnetic strip or stripe
of a payment card without the permission of the authorized user of the
payment card; or to use a reencoder to place the information encoded
on the magnetic strip onto a different card, or any electronic medium
that allows a transaction to occur, without the permission of the
authorized cardholder, issuer or merchant.
In addition, currently, it is a crime of the fourth degree for a person
to knowingly possess, with intent to commit an unlawful act, any
device, apparatus, equipment, software, article, material, goods,
property, or supply that is specifically designed or adapted for use as
or in a scanning device or reencoder. A crime of the third degree is
punishable by a term of imprisonment of three to five years, a fine of
up to $15,000, or both. A crime of the fourth degree is punishable by a
term of imprisonment of up to 18 months, a fine of up to $10,000, or
both.
This bill upgrades the criminal penalties for the use or possession
of a scanning device. The bill provides that the use of a scanning
device is to be a crime of the third degree; provided, however, it is to
be a crime of the second degree if a subsequent offense results in a
theft of at least $50,000 or if the first offense and the subsequent
offense result in a combined total theft of at least $50,000. The
possession of a scanning device is to be a crime of the fourth degree 2
for a first offense and a crime of the third degree for a second or
subsequent offense. A crime of the second degree is punishable by a
term of imprisonment of five to 10 years, a fine of up to $150,000, or
both.
In addition, this bill requires merchants that accept payment cards
to implement reasonable safety measures to prevent the use of
scanning devices at any payment terminal in accordance with rules and
regulations adopted by the Director of the Division of Consumer
Affairs. Under the bill, the director is to create rules and regulations to
effectuate the provisions of this bill, which are to include, but not be
limited to, the following security measures for merchants:
the regular inspection of payment terminals;
periodic training for employees on how to identify and prevent
payment card scanning;
the installation of security cameras or other applicable security
devices; and
the use of applicable antivirus or encryption software.
The bill also requires the director to provide direction and
oversight to merchants on complying with the provisions of this bill
and for the development and distribution of informational materials
regarding best practices that merchants are to implement to prevent the
use of any scanning device.
An unlawful practice is punishable by a monetary penalty of not
more than $10,000 for a first offense and not more than $20,000 for
any subsequent offense. In addition, a violation can result in a cease
and desist order issued by the Attorney General, the assessment of
punitive damages, and the awarding of treble damages and costs to the
injured.
COMMITTEE AMENDMENTS:
The committee amended the bill to provide that the use of a
scanning device is to be a crime of the third degree; provided,
however, it is to be a crime of the second degree if a subsequent
offense results in a theft of at least $50,000 or if the first offense and
the subsequent offense result in a combined total theft of at least
$50,000.