First Data 2009 Annual Report Download - page 19

subject the Company to periodic examinations. Many states require, among other things, that proceeds from the
sales of such instruments be invested in high-quality marketable securities prior to the settlement of the
transactions. Such licensing laws also may cover matters such as regulatory approval of consumer forms,
consumer disclosures and the filing of periodic reports by the licensee, and require the licensee to demonstrate
and maintain levels of net worth. Many states also require issuers of payment instruments and their agents to
comply with federal and/or state anti-money laundering laws and regulations.
Government agencies both inside and outside the U.S. may impose new or additional rules on sales of
payment instruments, including regulations which (i) impose additional identification, reporting or recordkeeping
requirements; (ii) limit the entities capable of providing the sale of payment instruments; and (iii) require
additional consumer disclosures.
Escheat Regulations
The Company is subject to unclaimed or abandoned property (escheat) laws in the U.S. and abroad which
require the Company to turn over to certain government authorities the property of others held by the Company
that has been unclaimed for a specified period of time such as, in the Integrated Payment Systems segment,
payment instruments that have not been presented for payment or, in the Retail and Alliance Services segment,
account balances that cannot be returned to a merchant following discontinuation of its relationship with the
Company. A number of the Company’s subsidiaries hold property subject to escheat laws and the Company has
an ongoing program to comply with those laws. The Company is subject to audit by individual U.S. states with
regard to the Company’s escheatment practices.
Other
Stored-value services offered to issuers by First Data Prepaid Services (“FDPS”) in the U.S., and by First
Data’s International businesses (“First Data International”) outside the U.S. are subject to various federal, state
and foreign laws and regulations, which may include laws and regulations related to consumer and data
protection, licensing, escheat, anti-money laundering, banking, trade practices and competition and wage and
employment. For example, the Credit CARD Act of 2009 created new requirements applicable to general-use
prepaid cards, store gift cards, and electronic gift certificates effective August 22, 2010, and the Federal Reserve
Board published on November 20, 2009, a proposed rule to amend Regulation E with respect to such cards and
electronic certificates. These laws and regulations are evolving, unclear and sometimes inconsistent and subject
to judicial and regulatory challenge and interpretation, and therefore the extent to which these laws and rules
have application to, and their impact on, FDPS, First Data International, financial institutions, merchants or
others is in flux. At this time the Company is unable to determine the impact that the clarification of these laws
and their future interpretations, as well as new laws, may have on FDPS, First Data International, financial
institutions, merchants or others in a number of jurisdictions. These services may also be subject to the rules and
regulations of the various international, domestic and regional schemes, Networks and Associations in which
FDPS, First Data International and the card issuers participate. These schemes, Networks or Associations may,
generally in their discretion, modify these rules and regulations and such modifications could also impact FDPS,
First Data International, financial institutions, merchants and others.
New regulation of the payments industry in the U.S. and abroad that is applicable to the Company’s
customers could impact the Company as well. For example, the Federal Reserve Board has issued rules
amending Regulation Z (rules implementing the Truth in Lending Act) that impose new restrictions on certain
credit card practices and require increased consumer disclosure effective February 22, 2010 and July 1, 2010. As
further example, the Canadian Department of Finance promulgated similar new rules (the Credit Business
Practices Regulations) and rules amending the existing Cost of Borrowing Regulations with effective dates in
2010. In addition, the Housing Assistance Tax Act of 2008 included an amendment to the Internal Revenue Code
that requires information returns to be made for each calendar year by merchant acquiring entities and third party
settlement organizations with respect to payments made in settlement of payment card transactions and third
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