Two members of the New York City Council have asked state banking regulators to investigate banks’ practices of mailing debit cards to people who did not ask for them, and to set guidelines about how banks should offer debit cards to consumers.

The council members say automated teller machine cards that double as debit cards expose consumers to a higher risk of theft than ATM cards that do not work at the point of sale. Most consumers do not know the difference, the council members say, and the banks have not explained it clearly to their customers.

While the council is powerless to impose its will on the state-chartered banks, the superintendent could issue new regulations. The council’s lack of direct jurisdiction has not stopped it from proposing other ways to tweak local banks: Council Speaker Peter F. Vallone has spent years pushing a bill to ban automated teller machine surcharges.

The debit card controversy started last fall, when Citibank began mailing MasterCard-branded debit cards to about a million customers, asking people to replace their ATM-only cards. The mailing instructed people to activate the new cards within 30 days, at which time their current cards would expire.

In a Feb. 20 letter to State Superintendent of Banks Elizabeth McCaul, Council Members Stephen DiBrienza of Brooklyn and Margarita Lopez of Manhattan argued that the Citigroup Inc. subsidiary effectively forced its customers to take a riskier card.

“Consumers were given no clear choice in determining whether or not they were interested in making this switch,” the letter said. The council members argued that Citibank, as well as J.P. Morgan Chase & Co. and other banks serving New Yorkers, did not clearly explain the function of a debit card in their mailings, and that the MasterCard logos on the cards might lead people to believe they were credit cards.

The council members said they did not contest banks’ rights to offer debit cards, but did want the state to create and enforce some guidelines. They said Citibank should have detailed in writing how its debit card differs from its ATM card, and from a credit card, both in the direct transfer of funds and any differences in fraud liability, and that customers should have been told they could choose not to have a debit card. Nowhere, they said, did Citibank’s literature inform cardholders that they could keep their old ATM cards.

Wayne Malone, the vice president of distribution management who runs Citibank’s debit and ATM card program, said he was unaware of any controversy surrounding the change, and said that “mass issuance” was simply the most efficient way to meet broad customer demand. It was not, he said, a way to slip unsuspecting customers a debit card. Moreover, he said, Citi had informed its customers through mailings about the change in cards.

Mr. Malone said there will always be consumers who cannot tell the difference. “Some people don’t understand debit,” he said. “They think it’s a credit card, even though we’ve provided a lot of information, including pre-mailers, post-mailers, and information when the card came.”

He added, “If anyone wants to opt out, they can opt out.” He said 80% of the debit card recipients have activated them and are using them, but not necessarily as debit cards. Many people use them simply as ATM cards without trying the debit feature. “Frankly, that’s the way we positioned it,” he said. “It’s still your ATM card, but now you can use it at millions of other locations.”

The replacement coincided with a larger brand adjustment, which included a reworked logo and font, and retiring the “Citicard” name, Mr. Malone said. “Whether it had the MasterCard logo on it or not, they were all going to get new cards anyway.”

But Councilwoman Lopez, who received a Citibank debit card herself, said she did not accept the bank’s explanations. “I have been a Citibank customer for 23 years, and I was absolutely surprised by this,” she said in a telephone interview. “Citibank is sending its customers misleading information and is not telling them that this card is something totally different.”

Like credit cards, the debit cards can be used at the point of sale with a signature and no PIN. Ms. Lopez said that Citibank did not tell people that the debit function is not protected by a PIN, and that transactions on a stolen card can be made simply by forging a signature.

Mr. Malone of Citibank agreed that signature verification is a looser standard than PIN. “Signatures don’t really count anymore,” he said. “I mean, you could sign ‘Mickey Mouse’ and it would go through.” Still, he said, Citibank’s losses arising from debit card fraud are “industry average or better.”

In any case, he said, consumers are not liable. According to Mr. Malone, Citibank’s policy states that customers have no liability for fraudulent transactions on their debit cards so long as they contact Citibank within two days of discovering the fraud. After that, they may be liable for up to $50. Mr. Malone said Citibank generally does not enforce the $50 rule. “Typically, our practice is really not to apply that,” he said.

After a debit card is reported stolen or missing, Citibank deactivates the card number and issues the customer provisional credit equivalent to the amount disputed, Mr. Malone said. But a handful of Citibank customers who told American Banker they have had their debit cards stolen said they received no such provisional credit, and that reimbursement took weeks or months. One customer said that after Citibank agreed to extend her provisional credit, the bank merely deducted the amount from her overdraft. Ms. Lopez said she has received similar complaints from constituents.

“Those incidents should not be happening,” Mr. Malone said. Though investigations of fraud can take several weeks because of reports that have to be filed by the merchants and merchant-acquirers, “the client is made whole in a few days.”

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