Texas House Bill HB4020

Texas 2015 - 84th Regular

Caption

Relating to the security of certain financial information and liability for certain security breaches.

Impact

The impact of HB 4020 on state laws includes a formalization of the definition of various financial terms such as 'access device,' 'breach of system security,' and the roles of 'financial institutions' and 'service providers.' This statutory clarity enhances legal accountability for businesses handling sensitive payment information, potentially reducing the risk of data breaches and unauthorized use of consumers' financial data. Additionally, the bill requires businesses that violate these provisions to reimburse affected financial institutions for costs incurred due to breaches, creating a financial incentive for compliance.

Summary

House Bill 4020 addresses the security of certain financial information and establishes liability for certain security breaches involving access device data. The bill specifically outlines the responsibilities of businesses regarding the handling of payment information, focusing on the retention of sensitive data post-transaction. It mandates that businesses and their service providers must limit the retention of card security codes, PIN verification codes, and magnetic strip data to enhance consumer protection against unauthorized transactions.

Contention

A notable point of contention surrounding HB 4020 is the burden it places on businesses, especially smaller entities that may struggle to implement the technological safeguards required to comply with the law. Advocates argue that the protections uphold consumers' rights and encourage best practices in data management, while critics express concerns about the financial and operational impacts on businesses, fearing it could lead to increased costs and administrative complications. The bill's stipulation for reimbursement of damages also raises questions about the financial ramifications for businesses who inadvertently violate the law.