By: Zaffirini S.B. No. 964
(In the Senate - Filed March 3, 2021; March 11, 2021, read
first time and referred to Committee on Business & Commerce;
April 7, 2021, reported adversely, with favorable Committee
Substitute by the following vote: Yeas 9, Nays 0; April 7, 2021,
sent to printer.)
Click here to see the committee vote
COMMITTEE SUBSTITUTE FOR S.B. No. 964 By: Nichols
A BILL TO BE ENTITLED
AN ACT
relating to the prevention, identification, investigation, and
enforcement of payment card fraud; providing a civil penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The heading to Chapter 607, Business & Commerce
Code, is amended to read as follows:
CHAPTER 607. PAYMENT CARD SKIMMERS ON MOTOR FUEL METERING DEVICES
[DISPENSERS]
SECTION 2. Section 607.001, Business & Commerce Code, is
amended by amending Subdivisions (1), (2), (4), (5), (7), and (8)
and adding Subdivisions (1-a), (1-b), (2-a), (3-a), (5-a), and
(6-a) to read as follows:
(1) "Center" means the financial crimes intelligence
[payment fraud fusion] center established under Chapter 2312 [424],
Occupations [Government] Code.
(1-a) "Commission" means the Texas Commission of
Licensing and Regulation.
(1-b) "Credit card issuer" has the meaning assigned by
Section 505.001.
(2) "Department" means the Texas Department of
Licensing and Regulation [state agency that is the licensing
authority for service companies and service technicians].
(2-a) "Executive director" means the executive
director of the department.
(3-a) "Institution of higher education" has the
meaning assigned by Section 61.003, Education Code.
(4) "Merchant" means a person whose business includes
the sale of motor fuel through motor fuel metering devices
[dispensers] to retail customers.
(5) "Motor fuel" and "motor fuel metering device" have
the meanings assigned by Section 2310.001, Occupations Code ["Motor
fuel dispenser" means a machine that is used to pump gasoline,
diesel, biofuels, or other types of fuels into motor vehicles].
(5-a) "Motor fuel unattended payment terminal" means a
point-of-sale terminal or kiosk that is operated by a customer to
activate or complete a transaction at a motor fuel metering device
through the use of a payment card or a payment by other electronic
means.
(6-a) "Payment card network" means an entity that
directly, or through a licensed member, processor, or agent,
provides the proprietary services, infrastructure, and software
that route information and data to conduct debit card or credit card
transaction authorization, clearance, and settlement, and that an
entity uses in order to accept as a form of payment a brand of debit
card, credit card, or other device that may be used to carry out
debit or credit transactions.
(7) "Service company" and "service technician" have
the meanings assigned by Section 2310.151 [13.451], Occupations
[Agriculture] Code.
(8) "Skimmer" means a wire or electronic device that
is capable of unlawfully intercepting electronic communications or
data to perpetrate fraud. [The term includes a re-encoder and
scanning device, as those terms are defined by Section 522.001.]
SECTION 3. Subchapter A, Chapter 607, Business & Commerce
Code, is amended by adding Sections 607.002, 607.003, and 607.004
to read as follows:
Sec. 607.002. ADMINISTRATION AND ENFORCEMENT OF CHAPTER.
(a) The department shall administer and enforce this chapter.
(b) The commission or the executive director may enforce
this chapter, a rule adopted under this chapter, or an order of the
commission or executive director as provided by Subchapters F and
G, Chapter 51, Occupations Code.
Sec. 607.003. FUNDING. The department may solicit and
accept gifts, grants, and other donations for purposes of
administering this chapter, except that the department may not
solicit or accept a gift, grant, or other donation from a license
holder as defined by Section 2310.151, Occupations Code.
Sec. 607.004. RULES. The commission shall adopt rules for
administering this chapter.
SECTION 4. Section 607.053, Business & Commerce Code, is
amended to read as follows:
Sec. 607.053. NOTICE OF DISCOVERY OF SKIMMER REQUIRED. (a)
If a service technician discovers a skimmer in or on a motor fuel
[the] unattended payment terminal or [of a] motor fuel metering
device [dispenser], the service technician or service company that
employs the technician shall [immediately] notify the department
and the merchant of the skimmer in the manner prescribed by
commission rule.
(b) If a merchant discovers a [the] skimmer in or on a motor
fuel unattended payment terminal or motor fuel metering device or
is notified of the presence of a skimmer [by a service technician or
other person], the merchant shall, in the manner prescribed by
commission rule:
(1) [immediately] disable, or cause to be disabled,
the motor fuel metering device [dispenser] on which the skimmer was
discovered;
(1-a) [and] notify a law enforcement agency and the
department that a skimmer has been detected; and
(2) take appropriate measures to protect [from
tampering with] the motor fuel metering device from being tampered
with [dispenser] until the department or law enforcement agency
arrives and the skimmer is removed[; and
[(3) not later than 24 hours after the discovery of the
skimmer or a report of the discovery of a skimmer is made to the
merchant, report the discovery to the department].
SECTION 5. Section 607.054(a), Business & Commerce Code, is
amended to read as follows:
(a) The department may accept a report of a suspected
skimmer from any interested person, including [In this section,
"interested person" includes]:
(1) a law enforcement agency;
(2) a financial institution;
(3) a credit card or debit card issuer [as defined by
Section 505.001];
(4) a service technician or service company;
(5) a member of the public; and[; or]
(6) a payment card network [any other interested
person].
SECTION 6. Section 607.055, Business & Commerce Code, is
amended to read as follows:
Sec. 607.055. INVESTIGATION OF SKIMMER REPORT. (a) On
receipt of a report under Section 607.053 or 607.054, the
department may conduct an inspection for the presence of suspected
skimmers [shall immediately notify the center and share the report
with the center].
(b) The department [and the center] shall coordinate with
law enforcement agencies in conducting an investigation of the
report.
(c) The department may inspect, directly or in coordination
with a law enforcement agency, the motor fuel metering device
[dispenser] that is the subject of the report and any other motor
fuel metering device located at the same place of business.
(d) A merchant shall cooperate with the department or law
enforcement agency during an investigation of a skimmer discovered
or reported at the merchant's place of business and permit the
inspection and alteration of motor fuel metering devices at the
place of business [department or agency to inspect and alter the
motor fuel dispenser that is the subject of the report] as
necessary.
SECTION 7. Sections 607.056(b), (d), and (e), Business &
Commerce Code, are amended to read as follows:
(b) Information described by Subsection (a) may be
disclosed to:
(1) an institution of higher education [the attorney
general];
(2) a law enforcement agency;
(3) the center;
(4) a credit card issuer, a debit card issuer, a
financial institution that is not a credit card issuer, or a payment
card network that may be impacted by the use of a skimmer on a motor
fuel [the] unattended payment terminal or [of a] motor fuel
metering device [dispenser]; [or]
(5) another person if the disclosure of the
information is permitted or required by other law or court order;
(6) a trade association representing a financial
institution; or
(7) a department contractor or other agent.
(d) On the dismissal or final resolution of a report [or
investigation] by the department, information described by
Subsection (a) is subject to disclosure under Chapter 552,
Government Code.
(e) Notwithstanding Subsection (a), a law enforcement
agency or the center [the attorney general] may disclose to the
public information made confidential by that subsection if the law
enforcement agency or the chief intelligence coordinator for the
center [attorney general] determines that the disclosure of the
information furthers a law enforcement purpose, except that a law
enforcement agency or the center may not disclose to the public the
identity of a person that submits a report of a suspected skimmer to
the department under Section 607.053 or 607.054.
SECTION 8. Subchapter C, Chapter 607, Business & Commerce
Code, is amended by adding Section 607.1021 to read as follows:
Sec. 607.1021. CIVIL PENALTY. (a) A person who violates
this chapter or a rule adopted under this chapter is liable to the
state for a civil penalty.
(b) The attorney general or the executive director may bring
an action to collect a penalty under this section.
(c) The provisions of Section 51.352, Occupations Code,
relating to an action to collect and the amount of a civil penalty
under that section apply to an action to collect and the amount of a
civil penalty under this section.
SECTION 9. Section 607.103, Business & Commerce Code, is
amended to read as follows:
Sec. 607.103. OFFENSES; PENALTIES. (a) A person commits an
offense if the person refuses to allow an inspection of a motor fuel
metering device [dispenser] at the merchant's place of business in
violation of Section 607.055. An offense under this subsection is a
Class C misdemeanor.
(b) A person commits an offense if the person negligently or
recklessly disposes of a skimmer that was installed on a motor fuel
[the] unattended payment terminal or [of a] motor fuel metering
device [dispenser] by another person. An offense under this
subsection is a Class B misdemeanor.
(c) A person commits an offense if, knowing that an
investigation is ongoing or that a criminal proceeding has been
commenced and is pending, the person disposes of a skimmer that was
installed on a motor fuel [the] unattended payment terminal or [of
a] motor fuel metering device [dispenser] by another person. An
offense under this subsection is a felony of the third degree.
SECTION 10. Section 2310.101, Occupations Code, is amended
by adding Subsection (c) to read as follows:
(c) Regardless of whether the department has received a
report of a suspected skimmer under Section 607.053 or 607.054,
Business & Commerce Code, the department may inspect each motor
fuel metering device located at a dealer's retail outlet if the
department has reason to believe that a skimmer is installed on or
in a motor fuel unattended payment terminal or motor fuel metering
device at the retail outlet. In this subsection, "motor fuel
unattended payment terminal" and "skimmer" have the meanings
assigned by Section 607.001, Business & Commerce Code.
SECTION 11. Chapter 424, Government Code, as added by
Chapter 863 (H.B. 2945), Acts of the 86th Legislature, Regular
Session, 2019, is transferred to Subtitle A, Title 14, Occupations
Code, redesignated as Chapter 2312, Occupations Code, and amended
to read as follows:
CHAPTER 2312 [424]. FINANCIAL CRIMES INTELLIGENCE [PAYMENT FRAUD
FUSION] CENTER
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2312.001 [424.001]. DEFINITIONS. In this chapter:
(1) "Card fraud" means an act that constitutes the
offense of fraudulent use or possession of a credit card or debit
card under Section 32.315, Penal Code.
(2) "Center" means the financial crimes intelligence
[payment fraud fusion] center established under this chapter.
(3) "Commission" means the Texas Commission of
Licensing and Regulation.
(4) "Department" means the Texas Department of
Licensing and Regulation.
(5) [(2) "Payment card" has the meaning assigned by
Section 522.001, Business & Commerce Code.
[(3) "Payment fraud" means a fraudulent payment
transaction made by the unauthorized use of a payment card or other
electronic means.
[(4)] "Skimmer" means an [a wire or] electronic,
mechanical, or other device that may be used to [is capable of]
unlawfully intercept [intercepting] electronic communications or
data to perpetrate card fraud.
Sec. 2312.002. RULES. The commission shall adopt rules as
necessary to implement this chapter [The term includes a re-encoder
and scanning device, as those terms are defined by Section 522.001,
Business & Commerce Code].
SUBCHAPTER B. PURPOSE AND ADMINISTRATION
Sec. 2312.051 [424.002]. FINANCIAL CRIMES INTELLIGENCE
[PAYMENT FRAUD FUSION] CENTER ESTABLISHED. [(a) Law enforcement
agencies or other governmental agencies designated by the attorney
general may collaborate with the attorney general to establish a
payment fraud fusion center.
[(b)] The commission [attorney general] shall establish the
center within the department [in the City of Tyler].
Sec. 2312.052. PURPOSES [424.003. PURPOSE] OF CENTER.
[(a)] The purposes of the center are to:
(1) serve [serves] as the state's primary entity for
the planning, coordination, and integration of [the capabilities
of] law enforcement agencies and other governmental agencies that
[to] respond to criminal activity [that is] related to card
[payment] fraud, including through the use of skimmers; and[.]
(2) [(b) The purpose of the center is to] maximize
the ability of the department, law enforcement agencies, and other
governmental agencies to detect, prevent, and respond to criminal
activities related to card [payment] fraud.
Sec. 2312.053. OPERATION AGREEMENTS AUTHORIZED; CHIEF
INTELLIGENCE COORDINATOR. (a) The department:
(1) may enter into agreements with law enforcement
agencies or other governmental agencies for the operation of the
center; and
(2) shall enter into an agreement with a law
enforcement agency or other governmental agency for the appointment
of a chief intelligence coordinator to supervise and manage the
operation of the center.
(b) The chief intelligence coordinator appointed under the
agreement required by Subsection (a)(2) may be a licensed peace
officer. The agreement must provide that the commission of a chief
intelligence coordinator who is a licensed peace officer will be
carried by the agency with which the department enters into the
agreement under that subdivision.
(c) Information a law enforcement agency or other
governmental agency collects and maintains under an agreement
entered into with the department under this chapter is the
intellectual property of the center. On termination of the
agreement, the contracting agency shall transfer the information to
the department in accordance with the terms of the agreement.
Sec. 2312.054 [424.004]. POWERS AND DUTIES. (a) The
center may collaborate with federal, state, and local governmental
agencies [for the performance of the center's duties and] to
accomplish the purposes [purpose] of the center.
(b) The center shall assist law enforcement agencies, [and]
other governmental agencies, financial institutions, credit card
issuers, debit card issuers, payment card networks, institutions of
higher education, and merchants in their efforts to develop and
implement strategies to:
(1) detect skimmers;
(2) ensure an effective response if a skimmer is
found; and
(3) prevent card [payment] fraud.
(c) The center may:
(1) serve as a centralized collection point for
information related to card fraud;
(2) provide training and educational opportunities to
law enforcement;
(3) provide outreach to the public; and
(4) release information to affected financial
institutions, credit card issuers, debit card issuers, payment card
networks, institutions of higher education, and merchants if the
center does not consider the information to be sensitive to law
enforcement.
(d) For purposes of Subsection (c)(4), information is
considered sensitive to law enforcement if the information could
cause harm to law enforcement activities or jeopardize an
investigation or operation if disclosed.
Sec. 2312.055. ANNUAL REPORT. (a) Not later than December
1 of each year, the chief intelligence coordinator shall file a
report with the department.
(b) The report must include:
(1) a plan of operation for the center and an estimate
of the amount of money necessary to implement that plan;
(2) an assessment of the current state of card fraud in
this state, including:
(A) an identification of the geographic
locations in this state that have the highest statistical
probability for card fraud; and
(B) a summary of card fraud statistics for the
year in which the report is filed;
(3) a detailed plan of operation for combatting card
fraud;
(4) a communications plan for outreach to law
enforcement agencies, financial institutions, credit card issuers,
debit card issuers, payment card networks, merchants, and the
public; and
(5) a list of expenditures made since the most recent
report was filed with the department.
SUBCHAPTER C. FINANCIAL PROVISIONS
[Sec. 424.005. DIRECTOR. (a) The attorney general shall
appoint a director to supervise and manage the center.
[(b) The director is under the supervision and direction of
the attorney general.
[Sec. 424.006. RULES. The attorney general by rule shall
adopt reasonable policies and procedures necessary to implement
this chapter.
[Sec. 424.007. FACILITIES AND ADMINISTRATIVE SUPPORT. A
municipality's police department may provide facilities and
administrative support to a payment fraud fusion center established
in the municipality.]
Sec. 2312.101 [424.008]. FUNDING [GIFTS AND GRANTS]. The
department [payment fraud fusion center] may solicit and accept
gifts, grants, and other donations to fund, administer, and carry
out the purposes [purpose] of the center, except that the
department may not solicit or accept a gift, grant, or other
donation from a license holder as defined by Section 2310.151.
Sec. 2312.102. AWARD OF GRANTS. (a) Subject to the
availability of appropriated money, the department may award grants
for the purposes of this chapter by entering into a contract with
each grant recipient.
(b) A grant recipient may use grant money to:
(1) reduce card fraud by removing skimmers;
(2) purchase or upgrade fraud deterrence equipment,
including unique locking systems, cameras, and lights;
(3) provide training opportunities regarding
skimmers; and
(4) conduct public outreach regarding card fraud.
SECTION 12. The following provisions of the Business &
Commerce Code are repealed:
(1) Section 607.001(9);
(2) Section 607.051;
(3) Section 607.052;
(4) Section 607.054(b);
(5) Section 607.101; and
(6) Section 607.102.
SECTION 13. (a) The Texas Department of Licensing and
Regulation may establish a workgroup composed of stakeholders to
provide input, advice, and recommendations regarding the
department's powers and duties under and the administration of:
(1) Chapter 607, Business & Commerce Code, as amended
by this Act;
(2) Section 2310.101(c), Occupations Code, as added by
this Act; and
(3) Chapter 2312, Occupations Code, as transferred,
redesignated, and amended by this Act.
(b) If a workgroup is established as authorized by
Subsection (a) of this section, the Texas Department of Licensing
and Regulation shall lead the workgroup and determine the
workgroup's size, composition, and scope of purpose.
(c) A workgroup established under this section is abolished
and this section expires December 1, 2022.
SECTION 14. The Texas Commission of Licensing and
Regulation shall adopt rules necessary to implement the changes in
law made by this Act not later than September 1, 2021.
SECTION 15. (a) On the effective date of this Act:
(1) the payment fraud fusion center is redesignated as
the financial crimes intelligence center;
(2) all powers, duties, functions, programs, and
activities of the office of the attorney general under Chapter 424,
Government Code, as added by Chapter 863 (H.B. 2945), Acts of the
86th Legislature, Regular Session, 2019, as that chapter existed
immediately before the effective date of this Act, are transferred
to the Texas Commission of Licensing and Regulation and the Texas
Department of Licensing and Regulation;
(3) all obligations, contracts, property, and records
of the office of the attorney general that are related to a power,
duty, function, program, or activity transferred under Subdivision
(2) of this subsection are transferred to the Texas Commission of
Licensing and Regulation and the Texas Department of Licensing and
Regulation; and
(4) all pending complaints, investigations, or
contested cases that are related to a power, duty, function,
program, or activity transferred under Subdivision (2) of this
subsection are transferred without change in status to the Texas
Commission of Licensing and Regulation and the Texas Department of
Licensing and Regulation.
(b) A rule or form adopted by the office of the attorney
general that relates to a power, duty, function, program, or
activity transferred under Subsection (a)(2) of this section is a
rule or form of the Texas Commission of Licensing and Regulation and
the Texas Department of Licensing and Regulation, as applicable,
until altered by the commission.
SECTION 16. Section 607.103, Business & Commerce Code, as
amended by this Act, applies only to an offense committed on or
after the effective date of this Act. An offense committed before
the effective date of this Act is governed by the law in effect on
the date the offense was committed, and the former law is continued
in effect for that purpose. For purposes of this section, an
offense was committed before the effective date of this Act if any
element of the offense occurred before that date.
SECTION 17. To the extent of any conflict, this Act prevails
over another Act of the 87th Legislature, Regular Session, 2021,
relating to nonsubstantive additions to and corrections in enacted
codes.
SECTION 18. This Act takes effect September 1, 2021.
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