By: Schaefer H.B. No. 2837
A BILL TO BE ENTITLED
AN ACT
relating to prohibiting financial institutions in Texas from
surveilling, reporting, or tracking the purchase of firearms and
ammunition; imposing a civil penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. This act shall be known and may be cited as the
"Second Amendment Financial Privacy Act".
(a) The Legislature finds that:
(1) The Second Amendment to the United States
Constitution guarantees the people the right to keep and bear arms;
(2) Article I, Section 23, of the Texas Constitution
provides that "Every citizen shall have the right to keep and bear
arms in the lawful defense of himself or the State.";
(3) In September 2022, the International Organization
for Standardization (ISO), based in Switzerland, approved a new
merchant category code for firearm and ammunition merchants;
(4) In the letter to payment card networks, federal
lawmakers stated that the new Merchant Category Code for firearms
retailers would be ". . .the first step towards facilitating the
collection of valuable financial data that could help law
enforcement in countering the financing of terrorism efforts",
expressing a clear government expectation that networks will
utilize the new Merchant Category Code to conduct mass surveillance
of constitutionally protected firearms and ammunition purchases in
cooperation with law enforcement;
(5) The new Merchant Category Code will allow the
banks, payment card networks, acquirers, and other entities
involved in payment card processing to identify and separately
track lawful payment card purchases at firearms retailers in the
State of Texas, paving the way for both unprecedented surveillance
of Second Amendment activity and unprecedented information sharing
between financial institutions and the government;
(6) This potential for cooperative surveillance and
tracking of lawful firearms and ammunition purchases will have a
significant chilling effect on citizens wishing to exercise their
federal and state constitutional rights to keep and bear arms in
Texas;
(7) While federal law requires some financial
institutions to report transactions that are highly indicative of
money laundering or other unlawful activities, there is no federal
or state law authorizing financial institutions to surveil and
track lawful activities by customers in cooperation with law
enforcement;
(8) The creation or maintenance of records of
purchases of firearms or ammunition or the tracking of sales made by
a retailer of firearms or ammunition by a nongovernmental entity,
including a financial institution, without a substantial and
historical business need or a requirement imposed by law, may
frustrate the right to keep and bear arms and violate the reasonable
privacy rights of lawful purchasers of firearms or ammunition; and
(9) Based on the above stated findings, it is the
intent of the Legislature to prohibit the misuse of payment card
processing systems to surveil, report, or otherwise discourage
constitutionally protected firearm and ammunition purchases within
the State of Texas.
SECTION 2. Chapter 271, Finance Code, is amended by adding
Section 271.007 to read as follows:
Sec. 271.007. DEFINITIONS. In this Section:
(1) "Customer" has the meaning assigned by Section
59.001, Finance Code.
(2) "Disclosure" means the transfer, publication, or
distribution of protected financial information to another person
or entity for any purpose other than to process or facilitate a
payment card transaction.
(3) "Financial institution" has the meaning assigned
by Section 201.101, Finance Code.
(4) "Financial record" means a record held by a
financial institution related to a payment card transaction that
the financial institution has processed or facilitated.
(5) "Firearms retailer" means any person or entity
engaged in the lawful business of selling or trading firearms or
ammunition to be used in firearms.
(6) "Firearms code" means the Merchant Category Code
5723 approved in September of 2022 by the International
Organization for Standardization for firearms retailers.
(7) "Government entity" means any county or
municipality, or state board, commission, agency, bureau,
department, or any other political subdivision of the state.
SECTION 3. Chapter 271, Finance Code, is amended by adding
Section 271.0071 to read as follows:
Sec. 271.0071. UNAUTHORIZED CATEGORIZATION OF FIREARMS AND
AMMUNITION TRANSACTIONS BY A FINANCIAL INSTITUTION. (a) Except
for those records kept during the regular course of a criminal
investigation and prosecution or as otherwise required by law, a
state governmental agency or local government, special district, or
other political subdivision or official, agent, or employee of the
state or other governmental entity or any other person, public or
private, other than the owner or owner's representative, may not
knowingly and willfully keep or cause to be kept any list, record,
or registry of privately owned firearms or any list, record, or
registry of the owners of those firearms.
(b) A financial institution or its agent may not require the
usage of the firearms code in a way that distinguishes a firearms
retailer physically located in the state of Texas from Texas
general merchandise retailers or sporting goods retailers.
(c) A financial institution may not discriminate against a
firearms retailer by:
(1) Declining a lawful payment card transaction based
solely on the assignment or non-assignment of a firearms code to the
merchant or transaction;
(2) Limiting or declining to do business with a
customer, potential customer, or merchant based on the assignment
or non-assignment of a firearms code to previous lawful
transactions involving the customer, potential customer, or
merchant;
(3) Charging a higher transaction or interchange fee
to any merchant or for a lawful transaction based on the assignment
or non-assignment of a firearms code; or
(4) Otherwise taking any action against a customer or
merchant that is intended to suppress lawful commerce involving
firearms, firearm accessories or components, or ammunition, which
action is based solely or in part on the customer's or merchant's
business involving firearms, firearm accessories or components, or
ammunition.
(d) Except as otherwise required by law, a financial
institution may not disclose a financial record, including a
firearms code that was collected in violation of this Act.
SECTION 4. Chapter 271, Finance Code, is amended by adding
section 271.0072 to read as follows:
Sec. 271.0072. VIOLATION OF UNAUTHORIZED CATEGORIZATION OF
FIREARM AND AMMUNITION TRANSACTIONS; CIVIL PENALTY. (a) The
Attorney General shall investigate alleged violations of this act
and, upon finding a violation, shall provide written notice to any
individual or entity, public or private, believed to be in
violation of this act. Upon receipt of such written notice from the
Attorney General, the entity shall have thirty (30) calendar days
to cease the requirement for usage of the firearms code by Texas
merchant physically located in Texas.
(b) Either a firearms retailer physically located in Texas
whose business was the subject of an alleged violation of this Act
or a customer who transacted at a firearms retailer physically
located in Texas whose business was the subject of an alleged
violation of this Act, may petition the Attorney General to
investigate the alleged violation in accordance with subsection
(a).
(c) If the Attorney General does not commence an action
within 90 days of receiving the petition under this subsection,
then the firearms retailer - or customer may file an action in court
to enjoin the individual or entity from requiring the firearms code
in violation of this Act.
(d) If an individual or entity is found to be requiring the
usage of a firearms code by any merchant physically located in Texas
in violation of this Act and fails to cease the requirement for
usage of the firearms code by any firearms retailer physically
located in Texas after the expiration of thirty (30) calendar days
from the receipt of written notice by the Attorney General's
office, the Attorney General shall pursue an injunction against any
individual or entity, public or private, alleged to be in violation
of this Act. The Attorney General shall pursue an injunction
pursuant to this subsection in court in the judicial district where
the alleged violation occurred against the individual or entity in
alleged violation of this Act.
(e) If a court finds that an individual or entity continues
to be in violation of this Act after thirty (30) calendar days from
receiving written notice from the Attorney General in accordance
with subsection (a) or from a finding by the court of a violation of
this Act in an action commenced under subsection (c), then the court
shall enjoin the individual or entity from continuing to require
the usage of the firearms code.
(f) If an individual or entity knowingly and willfully fails
to comply with an injunction as provided in subsection (e) above
within thirty (30) days after being served with the injunction,
then the court shall impose a civil penalty in a sum not to exceed
Ten Thousand Dollars ($10,000.00) per violation of an injunction
issued pursuant to subsection (e), committed after the expiration
of the period of thirty (30) days after the entity was served with
the injunction. In assessing such a penalty, the Court shall
consider factors including the financial resources of the violator
and the harm or risk of harm to Second Amendment rights resulting
from the violation. Any order assessing a penalty for violation of
this Act pursuant to this paragraph shall be stayed pending appeal
of the order.
(g) In addition to the remedies provided in this section,
the Attorney General or a petitioner who prevails in an action under
this section shall recover reasonable expenses incurred in
obtaining the civil penalty, including court costs, reasonable
attorney's fees, investigative costs, witness fees, and deposition
expenses.
(h) It shall not be a defense to a civil action filed under
this act that such information was disclosed to a federal
government entity, unless such disclosure or action was made based
on a good faith conclusion that the disclosure or action was
required by federal law or regulation.
SECTION 5. The change in law made by this Act applies only
to a violation on or after the effective date of this Act.
Section 6. This Act takes effect September 1, 2023.