BILL ANALYSIS H.B. 1074 By: West April 12, 1995 Committee Report (Unamended) BACKGROUND Retailers who accept personal checks as payment for merchandise may encounter problems because of the unavoidable delay between the time the check is accepted and the time it is presented for payment. Individuals may write checks to business owners for merchandise and cancel or stop payment on the check before the seller has the opportunity to cash or deposit the check. In some instances, the merchandise is never returned. This can result in marked financial loss for the business establishment. Current law (Penal Code, Section 31.06), establishes a criminal intent to deprive the owner of property or services if the buyer pays for the product/service with a check drawn on an account with insufficient funds or a non-existent account. Such an intent, according to Note of Decision #5 of the same section, is not established if an individual stops payment on a check. No distinction is drawn here between those stop-payment orders followed by a return of the merchandise and those fraudulent orders made without a return of merchandise. Given the absence of a clear establishment of criminal wrongdoing, law enforcement officers and prosecutors have been reticent to pursue such violations. PURPOSE If enacted, H.B 1074 would more fully distinguish between fraudulent stop-payment orders and legitimate stop-payment orders. The former essentially constitutes theft by virtue of the individual's refusing to return the merchandise after requesting the stop-payment. H.B. 1074 would also provide a mechanism in the law whereby officials could properly define, pursue, and prosecute fraudulent stop-payment orders. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 31.06, Penal Code, by amending Subsection (b) and adding Subsection (f) as follows: (b) adds Subsection (f)(3) as a condition in which notice of presumption for theft by check may be actual notice or in writing. (f) includes an actor's presumption of intent (and, therefore, grounds for prosecution) to deprive the owner of property if all of a number of preconditions are met: (1) the actor stopped payment on a check; (2) the bank/drawee refused payment to check holder within 30 days of issue; (3) the owner gave the actor notice of this refusal and demanded repayment or return of property; and (4) the actor failed to: (A) pay holder within 10 days following demand for payment; or (B) return property to owner within 10 days following the demand for return of property. SECTION 2. Change in law made by this Act applies only to those offenses committed on or after the effective date. SECTION 3. Effective date: September 1, 1995. SECTION 4. Emergency clause. SUMMARY OF COMMITTEE ACTION HB 1074 was considered by the full committee in a public hearing on March 13, 1995. The following person testified in favor or the bill: Harold Moore, representing himself. HB 1074 was left pending in committee. HB 1074 was considered by the full committee in a formal meeting on April 12, 1995. HB 1074 was reported favorably without amendment, with the recommendation that it do pass and be printed by a record vote of 6 ayes, 0 nays, 0 pnv, and 3 absent.