BILL ANALYSIS C.S.H.B. 2745 By: Romo 04-17-95 Committee Report (Substituted) BACKGROUND Automated Teller Machines (ATMs) came to the state of Texas 15 years ago. Today, with over 90,000 ATMs in the country, Texas consumers alone will perform nearly 300 million transactions. With the widespread availability and use of automated teller machines in today's convenience-oriented society, the vulnerability of the ATM user has increased and reports of ATM robberies and assaults are on the rise. As fixed locations open for business 24 hours a day, ATMs have become easy target sites for criminals. PURPOSE This purpose of this legislation is to provide guidelines for the implementation of uniform safety standards concerning the placement and operation of automated teller machines in Texas. RULEMAKING AUTHORITY It is the committee's opinion that this bill grants additional rulemaking authority to the Finance Commission and the Credit Union Commission in SECTION 1, Sec. 7 of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Chapter IX, Article 342-901, Texas Banking Code, by adding Article 3d.: Unmanned Teller Machines: User Safety. Section 1. Article 3d. Definitions. (1) Defines "access area" as a paved walkway or sidewalk that is within 50 feet of an unmanned teller machine. (2) Defines "access device" as having the definition in Section 7, Article 3c of this chapter in the Banking Code. (3) Defines "candlefoot power" as the light intensity of candles on a horizontal plane at 36 inches above ground level and 5 feet in front of the area to be measured. (4) Defines "control" as having the present, actual authority to determine how, when, and by whom an access area or defined parking area is to be used, maintained, lighted, and landscaped. (5) Defines "customer" as a natural person to whom an access device is issued for personal, family, or household use. (6) Defines "defined parking area" as the portion of a parking area open for unmanned teller machine customer parking that is contiguous to an access area, is regularly, principally, and lawfully used during the hours of darkness for parking by customers of the machine, and is owned or leased by the owner or operator of the unmanned teller machine or owned or controlled by a person leasing the machine site to the owner or operator of the machine. Term does not include a parking area that is physically closed, or on which conspicuous signs indicate that the area is closed, or the levels of a multiple-level parking area other than the single parking level considered by the operator of the unmanned teller machine to be the most directly accessible to customers. (7) Defines "financial institution" as a state or national bank or a state or federal savings and loan association, credit union, or savings bank. (8) Defines "hours of darkness" as the period beginning 30 minutes after sunset and ending 30 minutes before sunrise. (9) Defines "operator" as the person primarily responsible for the operation of an unmanned teller machine. Does not include a person whose primary function is to provide for the exchange, transfer, or dissemination of electronic fund transfer data. (10) Defines "owner" as a person having the right to determine the financial institutions permitted to use or participate in the use of an unmanned teller machine. Term does not include a person whose primary function is to provide for the exchange, transfer or dissemination of electronic fund transfer data. (11) Defines "person" as a natural person, corporation, firm, partnership, association, common law trust, or other entity. (12) Defines "public road" as a public right of way. Term includes a structure, sidewalk, facility, or appurtenance incidental to a public road. (13) Defines "unmanned teller machine" as having the meaning assigned by Section 2, Article 3a of this chapter; term does not include a customer convenience terminal as defined by Section 2, Article 3c of this chapter. Section 2. LEGISLATIVE INTENT: CONSTRUCTION. States in (a) the intent of legislature to establish a standard of good faith for the evaluation of the safety of each unmanned teller machine in the state adding that substantial compliance is prima facie evidence of an adequate effort to provide for public safety; (b) article does not create a duty, responsibility, obligation for a person whose primary function is to provide for the exchange, transfer, or dissemination of electronic fund transfer data and who is not the owner or operator of an unmanned teller machine. Person described by this subsection is not liable to a customer or user of an unmanned teller machine for any claim or cause of action arising out of or in connection with any use or attempted use of an unmanned teller machine. Section 3. SAFETY PROCEDURES. States (a) operator or owner of unmanned teller machine shall provide lighting during the hours of darkness for the machine and its access area and defined parking area. Owner or operator shall also provide lighting during hours of darkness for the exterior of the enclosure if the unmanned teller machine is located in the enclosure; (b) the owner or operator shall provide a minimum of: (1) 10 candlefoot power at the face of the unmanned teller machine and extending in an unobstructed direction outward five feet; (2) two candlefoot power within 50 feet from all unobstructed directions from the face of the machine unless machine is located within 10 feet of the corner of building and is accessible from adjacent side, in which event owner or operator shall provide minimum of two candlefoot power along first 40 unobstructed feet of adjacent side of the building; and (3) two candlefoot power in that portion of the defined parking area within 60 feet of the unmanned teller machine; (c) if an access area or defined parking area of machine is not controlled by operator of the machine, and if person who leased site controls the access area or defined parking area, that person shall comply with this section. Section 4. SAFETY EVALUATIONS. An owner or operator of unmanned teller machine shall evaluate safety of each machine owned or operated by the person and shall include in the evaluation a consideration of: (1) extent to which the lighting for machine complies with the standards required by Section 3 of this article; and (2) presence of landscaping, vegetation, or other obstructions in the area of the machine and the access area and defined parking area for the machine; and (3) incidence of crimes of violence in the immediate neighborhood of the machine as reflected in the records of local law enforcement and of which owner or operator has actual knowledge. Section 5. NOTICE. The issuer of access devices shall furnish customers with notice of basic safety precautions. The issuer shall deliver personally or mail information to each customer whose mailing address is in this state according to records. Issuer is required to furnish information to only one customer per account. Issuer may furnish information with other disclosures as described by the Federal Electronic Fund Transfer Act. Section 6. LIMITATION. This article does not apply to an unmanned teller machine located in: (1) inside a building, unless (a) the building is a freestanding installation existing solely to provide an enclosure for the unmanned teller machine or (b) except to the extent a transaction can be conducted from outside the building; or (2) in any area not controlled by the owner or operator of the unmanned teller machine. Section 7. ENFORCEMENT: RULES. (a) grants the Finance Commission and the Credit Union Commission enforcement power of this article rulemaking authority to implement this article. (b) rules must establish security requirements to be implemented by banks for the operation of unmanned teller machines. Institutions may be required to install and maintain security devices in addition to those required by this article to be operated in conjunction with the machines for the protection of customers using the machines, including: (1) video surveillance equipment that is maintained in working order and operated continuously during the hours of operation of a machine; and (2) adequate lighting around the premised that contains a machine. (c) Failure by a bank to comply with rules adopted under this section constitutes grounds for the imposition of a civil penalty under Section 7, Article 3a, of this code. SECTION 2. (a) an issuer of access devices to unmanned teller machines shall provide notice to customers as required by the Texas Banking Code and as added by this Act no later than January 1, 1996. (b) an owner or operator of an unmanned teller machine or any person described in Sec. 3(c) of this Act shall comply with safety requirements imposed by Article 3d, Chapter IX, The Texas Banking Code as added by this Act, no later than September 1, 1996. SECTION 3. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE In SECTION 1, Sec. 1, the definition of "Financial institution" is clarified in the substitute to include credit unions in addition to state or national banks, federal savings and loans and savings banks. In Sec. 2, legislative Intent is clarified in the substitute by adding a sentence which states that substantial compliance with this Act is prima facie evidence that an adequate effort has been made to provide for public safety. Sec. 3 is clarified to include not only the operator of an ATM but also the owner of an ATM as having to comply with this Act. The original bill granted rulemaking authority and enforcement power to the State Banking Board. There are several bills proposed to abolish the State Banking Board before the 74th Legislature, therefore an inconsistency was created by this bill. To rectify this, C.S.H.B. 2745 adds subsections (a), (b), and (c) to Sec. 7 of the bill entitled "Enforcement: Rules," which grants rulemaking authority and enforcement power to the Finance Commission and the Credit Union Commission. (a) states that the Finance Commission and the Credit Union Commission shall enforce this article and adopt rules to implement article. (b) states that rules must establish security requirements to be implemented by financial institutions for the operation of unmanned teller machines and that institutions may be required to install and maintain security devices in addition to those required by this article, including (1) video surveillance equipment; and (2) adequate lighting around premises that contains machine. (c) states that failure to comply with rules adopted under this Act constitutes grounds for imposition of civil penalty under Section 7, Article 3a of this code. Lastly, in SECTION 2 of the substitute, language has been removed regarding the State Banking Board who had previously been granted rulemaking authority in this Act, and, (b), the compliance clause, has been clarified. SUMMARY OF COMMITTEE ACTION The committee considered HB 2745 in a public hearing on March 27, 1995. The following people testified in favor of the bill: Gayle Vickers representing the Texas Bankers Association; Eric Sandberg representing the Texas Savings and Community Bankers Association; Jeff Huffman representing the Texas Credit Union League; and Chris Williston representing the Independent Bankers Association of Texas. The following person testified neutrally on the bill: Catherine A. Ghiglieri representing the Texas Department of Banking. The bill was left pending. The committee considered HB 2745 in a public hearing on April 10, 1995. The committee considered a complete committee substitute for the bill which was adopted without objection. The bill was reported favorably as substituted, with the recommendation that it do pass and be printed, by a record vote of: 7 Ayes, 0 Nays, 0 PNV, 2 Absent.