HBA-TYH H.B. 2676 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2676 By: Keel Financial Institutions 3/31/1999 Introduced BACKGROUND AND PURPOSE Currently, Texas law provides for pawnshops to provide law enforcement agencies with copies of pawn and purchase transaction receipts. Law enforcement agencies gather the paper slips and enter the data into their computer systems for stolen checks and information purposes relating to criminal intelligence. Most pawnshops already operate with computer systems that generate their transaction information. Some shops are already transmitting the transaction information to law enforcement agencies by electronic reporting on a voluntary basis. Current operating procedures for placing a hold on property in a pawnshop are not specific and need to be structured. The ability of police to place holds on items is allowed but there is not a uniform set of standards. There are also no rules for pawnshops to abide by relating to police holds and other procedures. Current law states that when a case has been filed, property seized as stolen from a pawnshop will be placed before the county or district court having disposition responsibility for that case. In some cases, the property may sit for a year or more pending the trial or plea arrangement while the complainant does not have access to the property. All parties involved would like to receive a speedy hearing to return the property to the rightful owner. H.B. 2676 sets forth specific guidelines for the transmittal of electronically gathered pawn and purchase transaction data from licensed pawnshops. This bill provides for electronic transmission of reportable data when a county or municipality passes an ordinance to require it. This bill does not require any pawnshop to purchase computer systems if they do not already use them. It establishes standardized rules for the placing of police holds on property in the possession of pawnshops, and adds the requirement for phone numbers and fingerprints to be placed on pawn and purchase tickets. This bill also allows a magistrate or judge to hold a property hearing in all cases for property that has been seized. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 371.003, Finance Code, by adding definitions for "chief law enforcement official," "designated law enforcement official," "misappropriated," and "pledgor." Makes conforming changes. SECTION 2. Amends Chapter 371, Finance Code, by adding Section 371.186, as follows: Sec. 371.186. PROVIDING DATA TO LAW ENFORCEMENT OFFICIALS BY ELECTRONIC MEANS. (a) Defines, for this section, "reportable data." (b) Authorizes a chief law enforcement official to require reporting pawnbrokers within the jurisdiction of such official to provide all reportable data to a designated law enforcement official by electronic means, in lieu of the paper documents. (c) Provides that this section applies only to a pawnbroker who possesses and uses the computer equipment capable of complying with the requirements for providing reportable data under this section and conducted at least a total of 1,200 pawn and purchase transactions. Provides that a pawnbroker who becomes eligible for application of this section remains eligible regardless of the number of pawn and purchase transactions conducted in subsequent periods. (d) Provides that if the pawnbroker possesses and uses adequate computer equipment, the pawnbroker is required to make available, within six months of the receipt of the notice from the chief law enforcement official, all reportable data to the designated law enforcement official. Sets forth the procedure for the eligible pawnbroker to follow in submitting the data. Requires a pawnbroker who does not possess and use adequate computer hardware and software to comply with the requirements of this section within 180 days from the date the pawnbroker obtains capable computer hardware and software. Provides that a pawnbroker is not responsible for any delay that results from the law enforcement official's delay in facilitating the receipt of the data. (e) Provides that the medium in which a pawnbroker provides data to the designated law enforcement official must contain the reportable data for all transactions during a particular business period of not less than one business day and must be made available to be picked up by or transmitted to the designated law enforcement official by the end of the second business day after the business period to which the data relates. (f) Requires the pawnbroker, during a test period beginning on the date a pawnbroker begins to provide reportable data under this section, to continue to make available copies of each of the underlying pawn or purchase transaction documents. Requires the test period to continue until the system is properly operating and transmitting data to the satisfaction of the designated law enforcement official. (g) Provides that a pawnbroker is responsible for training the pawnbroker's employees in correct data reporting and requires a pawnbroker to provide complete and accurate data to the designated law enforcement official. Requires the pawnbroker to be allowed a period of 30 days after the date of receipt of notice to correct an error. Requires the pawnbroker to be allowed a period of 30 days in which to correct a computer malfunction. Provides that a pawnbroker who makes a bona fide effort to make the appropriate system repairs during the periods prescribed by this subsection is not in violation of this section during those periods. Requires the pawnbroker, during those periods of error or malfunction, to provide paper copies of the transaction tickets to the designated law enforcement official. Requires any reduced hold period for purchased goods to revert to the standard hold period for property as set out in Section 371.182 (Hold Period) of this Act. (h) Provides that all reportable data transmitted or furnished to any law enforcement official under this Act is confidential and are authorized to be used by that official only for official law enforcement related investigations. Prohibits a pawnbroker from being held liable for furnishing the information required by this Act to a law enforcement agency. (i) Requires a Texas uniform reporting format to be established. Requires a committee to be formed under the direction of the Consumer Credit Commissioner (commissioner) consisting of representatives of the pawnbroker industry, law enforcement and computer software industry. Requires the committee to review and recommend to the commissioner, no later than November 1, 1999, a format to be designated by the commissioner as the Texas uniform reporting format. SECTION 3. Amends Chapter 371, Finance Code, by adding Section 371.187, as follows: Sec. 371.187. ALTERNATIVE RECIPIENTS OF ELECTRONIC DATA. Authorizes a chief law enforcement official to require pawnbrokers within the jurisdiction of such official to provide all reportable data to an alternative law enforcement agency (but not more than one such alternative recipient) in lieu of transmitting reportable data to that Chief law enforcement official. Requires that alternative recipient to be known as the designated law enforcement official for that jurisdiction for reporting purposes only. SECTION 4. Amends Chapter 371, Finance Code, by adding Section 371.188, as follows: Sec. 371.188. POLICE HOLDS. (a) Authorizes the official, if any law enforcement official has reasonable suspicion to believe that property in the possession of a pawnbroker has been misappropriated, to place a hold order on the property as provided by this section. (b) Authorizes any law enforcement official to place a hold order verbally, but if the pawnbroker does not receive a written order within 10 days after the date of the verbal order, the verbal hold order automatically expires. Prohibits the term of a written hold order from exceeding 60 days from the earlier of the date of the verbal hold order or the date of receipt by the pawnbroker of the written hold order. Authorizes the law enforcement official, if there is an unexpected delay in the investigation to extend the term of the hold order for up to an additional 30 days by notifying the pawnbroker in writing. Requires the hold order to automatically expire upon expiration of the hold period or extension. (c) Provides that a hold order must specify the enumerated information. (d) Authorizes a written hold order to be transmitted to the pawnbroker by facsimile machine, mail, or personal delivery. (e) Prohibits the pawnbroker from releasing or disposing of property subject to a hold order except under a search warrant, court order, release authorization from the official placing the item on hold, seizure by a law enforcement official, or the expiration of the hold period. Requires a pawnbroker to release property to the custody of a law enforcement official on the official's request for use in a criminal investigation if the official has furnished the pawnbroker with a written receipt for the property. Provides that the release of the property to the custody of the official is not considered to be a waiver or release of the pawnbroker's rights or interest in the property. Requires the property, on the earlier of the completion of the criminal investigation or the expiration of the hold period, to be returned to the pawnbroker who released it unless a court order provides for other disposition. Authorizes the court, if other disposition is ordered, to order the pledgor or seller to pay restitution to the pawnbroker in the amount received by the pledgor or seller for the property, plus accrued pawn service charges to the date of seizure, in the case of pawn transactions, and reasonable attorney's fees and costs. SECTION 5. Amends Section 371.182, Finance Code, as follows: Sec. 371.182. HOLD PERIOD. Requires a pawnbroker to hold for not less than 20 calendar days an item of tangible personal property purchased or otherwise acquired from the general public before the property may be modified, changed, sold, or disposed of in any manner. Authorizes the commissioner to provide for a hold period of 10 days upon written application by a pawnbroker. Authorizes a reduction in the hold period to be granted only if the pawnbroker and the chief law enforcement officer have implemented a procedure for transmitting reportable electronic data under Sections 371.186 or 371.187 of this Act. An application for a shorter hold period must be approved by the chief law enforcement official before the application is submitted to the commissioner by the pawnbroker. Deletes text requiring the consumer credit commissioner (commissioner) to designate a reasonable hold period. SECTION 6. Amends Section 371.157, Finance Code, to include, among other items, the pledgor's telephone number, the number of the unexpired identification of the pledgor as required in Section 371.174 (Property Identification Tags Required), and a complete description of pledged goods in a pawn ticket or other memorandum delivered to the pledgor. Requires the pawnbroker to record a legible thumbprint of the pledgor on the forth part of the pawn ticket or that part numerically filed and retained by the pawnbroker. SECTION 7. Amends Section 371.177, Finance Code, to make conforming changes. SECTION 8. Amends Article 47.01a, Code of Criminal Procedure, as follows: Art. 47.01a. New title: Restoring Property to Owner. Deletes text referring to a pending criminal action relating to stolen property. SECTION 9. Effective date: September 1, 1999. SECTION 10. Emergency clause.