C.S.H.B. 1839 78(R)    BILL ANALYSIS

C.S.H.B. 1839
By: Solomons
Financial Institutions
Committee Report (Substituted)


Current law requires pawnbrokers to watch for goods that might be stolen
and assist law enforcement officers in the recovery of stolen property.
There are no standardized procedures that all law enforcement personnel
must follow when requesting pawnbrokers to hold items which are suspected
of being stolen.  Instead, pawnbrokers and law enforcement agencies use
informal procedures which vary widely from municipality to municipality.
Pawnbrokers share information from paper pawn tickets with relevant law
enforcement officials according to rules adopted by the consumer credit
commissioner.  Having a law enforcement agency sort through these paper
records when searching for specific stolen items is an inefficient means
of identifying stolen property.   

C.S.H.B. 1839 establishes a uniform hold procedure for goods that are
suspected of being stolen and requires pawnbrokers to provide data to law
enforcement agencies in an electronic or otherwise mutually acceptable


It is the committee's opinion that rulemaking authority is expressly
granted to the Finance Commission of Texas in SECTION 2 (Section 371.359
and 371.360, Finance Code) of this bill. 


C.S.H.B. 1839 permits a "chief law enforcement officer" (the sheriff or
the sheriff's designee, or the police chief or the police chief's
designee) to place a hold order on goods the officer has reasonable
suspicion to believe were misappropriated.  A pawnbroker must keep any
good subject to a hold order in a secure area and may not release, sell,
redeem, or dispose of it unless: 
_the officer delivers a written release to the pawnbroker;
_the hold order and any extensions expire;
_a court order requires its release; or
_the officer takes custody of the good and provides a written receipt to
the pawnbroker. 
The bill specifies the information that must be contained in a hold order
and requires that it be signed by the officer and the pawnbroker, or the
pawnbroker's designee, to be properly executed.  A copy shall be provided
to the pawnbroker at no cost.  

Initially, a hold order may not exceed 60 days.  A hold order may be
extended for up to three successive 60-day periods, if the extension is
provided in writing prior to the expiration of the hold order.  The bill
permits the officer to place a verbal hold order on a good, or verbally
extend a hold order, for up to seven days while a written hold order or
extension is prepared.   

Goods subject to a hold order may be released to the custody of the
officer if the officer has probable cause to believe that the goods are
stolen and the officer issues a written receipt to the pawnbroker. Any
good taken by the officer is subject to Chapter 47, Code of Criminal
Procedure (Disposition of Stolen Property).   

C.S.H.B. 1839 makes it an offense for a person to pledge or sell
misappropriated property to a pawnbroker.  Such an offense is a Class B

The bill requires pawnbrokers who generate computerized pawn and purchase
tickets to provide data from those tickets to a law enforcement agency, as
directed by the chief law enforcement officer. The bill establishes three
methods of achieving this requirement.  First, the pawnbroker may transmit
"reportable data" (pawnshop name and address, transaction date, and item
description) directly to the law enforcement agency in a mutually agreed
upon format.  Second, the pawnbroker may transmit "transaction data" (all
reportable data plus the customer's identifying information) to a third
party.  Finally, a pawnbroker may provide transaction data to the chief
law enforcement officer by any other agreed upon means.  Pawnbrokers must
transmit data within one week of the transaction the pawn ticket relates
to, but a shorter period may be agreed upon between the pawnbroker and the

The bill permits a commercial enterprise ("provider") to establish an
electronic repository of pawn ticket information and make this information
available to authorized law enforcement personnel to facilitate criminal
investigations.  Authorized personnel may access reportable data simply
upon the provision of a secure identification or access code.  An officer
must present additional information, including the applicable case number,
to obtain the customer's identifying information.  A provider may charge a
reasonable fee to a law enforcement agency to access the data, but neither
a provider nor a law enforcement agency may charge a fee to pawnbrokers or
their customers.  C.S.H.B. 1839 enumerates technical specifications for
the repository and for any database operated by a law enforcement agency.
The consumer credit commissioner may require appropriate documentation
from a provider or a law enforcement agency regarding compliance with
these specifications.  The bill requires providers and law enforcement
agencies maintaining their own databases to report annually to the
commissioner the total number of pawn transaction reported by each

The bill establishes that a pawnbroker is not responsible for problems
arising from computer-related malfunctions and errors if the pawnbroker
makes a bona fide effort to repair any problem with the pawnbroker's
equipment.  In case of error or malfunction, the pawnbroker and the chief
law enforcement officer shall arrange a mutually acceptable alternative
method of transferring data.  The bill permits the Finance Commission to
adopt rules to establish formal procedures in case of computer-related
malfunctions and errors. 

The bill makes confidential the information contained in a provider's
repository and permits its release or disclosure only for a law
enforcement investigation of a crime or for the consumer credit
commissioner's administrative purposes.  The bill makes it an offense to
violate the bill's confidentiality provisions or fraudulently access a
repository.  Such an offense is a Class A misdemeanor. 

C.S.H.B. 1839 requires a pawnbroker to maintain paper copies of pawn
tickets and make them available for on-site inspection for 180 days after
transmitting data and following a computer-related malfunction or error.
The Finance Commission may adopt rules to implement this requirement. 


January 1, 2004


The substitute adds provisions relating to the hold procedure, making it
an offense to pledge or sell misappropriated property, permitting the
transmission of data to a third-party provider, establishing the
specifications of a provider's repository and a law enforcement agency's
database, specifying the information to be transmitted by pawnbrokers,
providing procedures following computer-related malfunctions and errors,
permitting oversight by the consumer credit commissioner, and permitting
the Finance Commission to adopt certain rules. 

The substitute deletes provisions relating to the specific format of data
to be transferred and requiring the deletion of data by a law enforcement
agency within seven days of receipt.  The substitute expands to seven days
from 24 hours the amount of time that a pawnbroker has to transmit data
from a transaction.  The substitute changes the effective date to January
1, 2004, from September 1, 2004.