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78R9946 ATP-D
By: Wise H.B. No. 56
Substitute the following for H.B. No. 56:
By: Hopson C.S.H.B. No. 56
A BILL TO BE ENTITLED
AN ACT
relating to the disclosure of a customer's personal information by
a financial institution.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle Z, Title 3, Finance Code, is amended by
adding Chapter 278 to read as follows:
CHAPTER 278. DISCLOSURE OF CUSTOMER INFORMATION
Sec. 278.001. DEFINITIONS. In this chapter:
(1) "Customer" means an individual who obtains, from a
financial institution, financial products or services that are used
primarily for personal, family, or household purposes.
(2) "Customer information" means financial
information that personally identifies a customer and that is:
(A) provided by the customer or the legal
representative of the customer to a financial institution;
(B) obtained as a result of a transaction with or
service performed for the customer or the legal representative of
the customer; or
(C) otherwise obtained by a financial
institution.
(3) "Financial institution" has the meaning assigned
by Section 201.101.
(4) "Financial institution regulatory agency" means
the:
(A) Federal Deposit Insurance Corporation;
(B) National Credit Union Administration;
(C) Board of Governors of the Federal Reserve
System;
(D) Office of the Comptroller of the Currency;
(E) Texas Department of Banking;
(F) Savings and Loan Department;
(G) Credit Union Department;
(H) Federal Housing Finance Board; or
(I) bank supervising agency of the state in which
an out-of-state state bank that maintains a branch office in this
state is chartered.
(5) "Nonaffiliated third party" means, with respect to
a financial institution, a person that does not control, is not
controlled by, or is not under common control with the financial
institution.
Sec. 278.002. DISCLOSURE OF CUSTOMER INFORMATION. (a)
Except as provided by Subsection (b) or (c), a financial
institution may disclose customer information to a nonaffiliated
third party only if:
(1) the financial institution clearly and
conspicuously notifies the customer or the legal representative of
the customer in writing by mail that the customer information may be
disclosed;
(2) the notification is made independently of any
other communication provided by the financial institution;
(3) the customer or the legal representative of the
customer is given the opportunity, before the information is
disclosed, to prevent the disclosure; and
(4) the customer or the legal representative of the
customer is given an explanation of how to prevent the disclosure.
(b) A financial institution may disclose customer
information to a nonaffiliated third party if the disclosure is
incidental to the third party's performance of services for or
functions on behalf of the financial institution, including the
marketing of financial products or services offered by the
financial institution or another person under an agreement with the
financial institution making the disclosure.
(c) A financial institution may disclose customer
information to a nonaffiliated third party as provided by 15 U.S.C.
Section 6802(e).
Sec. 278.003. RULEMAKING. A financial institution
regulatory agency of this state shall adopt rules necessary to
carry out the purposes of this chapter.
Sec. 278.004. LIABILITY. (a) A financial institution is
liable to a customer whose information is disclosed in violation of
this chapter for:
(1) an amount equal to one of the following, at the
option of the customer:
(A) $200 for each violation, not to exceed
$20,000; or
(B) actual damages; and
(2) attorney's fees.
(b) A financial institution is liable to a customer for
punitive damages for an intentional violation of this chapter.
SECTION 2. This Act takes effect September 1, 2003.
SECTION 3. (a) The change in law made by Chapter 278,
Finance Code, as added by this Act, applies only to the disclosure
of information on or after January 1, 2004.
(b) A financial regulatory agency shall adopt rules as
required by Section 278.003, Finance Code, as added by this Act, not
later than December 1, 2003. A rule adopted under Section 278.003,
Finance Code, shall take effect January 1, 2004.