By: Branch, et al. (Senate Sponsor - Van de Putte) H.B. No. 85

(In the Senate - Received from the House April 10, 2007; April 11, 2007, read first time and referred to Committee on Business and Commerce; April 26, 2007, reported adversely, with favorable Committee Substitute by the following vote: Yeas 8, Nays 0; April 26, 2007, sent to printer.)

COMMITTEE SUBSTITUTE FOR H.B. No. 85 By: Van de Putte

A BILL TO BE ENTITLED

AN ACT

relating to credit card marketing activities at postsecondary educational institutions; providing a civil penalty.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 35, Business & Commerce Code, is amended by adding Subchapter L to read as follows:

SUBCHAPTER L. CREDIT CARD MARKETING AT POSTSECONDARY EDUCATIONAL

INSTITUTIONS

Sec. 35.131. DEFINITIONS. In this subchapter:

(1) "Campus credit card marketing activity":

(A) means any activity:

(i) conducted by an agent or employee of a credit card issuer on the campus of a postsecondary educational institution; and

(ii) designed to encourage and enable students to apply for a credit card; and

(B) includes the act of placing on the campus a display or poster together with a form that can be returned to the credit card issuer as a credit card application, even if an employee or agent of the credit card issuer is not present at the display.

(2) "Credit card" means a card or device issued under an agreement by which the issuer gives to a cardholder the right to obtain credit from the issuer or another person.

(3) "Credit card issuer" means a lender, including a financial institution, or a merchant that receives applications and issues credit cards to individuals.

(4) "Governing board" means the body charged with policy direction of any postsecondary educational institution, including a board of directors, a board of regents, a board of trustees, and an independent school district board that is charged with policy direction of a public junior college.

(5) "Postsecondary educational institution" means:

(A) an institution of higher education as defined by Section 61.003, Education Code;

(B) a private or independent institution of higher education as defined by Section 61.003, Education Code; or

(C) a private postsecondary educational institution as defined by Section 61.302, Education Code.

Sec. 35.132. CAMPUS CREDIT CARD MARKETING ACTIVITY OUTSIDE DESIGNATED LOCATION OR TIME PROHIBITED. (a) A credit card issuer may not engage in campus credit card marketing activities:

(1) outside of a campus location designated by the governing board of the postsecondary educational institution for that purpose in accordance with Subsection (b); or

(2) at a time other than a time designated by the governing board in accordance with Subsection (b).

(b) The governing board of a postsecondary educational institution may designate:

(1) one or more locations on campus where a credit card issuer may engage in campus credit card marketing activities; and

(2) one or more times during which a credit card issuer may engage in campus credit card marketing activities.

Sec. 35.133. CREDIT CARD ISSUER TO DEVELOP FINANCIAL EDUCATIONAL MATERIAL. A credit card issuer who conducts campus credit card marketing activities shall develop financial educational material in consultation with or subject to approval by the postsecondary educational institution. The financial educational material must include a clear and practical explanation of:

(1) effective money management skills, including how to develop and maintain a budget;

(2) key financial terms and phrases related to credit cards and personal debt management;

(3) credit educational materials and programs offered by the credit card issuer that are available to student cardholders after they have opened an account;

(4) resources to assist students in understanding credit reports and credit scores and the consequences of irresponsible credit card use; and

(5) the importance of responsible credit practices, including timely paying the minimum amount due each month and reducing costs by paying as much of the balance as possible.

Sec. 35.134. CREDIT CARD ISSUER TO PROVIDE FINANCIAL EDUCATIONAL MATERIAL. A credit card issuer that conducts campus credit card marketing activities shall:

(1) during the time that the credit card issuer conducts the credit card marketing activity on the campus, make available to students, on the campus, financial educational material developed under Section 35.133;

(2) make financial educational material similar to material developed under Section 35.133 available on the Internet; and

(3) provide to a student to whom a credit card is issued, at the time the credit card is provided to the student, financial educational material developed under Section 35.133.

Sec. 35.135. RESTRICTION ON GIFTS OR INCENTIVES FOR COMPLETING CREDIT CARD APPLICATION. A credit card issuer may not offer a gift or other incentive in exchange for the completion of a credit card application as part of a campus credit card marketing activity unless the credit card issuer, at the time the credit card issuer provides a credit card application to an individual, provides financial educational material developed under Section 35.133 to the individual.

Sec. 35.136. CREDIT CARD AND DEBT EDUCATION AT NEW STUDENT ORIENTATION. The governing board of a postsecondary educational institution that has designated a location for campus credit card marketing activities under Section 35.132(b) shall also adopt a policy requiring a credit card and debt education and counseling session to be included in any orientation program for new students. The postsecondary educational institution may use existing educational materials prepared by nonprofit entities for purposes of the credit card and debt education and counseling session.

Sec. 35.137. CIVIL PENALTY. A person who intentionally violates this subchapter is liable to the state for a civil penalty in an amount not to exceed $2,500 for each violation. The attorney general or the prosecuting attorney in the county in which the violation occurs may bring suit to recover the civil penalty imposed under this section.

SECTION 2. This Act takes effect September 1, 2007.

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