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A BILL TO BE ENTITLED
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AN ACT
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relating to requiring a financial institution to notify check |
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verification entities when a customer reports that the customer is |
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a victim of identity theft and the consequences of the notice; |
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providing a civil penalty. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter D, Chapter 35, Business & Commerce |
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Code, is amended by adding Section 35.595 to read as follows: |
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Sec. 35.595. NOTIFICATION BY FINANCIAL INSTITUTION |
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REQUIRED. (a) In this section: |
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(1) "Check verification" means a determination of |
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whether the issuer of a check or similar sight order: |
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(A) has sufficient funds in or on deposit with |
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the bank or other drawee for the payment in full of the check or |
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order and all other checks or orders then outstanding; or |
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(B) has a history of issuing checks or other |
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sight orders for which the issuer does not have sufficient funds in |
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or on deposit with the bank or other drawee for the payment in full |
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of the check or order and all other checks or orders then |
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outstanding. |
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(2) "Check verification entity" means a business |
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entity that provides check verification services to businesses in |
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this state. |
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(3) "Financial institution" means a bank, savings |
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association, savings bank, or credit union maintaining an office, |
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branch, or agency office in this state. |
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(b) A financial institution shall give notice as provided by |
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Subsection (c) to a customer who notifies the financial institution |
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that the customer was a victim of an offense under Section 32.51, |
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Penal Code, and presents to the financial institution a copy of: |
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(1) a police report of an offense under Section 32.51, |
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Penal Code; or |
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(2) a sworn statement by the person that the person was |
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the victim of an offense under that section. |
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(c) If a customer notifies a financial institution of an |
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offense under Section 32.51, Penal Code, and presents to the |
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financial institution the information required by Subsection (b), |
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the financial institution shall notify the customer that the |
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financial institution will notify check verification entities, as |
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provided by Subsection (d), if the customer provides written |
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authorization to the financial institution. |
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(d) A financial institution that receives written |
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authorization from a customer under Subsection (c), not later than |
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48 hours after the customer provides the authorization to the |
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financial institution, shall notify each check verification entity |
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on the list maintained by the banking commissioner of Texas, as |
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required by Section 11.309, Finance Code, through the electronic |
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notification system established by the Finance Commission of Texas. |
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(e) The notification given by a financial institution under |
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Subsection (d) must include the name of the customer who reported |
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the offense under Section 32.51, Penal Code, and the allegation of |
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an offense under that section by the customer. |
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(f) A check verification entity may not approve a check or |
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similar sight order purportedly issued by a person if a financial |
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institution notifies the check verification entity that the person |
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was a victim of an offense under Section 32.51, Penal Code, as |
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required by this section. |
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(g) A financial institution that violates Subsection (b), |
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(c), or (d) or a check verification entity that violates Subsection |
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(f) is liable to the state for a civil penalty of up to $1,000. The |
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attorney general may sue to collect the penalty. |
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(h) The attorney general may recover reasonable expenses |
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incurred in obtaining a civil penalty under this section, including |
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court costs, reasonable attorney's fees, investigative costs, |
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witness fees, and deposition expenses. |
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SECTION 2. Subchapter D, Chapter 11, Finance Code, is |
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amended by adding Section 11.309 to read as follows: |
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Sec. 11.309. RULES RELATING TO CHECK VERIFICATION ENTITIES. |
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(a) In this section, "check verification entity" and "financial |
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institution" have the meanings assigned by Section 35.595, Business & |
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Commerce Code. |
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(b) The finance commission shall adopt rules: |
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(1) requiring a check verification entity to register |
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with the banking commissioner: |
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(A) at the intervals the finance commission |
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determines, but not less frequently than annually; and |
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(B) by providing to the banking commissioner the |
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information, including a secure e-mail address, that the finance |
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commission determines is necessary; |
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(2) requiring the banking commissioner to make |
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available to a financial institution, on the website of the Texas |
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Department of Banking and on request of the financial institution, |
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an electronic or paper copy of a list of check verification entities |
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registered with the commissioner; |
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(3) authorizing the banking commissioner to charge a |
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check verification entity a reasonable fee not to exceed $50 to |
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register with the commissioner; and |
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(4) establishing an electronic notification system, |
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through secure e-mail or another secure system as determined by the |
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finance commission, to be used by a financial institution to notify |
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a check verification entity under Section 35.595, Business & |
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Commerce Code, that the financial institution's customer was a |
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victim of identity theft. |
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SECTION 3. This Act takes effect September 1, 2007. |