By: Chavez, Turner of Harris, Pickett, H.B. No. 1771

Leibowitz

A BILL TO BE ENTITLED

AN ACT

relating to the reduction in value or abandonment of stored value cards.

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

SECTION 1. Section 604.002, Business & Commerce Code, is amended to read as follows:

Sec. 604.002. INAPPLICABILITY OF CHAPTER. This chapter does not apply to a stored value card that:

(1) is issued by:

(A) a financial institution acting as a financial agent of the United States or this state;

(B) a federally insured financial institution, as defined by Section 201.101, Finance Code, if the financial institution is primarily liable for the card as the issuing principal; or

(C) an air carrier holding a certificate of public convenience and necessity under Title 49, United States Code;

(2) is issued as a prepaid calling card by a prepaid calling card company regulated under Section 55.253, Utilities Code;

(3) is distributed by the issuer to a person under an awards, rewards, loyalty, incentive, rebate, or promotional program and is not issued or reloaded in exchange for money tendered by the cardholder;

(4) is sold below face value or donated to:

(A) an employee of the seller or issuer;

(B) a nonprofit or charitable organization; or

(C) an educational institution for fund-raising purposes; [or]

(5) does not expire and for which the seller does not charge a fee [other than a fee] described in Section 604.051;

(6) is issued or sold as a voucher:

(A) for admission to an event, attraction, or establishment, including an amusement park, zoo, museum, water park, and concert; or

(B) for permission to travel on a vehicle, including a train, bus, and boat; or

(7) is a debit card on which information evidencing a promise to pay money representing child support payments is stored and for which a fee described by Section 604.051 is not charged.

SECTION 2. The heading to Subchapter B, Chapter 604, Business & Commerce Code, is amended to read as follows:

SUBCHAPTER B. CERTAIN [PERMISSIBLE] FEES PROHIBITED

SECTION 3. Section 604.051, Business & Commerce Code, is amended to read as follows:

Sec. 604.051. CERTAIN FEES AND CHARGES ASSOCIATED WITH [RELATED TO ISSUANCE AND HANDLING OF] CARD PROHIBITED. (a) The [If disclosed as required by Subchapter C, the] issuer of a stored value card may not impose or [and] collect a fee associated with a stored value card, including [reasonable]:

(1) an [handling fee in connection with the issuance of or adding of value to the card;

[(2)] access fee for a card transaction conducted at an unmanned teller machine, as defined by Section 59.301, Finance Code; [and]

(2) a [(3)] reissue or replacement charge if an expired or lost card is reissued or replaced; or

(3) a periodic fee or other charge that causes the unredeemed balance of the card to decrease over time.

(b) This chapter does not prohibit a stored value card fee charged by a seller at the time of initial sale or when adding value to a stored value card if the fee is disclosed to the consumer at the time of the transaction and the consumer has the opportunity to decline the transaction after having been informed of the fee.

SECTION 4. Section 604.101, Business & Commerce Code, is amended to read as follows:

Sec. 604.101. REQUIRED DISCLOSURE OF CERTAIN MATTERS APPLICABLE TO CARD. An expiration date, [or] policy, [fee,] or other material restriction or contract term applicable to a stored value card must be clearly and conspicuously disclosed at the time the card is sold or issued to a person to enable the person to make an informed decision before purchasing the card.

SECTION 5. Section 604.102, Business & Commerce Code, is amended to read as follows:

Sec. 604.102. REQUIRED PRINTING OF CERTAIN DISCLOSURES. In addition to the disclosure required under Section 604.101, a disclosure regarding the expiration of a stored value card [or a periodic fee that reduces the unredeemed value of a stored value card] must be legibly printed on the card.

SECTION 6. Section 604.103, Business & Commerce Code, is amended to read as follows:

Sec. 604.103. VALIDITY OF CARD SOLD WITHOUT REQUIRED DISCLOSURES. A stored value card sold without a [the] disclosure required by this chapter [subchapter] of an expiration date or policy, fee, or other material restriction or contract term applicable to the card is valid until redeemed or replaced.

SECTION 7. Section 72.1016(a), Property Code, is amended to read as follows:

(a) This section applies to a stored value card, as defined by Section 604.001, Business & Commerce Code, other than a card:

(1) to which Chapter 604, Business & Commerce Code, does not apply by operation of Sections 604.002(1)(A) and (C), 604.002(2)-(4), and 604.002(6)-(7) [and 604.002(2)-(5)] of that code; or

(2) that is linked to and draws its value solely from a deposit account subject to Chapter 73.

SECTION 8. The following provisions are repealed:

(1) Section 604.052, Business & Commerce Code; and

(2) Section 72.1016(d), Property Code.

SECTION 9. The changes in law made by this Act apply only to a stored value card issued or activated on or after the effective date of this Act. A stored value card issued or activated before the effective date of this Act is governed by the law in effect when the card was issued or activated, and the former law is continued in effect for that purpose.

SECTION 10. This Act takes effect January 1, 2010.