By: Zaffirini S.B. No. 964

(In the Senate - Filed March 3, 2021; March 11, 2021, read first time and referred to Committee on Business & Commerce; April 7, 2021, reported adversely, with favorable Committee Substitute by the following vote: Yeas 9, Nays 0; April 7, 2021, sent to printer.) Click here to see the committee vote

COMMITTEE SUBSTITUTE FOR S.B. No. 964 By: Nichols

A BILL TO BE ENTITLED

AN ACT

relating to the prevention, identification, investigation, and enforcement of payment card fraud; providing a civil penalty.

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

SECTION 1. The heading to Chapter 607, Business & Commerce Code, is amended to read as follows:

CHAPTER 607. PAYMENT CARD SKIMMERS ON MOTOR FUEL METERING DEVICES

[DISPENSERS]

SECTION 2. Section 607.001, Business & Commerce Code, is amended by amending Subdivisions (1), (2), (4), (5), (7), and (8) and adding Subdivisions (1-a), (1-b), (2-a), (3-a), (5-a), and (6-a) to read as follows:

(1) "Center" means the financial crimes intelligence [payment fraud fusion] center established under Chapter 2312 [424], Occupations [Government] Code.

(1-a) "Commission" means the Texas Commission of Licensing and Regulation.

(1-b) "Credit card issuer" has the meaning assigned by Section 505.001.

(2) "Department" means the Texas Department of Licensing and Regulation [state agency that is the licensing authority for service companies and service technicians].

(2-a) "Executive director" means the executive director of the department.

(3-a) "Institution of higher education" has the meaning assigned by Section 61.003, Education Code.

(4) "Merchant" means a person whose business includes the sale of motor fuel through motor fuel metering devices [dispensers] to retail customers.

(5) "Motor fuel" and "motor fuel metering device" have the meanings assigned by Section 2310.001, Occupations Code ["Motor fuel dispenser" means a machine that is used to pump gasoline, diesel, biofuels, or other types of fuels into motor vehicles].

(5-a) "Motor fuel unattended payment terminal" means a point-of-sale terminal or kiosk that is operated by a customer to activate or complete a transaction at a motor fuel metering device through the use of a payment card or a payment by other electronic means.

(6-a) "Payment card network" means an entity that directly, or through a licensed member, processor, or agent, provides the proprietary services, infrastructure, and software that route information and data to conduct debit card or credit card transaction authorization, clearance, and settlement, and that an entity uses in order to accept as a form of payment a brand of debit card, credit card, or other device that may be used to carry out debit or credit transactions.

(7) "Service company" and "service technician" have the meanings assigned by Section 2310.151 [13.451], Occupations [Agriculture] Code.

(8) "Skimmer" means a wire or electronic device that is capable of unlawfully intercepting electronic communications or data to perpetrate fraud. [The term includes a re-encoder and scanning device, as those terms are defined by Section 522.001.]

SECTION 3. Subchapter A, Chapter 607, Business & Commerce Code, is amended by adding Sections 607.002, 607.003, and 607.004 to read as follows:

Sec. 607.002. ADMINISTRATION AND ENFORCEMENT OF CHAPTER. (a) The department shall administer and enforce this chapter.

(b) The commission or the executive director may enforce this chapter, a rule adopted under this chapter, or an order of the commission or executive director as provided by Subchapters F and G, Chapter 51, Occupations Code.

Sec. 607.003. FUNDING. The department may solicit and accept gifts, grants, and other donations for purposes of administering this chapter, except that the department may not solicit or accept a gift, grant, or other donation from a license holder as defined by Section 2310.151, Occupations Code.

Sec. 607.004. RULES. The commission shall adopt rules for administering this chapter.

SECTION 4. Section 607.053, Business & Commerce Code, is amended to read as follows:

Sec. 607.053. NOTICE OF DISCOVERY OF SKIMMER REQUIRED. (a) If a service technician discovers a skimmer in or on a motor fuel [the] unattended payment terminal or [of a] motor fuel metering device [dispenser], the service technician or service company that employs the technician shall [immediately] notify the department and the merchant of the skimmer in the manner prescribed by commission rule.

(b) If a merchant discovers a [the] skimmer in or on a motor fuel unattended payment terminal or motor fuel metering device or is notified of the presence of a skimmer [by a service technician or other person], the merchant shall, in the manner prescribed by commission rule:

(1) [immediately] disable, or cause to be disabled, the motor fuel metering device [dispenser] on which the skimmer was discovered;

(1-a) [and] notify a law enforcement agency and the department that a skimmer has been detected; and

(2) take appropriate measures to protect [from tampering with] the motor fuel metering device from being tampered with [dispenser] until the department or law enforcement agency arrives and the skimmer is removed[; and

[(3) not later than 24 hours after the discovery of the skimmer or a report of the discovery of a skimmer is made to the merchant, report the discovery to the department].

SECTION 5. Section 607.054(a), Business & Commerce Code, is amended to read as follows:

(a) The department may accept a report of a suspected skimmer from any interested person, including [In this section, "interested person" includes]:

(1) a law enforcement agency;

(2) a financial institution;

(3) a credit card or debit card issuer [as defined by Section 505.001];

(4) a service technician or service company;

(5) a member of the public; and[; or]

(6) a payment card network [any other interested person].

SECTION 6. Section 607.055, Business & Commerce Code, is amended to read as follows:

Sec. 607.055. INVESTIGATION OF SKIMMER REPORT. (a) On receipt of a report under Section 607.053 or 607.054, the department may conduct an inspection for the presence of suspected skimmers [shall immediately notify the center and share the report with the center].

(b) The department [and the center] shall coordinate with law enforcement agencies in conducting an investigation of the report.

(c) The department may inspect, directly or in coordination with a law enforcement agency, the motor fuel metering device [dispenser] that is the subject of the report and any other motor fuel metering device located at the same place of business.

(d) A merchant shall cooperate with the department or law enforcement agency during an investigation of a skimmer discovered or reported at the merchant's place of business and permit the inspection and alteration of motor fuel metering devices at the place of business [department or agency to inspect and alter the motor fuel dispenser that is the subject of the report] as necessary.

SECTION 7. Sections 607.056(b), (d), and (e), Business & Commerce Code, are amended to read as follows:

(b) Information described by Subsection (a) may be disclosed to:

(1) an institution of higher education [the attorney general];

(2) a law enforcement agency;

(3) the center;

(4) a credit card issuer, a debit card issuer, a financial institution that is not a credit card issuer, or a payment card network that may be impacted by the use of a skimmer on a motor fuel [the] unattended payment terminal or [of a] motor fuel metering device [dispenser]; [or]

(5) another person if the disclosure of the information is permitted or required by other law or court order;

(6) a trade association representing a financial institution; or

(7) a department contractor or other agent.

(d) On the dismissal or final resolution of a report [or investigation] by the department, information described by Subsection (a) is subject to disclosure under Chapter 552, Government Code.

(e) Notwithstanding Subsection (a), a law enforcement agency or the center [the attorney general] may disclose to the public information made confidential by that subsection if the law enforcement agency or the chief intelligence coordinator for the center [attorney general] determines that the disclosure of the information furthers a law enforcement purpose, except that a law enforcement agency or the center may not disclose to the public the identity of a person that submits a report of a suspected skimmer to the department under Section 607.053 or 607.054.

SECTION 8. Subchapter C, Chapter 607, Business & Commerce Code, is amended by adding Section 607.1021 to read as follows:

Sec. 607.1021. CIVIL PENALTY. (a) A person who violates this chapter or a rule adopted under this chapter is liable to the state for a civil penalty.

(b) The attorney general or the executive director may bring an action to collect a penalty under this section.

(c) The provisions of Section 51.352, Occupations Code, relating to an action to collect and the amount of a civil penalty under that section apply to an action to collect and the amount of a civil penalty under this section.

SECTION 9. Section 607.103, Business & Commerce Code, is amended to read as follows:

Sec. 607.103. OFFENSES; PENALTIES. (a) A person commits an offense if the person refuses to allow an inspection of a motor fuel metering device [dispenser] at the merchant's place of business in violation of Section 607.055. An offense under this subsection is a Class C misdemeanor.

(b) A person commits an offense if the person negligently or recklessly disposes of a skimmer that was installed on a motor fuel [the] unattended payment terminal or [of a] motor fuel metering device [dispenser] by another person. An offense under this subsection is a Class B misdemeanor.

(c) A person commits an offense if, knowing that an investigation is ongoing or that a criminal proceeding has been commenced and is pending, the person disposes of a skimmer that was installed on a motor fuel [the] unattended payment terminal or [of a] motor fuel metering device [dispenser] by another person. An offense under this subsection is a felony of the third degree.

SECTION 10. Section 2310.101, Occupations Code, is amended by adding Subsection (c) to read as follows:

(c) Regardless of whether the department has received a report of a suspected skimmer under Section 607.053 or 607.054, Business & Commerce Code, the department may inspect each motor fuel metering device located at a dealer's retail outlet if the department has reason to believe that a skimmer is installed on or in a motor fuel unattended payment terminal or motor fuel metering device at the retail outlet. In this subsection, "motor fuel unattended payment terminal" and "skimmer" have the meanings assigned by Section 607.001, Business & Commerce Code.

SECTION 11. Chapter 424, Government Code, as added by Chapter 863 (H.B. 2945), Acts of the 86th Legislature, Regular Session, 2019, is transferred to Subtitle A, Title 14, Occupations Code, redesignated as Chapter 2312, Occupations Code, and amended to read as follows:

CHAPTER 2312 [424]. FINANCIAL CRIMES INTELLIGENCE [PAYMENT FRAUD

FUSION] CENTER

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 2312.001 [424.001]. DEFINITIONS. In this chapter:

(1) "Card fraud" means an act that constitutes the offense of fraudulent use or possession of a credit card or debit card under Section 32.315, Penal Code.

(2) "Center" means the financial crimes intelligence [payment fraud fusion] center established under this chapter.

(3) "Commission" means the Texas Commission of Licensing and Regulation.

(4) "Department" means the Texas Department of Licensing and Regulation.

(5) [(2) "Payment card" has the meaning assigned by Section 522.001, Business & Commerce Code.

[(3) "Payment fraud" means a fraudulent payment transaction made by the unauthorized use of a payment card or other electronic means.

[(4)] "Skimmer" means an [a wire or] electronic, mechanical, or other device that may be used to [is capable of] unlawfully intercept [intercepting] electronic communications or data to perpetrate card fraud.

Sec. 2312.002. RULES. The commission shall adopt rules as necessary to implement this chapter [The term includes a re-encoder and scanning device, as those terms are defined by Section 522.001, Business & Commerce Code].

SUBCHAPTER B. PURPOSE AND ADMINISTRATION

Sec. 2312.051 [424.002]. FINANCIAL CRIMES INTELLIGENCE [PAYMENT FRAUD FUSION] CENTER ESTABLISHED. [(a) Law enforcement agencies or other governmental agencies designated by the attorney general may collaborate with the attorney general to establish a payment fraud fusion center.

[(b)] The commission [attorney general] shall establish the center within the department [in the City of Tyler].

Sec. 2312.052. PURPOSES [424.003. PURPOSE] OF CENTER. [(a)] The purposes of the center are to:

(1) serve [serves] as the state's primary entity for the planning, coordination, and integration of [the capabilities of] law enforcement agencies and other governmental agencies that [to] respond to criminal activity [that is] related to card [payment] fraud, including through the use of skimmers; and[.]

(2) [(b) The purpose of the center is to] maximize the ability of the department, law enforcement agencies, and other governmental agencies to detect, prevent, and respond to criminal activities related to card [payment] fraud.

Sec. 2312.053. OPERATION AGREEMENTS AUTHORIZED; CHIEF INTELLIGENCE COORDINATOR. (a) The department:

(1) may enter into agreements with law enforcement agencies or other governmental agencies for the operation of the center; and

(2) shall enter into an agreement with a law enforcement agency or other governmental agency for the appointment of a chief intelligence coordinator to supervise and manage the operation of the center.

(b) The chief intelligence coordinator appointed under the agreement required by Subsection (a)(2) may be a licensed peace officer. The agreement must provide that the commission of a chief intelligence coordinator who is a licensed peace officer will be carried by the agency with which the department enters into the agreement under that subdivision.

(c) Information a law enforcement agency or other governmental agency collects and maintains under an agreement entered into with the department under this chapter is the intellectual property of the center. On termination of the agreement, the contracting agency shall transfer the information to the department in accordance with the terms of the agreement.

Sec. 2312.054 [424.004]. POWERS AND DUTIES. (a) The center may collaborate with federal, state, and local governmental agencies [for the performance of the center's duties and] to accomplish the purposes [purpose] of the center.

(b) The center shall assist law enforcement agencies, [and] other governmental agencies, financial institutions, credit card issuers, debit card issuers, payment card networks, institutions of higher education, and merchants in their efforts to develop and implement strategies to:

(1) detect skimmers;

(2) ensure an effective response if a skimmer is found; and

(3) prevent card [payment] fraud.

(c) The center may:

(1) serve as a centralized collection point for information related to card fraud;

(2) provide training and educational opportunities to law enforcement;

(3) provide outreach to the public; and

(4) release information to affected financial institutions, credit card issuers, debit card issuers, payment card networks, institutions of higher education, and merchants if the center does not consider the information to be sensitive to law enforcement.

(d) For purposes of Subsection (c)(4), information is considered sensitive to law enforcement if the information could cause harm to law enforcement activities or jeopardize an investigation or operation if disclosed.

Sec. 2312.055. ANNUAL REPORT. (a) Not later than December 1 of each year, the chief intelligence coordinator shall file a report with the department.

(b) The report must include:

(1) a plan of operation for the center and an estimate of the amount of money necessary to implement that plan;

(2) an assessment of the current state of card fraud in this state, including:

(A) an identification of the geographic locations in this state that have the highest statistical probability for card fraud; and

(B) a summary of card fraud statistics for the year in which the report is filed;

(3) a detailed plan of operation for combatting card fraud;

(4) a communications plan for outreach to law enforcement agencies, financial institutions, credit card issuers, debit card issuers, payment card networks, merchants, and the public; and

(5) a list of expenditures made since the most recent report was filed with the department.

SUBCHAPTER C. FINANCIAL PROVISIONS

[Sec. 424.005. DIRECTOR. (a) The attorney general shall appoint a director to supervise and manage the center.

[(b) The director is under the supervision and direction of the attorney general.

[Sec. 424.006. RULES. The attorney general by rule shall adopt reasonable policies and procedures necessary to implement this chapter.

[Sec. 424.007. FACILITIES AND ADMINISTRATIVE SUPPORT. A municipality's police department may provide facilities and administrative support to a payment fraud fusion center established in the municipality.]

Sec. 2312.101 [424.008]. FUNDING [GIFTS AND GRANTS]. The department [payment fraud fusion center] may solicit and accept gifts, grants, and other donations to fund, administer, and carry out the purposes [purpose] of the center, except that the department may not solicit or accept a gift, grant, or other donation from a license holder as defined by Section 2310.151.

Sec. 2312.102. AWARD OF GRANTS. (a) Subject to the availability of appropriated money, the department may award grants for the purposes of this chapter by entering into a contract with each grant recipient.

(b) A grant recipient may use grant money to:

(1) reduce card fraud by removing skimmers;

(2) purchase or upgrade fraud deterrence equipment, including unique locking systems, cameras, and lights;

(3) provide training opportunities regarding skimmers; and

(4) conduct public outreach regarding card fraud.

SECTION 12. The following provisions of the Business & Commerce Code are repealed:

(1) Section 607.001(9);

(2) Section 607.051;

(3) Section 607.052;

(4) Section 607.054(b);

(5) Section 607.101; and

(6) Section 607.102.

SECTION 13. (a) The Texas Department of Licensing and Regulation may establish a workgroup composed of stakeholders to provide input, advice, and recommendations regarding the department's powers and duties under and the administration of:

(1) Chapter 607, Business & Commerce Code, as amended by this Act;

(2) Section 2310.101(c), Occupations Code, as added by this Act; and

(3) Chapter 2312, Occupations Code, as transferred, redesignated, and amended by this Act.

(b) If a workgroup is established as authorized by Subsection (a) of this section, the Texas Department of Licensing and Regulation shall lead the workgroup and determine the workgroup's size, composition, and scope of purpose.

(c) A workgroup established under this section is abolished and this section expires December 1, 2022.

SECTION 14. The Texas Commission of Licensing and Regulation shall adopt rules necessary to implement the changes in law made by this Act not later than September 1, 2021.

SECTION 15. (a) On the effective date of this Act:

(1) the payment fraud fusion center is redesignated as the financial crimes intelligence center;

(2) all powers, duties, functions, programs, and activities of the office of the attorney general under Chapter 424, Government Code, as added by Chapter 863 (H.B. 2945), Acts of the 86th Legislature, Regular Session, 2019, as that chapter existed immediately before the effective date of this Act, are transferred to the Texas Commission of Licensing and Regulation and the Texas Department of Licensing and Regulation;

(3) all obligations, contracts, property, and records of the office of the attorney general that are related to a power, duty, function, program, or activity transferred under Subdivision (2) of this subsection are transferred to the Texas Commission of Licensing and Regulation and the Texas Department of Licensing and Regulation; and

(4) all pending complaints, investigations, or contested cases that are related to a power, duty, function, program, or activity transferred under Subdivision (2) of this subsection are transferred without change in status to the Texas Commission of Licensing and Regulation and the Texas Department of Licensing and Regulation.

(b) A rule or form adopted by the office of the attorney general that relates to a power, duty, function, program, or activity transferred under Subsection (a)(2) of this section is a rule or form of the Texas Commission of Licensing and Regulation and the Texas Department of Licensing and Regulation, as applicable, until altered by the commission.

SECTION 16. Section 607.103, Business & Commerce Code, as amended by this Act, applies only to an offense committed on or after the effective date of this Act. An offense committed before the effective date of this Act is governed by the law in effect on the date the offense was committed, and the former law is continued in effect for that purpose. For purposes of this section, an offense was committed before the effective date of this Act if any element of the offense occurred before that date.

SECTION 17. To the extent of any conflict, this Act prevails over another Act of the 87th Legislature, Regular Session, 2021, relating to nonsubstantive additions to and corrections in enacted codes.

SECTION 18. This Act takes effect September 1, 2021.

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