BILL ANALYSIS

C.S.H.B. 3615

By: Lambert

Pensions, Investments & Financial Services

Committee Report (Substituted)

BACKGROUND AND PURPOSE

A federal district court in Rowell v. Paxton held in 2018 that Texas' statute prohibiting credit card surcharges violates commercial free speech rights under the First Amendment. The district court relied on the U.S. Supreme Court decision in Expressions Hair Design v. Schneiderman (2017) to reach its decision, concluding that the Texas law regulated how sellers may communicate their prices. The district court in Rowell vs. Paxton further concluded that the Texas statute did not withstand constitutional scrutiny under a First Amendment analysis. C.S.H.B. 3615 seeks to align Texas statute with these court cases by repealing the prohibition remaining in statute and clarifying that surcharges are optional. The bill further clarifies that payment of the surcharge is the responsibility of the cardholder.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

C.S.H.B. 3615 repeals Section 604A.0021, Business & Commerce Code, which prohibits a seller that is not a governmental entity or private school in a sale of goods or services from imposing a surcharge on a buyer who uses a credit card for an extension of credit instead of cash, a check, or a similar means of payment.  

C.S.H.B. 3615 amends the Business & Commerce Code to authorize a merchant to impose a surcharge on a buyer who uses a credit card for an extension of credit instead of cash, a check, or a similar means of payment to pay for the purchase of goods or services. The bill establishes that the buyer is obligated to pay any surcharge imposed on the credit extension transaction and requires a merchant to provide to a buyer who uses a credit card for an extension of credit a disclosure stating that "The payment of a credit card surcharge is the responsibility of the cardholder."

EFFECTIVE DATE

September 1, 2023.

COMPARISON OF INTRODUCED AND SUBSTITUTE

While C.S.H.B. 3615 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.

The substitute includes provisions that were not in the introduced authorizing a merchant to impose a surcharge on a buyer's use of a credit card for an extension of credit to purchase goods or services, obligating the buyer to pay for a surcharge, and requiring a merchant who imposes such a surcharge to provide a buyer using a credit card for an extension of credit a specifically worded disclosure regarding the cardholder's responsibility to pay the surcharge.