BILL ANALYSIS

S.B. 1499

By: Nichols

Pensions, Investments & Financial Services

Committee Report (Unamended)

BACKGROUND AND PURPOSE

During the 87th Regular Session, the Texas Legislature enacted H.B. 2106, which gave the Texas Commission of Licensing and Regulation rulemaking authority to enforce provisions relating to payment card skimmers on motor fuel metering devices and established the Financial Crimes Intelligence Center (FCIC) within the Texas Department of Licensing and Regulation to better coordinate law enforcement efforts in the detection, prevention, and response to crimes involving credit card or debit card fraud. The bill sponsor has informed the committee that, as financial crimes have surged in recent years, the FCIC's role has expanded significantly beyond its original purpose; however, the current statutory framework limits the FCIC's scope, which creates a need for legislative action to support broader efforts by the FCIC in fighting financial and organized crime. S.B. 1499 seeks to ensure the FCIC can help protect Texans against a broader range of financial crimes by expanding the statutorily prescribed purposes of the FCIC to include other forms of payment fraud beyond card fraud.

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 rulemaking authority is expressly granted to the Texas Commission of Licensing and Regulation in SECTION 1 of this bill.

ANALYSIS

S.B. 1499 transfers provisions relating to the financial crimes intelligence center from the Occupations Code to the Government Code and amends those provisions in the following manner.

S.B. 1499 expands the type of fraud addressed by the center by replacing references to card fraud with references to payment fraud in provisions establishing the following:

· the center's purposes of serving as the state's primary entity for the planning, coordination, and integration of agencies that respond to criminal activity related to card fraud and maximizing the ability of agencies to detect, prevent, and respond to such criminal activity;

· the center's duty to assist certain entities in their efforts to develop and implement strategies to prevent card fraud;

· the center's authority to serve as a centralized collection point for information related to card fraud; and

· the content of the center's annual report to the Texas Department of Licensing and Regulation (TDLR).

S.B. 1499 defines the following terms for purposes of provisions governing the center:

· "payment fraud" as conduct constituting card fraud or check fraud, sending an unauthorized payment order, initiating an electronic fund transfer without the consent of the account holder, or any other act involving a fraudulent order for payment of money as defined by rule of the Texas Commission of Licensing and Regulation (TCLR);

· "check fraud" as conduct that constitutes a forgery offense with respect to a sight order, as defined under the Penal Code;

· "electronic fund transfer" as any transfer of funds, other than a transaction originated by check, money order, or similar paper instrument, that is initiated through an electronic terminal, telephonic instrument, computer, or magnetic tape and that orders, instructs, or authorizes a financial institution to debit or credit an account; and

· "unauthorized payment order" as a payment order received by a receiving bank that is not an authorized order of a customer identified as sender or effective as an order of the customer, as provided under applicable Business & Commerce Code provisions.

S.B. 1499 further expands the center's duty to assist certain entities in their efforts to develop and implement strategies for fraud prevention by also requiring the center to provide such assistance with strategies for responding to payment fraud. The bill changes the type of officer appointed to supervise and manage the operation of the center from a chief intelligence coordinator to a director.

S.B. 1499 revises the authorized uses of a grant awarded by TDLR to further the center's purposes as follows:

· in the provisions authorizing use of the grant to reduce card fraud by removing skimmers or to conduct public outreach regarding card fraud, replaces the references to card fraud with references to payment fraud;

· specifies that the fraud deterrence equipment that may be purchased or upgraded is payment fraud deterrence equipment; and

· includes the provision of training opportunities regarding payment fraud as an authorized use.

S.B. 1499 requires TCLR, as soon as practicable after the bill's effective date, to adopt rules necessary to implement the bill's provisions.

EFFECTIVE DATE

September 1, 2025.