By: Dutton H.B. No. 5621

A BILL TO BE ENTITLED

AN ACT

Relating to the jurisdiction of district and county attorneys to prosecute certain consumer protection violations.

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

SECTION 1. Section 17.48, Business & Commerce Code, is amended by adding the following:

(a) An act to which this section applies is subject to action by a district or county attorney under Sections 17.58, 17.60, 17.61, and 17.62 to the same extent as the act is subject to action by the consumer protection division under those sections.

(b) If a district or county attorney, under the authority of this section, accepts assurance of voluntary compliance under Section 17.58, the district or county attorney must file the assurance of voluntary compliance in the district court in the county in which the alleged violator resides or does business.

(c) If a district or county attorney, under the authority of this section, executes and serves a civil investigative demand and files a petition described in Section 17.61(g), the petition must be filed in the district court in the county where the parties reside.

(ad) It is the duty of the district and county attorneys to lend to the consumer protection division any assistance requested in the commencement and prosecutions of actions under this subchapter.

(be) A district or county attorney, with prior written notice to the consumer protection division, may institute and prosecute actions under Section 17.47 to the same extent and in the same manner as the consumer protection division so long as the consumer protection division does not intend to institute or prosecute an action with respect to that matter. A district or county attorney may institute a suit described by this section on or after the 90th day after the date the consumer protection division receives written notice unless before the 90th day after the date the notice is received the attorney general responds that it is actively investigating or litigating at least one of the alleged violations set forth in the notice. The consumer protection division shall notify the district or county attorney it no longer intends to actively investigate or litigate an alleged violation within a reasonable time of such determination. On request, the consumer protection division shall assist the district or county attorney in any action taken under this subchapter. If an action is prosecuted by a district or county attorney alone, he shall make a full report to the consumer protection division including the final disposition of the matter. No district or county attorney may bring an action under this section against any licensed insurer or licensed insurance agent transacting business under the authority and jurisdiction of the State Board of Insurance unless first requested in writing to do so by the State Board of Insurance, the commissioner of insurance, or the consumer protection division pursuant to a request by the State Board of Insurance or commissioner of insurance.

(f) In an action prosecuted by a district or county attorney under this subchapter for a violation of Section 17.46(b)(28), three-fourths of any civil penalty awarded by a court must be paid to the county where the court is located.

(g) A district or county attorney is not required to obtain the permission of the consumer protection division to prosecute an action under this subchapter for a violation of Section 17.46(b)(28), if the district or county attorney provides prior written notice to the divisionas required by Subsection (b).

SECTION 2. Section 17.61, Business & Commerce Code is amended to read as follows.

(a) Whenever the consumer protection division believes that any person may be in possession, custody, or control of the original copy of any documentary material relevant to the subject matter of an investigation of a possible violation of this subchapter, an authorized agent of the division may execute in writing and serve on the person a civil investigative demand requiring the person to produce the documentary material and permit inspection and copying.

(b) Each demand shall:

(1) state the statute and section under which the alleged violation is being investigated, and the general subject matter of the investigation;

(2) describe the class or classes of documentary material to be produced with reasonable specificity so as to fairly indicate the material demanded;

(3) prescribe a return date within which the documentary material is to be produced; and

(4) identify the persons authorized by the consumer protection division to whom the documentary material is to be made available for inspection and copying.

(c) A civil investigative demand may contain a requirement or disclosure of documentary material which would be discoverable under the Texas Rules of Civil Procedure.

(d) Service of any demand may be made by:

(1) delivering a duly executed copy of the demand to the person to be served or to a partner or to any officer or agent authorized by appointment or by law to receive service of process on behalf of that person;

(2) delivering a duly executed copy of the demand to the principal place of business in the state of the person to be served;

(3) mailing by registered mail or certified mail a duly executed copy of the demand addressed to the person to be served at the principal place of business in this state, or if the person has no place of business in this state, to his principal office or place of business.

(e) Documentary material demanded pursuant to this section shall be produced for inspection and copying during normal business hours at the principal office or place of business of the person served, or at other times and places as may be agreed on by the person served and the consumer protection division.

(f) No documentary material produced pursuant to a demand under this section, unless otherwise ordered by a court for good cause shown, shall be produced for inspection or copying by, nor shall its contents be disclosed to any person other than the authorized employee of the office of the attorney general or district or county attorney without the consent of the person who produced the material. The office of the attorney general or district or county attorney shall prescribe reasonable terms and conditions allowing the documentary material to be available for inspection and copying by the person who produced the material or any duly authorized representative of that person. The office of the attorney general or district or county attorney may use the documentary material or copies of it as it determines necessary in the enforcement of this subchapter, including presentation before any court. Any material which contains trade secrets shall not be presented except with the approval of the court in which the action is pending after adequate notice to the person furnishing the material.

(g) At any time before the return date specified in the demand, or within 20 days after the demand has been served, whichever period is shorter, a petition to extend the return date for, or to modify or set aside the demand, stating good cause, may be filed in the district court in the county where the parties reside, or a district court of Travis County.

(h) A person on whom a demand is served under this section shall comply with the terms of the demand unless otherwise provided by a court order.

(i) Personal service of a similar investigative demand under this section may be made on any person outside of this state if the person has engaged in conduct in violation of this subchapter. Such persons shall be deemed to have submitted themselves to the jurisdiction of this state within the meaning of this section.

SECTION 3 Section 59.006 of the Texas Finance Code is amended to read as follows:

(a) This section provides the exclusive method for compelled discovery of a record of a financial institution relating to one or more customers but does not create a right of privacy in a record. This section does not apply to and does not require or authorize a financial institution to give a customer notice of:

(1) a demand or inquiry from a state or federal government agency authorized by law to conduct an examination of the financial institution;

(2) a record request from a state or federal government agency or instrumentality under statutory or administrative authority that provides for, or is accompanied by, a specific mechanism for discovery and protection of a customer record of a financial institution, including a record request from a federal agency subject to the Right to Financial Privacy Act of 1978 (12 U.S.C. Section 3401 et seq.), as amended, or from the Internal Revenue Service under Section 1205, Internal Revenue Code of 1986;

(3) a record request from or report to a government agency arising out of:

(A) the investigation or prosecution of a criminal offense;

(B) the investigation of alleged abuse, neglect, or exploitation of an elderly or disabled person in accordance with Chapter 48, Human Resources Code; or

(C) the assessment for or provision of guardianship services under Subchapter E, Chapter 161, Human Resources Code;

(4) a record request in connection with a garnishment proceeding in which the financial institution is garnishee and the customer is debtor;

(5) a record request by a duly appointed receiver for the customer;

(6) an investigative demand or inquiry from a state legislative investigating committee;

(7) an investigative demand or inquiry from the attorney general of this state or a district or county attorney as authorized by law other than the procedural law governing discovery in civil cases;

(8) the voluntary use or disclosure of a record by a financial institution subject to other applicable state or federal law; or

(9) a record request in connection with an investigation conducted under Section 1054.151, 1054.152, or 1102.001, Estates Code.

(b) A financial institution shall produce a record in response to a record request only if:

(1) it is served with the record request not later than the 24th day before the date that compliance with the record request is required;

(2) before the financial institution complies with the record request the requesting party pays the financial institution's reasonable costs of complying with the record request, including costs of reproduction, postage, research, delivery, and attorney's fees, or posts a cost bond in an amount estimated by the financial institution to cover those costs; and

(3) if the customer is not a party to the proceeding in which the request was issued, the requesting party complies with Subsections (c) and (d) and:

(A) the financial institution receives the customer's written consent to release the record after a request under Subsection (c)(3); or

(B) the tribunal takes further action based on action initiated by the requesting party under Subsection (d).

(b-1) If the requesting party has not paid a financial institution's costs or posted a cost bond as required by Subsection (b)(2), a court may not:

(1) order the financial institution to produce a record in response to the record request; or

(2) find the financial institution to be in contempt of court for failing to produce the record.

(c) If the affected customer is not a party to the proceeding in which the record request was issued, in addition to serving the financial institution with a record request, the requesting party shall:

(1) give notice stating the rights of the customer under Subsection (e) and a copy of the request to each affected customer in the manner and within the time provided by Rule 21a, Texas Rules of Civil Procedure;

(2) file a certificate of service indicating that the customer has been mailed or served with the notice and a copy of the record request as required by this subsection with the tribunal and the financial institution; and

(3) request the customer's written consent authorizing the financial institution to comply with the request.

(d) If the customer that is not a party to the proceeding does not execute the written consent requested under Subsection (c)(3) on or before the date that compliance with the request is required, the requesting party may by written motion seek an in camera inspection of the requested record as its sole means of obtaining access to the requested record. In response to a motion for in camera inspection, the tribunal may inspect the requested record to determine its relevance to the matter before the tribunal. The tribunal may order redaction of portions of the records that the tribunal determines should not be produced and shall enter a protective order preventing the record that it orders produced from being:

(1) disclosed to a person who is not a party to the proceeding before the tribunal; and

(2) used by a person for any purpose other than resolving the dispute before the tribunal.

(e) A customer that is a party to the proceeding bears the burden of preventing or limiting the financial institution's compliance with a record request subject to this section by seeking an appropriate remedy, including filing a motion to quash the record request or a motion for a protective order. Any motion filed shall be served on the financial institution and the requesting party before the date that compliance with the request is required. A financial institution is not liable to its customer or another person for disclosure of a record in compliance with this section.

(f) A financial institution may not be required to produce a record under this section before the later of:

(1) the 24th day after the date of receipt of the record request as provided by Subsection (b)(1);

(2) the 15th day after the date of receipt of a customer consent to disclose a record as provided by Subsection (b)(3); or

(3) the 15th day after the date a court orders production of a record after an in camera inspection of a requested record as provided by Subsection (d).

(g) An order to quash or for protection or other remedy entered or denied by the tribunal under Subsection (d) or (e) is not a final order and an interlocutory appeal may not be taken.

SECTION 4. The changes in law made by this Act apply only to a cause of action that accrues on or after the effective date of this Act. A cause of action that accrues before the effective date of this Act is governed by the law as it existed immediately before the effective date of this Act, and that law is continued in effect for that purpose.

SECTION 5. This Act takes effect immediately if it receives a vote of two-thirds of all members eleted to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2025.