87R13636 JES-F     By: Perez, Thompson of Harris, Parker, Leman, H.B. No. 2106       Moody       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.