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Texas House Committee to Hear Data Security Bills Today
Tuesday, April 21, 2015 7:00 AM

The House Business and Industry Committee will hear three bills on data security today.  HB 3478 by Rep. Gary Elkins (R-Houston) and HB 3537 by Rep. Yvonne Davis (D-Dallas) would strengthen the law in the event of data breaches. Under these bills, if a merchant retains sensitive credit or debit card information other than the confirmation number of a transaction and experiences a data breach, the retailer would be required to disclose the breach to the attorney general and, as soon as possible, send notice of the breach to each financial institution that issued a credit or debit card affected by the breach.

Kyle Ashley, president of United San Antonio FCU will be appearing before the committee today to testify in support of data security reform.

HB 3478 would also require the AG to be notified within 24 hours after discovery and  establishes a "Data Security Breach Victim Compensation Fund" that would pay claims to consumers who suffered financial loss in a breach and reimburse financial institutions for costs associated with the breach. The funds would come from civil penalties assessed by the AG of up to $50 per credit or debit card that is compromised.

HB 3537 is identical to HB 3478 except the notice to the AG within 24 hours is not included.

HB 4020 by Rep. Richard Raymond (D-Laredo) also addresses the problem of retailer data breaches. It would make it illegal for a business or its service provider to retain sensitive information on credit, debit, or prepaid cards after the transaction is complete or, in the case of PIN debit transactions, more than 48 hours after authorization.

Businesses that illegally retain data would be required to reimburse financial institutions for the costs associated with the breach, including cancellation and reissuance of the cards, any costs associated with closing and reopening accounts, and notification to members affected by the breach. In addition, the financial institutions are entitled to recover the costs for damages that were paid to cardholders who lost money due to the breach.

For more information, contact Jeff Huffman, president, Texas Credit Union Association, at 469-385-6488 or jhuffman@txcua.coop.