By: Schaefer, et al. (Senate Sponsor - Schwertner)	H.B. No. 2837
	(In the Senate - Received from the House May 4, 2023;
	May 5, 2023, read first time and referred to Committee on State
	Affairs; May 16, 2023, reported favorably by the following vote:
	Yeas 8, Nays 3; May 16, 2023, sent to printer.)
Click here to see the committee vote

	A BILL TO BE ENTITLED
	AN ACT
	relating to prohibiting a person or entity from surveilling,
	reporting, or tracking the purchase of firearms, ammunition, and
	accessories through the use of certain merchant category codes;
	imposing a civil penalty.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  This Act may be cited as the Second Amendment
	Financial Privacy Act.
	SECTION 2.  The legislature finds that:
	(1)  The Second Amendment to the United States
	Constitution guarantees the people the right to keep and bear arms;
	(2)  Section 23, Article I, of the Texas Constitution
	provides that "Every citizen shall have the right to keep and bear
	arms in the lawful defence of himself or the State";
	(3)  In September 2022, the International Organization
	for Standardization (ISO), based in Switzerland, approved a new
	merchant category code for firearm and ammunition merchants;
	(4)  In a letter to payment card networks, federal
	lawmakers stated that the new merchant category code for firearms
	retailers would be ". . . the first step towards facilitating the
	collection of valuable financial data that could help law
	enforcement in countering the financing of terrorism efforts,"
	expressing a clear government expectation that payment card
	networks will utilize the new merchant category code to conduct
	mass surveillance of constitutionally protected firearms and
	ammunition purchases in cooperation with law enforcement;
	(5)  The new merchant category code will allow banks,
	payment card networks, acquirers, and other entities involved in
	payment card processing to identify and separately track lawful
	payment card purchases at firearms retailers in this state, paving
	the way for unprecedented surveillance of Second Amendment activity
	and information sharing between financial institutions and the
	government;
	(6)  This potential for cooperative surveillance and
	tracking of lawful firearms and ammunition purchases will have a
	significant chilling effect on citizens wishing to exercise their
	federal and state constitutional rights to keep and bear arms in
	this state;
	(7)  While federal law requires some financial
	institutions to report transactions that are highly indicative of
	money laundering or other unlawful activities, there is no federal
	or state law authorizing financial institutions to surveil and
	track lawful activities by customers in cooperation with law
	enforcement;
	(8)  The creation or maintenance of records of
	purchases of firearms or ammunition or the tracking of sales made by
	a retailer of firearms or ammunition by a nongovernmental entity,
	including a financial institution, without a substantial and
	historical business need or a requirement imposed by law, may
	frustrate the right to keep and bear arms and violate the reasonable
	privacy rights of lawful purchasers of firearms or ammunition; and
	(9)  Based on the above stated findings, it is the
	intent of the legislature to prohibit the misuse of payment card
	processing systems to surveil, report, or otherwise discourage
	constitutionally protected firearm and ammunition purchases within
	this state.
	SECTION 3.  Title 12, Business & Commerce Code, is amended by
	adding Chapter 610 to read as follows:
	CHAPTER 610. UNAUTHORIZED TRANSACTION CATEGORIZATION
	Sec. 610.001.  DEFINITIONS. In this chapter:
	(1)  "Electronic payment transaction" means a
	transaction in which a person uses a payment card or other payment
	code or device issued or approved through a payment card network to
	debit a deposit account or use a line of credit, whether
	authorization is based on a signature, personal identification
	number, or other means.
	(2)  "Firearms code" means any merchant category code
	approved by the International Organization for Standardization for
	a firearms retailer, including Merchant Category Code 5723.
	(3)  "Firearms retailer" means any person or entity
	engaged in the sale of firearms, ammunition for use in firearms, or
	firearms accessories.
	(4)  "Payment card" means a credit card, debit card,
	check card, or other card that is issued to an authorized user to
	purchase or obtain goods, services, money, or any other thing of
	value.
	(5)  "Payment card issuer" means a lender, including a
	financial institution, or a merchant that receives applications and
	issues payment cards to individuals.
	(6)  "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.
	Sec. 610.002.  UNAUTHORIZED CATEGORIZATION OF CERTAIN
	TRANSACTIONS. (a) A person or entity involved in facilitating or
	processing an electronic payment transaction, including a payment
	card issuer or payment card network, may not assign to a merchant or
	require a merchant to use a firearms code.
	(b)  For the purposes of the sale of firearms, ammunition for
	use in firearms, and firearms accessories, a firearms retailer may
	not provide a firearms code to a payment card issuer or payment card
	network and may only use or be assigned a merchant category code for
	general merchandise retailers or sporting goods retailers. Any
	agreement or contractual provision to the contrary is void.
	(c)  A payment card issuer or payment card network shall
	notify the payment card holder in writing on every occasion that a
	firearms code is assigned to an electronic payment transaction on
	the payment card holder's account.
	Sec. 610.003.  INVESTIGATIVE AUTHORITY OF ATTORNEY GENERAL.
	(a) If the attorney general has reasonable cause to believe that a
	person or entity has engaged in, is engaging in, or is about to
	engage in a violation of this chapter, the attorney general shall
	issue a civil investigative demand. The procedures established for
	the issuance of a civil investigative demand under Section 15.10
	apply to the same extent and manner to the issuance of a civil
	investigative demand under this section.
	(b)  The attorney general may request, pursuant to a civil
	investigative demand issued under Subsection (a), that a person or
	entity disclose any data that is relevant to an investigation
	conducted by the attorney general. The attorney general shall
	evaluate the data for compliance with the requirements set forth in
	Section 610.002.
	Sec. 610.004.  NOTICE OF VIOLATION OF CHAPTER; OPPORTUNITY
	TO CURE.  (a)  Not later than the 30th day before bringing an action
	under Section 610.005, the attorney general must give written
	notice to the person or entity identifying the specific provisions
	of this chapter that are or were being violated.
	(b)  The attorney general may not bring an action against the
	person or entity if the person or entity:
	(1)  cures the identified violation within the 30-day
	period; and
	(2)  provides the attorney general a written statement
	affirming that the person or entity has:
	(A)  cured the alleged violation;
	(B)  provided supporting documentation to show
	how the violation was cured; and
	(C)  made changes to internal policies to prevent
	the recurrence of any similar violation in the future.
	Sec. 610.005.  ENFORCEMENT; CIVIL PENALTY; INJUNCTION. (a)
	Except as provided by Section 610.006, the attorney general has
	exclusive authority to enforce this chapter.
	(b)  A person or entity who violates this chapter and fails
	to cure the violation in accordance with Section 610.004, or who
	breaches a written statement provided to the attorney general under
	that section, is liable for a civil penalty in the amount of $10,000
	for each violation.
	(c)  The attorney general shall bring an action to:
	(1)  recover a civil penalty under this section; and
	(2)  restrain or enjoin a person or entity from
	violating this chapter.
	(d)  The attorney general may recover reasonable attorney's
	fees and other reasonable expenses incurred in investigating and
	bringing an action under this section.
	(e)  The attorney general shall deposit a civil penalty
	collected under this section in the state treasury to the credit of
	the general revenue fund.
	Sec. 610.006.  PRIVATE RIGHT OF ACTION. (a) A person who has
	used a payment card to purchase a firearm, ammunition for use in a
	firearm, or a firearm accessory may bring an action against a
	payment card issuer or payment card network to obtain:
	(1)  a declaratory judgment under Chapter 37, Civil
	Practice and Remedies Code, that the payment card issuer or payment
	card network has violated Section 610.002; or
	(2)  a judgment enjoining the payment card issuer or
	payment card network from violating Section 610.002.
	(b)  Except as provided by Subsection (a), this chapter may
	not be construed as providing a basis for, or being subject to, a
	private right of action for a violation of this chapter or any other
	law.
	SECTION 4.  The changes in law made by Chapter 610, Business &
	Commerce Code, as added by this Act, apply only to a purchase of a
	firearm, ammunition for use in a firearm, or a firearm accessory
	that takes place on or after the effective date of this Act.
	SECTION 5.  If any provision of this Act or its application
	to any person or circumstance is held invalid, the invalidity does
	not affect other provisions or applications of this Act that can be
	given effect without the invalid provision or application, and to
	this end the provisions of this Act are declared to be severable.
	SECTION 6.  This Act takes effect September 1, 2023.
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