80C415(2) PEP

 

CHAPTER 604. SALE OR ISSUANCE OF STORED VALUE CARD

SUBCHAPTER A.  GENERAL PROVISIONS

Revised Law

Sec. 604.001.  DEFINITION OF STORED VALUE CARD.  In this chapter, "stored value card":

(1)  means a record, as defined by Section 322.002, including a record that contains a microprocessor chip, magnetic strip, or other means of storing information:

(A)  that evidences a promise made for monetary consideration by the seller or issuer of the record that goods or services will be provided to the owner of the record in the value shown in the record;

(B)  that is prefunded; and

(C)  the value of which is reduced on redemption; and

(2)  includes a gift card or gift certificate.  (Bus. & Com. Code, Secs. 35.42(a)(1), (2).)

Source Law

Sec. 35.42.  REDUCTION OF VALUE OR EXPIRATION OF STORED VALUE CARD.  (a)  In this section:

(1)  "Record" has the meaning assigned by Section 43.002, and includes a record that contains a microprocessor chip, magnetic strip, or other means of storing information.

(2)  "Stored value card" means a record that evidences a promise made for monetary consideration by the seller or issuer of the record that goods or services will be provided to the owner of the record in the value shown in the record, that is prefunded, and the value of which is reduced on redemption.  The term includes a gift card or gift certificate.

Revisor's Note

(1)  Sections 35.42(a)(1) and (2), Business & Commerce Code, provide definitions of "record" and "stored value card," respectively, for purposes of the law revised in this chapter.  The only references to "record" that appear in Section 35.42 are contained in the definition of "stored value card" provided by Section 35.42(a)(2).  For that reason, the revised law omits the definition of "record" provided by Section 35.42(a)(1) and defines "stored value card" in a manner that includes the substance of that definition.

(2)  Section 35.42(a)(3), Business & Commerce Code, provides a definition for the term "use" in the context of using a stored value card.  The revised law omits this definition as unnecessary because the defined term is not used in the source law for this chapter or in the revision of this chapter.  The omitted law reads:

(3)  "Use" of a stored value card includes a whole or partial redemption of or adding value to the card.

Revised Law

Sec. 604.002.  INAPPLICABILITY OF CHAPTER.  This chapter does not apply to a stored value card that:

(1)  is issued by:

(A)  a financial institution acting as a financial agent of the United States or this state;

(B)  a federally insured financial institution, as defined by Section 201.101, Finance Code, if the financial institution is primarily liable for the card as the issuing principal; or

(C)  an air carrier holding a certificate of public convenience and necessity under Title 49, United States Code;

(2)  is issued as a prepaid calling card by a prepaid calling card company regulated under Section 55.253, Utilities Code;

(3)  is distributed by the issuer to a person under an awards, rewards, loyalty, incentive, rebate, or promotional program and is not issued or reloaded in exchange for money tendered by the cardholder;

(4)  is sold below face value or donated to:

(A)  an employee of the seller or issuer;

(B)  a nonprofit or charitable organization; or

(C)  an educational institution for fund-raising purposes; or

(5)  does not expire and for which the seller does not charge a fee other than a fee described in Section 604.051. (Bus. & Com. Code, Secs. 35.42(b), (c).)

Source Law

(b)  This section does not apply to a stored value card that:

(1)  is distributed by the issuer to a person under an awards, rewards, loyalty, incentive, rebate or promotional program and not issued or reloaded in exchange for money tendered by the cardholder;

(2)  is sold below face value or donated to:

(A)  an employee of the seller or issuer;

(B)  a nonprofit or charitable organization; or

(C)  an educational institution, for fund-raising purposes;

(3)  is issued by a financial institution acting as a financial agent of the United States or this state;

(4)  is issued as a prepaid calling card by a prepaid calling card company regulated under Section 55.253, Utilities Code;

(5)  does not expire and for which the seller does not charge a fee other than a fee described in Subsection (d); or

(6)  is issued by an air carrier holding a certificate of public convenience and necessity under Title 49, United States Code.

(c)  This section does not apply to a stored value card issued by a federally insured financial institution, as defined by Section 201.101, Finance Code, for which the financial institution is primarily liable as the issuing principal.

Revised Law

Sec. 604.003.  CAUSE OF ACTION NOT CREATED.  This chapter does not create a cause of action against a person who issues or sells a stored value card.  (Bus. & Com. Code, Sec. 35.42(g).)

Source Law

(g)  This section does not create a cause of action against a person who issues or sells a stored value card.

[Sections 604.004-604.050 reserved for expansion]

SUBCHAPTER B.  PERMISSIBLE FEES

Revised Law

Sec. 604.051.  FEES AND CHARGES RELATED TO ISSUANCE AND HANDLING OF CARD.  If disclosed as required by Subchapter C, the issuer of a stored value card may impose and collect a reasonable:

(1)  handling fee in connection with the issuance of or adding of value to the card;

(2)  access fee for a card transaction conducted at an unmanned teller machine, as defined by Section 59.301, Finance Code; and

(3)  reissue or replacement charge if an expired or lost card is reissued or replaced. (Bus. & Com. Code, Sec. 35.42(d).)

Source Law

(d)  If disclosed as provided by Subsection (f), the issuer of a stored value card may impose and collect a reasonable handling fee in connection with the issuance of or adding of value to the card, a reasonable access fee for a card transaction conducted at an unmanned teller machine, as defined by Section 59.301, Finance Code, and a reasonable reissue or replacement charge if a lost or expired card is reissued or replaced.

Revised Law

Sec. 604.052.  FEES OR CHARGES THAT DECREASE UNREDEEMED BALANCE OF CARD.  The issuer of a stored value card may impose or collect a periodic fee or other charge that causes the unredeemed balance of the card to decrease over time only if the fee:

(1)  is reasonable;

(2)  is not assessed until after the first anniversary of the date the card is sold or issued; and

(3)  is disclosed as required by Subchapter C.  (Bus. & Com. Code, Sec. 35.42(e).)

Source Law

(e)  The issuer of a stored value card may impose or collect a periodic fee or other charge that causes the unredeemed balance of the card to decrease over time only if the fee is reasonable, is not assessed until after the first anniversary of the date the card is sold or issued, and is disclosed as provided by Subsection (f).

[Sections 604.053-604.100 reserved for expansion]

SUBCHAPTER C.  REQUIRED DISCLOSURES

Revised Law

Sec. 604.101.  REQUIRED DISCLOSURE OF CERTAIN MATTERS APPLICABLE TO CARD.  An expiration date or policy, fee, or other material restriction or contract term applicable to a stored value card must be clearly and conspicuously disclosed at the time the card is sold or issued to a person to enable the person to make an informed decision before purchasing the card. (Bus. & Com. Code, Sec. 35.42(f) (part).)

Source Law

(f)  An expiration date or policy, fee, or other material restriction or contract term applicable to a stored value card must be clearly and conspicuously disclosed to a person at the time the card is sold or issued to the person to enable the person to make an informed decision before the person purchases the card… .

Revised Law

Sec. 604.102.  REQUIRED PRINTING OF CERTAIN DISCLOSURES.  In addition to the disclosure required under Section 604.101, a disclosure regarding the expiration of a stored value card or a periodic fee that reduces the unredeemed value of a stored value card must be legibly printed on the card.  (Bus. & Com. Code, Sec. 35.42(f) (part).)

Source Law

(f)  …  A disclosure regarding expiration or a periodic fee that reduces the unredeemed value of the stored value card must also be legibly printed on the card… .

Revised Law

Sec. 604.103.  VALIDITY OF CARD SOLD WITHOUT REQUIRED DISCLOSURES.  A stored value card sold without the disclosure required by this subchapter of an expiration date or policy, fee, or other material restriction or contract term applicable to the card is valid until redeemed or replaced.  (Bus. & Com. Code, Sec. 35.42(f) (part).)

Source Law

(f)  …  A stored value card that is sold without the disclosure as required by this section of an expiration date or policy, fee, or other material restriction or contract term applicable to the card is valid until redeemed or replaced.