HB 3522

84(R) - 2015
House Investments & Financial Services
House Investments & Financial Services

Vote Recommendation

  • Negative
  • Neutral
  • Neutral
  • Negative
  • Neutral


Oscar Longoria

Bill Caption

Relating to photo identification requirements for certain stored value card purchases.

Fiscal Notes

A fiscal note dated March 23, 2015 anticipates no fiscal implication to the State or units of local government.

Bill Analysis

HB 3522 would amend the Business and Commerce code to prohibit a merchant from accepting a credit card or debit card for payment in certain circumstances unless the person using the card provides photo identification.

This provision would not apply if the merchant requires the user to present a ZIP code or PIN number to help verify identity.

The bill would make the merchant liable for any losses when failing to comply with the bill.

This would cover purchases of, as well as adding value to, a stored value card. 

Vote Recommendation Notes

House Bill 3522 would expand the scope of government by intervening in the business relationship between some merchants, their card-issuing financial institutions, and stored value card providers such as Visa or Mastercard. In fact, provisions of House Bill 3522 could invalidate certain provisions of private contracts agreed upon voluntarily by the above-mentioned parties.

For instance, Visa requires that a merchant ask for an official government ID only in certain cases (when the card that is being presented for payment has not been signed, for example), Visa's Card Acceptance Guidelines for Visa Merchants stipulates that:

"Although Visa rules do not preclude merchants from asking for cardholder ID except in the specific circumstances discussed in this guide, merchants cannot make an ID a condition of acceptance. Therefore, merchants cannot as part of their regular card acceptance procedures refuse to complete a purchase transaction because a cardholder refuses to provide ID."
Visa gives specific reasons for this policy, such as not annoying customers and, thus, risking losing a potential sale.

House Bill 3522, though, would require a merchant to see a purchaser's photo identification before completing a transaction for the purchase of stored value cards when the purchase is being made using a debit or credit card.

House Bill 3522's statement of purpose indicates that the bill found its origins in concerns for the proliferation of identity theft cases and the liability of financial institutions in cases of merchants selling gift or stored value cards. But these issues can and should be dealt with within the framework of the private contracts and/or agreements between card-issuing financial institutions and merchants. They are the best judges as to the conditions according to which they would agree to take risks and do business together.

Furthermore it should be pointed out that financial protection already exists for consumers whose debit or credit cards have been stolen or otherwise used to fraudulently make purchases. 

Because financial institutions and merchants already have the ability to set terms and conditions related to the acceptance of debit or credit cards, and because consumer protection laws already exist to protect people against theft associated with the fraudulent use of a debit or credit card, there is no need for the state to enact new laws regulating the terms of private transactions. For these reasons we oppose House Bill 3522 as a growth of government and interference in free market transactions.