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A BILL TO BE ENTITLED
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AN ACT
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relating to credit card marketing activities at postsecondary |
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educational institutions; providing a civil penalty. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 35, Business & Commerce Code, is amended |
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by adding Subchapter L to read as follows: |
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SUBCHAPTER L. CREDIT CARD MARKETING AT POSTSECONDARY EDUCATIONAL |
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INSTITUTIONS |
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Sec. 35.131. DEFINITIONS. In this subchapter: |
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(1) "Campus credit card marketing activity": |
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(A) means any activity: |
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(i) conducted by an agent or employee of a |
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credit card issuer on the campus of a postsecondary educational |
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institution; and |
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(ii) designed to encourage students to |
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apply for a credit card; and |
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(B) includes the act of placing a display or |
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poster together with credit card applications on the campus, even |
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if an employee or agent of the credit card issuer is not present at |
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the display. |
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(2) "Credit card" means a card or device issued under |
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an agreement by which the issuer gives to a cardholder the right to |
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obtain credit from the issuer or another person. |
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(3) "Credit card issuer" means a lender, including a |
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financial institution, or a merchant that receives applications and |
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issues credit cards to individuals. |
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(4) "Governing board" means the body charged with |
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policy direction of any postsecondary educational institution, |
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including a board of directors, a board of regents, a board of |
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trustees, and an independent school district board that is charged |
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with policy direction of a public junior college. |
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(5) "Postsecondary educational institution" means: |
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(A) an institution of higher education as defined |
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by Section 61.003, Education Code; |
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(B) a private or independent institution of |
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higher education as defined by Section 61.003, Education Code; or |
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(C) a private postsecondary educational |
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institution as defined by Section 61.302, Education Code. |
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Sec. 35.132. CAMPUS CREDIT CARD MARKETING ACTIVITY OUTSIDE |
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DESIGNATED LOCATION PROHIBITED. (a) A credit card issuer may not |
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engage in campus credit card marketing activities outside of the |
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campus location designated by the governing board of the |
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postsecondary educational institution for that purpose in |
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accordance with Subsection (b). |
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(b) The governing board of a postsecondary educational |
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institution shall designate not more than one location on campus |
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where a credit card issuer may engage in campus credit card |
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marketing activities. |
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Sec. 35.133. GIFTS OR INCENTIVES FOR COMPLETING CREDIT CARD |
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APPLICATION PROHIBITED. A credit card issuer may not offer a gift |
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or other incentive in exchange for the completion of a credit card |
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application as part of a campus credit card marketing activity. |
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Sec. 35.134. CREDIT CARD ISSUER TO OFFER EDUCATIONAL |
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PROGRAM ON RESPONSIBLE USE OF CREDIT. (a) A credit card issuer |
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that conducts campus credit card marketing activities shall provide |
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to students and their families, on the campus, an educational |
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program on the responsible use of credit. The educational program |
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must be presented before or during the time that the credit card |
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issuer conducts any credit card marketing activity on the campus. |
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(b) An educational program offered by a credit card issuer |
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under Subsection (a) must be developed in consultation with the |
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postsecondary educational institution and must include a full |
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explanation of: |
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(1) the financial consequences of not paying off |
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balances in full within the time specified by the billing statement |
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to avoid interest charges, including how the issuer computes |
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interest on unpaid balances; |
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(2) the impact of a shift from an introductory or |
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initial interest rate to an ongoing interest rate that is higher, |
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including the time when the higher ongoing interest rate takes |
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effect and a description of acts by the cardholder that will cause |
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an immediate shift to the higher interest rate; |
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(3) how long it would take to pay off various balance |
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amounts by paying the minimum monthly payment required under the |
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credit card agreement at the interest rate charged by the issuer, |
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using examples; |
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(4) credit- |
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related terms, including fixed rates, |
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variable rates, introductory rates, balance transfers, grace |
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periods, annual fees, and other fees; and |
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(5) the generally accepted prudent uses of credit and |
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the perils of imprudent uses, as presented by recognized consumer |
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credit counseling agencies. |
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Sec. 35.135. PROOF OF ATTENDANCE AT EDUCATIONAL PROGRAM |
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REQUIRED WITH CREDIT CARD APPLICATION. A credit card issuer may not |
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issue a credit card to a student enrolled in a postsecondary |
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institution unless the application submitted by the student |
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includes a certificate or other reasonable proof that the student |
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has attended the educational program required by Section 35.134. |
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Sec. 35.136. CIVIL PENALTY. A person who violates this |
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subchapter is liable to the state for a civil penalty in an amount |
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not to exceed $2,500 for each violation. The attorney general or |
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the prosecuting attorney in the county in which the violation |
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occurs may bring suit to recover the civil penalty imposed under |
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this section. |
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SECTION 2. Section 35.135, Business & Commerce Code, as |
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added by this Act, applies only to an application for a credit card |
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submitted on or after the effective date of this Act. An |
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application for a credit card submitted before the effective date |
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of this Act is covered by the law in effect on the date the |
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application was submitted, and the former law is continued in |
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effect for that purpose. |
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SECTION 3. This Act takes effect September 1, 2007. |