BILL ANALYSIS
| Senate Research Center | S.B. 1809 |
| 89R10222 JDK-F | By: Flores |
| | Criminal Justice |
| | 3/28/2025 |
| | As Filed |
AUTHOR'S / SPONSOR'S STATEMENT OF INTENT
Gift card fraud has been on the rise, with criminals exploiting various methods to illegally obtain or use gift cards. This includes stealing gift card numbers, tampering with physical cards, and using stolen credit card information to purchase gift cards. Such activities not only result in financial losses for consumers and businesses but also undermine consumer confidence in using gift cards as a secure method of payment. The bill seeks to address these issues by creating specific offenses and penalties, thereby providing law enforcement with the tools needed to prosecute offenders effectively. Gift cards are often targeted by fraudsters due to their monetary value and the ease with which they can be transferred and used. By establishing clear legal definitions and penalties for fraudulent actions involving gift cards, the bill aims to protect consumers, card issuers, and merchants from financial losses and to uphold the integrity of the gift card market.
SECTION 1: The amendment to Penal Code Subchapter D, Chapter 32 introduces a new section, 32.56, to the Texas Penal Code, which specifically addresses fraudulent activities involving gift cards.
Section. 32.56: Fraudulent Use or Possession of Gift Card or Gift Card Redemption Information:
Subsection (a): Definitions
(1) "Cardholder": Defined as the person who receives or purchases a gift card, whether physical or virtual.
(2) "Card issuer": The entity or its agent that issues the gift card.
(3) "Gift card": A prepaid card, code, or device redeemable for goods or services, which can be either activated or inactivated.
(4) "Gift card redemption information": Unique information that allows access to the funds on a gift card.
(5) "Gift card seller": A merchant who sells gift cards to consumers.
Subsection (b): Offenses
A person commits an offense if they, with intent to harm or defraud:
(1) Acquire or retain a gift card or redemption information without consent from the cardholder, card issuer, or gift card seller.
(2) Alter or tamper with a gift card.
(3) Use or attempt to use a fraudulently obtained or altered gift card to obtain goods, services, or anything of value.
Subsection (c): Penalties
The penalties for offenses are based on the value of the gift card(s) involved:
(1) Class C Misdemeanor: If the value is less than $100.
(2) Class B Misdemeanor: If the value is $100 or more but less than $750.
(3) Class A Misdemeanor: If the value is $750 or more but less than $2,500.
(4) State Jail Felony: If the value is $2,500 or more but less than $30,000.
(5) Third Degree Felony: If the value is $30,000 or more but less than $150,000.
(6) Second Degree Felony: If the value is $150,000 or more but less than $300,000.
(7) First Degree Felony: If the value is $300,000 or more.
S.B. 1809 Committee Substitute:
It broadens the applicability to include tampering with gift card packaging.
It adds definitions for the following terms: "counterfeit gift card" and "digital imprint."
It further defines the offense to include: possession and transportation of stolen gift cards, gift card redemption information or counterfeit gift cards; possession of the unlawfully obtained data stored on the digital imprint of a gift card; and the transport of an un-activated gift card or gift card redemption information into a retail location with the intent to display it for sale.
Adds a rebuttable presumption related to possession of three or more gift cards and related items.
Changes the penalty structure from a value-based penalty (based on the monetary value of the gift cards stolen) to the punishment being linked to the number of items the actor unlawfully possesses. The base penalty is a state jail felony for possession of less than five items involved.
Adds prosecutorial discretion for the offense.
As proposed, S.B. 1809 amends current law relating to the creation of the offense of fraudulent use or possession of a gift card or gift card redemption information.
RULEMAKING AUTHORITY
This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Subchapter D, Chapter 32, Penal Code, by adding Section 32.56, as follows:
Sec. 32.56. FRAUDULENT USE OR POSSESSION OF GIFT CARD OR GIFT CARD REDEMPTION INFORMATION. (a) Defines "cardholder," "card issuer," "gift card," "gift card redemption information," and "gift card seller."
(b) Provides that a person commits an offense if the person, with the intent to harm or defraud another:
(1) acquires or retains possession of a gift card or gift card redemption information without the consent of the cardholder, card issuer, or gift card seller;
(2) alters or tampers with a gift card; or
(3) uses or attempts to use a gift card or gift card redemption information to obtain goods, services, or anything else of value with knowledge that the gift card or gift card redemption information has been obtained in violation of Subdivision (1) or altered or tampered with.
(c) Provides that an offense under this section is:
(1) a Class C misdemeanor if the value of the gift card, gift cards, or gift card redemption information involved is less than $100;
(2) a Class B misdemeanor if the value of the gift card, gift cards, or gift card redemption information involved is $100 or more but less than $750;
(3) a Class A misdemeanor if the value of the gift card, gift cards, or gift card redemption information involved is $750 or more but less than $2,500;
(4) a state jail felony if the value of the gift card, gift cards, or gift card redemption information involved is $2,500 or more but less than $30,000;
(5) a felony of the third degree if the value of the gift card, gift cards, or gift card redemption information involved is $30,000 or more but less than $150,000;
(6) a felony of the second degree if the value of the gift card, gift cards, or gift card redemption information involved is $150,000 or more but less than $300,000; and
(7) a felony of the first degree if the value of the gift card, gift cards, or gift card redemption information involved is $300,000 or more.
SECTION 2. Effective date: September 1, 2025.
