HB 2004 — Prevent the use of payment card processing systems for surveillance of Second Amendment activity and discriminatory conduct

HB2004 S JUD AMAMT #1 3-3Curia  7824The Committee on the Judiciary moved to amend the bill by striking out everythingthe aftertitle theand enactingsubstituting clausetherefor anda insertingnew intitle, lieuto thereofread theas following:follows:Eng.

ARTICLECom. 2A.

MAXWELLSub. GOVERNMENTAL ACCESS TO FINANCIAL RECORDS ACT.

§31A‑2A‑4.for House Bill 2004 — A BILL to amend and reenact §31A-2A-4 of the Code of West Virginia, 1931, as amended;

Exceptions.and to amend said code by adding thereto a new article, designated §31A-2B-1, §31A-2B-2, §31A-2B-3, §31A-2B-4, §31A-2B-5, §31A-2B-6, §31A-2B-7, §31A-2B-8, §31A-2B-9, and §31A-2B-10, all relating generally to payment card transactions involving firearm, firearm accessory or component, and ammunition retailers;

 (a)clarifying Nothingthat infinancial thisrecords articlemay isnot intendedbe to,disclosed or shallcompelled prohibit,to applybe to,disclosed orin interfere with:(1) The lawful authority or ability of the commissioner of banking or any other state or federal regulatory agency of a bank,manner savingsthat anddiscriminates loanagainst association,constitutionally trustprotected company,activities; or credit union to obtain or to share between such regulatory agencies any records which the commissioner of banking or such state or federal regulatory agency may deem appropriate for the examination and regulation of the financial institution:

Provided,providing Thata nothingshort intitle; this subdivision permits disclosure of protected financial information in violation of §31A‑2B‑1 et seq.

ofsetting thisforth code;(2)legislative Thefindings lawful authority or ability of the Commissioner of Insurance Commissioner or the State Auditor to obtain any records from a financial institution relating to the financial institution’s sale of insurance or securities;(3) The dissemination or publication of information derived from financial records if the information cannot be identified to any particular customer, deposit, or account, or if the information is in composite form and isintent; not disseminated or published in a way which identifies any particular customer, deposit, or account;(4) The making of reports or returns specifically required or permitted by federal or state law, including applicable tax law or regulations;(5) The disclosure of any information under the provisions of the uniform commercial code governing the dishonor of a negotiable instrument, or the disclosure to any purported state entity payee or to any purported state entity holder of a check, draft, order, or other item, whether or not such instrument has been accepted by such payee or holder as payment, as to whether or not such instrument would be honored if presented at the time of such disclosure;(6) A state entity obtaining a credit report or consumer credit report from anyone other than a financial institution;(7) The exchange, in the regular course of business, of information showing the outstanding balance of a mortgage loan account in connection with a sale, refinancing, or foreclosure of real property in a transaction to which the state entity is a party;

ordefining theterms; disclosure, in the regular course of business, of information on a mortgage or deed of trust on a subject property to a state entity as holder of any subordinate mortgage, deed of trust or security interest;(8) The disclosure to the Department of Health and Human Resources, upon written request, of an individual’s financial records which the department determines are necessary to verify or confirm the individual’s eligibility or ineligibility for public assistance;(9) The disclosure of an individual’s financial records in response to a written request by the Department of Health and Human Resources, as authorized by the federal parent locator service of the United States Department of Health and Human Services;(10) The examination or audit of financial records relating to preneed funeral trust accounts pursuant to §47‑14‑1 et seq.

ofprohibiting this code;(11) The disclosure of protected financial recordsinformation relatingexcept toin unclaimedlimited propertycircumstances; pursuant to §36‑8‑1 et seq.

ofestablishing thisrequirements code,for includingwritten theauthorization examinationfor ofdisclosure financial records by the State Treasurer or his or her agent to determine compliance with the handling and reporting of unclaimedprotected property as provided by, and subject to, the limitations set forth in §36‑8‑20 of this code;(12) The presentation to appropriate local, state, or federal law‑enforcement authorities of a certificate under oath by an authorized representative of a financial institutioninformation; drawee that declares the dishonor of the check, draft, or order by the drawee, the lack of an account with the drawee at the time of utterance or the insufficiency of the drawer’s funds at the time of presentation and utterance in connection with any criminal action for obtaining property or services by a worthless check, draft, or order;(13) The notification to appropriate local, state, or federal law‑enforcement authorities or regulatory agencies that the financial institution, its officers, employees or agents thereof have information which may be relevant to a possible violation of any statute or regulation:

Provided,establishing Thatrequirements nothingfor insubpoenas this subdivision permits disclosure of protected financial informationinformation; in violation of §31A‑2B‑1 et seq.

prohibiting use of thisprotected code.financial information for discriminatory conduct;

Theproviding disclosurecivil ofremedies any information pursuant to this subdivision may only include the name or other identifying information concerning any individual, corporation, or account involved in and the nature of any suspected illegal activity;(14) The disclosure of information or records by a financial institution to any court or other appropriate state entity which is incidental to recording a lien, perfecting a security interest, proving a claim in bankruptcy, or otherwise collecting on a debt owing either to the financial institution itself or in its role as a fiduciary;(15) The disclosure of information or records by a financial institution which is incidental to processing an application for assistanceviolations to a customer in the form of anew governmentarticle loan, loan guaranty, or loan insurance agreement, or which is incidental to processing a default on, or administering, a government guaranteed or insured loan or to initiating contact with anliquidated appropriate state entity for the purpose of providing any financial record necessary to permit such authority to carry out its responsibilities under a loan, loan guaranty, or loancompensatory insurancedamages; agreement;(16) The disclosure of information incidental to a transaction in the normal course of business of the financial institution where there is no reasonable cause to believe that the information is intended to be used by the state entity in connection with an investigation of the customer;

(17)providing Theinjunctive preparation,relief review,for handling,violations or maintenance of financialnew recordsarticle; in the ordinary course of business by any officer, employee, or agent of a financial institution having custody of the records;

or(18)providing Thedefendants disclosurein to appropriate law‑enforcement officials of the financial records of any officer, director, employee, or controlling shareholder of a financialcivil institutionaction bywith a financialright institution or by any state or federal regulatory agency having authority to regulatecure; the financial institution, if there is reason to believe that the financial record is relevant to a possible violation by such person of any law relating to a crime against the financial institution or any such state or federal regulatory agency.

Noallowing state or federal regulatory agency which discloses any information pursuant to this subdivision shall be deemed to have waived any privilege applicable to that record under law.(b) Nothing in this article shall preclude a state entity from obtaining information that is public record without regard to this article although the informationaggrieved mayparty have been derived from financial records.(c) Nothing in this article shall preclude a statecivil entityaction from obtaining information or financial records voluntarily submitted to itrecover byattorney’s othersfees; in an attempt to seek governmental assistance or redress of a grievance, including legislative change:

Provided,establishing That the financial record or information was not solicited by the state entity in an effort to evade the requirements of this article or submitted by a financialstatute institution in contravention of §31A‑2A‑7limitations offor thiscivil code.(d)remedies; Notwithstanding the exceptions set forth in this section, a financial institution may not disclose financial records to a state entity and a state entity may not compel disclosure of financial records in a manner that singles out or discriminates against any person based on activity protected by the Second Amendment to the United States Constitution or Section 22, Article III of the West Virginia Constitution.  ARTICLE 2B.

THEproviding SECONDthat AMENDMENTcivil FINANCIALremedies PRIVACYare ACT.exclusive for violations of new article;

§31A‑2B‑1.authorizing the Commissioner of Financial Institutions to administer requirements of new article;

Shortauthorizing title.the Attorney General to investigate and judicially enforce new article subject to certain limitations;

Thisallowing articlethe shallAttorney beGeneral knownto andrecover mayattorney’s befees citedin asaction thefor "Secondinjunctive Amendmentrelief; Financial Privacy Act."   §31A‑2B‑2.

Findingsauthorizing andthe intent.State Treasurer to disqualify financial institutions from certain state contracts if violations of new article have occurred;

 (a)establishing The Legislature finds that:(1) The Second Amendment to the Unitedscope States Constitution guarantees the people the right to keep and bear arms;(2) Section 22, Article III of thenew Westarticle; Virginia Constitution provides that "[a] person has the right to keep and bear arms for the defense of self, family, home and state, and for lawful hunting and recreational use";(3) In September of 2022, the International Organization for Standardization, based in Switzerland, approved a unique Merchant Category Code for firearm and ammunition retailers;

(4)and Laterproviding in September of 2022, the world’s three largest payment card networks publicly announced they would assign the new Merchant Category Code to firearms retailers accepting payment cards for purchases, after 28 members of Congress sent a publicseverability letterclause. to networks, pressuring them to adopt the new code;

(5) In the 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 networks will utilize the new Merchant Category Code to conduct mass surveillance of constitutionally protected firearms, firearm accessories or components, and ammunition purchases in cooperation with law enforcement;(6) The new Merchant Category Code will allow the 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 West Virginia, paving the way for both unprecedented surveillance of Second Amendment activity and unprecedented information sharing between financial institutions and the government;(7) This potential for cooperative surveillance and tracking of lawful firearms, firearm accessories or components, 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 West Virginia;

(8) 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;

in fact, both the federal Right to Financial Privacy Act and West Virginia’s Maxwell Governmental Access to Financial Records Act prohibit financial institutions from disclosing a customer’s financial records except in limited circumstances;

and(9) This article should be construed as a generally applicable consumer financial protection law that does not prevent or significantly interfere with the duly authorized powers of any bank, nor does this article directly or indirectly discriminate against any bank based on its charter or structure.(b) 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, firearm accessories or components, and ammunition purchases and sales within West Virginia’s jurisdiction.

§31A‑2B‑3.

Definitions.

 (a) The terms used in this article shall have the same meaning provided in §31A‑2A‑1 of this code, unless otherwise specified in this section.

(b) For the purposes of this article, the following terms have the following meanings:(1) “Ammunition” means ammunition or cartridge cases, primers, bullets, or propellant powder designed for use in any firearm.(2) "Assign" or "assignment" refers to a financial institution policy, process, or practice that labels, links, or otherwise associates a firearms code with a merchant or payment card transaction in a manner that allows the financial institution or any other entity facilitating or processing the payment card transaction to identify whether a merchant is a firearms retailer or whether a transaction involves the sale of firearms, firearm accessories or components, or ammunition.(3) "Customer", in addition to the definition provided in §31A‑2A‑1(a) of this code, includes any person who presents a payment card to a merchant for the purchase of goods or services.(4) "Disclosure" means the transfer, publication, or distribution of protected financial information to another person for any purpose other than to process or facilitate a payment card transaction.(5) "Financial institution", in addition to the definition provided in §31A‑2A‑1(b) of this code, includes an entity other than a merchant involved in facilitating or processing a payment card transaction, including, but not limited to, a bank, acquirer, gateway, payment card network, or payment card issuer.(6) "Financial record", in addition to the definition provided in §31A‑2A‑1(c) of this code, includes a financial record held by a financial institution related to a payment card transaction that the financial institution has processed or facilitated.(7) “Firearm” has the same meaning as that term is defined in §61-7-2 of this code and includes antique firearms.(8) “Firearm accessories or components” means:(A) Any device specifically adapted to enable the wearing or carrying about one’s person or the storage or mounting in or on any conveyance of a firearm and any attachment or device specifically adapted to be inserted into or affixed onto any firearm to enable, alter, or improve the functioning or capabilities of the firearm;

(B) Any item that is used in conjunction with or mounted upon a firearm, including but not limited to telescopic or laser sights, magazines, flash or sound suppressors, folding or aftermarket stocks and grips, speedloaders, braces, ammunition carriers, and lights for target illumination;

and(C) Any component for making ammunition, reloading materials and equipment, machinery, and tools for manufacturing ammunition.(9) "Firearms code" means any code or other indicator a financial institution assigns to a merchant or to a payment card transaction that identifies whether a merchant is a firearms retailer or whether the payment card transaction involves the purchase of a firearm, firearm accessories or components, or ammunition.

The term includes, but is not limited to, a Merchant Category Code assigned to a retailer by a payment card network or other financial institution.

(10) "Firearms retailer" means any person engaged in the lawful business of selling or trading firearms or antique firearms, as those terms are defined in §61‑7‑2 of this code, firearm accessories or components, or ammunition to be used in firearms or antique firearms.(11) "Government entity" means any state or local government agency or instrumentality thereof, located in West Virginia.(12) “Merchant” means a person or entity that accepts payment cards from customers for the purchase of goods or services.

The term includes a firearms retailer that accepts payment cards for the lawful purchase of firearms, firearm accessories or components, or ammunition.(13) “Payment card” means a credit card, charge card, debit card, or any other card that is issued to an authorized card user and that allows the user to purchase goods or services from a merchant.(14) "Protected financial information" means any record of a sale, purchase, return, or refund involving a payment card that is retrieved, characterized, generated, labeled, sorted, or grouped based on the assignment of a firearms code.

A "customer’s protected financial information" refers to protected financial information appearing in a financial institution’s records pertaining to a customer.