On June 18, 2023, Governor Greg Abbott signed into law House Bill 4, the Texas Data Privacy and Security Act.  This makes Texas the tenth state to enact a comprehensive consumer data privacy law, following California, Virginia, Colorado, Utah, Connecticut,  Iowa, Indiana, Tennessee, and Montana.  The Act will go into effect July 1, 2024, except for a section related to authorized agents that will go into effect January 1, 2025.

Applicability
The Act applies to a person that:

  1. Conducts business in Texas or produces a product or service consumed by residents of Texas;
  2. Processes or engages in the sale of personal data; and
  3. Is not a small business as defined by the United States Small Business Administration, except to the extent it sells sensitive data which requires consumer consent.

Exemptions
Exemptions include:

  1. Financial institutions or data subject to the Gramm-Leach-Bliley Act (GLBA);
  2. Covered entities or business associates governed by the Health Insurance Portability and Accountability Act of and the Health Information Technology for Economic and Clinical Health Act;
  3. Nonprofit organizations;
  4. Institutions of higher education;
  5. Protected health information under the Health Insurance Portability and Accountability Act;
  6. Personal information to the extent its collection, maintenance, disclosure, sale, communication, or use is regulated and authorized by the Fair Credit Reporting Act.

Consumer Rights
Consumers have the right to:

  1. Confirm processing of their personal data and access such data;
  2. Correct inaccuracies;
  3. Delete personal data;
  4. Obtain personal data provided by the consumer in a portable and readily usable format, if stored digitally;
  5. Opt out of processing if for the purpose of targeted advertising, sale, or profiling.

Sensitive Personal Information
Sensitive personal data may not be processed without the consumer’s consent or, in the case of a known child, pursuant to the Children’s Online Privacy Protection Act.

Sensitive Data includes:

  1. Personal data revealing racial or ethnic origin, religious beliefs, mental or physical health diagnosis, sexual orientation, or citizenship or immigration status;
  2. Genetic or biometric data that is processed for the purpose of uniquely identifying an individual;
  3. Personal data collected from a known child; or
  4. Precise geolocation data.

Contract Requirements
A contract between a controller and processor must include:

  1. Clear instructions for processing data;
  2. The nature and purpose of processing;
  3. The type of data subject to processing;
  4. The duration of processing;
  5. The rights and obligations of both parties;
  6. A requirement the processor will ensure the confidentiality of the data;
  7. A requirement the processor delete or return all personal data to the controller as requested after the provision of the service is completed;
  8. A requirement the processor make available all information in the processor’s possession necessary to demonstrate compliance;
  9. A requirement the processor will allow and cooperate with reasonable assessments by the controller; and
  10. A requirement subcontractors be engaged pursuant to a written contract mirroring the processor’s requirements.

Data Assessments
Controllers must conduct and document a data protection assessment of each of the following processing activities:

  1. The processing of personal data for purposes of targeted advertising;
  2. The sale of personal data;
  3. The processing of personal data for purposes of certain profiling;
  4. The processing of sensitive data; and
  5. Any processing that presents a heightened risk of harm.

Enforcement
There is no private right of action.  Provided a person cannot cure a violation within 30 days, the attorney general may seek injunctive relief and a civil penalty not to exceed $7,500 for each violation.

RMAI strongly recommends that its members share this Member Alert with those in their organization who are responsible for their operations, compliance, and legal matters.

RMAI previously issued Member Alerts for the following states’ comprehensive privacy laws enacted in 2023:

Montana (May 23, 2023)

Tennessee (May 12, 2023)

Indiana (May 1, 2023)

Iowa (March 30, 2023)

This Member Alert is intended for members of the Receivables Management Association International, is for informational purposes only, and is in no way intended to provide legal advice. Members are encouraged to consult with an attorney of their choice for legal advice concerning this matter.