BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2307


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          Date of Hearing:   April 5, 2016


                ASSEMBLY COMMITTEE ON PRIVACY AND CONSUMER PROTECTION


                                   Ed Chau, Chair


          AB 2307  
          (Chau) - As Introduced February 18, 2016


          SUBJECT:  Weights and measures:  service agencies and service  
          agents:  reporting fraud


          SUMMARY:  Protects consumers from credit card fraud and identity  
          theft at gas stations by requiring service agents who repair  
          gasoline pumps to report to the county sealer any credit card  
          skimming devices found in the course of their repair work.   
          Specifically, this bill:  





          1)Requires a service agency or service agent to report to the  
            county sealer if a measuring device has been altered in such a  
            way as to facilitate fraud. 



          2)Requires that if a service agency or service agent has  
            possession of the device used to alter the measuring device,  
            then the service agency or service agent must surrender the  
            device to the county sealer or local law enforcement within 24  
            hours of discovering that the measuring device has been  
            altered. 








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          EXISTING LAW:  


          1)Establishes the office of the county sealer in the 58 counties  
            and authorizes the sealer to prosecute violations of laws  
            relating to weights and measures.  (Business and Professions  
            Code (BPC) Section 12013, 12015, and 12200, et seq.)



          2)Specifies that service agents, who act as agents of county  
            sealers, must be registered by the Secretary of Food and  
            Agriculture.  (BPC 12532(a))

          3)Specifies that a device may only be placed into service by a  
            county sealer or a service agent. (BPC 12532(d))





          4)Specifies that a person who repairs a device is not required  
            to be registered with the Secretary of Food and Agriculture as  
            long as the device is placed into service following a repair  
            by a sealer or registered service agent or registered service  
            agency.  (BPC 12532(e))



          FISCAL EFFECT:  Unknown


          COMMENTS: 


           1)Purpose of this bill  .  This bill is intended to help prevent  








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            credit card fraud and identity theft by requiring service  
            agents who repair gas pumps to report and turn over credit  
            card skimming devices within 24 hours to their county sealer,  
            or law enforcement.  This measure is sponsored by the  
            California Agricultural Commissioners and Sealers Association.  
             



           2)Author's statement  .  According to the author's office, "Across  
            the country, criminal organizations are using skimmer devices  
            to steal money from unsuspecting victims using gas pumps,  
            ATMs, or other credit card vending machines.  In 2015, there  
            was an inspection conducted at 33 gas stations in Los Angeles  
            and Ventura Counties, by personnel from the Los Angeles County  
            Agricultural Commissioner's office, numerous federal and local  
            law enforcement agencies, an energy corporation, and a  
            financial services corporation, which found ten credit card  
            skimmers located at eight gas stations.



            "Unfortunately, there is no uniform process for dealing with  
            these devices when they are discovered by a service agent in  
            California.  Reports from county sealers throughout California  
            indicate that service agents often dispose skimmers into the  
            garbage or hand them over to gas station attendants instead of  
            reporting the problem."





           3)The prevalence of credit card skimmers.   Organized crime rings  
            have begun using credit card skimmers to steal money from  
            unsuspecting victims at gas pumps, ATMs, and credit card  
            vending machines.  In 2015, the Los Angeles County  
            Agricultural Commissioner's office, along with federal and  
            local law enforcement agencies, conducted inspections of 33  








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            gas stations in Los Angeles and Ventura Counties and found ten  
            credit card skimmers located at eight different gas stations.   




            Modern credit card skimmers are outfitted with Bluetooth  
            devices that can instantly transmit credit card data,  
            including PIN numbers and security codes, to a nearby mobile  
            device or laptop.  Once thieves receive the credit card data  
            they can immediately begin making fraudulent charges using the  
            card.  Most people do not discover the fraud until their next  
            bank or credit card statement, which makes it difficult, if  
            not impossible, to narrow down where and when the credit card  
            data was stolen. 





            Other states hit hard by this growing criminal activity  
            include Illinois, Indiana, Kentucky, Ohio, Michigan, and  
            Wisconsin.





           4)Self-service gas pumps using non-chip credit card technology  
            are particularly risky.   Unlike retails stores which typically  
            have cashiers at point-of-sale who can readily monitor the  
            security of the cash registers and credit card swiping  
            machines, gas stations typically have self-service pumps.  The  
            cashiers who work inside of gas station convenience stores  
            simply cannot easily monitor gas pumps throughout the day to  
            prevent tampering by criminals.  Gas pumps are also an easy  
            target for criminals because the oil industry received a  
            two-year extension to October 2017 to comply with new federal  
            regulations that began requiring all other retailers to  








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            install chip enabled credit card machines by October 2015.  



           5)The role of county sealers and service agents  .  County sealers  
            of weights and measures are responsible for ensuring all  
            commercial scaling and volumetric measuring devices are  
            providing accurate readings, so customers pay the appropriate  
            amount for the product they are purchasing.  One of the most  
            common devices sealers test annually is gas station pumps. If  
            the county sealer determines that a gas pump is not providing  
            an accurate reading, then it is removed from operation until  
            an authorized service agent can repair the pump.  According to  
            the California Agricultural Commissioners and Sealers  
            Association, service agents have been encountering a growing  
            number of credit card skimmers in the course of repairing gas  
            pumps.



            This bill requires all service agents who work on gas pump  
            meters to confiscate and turn in credit card skimmers when  
            they discover them inside gas pumps.  Reports from county  
            sealers indicate that some service agents dispose of skimmers  
            or hand them over to gas station attendants instead of  
            reporting the problem.  This bill requires all service agents  
            to report potential credit card skimming and turn in all  
            evidence within 24 hours to their county sealer, who can then  
            contact the appropriate law enforcement authorities. 





           6)Author's amendments.   The author has agreed to accept the  
            below amendments to clarify the language of the bill and to  
            require county sealers to coordinate with the appropriate law  
            enforcement authorities as needed in investigating and  
            prosecuting criminal activities. 








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          On page 2, line 1, after "SECTION 1" add:





          Section 12215 shall be added to the Business and Professions  
          Code to read:


           


          12215. A sealer who receives information or evidence indicating  
          that any weighing or measuring device, parking meter, or other  
          installation under the jurisdiction of the sealer has been  
          altered in such a way as to facilitate any type of fraud, shall  
          coordinate with the appropriate law enforcement authorities as  
          needed in investigating and prosecuting fraudulent activity. 


          SECTION 2.


                On page 3, lines 4-9, revise the bill language as follows:


               (i) If a device has been altered in such a way as to  
               facilitate fraud, a service agency or service agent shall  
               report it to the county sealer  within 24 hours of  
               discovering that the device has been altered  .  If the  
               service agency or service agent has possession of the  
               device  or any mechanism, component, software or device  
               found attached thereto or used in conjunction with the  
               device that serves to facilitate fraud  , the service agency  
               or service agent shall surrender the device  or any such  








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               mechanism, component, software or attachment  to the county  
               sealer or local law enforcement within 24 hours of  
               discovering that the device has been altered.


           7)Arguments in support  .  According to the California  
            Agricultural Commissioners and Sealers Association, "Skimming  
            technology is always improving and may be difficult to detect  
            to the untrained eye.  Skimmers are sometimes installed  
            outside an ATM or pump and frequently hidden within the  
            machine.  Often times, the devices are discovered by  
            registered service agents during the course of responding to  
            calls for repair.  AB 2307 will establish a uniform reporting  
            protocol for service agents alerted to the presence of a  
            credit card skimming device or who discover a suspicious  
            device during the course of a repair of a weighing and  
            measuring device."  
          REGISTERED SUPPORT / OPPOSITION:




          Support


          California Agricultural Commissioners and Sealers Association  
          (sponsor)




          Opposition


          None on file.












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          Analysis Prepared by:Jennie Bretschneider / P. & C.P. / (916)  
          319-2200