1. (a) Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

   1. (1) Card Activation--process of sending new plastic cards from the issuer to the legitimate cardholder in an "inactive" mode. Once the legitimate cardholder receives the card, they must call the issuer/processor and go through a member verification process before the card is "activated".
   2. (2) Card Security Code--a set of unique numbers encoded on the magnetic strip of plastic cards used to combat counterfeit fraud.
   3. (3) Neural Network--a computer program that monitors usage patterns of an account and typical fraud patterns. The program analyzes activity to determine fraud risk scores to detect potentially fraudulent activity.
   4. (4) Plastic Cards--includes credit cards, debit cards, automated teller machine (ATM) or specific network cards; and predetermined stored value and smart cards with micro-processor chips.

2. (b) Credit cards. A credit union may issue credit cards in accordance with the credit union's written policies, which shall include at a minimum:

   1. (1) Credit policies to set individual limits for credit card accounts:
   2. (2) A process for reviewing each member's payment and/or credit history periodically for the purpose of determining risk; and
   3. (3) The credit underwriting standards for each type of card program offered.

3. (c) Program Review.

   1. (1) A credit union shall review, on at least an annual basis, its plastic card program with particular emphasis on:

      1. (A) The amount of losses caused by theft and fraud;
      2. (B) The loss prevention measures (and their adequacy) currently employed by the credit union;
      3. (C) The availability and possible implementation of other loss prevention measures such as card activation, card security codes, neural networks, and other evolving technology; and
      4. (D) A cost benefit analysis of supplemental insurance coverage for theft and fraud related losses.
   2. (2) The review shall be documented in writing, with any approved changes to the plastic card program being entered into the minutes of the board meeting.

Source Note:The provisions of this §91.712 adopted to be effective August 9, 1999, 24 TexReg 6023; amended to be effective August 10, 2003, 28 TexReg 6268; amended to be effective November 9, 2006, 31 TexReg 9020.