1-1 By: Harris of Dallas S.B. No. 1133
1-2 (In the Senate - Filed March 12, 1993; March 15, 1993, read
1-3 first time and referred to Committee on State Affairs;
1-4 April 26, 1993, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 11, Nays 0; April 26, 1993,
1-6 sent to printer.)
1-7 COMMITTEE VOTE
1-8 Yea Nay PNV Absent
1-9 Harris of Dallas x
1-10 Rosson x
1-11 Carriker x
1-12 Henderson x
1-13 Leedom x
1-14 Lucio x
1-15 Luna x
1-16 Nelson x
1-17 Patterson x
1-18 Shelley x
1-19 Sibley x
1-20 West x
1-21 Whitmire x
1-22 COMMITTEE SUBSTITUTE FOR S.B. No. 1133 By: Harris of Dallas
1-23 A BILL TO BE ENTITLED
1-24 AN ACT
1-25 relating to the authority of the Consumer Credit Commissioner and
1-26 to the regulation of certain consumer credit practices; providing
1-27 penalties.
1-28 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-29 SECTION 1. Article 2.02A, Title 79, Revised Statutes
1-30 (Article 5069-2.02A, Vernon's Texas Civil Statutes), is amended by
1-31 adding Section (12) to read as follows:
1-32 (12)(a) The Consumer Credit Commissioner may not accept or
1-33 use money offered by an individual, firm, partnership, corporation,
1-34 or association either (i) for investigating or prosecuting a
1-35 matter, or (ii) if such individual, firm, partnership, corporation,
1-36 or association is affiliated with any industry under the regulatory
1-37 jurisdiction of the Finance Commission, except in the context of a
1-38 judgment or the negotiated settlement of a claim or action
1-39 threatened or asserted by or on behalf of the office of Consumer
1-40 Credit Commissioner. The Consumer Credit Commissioner is not
1-41 hereby prohibited from receiving and using money from persons under
1-42 the jurisdiction of the commissioner when expressly authorized by
1-43 law or rule.
1-44 (b) The Consumer Credit Commissioner may accept money,
1-45 gifts, and grants on behalf of the state for purposes related to
1-46 duties performed by the commissioner or for consumer credit
1-47 educational opportunities, unless the acceptance is prohibited
1-48 under Subsection (a) of this section or other law. Money received
1-49 under this subsection shall be deposited in the state treasury to
1-50 the credit of an account established in the general revenue fund
1-51 for the receipt of those funds and may be appropriated only for the
1-52 purposes for which the money was given. Acceptance and use of
1-53 money herein is subject to approval of the Finance Commission.
1-54 SECTION 2. Section (7), Article 2.03, Title 79, Revised
1-55 Statutes (Article 5069-2.03, Vernon's Texas Civil Statutes), is
1-56 amended to read as follows:
1-57 (7) Whenever the Consumer Credit Commissioner has reasonable
1-58 cause to believe that any person is violating any provisions of the
1-59 statutes to which this Article applies he may in addition to all
1-60 actions provided for, and without prejudice thereto, enter an order
1-61 requiring such person to desist or to refrain from such violation.
1-62 A person may appeal such an order to the Finance Commission. The
1-63 appeal must be made in accordance with the Administrative Procedure
1-64 and Texas Register Act (Article 6252-13a, Vernon's Texas Civil
1-65 Statutes) and its subsequent amendments <rules adopted by the
1-66 Finance Commission for that purpose>. In addition to the order,
1-67 the Commissioner may bring an action in any district court of this
1-68 State having jurisdiction and venue, on the relation of the
2-1 Attorney General at the request of the Commissioner, to enjoin such
2-2 person from engaging in or continuing such violation or from doing
2-3 any act or acts in furtherance thereof. In any such action, an
2-4 order or judgment may be entered awarding such preliminary or final
2-5 injunction as may be deemed proper. In addition to all other means
2-6 provided by law for the enforcement of a restraining order or
2-7 injunction, the court in which such action is brought shall have
2-8 power and jurisdiction to impound, and to appoint a receiver for,
2-9 the property and business of the defendant, including books,
2-10 papers, documents, and records pertaining thereto or so much
2-11 thereof as the court may deem reasonably necessary to prevent
2-12 violations through or by means of the use of said property and
2-13 business. Such receiver, when appointed and qualified, shall have
2-14 such powers and duties as he would have under Chapter 64, Civil
2-15 Practice and Remedies Code.
2-16 SECTION 3. Chapter 2, Title 79, Revised Statutes (Article
2-17 5069-2.01 et seq., Vernon's Texas Civil Statutes), is amended by
2-18 adding Article 2.03A to read as follows:
2-19 Art. 2.03A. ADMINISTRATIVE PENALTY; RESTITUTION ORDER.
2-20 (a) The Consumer Credit Commissioner may assess an administrative
2-21 penalty against a person who knowingly and wilfully violates or
2-22 causes a violation of this Subtitle, Chapter 9 or 15 of this Title,
2-23 or a rule adopted under this Subtitle or Chapter 9 or 15 of this
2-24 Title. The Consumer Credit Commissioner may order a person who
2-25 violates or causes a violation of this Subtitle, Chapter 9 or 15 of
2-26 this Title, or a rule adopted under this Subtitle or Chapter 9 or
2-27 15 of this Title to make restitution to an identifiable person
2-28 injured by the violation.
2-29 (b) The amount of the penalty may not exceed $1,000 for each
2-30 day of violation and for each act of violation. The aggregate
2-31 amount of penalties that may be assessed against a person during
2-32 one calendar year under this Article may not exceed $5,000 for each
2-33 business location at which an element of a violation occurred and
2-34 may not exceed $50,000 if the person committed violations at 11 or
2-35 more business locations.
2-36 (c) In determining the amount of a penalty, the Consumer
2-37 Credit Commissioner shall consider:
2-38 (1) the seriousness of the violation, including the
2-39 nature, circumstances, extent, and gravity of the prohibited act;
2-40 (2) the extent of actual or potential harm to a third
2-41 party;
2-42 (3) the history of violations during the preceding
2-43 four years;
2-44 (4) the amount necessary to deter future violations;
2-45 (5) efforts to correct the violation; and
2-46 (6) any other matter that justice may require.
2-47 (d) If the Consumer Credit Commissioner determines that a
2-48 violation has occurred the commissioner may issue a report that
2-49 states the facts on which the determination is based and the
2-50 commissioner's recommendation on the imposition of a penalty,
2-51 including a recommendation on the amount of the penalty.
2-52 (e) Within 14 days after the date the report is issued, the
2-53 Consumer Credit Commissioner shall give written notice of the
2-54 report to the person. The notice may be given by certified mail.
2-55 The notice must include a brief summary of the alleged violation
2-56 and a statement of the amount of the recommended penalty and must
2-57 inform the person that the person has a right to a hearing on the
2-58 occurrence of the violation, the amount of the penalty, or both the
2-59 occurrence of the violation and the amount of the penalty.
2-60 (f) Within 20 days after the date the person received the
2-61 notice, the person in writing may accept the determination and
2-62 recommended penalty of the Consumer Credit Commissioner or may make
2-63 a written request for a hearing on the occurrence of the violation,
2-64 the amount of the penalty, or both the occurrence of the violation
2-65 and the amount of the penalty.
2-66 (g) If the person accepts the determination and recommended
2-67 penalty of the Consumer Credit Commissioner, the commissioner by
2-68 order shall approve the determination and impose the recommended
2-69 penalty.
2-70 (h) If the person requests a hearing or fails to respond
3-1 timely to the notice, the Consumer Credit Commissioner shall set a
3-2 hearing and give notice of the hearing to the person. The hearing
3-3 shall be held by an administrative law judge of the State Office of
3-4 Administrative Hearings. The administrative law judge shall make
3-5 findings of fact and conclusions of law and promptly issue a
3-6 proposal of decision about the occurrence of the violation and the
3-7 amount of a proposed penalty. Based on the findings of fact,
3-8 conclusions of law, and proposal for a decision, the commissioner
3-9 by order may find that a violation has occurred and impose a
3-10 penalty or may find that no violation occurred.
3-11 (i) The notice of the Consumer Credit Commissioner's order
3-12 given to the person under the Administrative Procedure and Texas
3-13 Register Act (Article 6252-13a, Vernon's Texas Civil Statutes) and
3-14 its subsequent amendments must include a statement of the right of
3-15 the person to judicial review of the order.
3-16 (j) Within 30 days after the date the Consumer Credit
3-17 Commissioner's order is final as provided by Section 16(c),
3-18 Administrative Procedure and Texas Register Act (Article 6252-13a,
3-19 Vernon's Texas Civil Statutes), the person shall:
3-20 (1) pay the amount of the penalty;
3-21 (2) pay the amount of the penalty and file a petition
3-22 for judicial review contesting the occurrence of the violation, the
3-23 amount of the penalty, or both the occurrence of the violation and
3-24 the amount of the penalty; or
3-25 (3) without paying the amount of the penalty, file a
3-26 petition for judicial review contesting the occurrence of the
3-27 violation, the amount of the penalty, or both the occurrence of the
3-28 violation and the amount of the penalty.
3-29 (k) Within the 30-day period, a person who acts under
3-30 Subsection (j)(3) of this Section may:
3-31 (1) stay enforcement of the penalty by:
3-32 (A) paying the amount of the penalty to the
3-33 court for placement in an escrow account; or
3-34 (B) giving to the court a supersedeas bond
3-35 approved by the court in the amount of the penalty, effective until
3-36 all judicial review of the Consumer Credit Commissioner's order is
3-37 final; or
3-38 (2) request the court to stay enforcement of the
3-39 penalty by:
3-40 (A) filing with the court a sworn affidavit of
3-41 the person stating that the person is financially unable to pay the
3-42 amount of the penalty and is financially unable to give the
3-43 supersedeas bond; and
3-44 (B) giving a copy of the affidavit to the
3-45 commissioner by certified mail.
3-46 (l) If the Consumer Credit Commissioner receives a copy of
3-47 an affidavit under Subsection (k)(2) of this Section the
3-48 commissioner may file with the court within five days after the
3-49 date the copy is received a contest to the affidavit. The court
3-50 shall hold a hearing on the facts alleged in the affidavit as soon
3-51 as practicable and shall stay the enforcement of the penalty on
3-52 finding that the alleged facts are true. The person who files an
3-53 affidavit has the burden of proving that the person is financially
3-54 unable to pay the amount of the penalty and to give a supersedeas
3-55 bond.
3-56 (m) If the person does not pay the amount of the penalty and
3-57 the enforcement of the penalty is not stayed, the Consumer Credit
3-58 Commissioner may refer the matter to the attorney general for
3-59 collection of the amount of the penalty.
3-60 (n) Judicial review of the order of the Consumer Credit
3-61 Commissioner:
3-62 (1) is instituted by filing a petition as provided by
3-63 Section 19, Administrative Procedure and Texas Register Act
3-64 (Article 6252-13a, Vernon's Texas Civil Statutes), and its
3-65 subsequent amendments; and
3-66 (2) is under the substantial evidence rule.
3-67 (o) If the court sustains the occurrence of the violation,
3-68 the court may uphold or reduce the amount of the penalty and order
3-69 the person to pay the full or reduced amount of the penalty. If
3-70 the court does not sustain the occurrence of the violation, the
4-1 court shall order that no penalty is owed.
4-2 (p) When the judgment of the court becomes final, the court
4-3 shall proceed under this Subsection. If the person paid the amount
4-4 of the penalty and if that amount is reduced or is not upheld by
4-5 the court, the court shall order that the appropriate amount plus
4-6 accrued interest be remitted to the person. The rate of the
4-7 interest is the rate charged on loans to depository institutions by
4-8 the New York Federal Reserve Bank, and the interest shall be paid
4-9 for the period beginning on the date the penalty was paid and
4-10 ending on the date the penalty is remitted. If the person gave a
4-11 supersedeas bond and the amount of the penalty is not upheld by the
4-12 court, the court shall order the release of the bond. If the
4-13 person gave a supersedeas bond and the amount of the penalty is
4-14 reduced, the court shall order the release of the bond after the
4-15 person pays the amount.
4-16 (q) In addition to the administrative penalty or restitution
4-17 amount, the court may authorize the Consumer Credit Commissioner to
4-18 recover from a person who pays an administrative penalty or
4-19 restitution amount, or both, under this Article reasonable expenses
4-20 incurred in obtaining the ordered amount, including investigation
4-21 costs, witness fees, and deposition expenses.
4-22 (r) A penalty collected under this Article shall be remitted
4-23 to the comptroller for deposit in the general revenue fund.
4-24 (s) All proceedings under this Section are subject to the
4-25 Administrative Procedure and Texas Register Act (Article 6252-13a,
4-26 Vernon's Texas Civil Statutes) and its subsequent amendments.
4-27 (t) An administrative penalty or restitution order
4-28 authorized by this Article is in addition to any other enforcement
4-29 authority provided by law.
4-30 SECTION 4. Article 2.06, Title 79, Revised Statutes (Article
4-31 5069-2.06, Vernon's Texas Civil Statutes), is amended to read as
4-32 follows:
4-33 Art. 2.06. Advertising. (1) No person shall advertise or
4-34 cause to be advertised, in any manner whatsoever, any false,
4-35 misleading or deceptive statement or representation with regard to
4-36 the rates, terms or conditions of any loan or credit transaction
4-37 regulated by the statutes listed by Section (1), Article 2.02A of
4-38 this Title <Subtitle Two>. If rates or charges are stated in
4-39 advertising they shall be stated fully and clearly.
4-40 (2) A person may not advertise or otherwise perform any act
4-41 or offer any service that would cause another to believe that the
4-42 person is offering to make, arrange, or negotiate a loan or credit
4-43 sale that is subject to the statutes listed by Section (1), Article
4-44 2.02A of this Title unless the person is authorized to perform that
4-45 act or offer that service as:
4-46 (a) a credit services organization under Chapter 18,
4-47 Business & Commerce Code;
4-48 (b) a pawnbroker under the Texas Pawnshop Act (Article
4-49 5069-51.01 et seq., Vernon's Texas Civil Statutes); or
4-50 (c) an authorized lender or a registered creditor
4-51 under this Subtitle.
4-52 (3) A person commits an offense if the person violates
4-53 Section (2) of this Article. An offense under this Section is a
4-54 Class A misdemeanor.
4-55 (4) A person who violates Section (2) of this Article also
4-56 is subject to the penalties provided by Chapter 8 of this Title and
4-57 to any civil penalties that the Consumer Credit Commissioner may
4-58 assess.
4-59 (5) In each advertisement that purports to offer credit
4-60 subject to the statutes listed by Section (1), Article 2.02A of
4-61 this Title, the advertiser shall disclose the legal or properly
4-62 registered name of the advertiser and the physical address of the
4-63 advertiser's place of business unless the advertisement is located
4-64 on the premises of the advertiser's place of business. This
4-65 Section does not apply to a federally insured depository
4-66 institution or to a person engaged in interstate commerce who
4-67 advertises under a generally recognized trade name, abbreviated
4-68 form of a trade name, or logo.
4-69 SECTION 5. Article 2.07, Title 79, Revised Statutes (Article
4-70 5069-2.07, Vernon's Texas Civil Statutes), is amended to read as
5-1 follows:
5-2 Art. 2.07. Credit and loans to individuals. No authorized
5-3 lender <licensee> under Chapter 3 of this Title or other person
5-4 involved in transactions subject to this Title may deny an
5-5 individual who has the capacity to contract credit or loans in his
5-6 or her name, or restrict or limit the credit or loan granted
5-7 <solely> on the basis of sex, race, color, religion, <or> national
5-8 origin, marital status, or age or because all or part of the
5-9 individual's income derives from a public assistance program or the
5-10 individual has in good faith exercised any right under the Consumer
5-11 Credit Protection Act (15 U.S.C. Section 1601 et seq.; 18 U.S.C.
5-12 Section 891 et seq.). In interpreting this section, the courts and
5-13 administrative agencies shall be guided by the federal Equal Credit
5-14 Opportunity Act and regulations thereunder and interpretations
5-15 thereof by the Federal Reserve Board to the extent that that Act
5-16 and those regulations and interpretations pertain to conduct
5-17 prohibited by this section.
5-18 SECTION 6. Subsections (a), (b), and (e), Article 6.01,
5-19 Title 79, Revised Statutes (Article 5069-6.01, Vernon's Texas Civil
5-20 Statutes), are amended to read as follows:
5-21 (a) "Goods" means all tangible personal property when
5-22 purchased primarily for personal, family or household use and not
5-23 for commercial or business use, including such property which is
5-24 furnished or used at the time of sale or subsequently, in the
5-25 modernization, rehabilitation, repair, alteration, improvement or
5-26 construction of real property so as to become a part thereof
5-27 whether or not severable therefrom. The term also includes, but is
5-28 not limited to, a structure, except a mobile home, to be used as a
5-29 residence, any boat, boat-trailer, motor scooter, motor-assisted
5-30 bicycle, motorcycle, trailer designed or intended to be pulled by,
5-31 or to transport, a motor scooter, motor-assisted bicycle,
5-32 motorcycle or all-terrain vehicle, recreational vehicles commonly
5-33 known as travel trailers designed for temporary living
5-34 accommodations, camper-type trailer, horse trailer, any vehicle
5-35 propelled or drawn exclusively by muscular power, and merchandise
5-36 certificates or coupons, issued by a retail seller, not redeemable
5-37 in cash and to be used in their face amount in lieu of cash, in
5-38 exchange for goods or services sold by such seller.
5-39 The term does not include (i) money, things in action or
5-40 intangible personal property, other than merchandise certificates
5-41 or coupons as herein described; or (ii) any automobile, mobile
5-42 home, truck, trailer, other than a trailer expressly included in
5-43 the term, semi-trailer, truck tractor or bus designed and used
5-44 primarily to transport persons or property on a public highway; or
5-45 (iii) any vehicle designed to run only on rails or tracks or in the
5-46 air, as defined in Chapter 7 of this Subtitle; or (iv) any goods
5-47 which are authorized to be and are included in a contract subject
5-48 to Chapter 7 of this Subtitle.
5-49 (b) "Services" means work, labor, or services of any kind
5-50 when purchased primarily for personal, family or household use and
5-51 not for commercial or business use, and includes a maintenance or
5-52 service contract or agreement or warranty, but does not include
5-53 (i) the services, other than medical and dental services or
5-54 prearranged or prepaid funeral benefits regulated by Chapter 512,
5-55 Acts of the 54th Legislature, 1955 (Article 548b, Vernon's Texas
5-56 Civil Statutes), of a professional person licensed by the State
5-57 except when those services are rendered in connection with the
5-58 purchase of goods; or (ii) services for which the cost is by law
5-59 fixed or approved by, or filed with or subject to approval or
5-60 disapproval by the United States or the State of Texas, or any
5-61 agency, instrumentality or subdivision thereof; or
5-62 (iii) educational services provided by an accredited college or
5-63 university or a primary or secondary school providing education
5-64 required by the State of Texas or services of a kindergarten or
5-65 nursery school; (iv) any services which are authorized to be and
5-66 are included in a contract subject to Chapter 7 of this Subtitle;
5-67 or (v) any <medical or> legal services.
5-68 (e) "Retail installment transaction" means any transaction
5-69 in which a retail buyer purchases goods or services from a retail
5-70 seller pursuant to a retail installment contract or retail charge
6-1 agreement, as defined in this Article, which provides for a time
6-2 price differential, as defined in this Article, and under which the
6-3 buyer agrees to pay the unpaid balance in one or more installments,
6-4 together with a time price differential. The term includes
6-5 transactions made pursuant to a retail credit card arrangement as
6-6 defined in this Article. This term also includes the sale of
6-7 prearranged or prepaid funeral benefits regulated by Chapter 512,
6-8 Acts of the 54th Legislature, 1955 (Article 548b, Vernon's Texas
6-9 Civil Statutes).
6-10 SECTION 7. Sections (2) and (3), Article 6.02, Title 79,
6-11 Revised Statutes (Article 5069-6.02, Vernon's Texas Civil
6-12 Statutes), are amended to read as follows:
6-13 (2) The printed or typed portion of the contract, other than
6-14 instructions for completion, shall be in a size equal to at least
6-15 eight-point type. The contract shall be designated "Retail
6-16 Installment Contract" and shall contain substantially the following
6-17 notice printed or typed in a size equal to at least ten-point
6-18 <bold> type that is boldface, capitalized, underlined, or otherwise
6-19 set out from surrounding written material so as to be conspicuous:
6-20 "NOTICE TO THE BUYER. DO NOT SIGN THIS CONTRACT BEFORE
6-21 YOU READ IT OR IF IT CONTAINS BLANK SPACES. YOU ARE
6-22 ENTITLED TO A COPY OF THE CONTRACT YOU SIGN. UNDER THE
6-23 LAW YOU HAVE THE RIGHT TO PAY OFF IN ADVANCE THE FULL
6-24 AMOUNT DUE AND UNDER CERTAIN CONDITIONS MAY OBTAIN A
6-25 PARTIAL REFUND OF THE FINANCE CHARGE. KEEP THIS
6-26 CONTRACT TO PROTECT YOUR LEGAL RIGHTS."
6-27 (3) The retail seller shall deliver to the retail buyer, or
6-28 mail to him at his address shown on the retail installment
6-29 contract, a copy of the contract as accepted by the seller. Until
6-30 the seller does so, a buyer, who has not received delivery of the
6-31 goods or been furnished or rendered the services, shall have the
6-32 right to rescind the contract and to receive a refund of all
6-33 payments made and return of all goods traded in to the seller on
6-34 account of or in contemplation of the contract, or if such goods
6-35 cannot be returned, the trade-in allowance thereof. Any
6-36 acknowledgement by the buyer of delivery of a copy of the contract
6-37 shall be in a size equal to at least ten-point <bold> type that is
6-38 boldface, capitalized, underlined, or otherwise set out from
6-39 surrounding written material so as to be conspicuous and, if
6-40 contained in the contract, shall appear directly above the buyer's
6-41 signature.
6-42 SECTION 8. Section (1), Article 6.03, Title 79, Revised
6-43 Statutes (Article 5069-6.03, Vernon's Texas Civil Statutes), is
6-44 amended to read as follows:
6-45 (1) A retail charge agreement may be established by a seller
6-46 or credit card issuer upon the request of a buyer or prospective
6-47 buyer. The retail charge agreement shall be in writing and signed
6-48 by the buyer. A copy of such agreement executed on or after the
6-49 effective date of this Chapter shall be delivered or mailed to the
6-50 buyer prior to the date on which the first payment is due
6-51 thereunder. Any acknowledgment by the buyer of delivery of a copy
6-52 of the agreement contained in the body thereof shall be in a size
6-53 equal to at least ten-point <bold> type that is boldface,
6-54 capitalized, underlined, or otherwise set out from surrounding
6-55 written material so as to be conspicuous and shall appear directly
6-56 above the buyer's signature. No agreement executed on or after the
6-57 effective date of this Chapter shall be signed by the buyer when it
6-58 contains blank spaces to be filled in after it has been signed.
6-59 The buyer's acknowledgment, conforming to the requirements of this
6-60 section, of delivery of a copy of an agreement, shall be
6-61 presumptive proof, in any action or proceeding, of such delivery
6-62 and that the agreement, when signed, did not contain any blank
6-63 spaces as herein provided. If no copy of the agreement is retained
6-64 by the seller, a notation in his permanent record showing that such
6-65 agreement was mailed and the date of mailing shall serve as
6-66 presumptive proof of such mailing. Any such agreement shall
6-67 contain substantially the following notice printed or typed in a
6-68 size equal to at least ten-point <bold> type that is boldface,
6-69 capitalized, underlined, or otherwise set out from surrounding
6-70 written material so as to be conspicuous:
7-1 "NOTICE TO THE BUYER--DO NOT SIGN THIS AGREEMENT BEFORE
7-2 YOU READ IT OR IF IT CONTAINS BLANK SPACES. YOU ARE
7-3 ENTITLED TO A COPY OF THE AGREEMENT YOU SIGN. KEEP
7-4 THIS AGREEMENT TO PROTECT YOUR LEGAL RIGHTS."
7-5 SECTION 9. Chapter 6, Title 79, Revised Statutes (Article
7-6 5069-6.01 et seq., Vernon's Texas Civil Statutes), is amended by
7-7 adding Article 6.12 to read as follows:
7-8 Art. 6.12. RATES FOR MEDICAL AND DENTAL SERVICES OR
7-9 PREARRANGED OR PREPAID FUNERAL BENEFITS. Medical and dental
7-10 services or prearranged or prepaid funeral services regulated by
7-11 Chapter 512, Acts of the 54th Legislature, 1955 (Article 548b,
7-12 Vernon's Texas Civil Statutes), may be financed only at rates
7-13 authorized by Article 1.04 of this Title.
7-14 SECTION 10. Section (1), Article 6.06, Title 79, Revised
7-15 Statutes (Article 5069-6.06, Vernon's Texas Civil Statutes), is
7-16 amended to read as follows:
7-17 (1) A seller who has entered into a retail installment
7-18 transaction to perform services or install goods for the
7-19 modernization, rehabilitation, repair, alteration, improvement or
7-20 construction of improvements on real property shall obtain a
7-21 certificate of completion or certificate of satisfaction
7-22 (hereinafter designated "certificate") signed by the buyer, when
7-23 all such goods and/or services purchased under a retail installment
7-24 contract have been performed or installed as required by such
7-25 contract; and may obtain such a certificate whether or not any
7-26 guarantee or warranty of the goods or services remains in force.
7-27 Such certificate shall be a separate writing and shall have the
7-28 following notation at the top thereof in at least ten-point <bold>
7-29 type that is boldface, capitalized, underlined, or otherwise set
7-30 out from surrounding written material so as to be conspicuous:
7-31 WARNING TO BUYER DO NOT SIGN THIS CERTIFICATE UNTIL ALL
7-32 SERVICES HAVE BEEN SATISFACTORILY PERFORMED AND
7-33 MATERIALS SUPPLIED OR GOODS RECEIVED AND FOUND
7-34 SATISFACTORY.
7-35 SECTION 11. Article 6.07, Title 79, Revised Statutes
7-36 (Article 5069-6.07, Vernon's Texas Civil Statutes), is amended to
7-37 read as follows:
7-38 Art. 6.07. ASSIGNMENT AND NEGOTIATION. Notwithstanding the
7-39 provisions of any other law, a person may purchase or acquire or
7-40 agree to purchase or acquire any retail installment contract or
7-41 retail charge agreement or any outstanding balance under either
7-42 from another person on such terms and conditions and for such price
7-43 as may be mutually agreed upon. Notice to the buyer of the
7-44 assignment or negotiation and any requirement that the seller be
7-45 deprived of dominion over payments upon a retail installment
7-46 contract or retail charge agreement, or over the goods if returned
7-47 to or repossessed by the seller, is not necessary to the validity
7-48 of a written assignment or negotiation of the retail installment
7-49 contract or retail charge agreement or any outstanding balance
7-50 under either, as against creditors, subsequent purchasers, pledges,
7-51 mortgagees and lien claimants of the seller. Unless the buyer has
7-52 notice of the assignment or negotiation of his retail installment
7-53 contract, retail charge agreement or any outstanding balance under
7-54 either, payment therefor made by the buyer to the holder last known
7-55 to him shall be binding upon all subsequent holders. No right of
7-56 action or defense of a buyer arising out of a retail installment
7-57 transaction which would be cut off by negotiation, shall be cut off
7-58 by negotiation of the retail installment contract or retail charge
7-59 agreement to any third party unless such holder acquires the
7-60 contract relying in good faith upon a certificate of completion or
7-61 certificate of satisfaction, if required by the provisions of
7-62 Article 6.06; and such holder gives notice of the negotiation to
7-63 the buyer as provided in this Article, and within thirty days of
7-64 the mailing of such notice receives no written notice from the
7-65 buyer of any facts giving rise to any claim or defense of the
7-66 buyer. Such notice of negotiation shall be in writing addressed to
7-67 the buyer at the address shown on the contract and shall: identify
7-68 the contract; state the names and addresses of the seller and
7-69 buyer; describe the goods or services; state the time balance and a
7-70 description of the payment schedule. The notice of negotiation
8-1 shall contain the following warning to the buyer in at least
8-2 ten-point <bold face> type that is boldface, capitalized,
8-3 underlined, or otherwise set out from surrounding written material
8-4 so as to be conspicuous:
8-5 ARE THE TERMS OF THE CONTRACT DESCRIBED ABOVE CORRECT
8-6 AND ARE YOU SATISFIED WITH THE GOODS OR SERVICES
8-7 FURNISHED? IF NOT, YOU SHOULD NOTIFY US GIVING DETAILS
8-8 WITHIN 30 DAYS FROM THE DATE THE ABOVE NOTICE WAS
8-9 MAILED.
8-10 SECTION 12. Section (b), Article 6.10, Title 79, Revised
8-11 Statutes (Article 5069-6.10, Vernon's Texas Civil Statutes), is
8-12 amended to read as follows:
8-13 (b) Preliminary worksheets that are shown to the buyer in
8-14 which a sale price is computed, an order from the buyer, and the
8-15 retail installment contract must include, in reasonable proximity
8-16 to the place in the worksheet, order, or contract where the
8-17 documentary fee is disclosed, the amount of the fee and the
8-18 following notice in <bold-faced> type that is boldface,
8-19 capitalized, underlined, or otherwise set out from surrounding
8-20 written material so as to be conspicuous:
8-21 "A DOCUMENTARY FEE IS NOT AN OFFICIAL FEE. A
8-22 DOCUMENTARY FEE <AND> IS NOT REQUIRED BY LAW, BUT MAY
8-23 BE CHARGED TO BUYERS <A BUYER> FOR <THE> HANDLING <OF>
8-24 DOCUMENTS AND <THE> PERFORMING <OF> SERVICES RELATING
8-25 <RELATED> TO THE CLOSING OF A SALE. BUYERS <A BUYER>
8-26 MAY AVOID PAYMENT OF THE FEE TO THE SELLER BY HANDLING
8-27 THE <THESE> DOCUMENTS AND PERFORMING THE <THESE>
8-28 SERVICES RELATING TO THE CLOSING OF THE SALE. A
8-29 DOCUMENTARY FEE MAY NOT EXCEED $25. THIS NOTICE IS
8-30 REQUIRED BY LAW."
8-31 SECTION 13. Subsection (d), Article 7.01, Title 79, Revised
8-32 Statutes (Article 5069-7.01, Vernon's Texas Civil Statutes), is
8-33 amended to read as follows:
8-34 (d) "Retail Installment Transaction" or "Transaction" means
8-35 any transaction as a result of which a retail buyer acquires a
8-36 motor vehicle from a retail seller <under a retail installment
8-37 contract for a sum consisting of the cash sale price and other
8-38 charges as limited by this Chapter> and agrees with a retail seller
8-39 to pay part or all of the cash price <such sum> in one or more
8-40 deferred installments. All such transactions shall be under a
8-41 retail installment contract and be subject to the provisions of
8-42 this Chapter. The term shall include every transaction wherein the
8-43 promise or agreement to pay the deferred balance of the cash price
8-44 <such sum> is made by the retail buyer to the retail seller
8-45 notwithstanding the existence or occurrence of any one or more of
8-46 the following events: (i) that the retail seller has arranged or
8-47 arranges to sell, transfer or assign the retail buyer's obligation;
8-48 (ii) that the amount of any <the> charges is determined by
8-49 reference to charts or information furnished by a financing
8-50 institution; (iii) that the forms of instruments used to evidence
8-51 the retail installment transaction are furnished by a financing
8-52 institution; and (iv) that the credit standing of the retail buyer
8-53 is or has been evaluated by a financing institution.
8-54 SECTION 14. Sections (2), (3), and (4), Article 7.02, Title
8-55 79, Revised Statutes (Article 5069-7.02, Vernon's Texas Civil
8-56 Statutes), are amended to read as follows:
8-57 (2) The printed portion of the retail installment contract,
8-58 other than instructions for completion, shall be in a size equal to
8-59 at least eight-point type. Such contract shall contain
8-60 substantially the following notice in a size equal to at least
8-61 ten-point <bold> type that is boldface, capitalized, underlined, or
8-62 otherwise set out from surrounding written material so as to be
8-63 conspicuous:
8-64 "NOTICE TO THE BUYER--DO NOT SIGN THIS CONTRACT BEFORE
8-65 YOU READ IT OR IF IT CONTAINS ANY BLANK SPACES. YOU
8-66 ARE ENTITLED TO A COPY OF THE CONTRACT YOU SIGN. UNDER
8-67 THE LAW YOU HAVE THE RIGHT TO PAY OFF IN ADVANCE THE
8-68 FULL AMOUNT DUE AND UNDER CERTAIN CONDITIONS MAY OBTAIN
8-69 A PARTIAL REFUND OF THE FINANCE CHARGE. KEEP THIS
8-70 CONTRACT TO PROTECT YOUR LEGAL RIGHTS."
9-1 (3) A retail installment contract or separate written
9-2 statement shall also contain, in a size equal to at least ten-point
9-3 <bold> type that is boldface, capitalized, underlined, or otherwise
9-4 set out from surrounding written material so as to be conspicuous,
9-5 a specific statement that liability insurance coverage for bodily
9-6 injury and property damage caused to others is not included, if
9-7 that is the case.
9-8 (4) The seller shall deliver to the buyer, or mail to him at
9-9 his address shown on the retail installment contract, a copy of
9-10 such contract as accepted by the seller. Until the seller does so,
9-11 a buyer who has not received delivery of the motor vehicle shall
9-12 have the right to rescind his contract and to receive a refund of
9-13 all payments made and a return of all goods traded in to the seller
9-14 on account of or in contemplation of such contract, or if the goods
9-15 traded in cannot be returned, the value thereof. Any
9-16 acknowledgement by the buyer of delivery of a copy of the retail
9-17 installment contract shall be in a size equal to at least ten-point
9-18 <bold> type that is boldface, capitalized, underlined, or otherwise
9-19 set out from surrounding written material so as to be conspicuous
9-20 and shall appear directly above the buyer's signature.
9-21 SECTION 15. Article 8.03, Title 79, Revised Statutes
9-22 (Article 5069-8.03, Vernon's Texas Civil Statutes), is amended to
9-23 read as follows:
9-24 Art. 8.03. ENGAGING IN LENDING BUSINESS WITHOUT LICENSE. In
9-25 addition to the foregoing penalties, if applicable, any person
9-26 engaging in any business under the scope of Chapters 3, 4, <or> 5,
9-27 or 15 of this Subtitle without first securing a license provided,
9-28 or without the authorization prescribed, in such Chapter shall be
9-29 guilty of a misdemeanor and upon conviction thereof shall be
9-30 punishable by a fine of not more than One Thousand Dollars, and
9-31 each such loan made without the authority granted by such license
9-32 shall constitute a separate offense punishable hereunder; and in
9-33 addition such person shall forfeit all principal and charges
9-34 contracted for or collected on each such loan, and shall pay
9-35 reasonable attorneys' fees incurred by the obligor.
9-36 SECTION 16. Subsection (a), Article 8.06, Title 79, Revised
9-37 Statutes (Article 5069-8.06, Vernon's Texas Civil Statutes), is
9-38 amended to read as follows:
9-39 (a) Any person who violates the terms of Article 2.07 of
9-40 this Title is liable to the aggrieved individual for the actual
9-41 damages caused by the denial, punitive damages not to exceed
9-42 $10,000 in an action brought by the aggrieved individual <or for
9-43 $50.00, whichever is greater>, and court costs. The liability of
9-44 any person under this Article for a violation of Article 2.07 of
9-45 this Title is in lieu of and not in addition to that person's
9-46 liability under Title VII of the Consumer Credit Protection Act (15
9-47 U.S.C. Section 1601 et seq.). If the same act or omission
9-48 constitutes a violation of Article 2.07 of this Title and of
9-49 applicable federal law, the person aggrieved by that conduct may
9-50 bring a legal action to recover monetary damages either under this
9-51 Article or under that federal law, but not both.
9-52 SECTION 17. This Act applies only to acts done and
9-53 transactions entered into on or after the effective date of this
9-54 Act. Transactions entered into before the effective date of this
9-55 Act are governed by the law in effect immediately before this Act
9-56 takes effect and that law continues in effect for that purpose. It
9-57 is the intent of the Legislature that the enactment of Article
9-58 5069-2.09 is prospective but shall not be construed to mean that
9-59 transactions described therein are not loans under current law.
9-60 SECTION 18. This Act takes effect September 1, 1993.
9-61 SECTION 19. The importance of this legislation and the
9-62 crowded condition of the calendars in both houses create an
9-63 emergency and an imperative public necessity that the
9-64 constitutional rule requiring bills to be read on three several
9-65 days in each house be suspended, and this rule is hereby suspended.
9-66 * * * * *
9-67 Austin,
9-68 Texas
9-69 April 26, 1993
9-70 Hon. Bob Bullock
10-1 President of the Senate
10-2 Sir:
10-3 We, your Committee on State Affairs to which was referred S.B. No.
10-4 1133, have had the same under consideration, and I am instructed to
10-5 report it back to the Senate with the recommendation that it do not
10-6 pass, but that the Committee Substitute adopted in lieu thereof do
10-7 pass and be printed.
10-8 Harris of
10-9 Dallas, Chairman
10-10 * * * * *
10-11 WITNESSES
10-12 FOR AGAINST ON
10-13 ___________________________________________________________________
10-14 FOR AGAINST ON
10-15 ___________________________________________________________________
10-16 Name: Al Endsley x
10-17 Representing: Office on Consumer Credit Com
10-18 City: Austin
10-19 -------------------------------------------------------------------
10-20 Name: Rich Tomlinson x
10-21 Representing: Office of the Atty General
10-22 City: Houston
10-23 -------------------------------------------------------------------