BILL ANALYSIS H.B. 1992 By: Giddings 04-07-95 Committee Report (Amended) BACKGROUND The Legislature has directed the Office of Consumer Credit Commissioner to educate consumers in the prudent use of credit. While the Office of Consumer Credit Commissioner is funded by fees paid by regulated entities, appropriation authority has not been sufficient to adequately address consumer credit education. Though several grants are available from private foundations, the agency has no express authority to receive grants and, therefore, has been unable to apply for them. State law governing the prohibition of discrimination in credit is not consistent with the federal Equal Credit Opportunity Act since it omits three prohibited basis of discrimination; age, marital status and receipt of public assistance income. PURPOSE This bill authorizes the Office of Consumer Credit Commissioner to accept gifts and grants, primarily for the purpose of consumer education, creates an offense for advertising credit transactions if a person is not properly licensed or registered, and brings state law on unlawful discrimination in credit transactions in line with applicable federal law. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1 - Article 2.02A, Title 79, Revised Statutes is amended by adding Section (12) as follows: Section (12)(a) The commissioner may not accept or use money offered by anyone or any company if affiliated with any industry regulated by the Finance Commission. An exception is allowed if the money pays a judgment or negotiated settlement to the Consumer Credit Commission. If authorized by law, the commissioner may accept money from persons under jurisdiction of the commissioner. Section (12)(b) The commissioner is authorized to accept money, gifts and grants for purposes related to the duties of the commissioner or consumer credit education. Money received is deposited in the general revenue fund. Acceptance and use of the money is subject to approval of the Finance Commission. SECTION 2 - Article 2.06, Title 79, Revised Statutes (Art. 5069-2.06, V.T.C.S.) is amended as follows: Article 2.06(1) Restricts false, misleading, or deceptive advertising with regard to rates, terms or conditions of loans or credit transactions listed in Section (1), Art. 2.02A. Article 2.06(2) Prohibits advertising or acting in a way that causes another to believe that the actor is offering to make, arrange, or negotiate certain consumer credit transactions when the actor is not licensed or registered to engage in such activity. Article 2.06(3) A Class C misdemeanor offense is created for violation of Section 2 and Class A misdemeanor for future violations of the section. Article 2.06(4) Subjects violators of Section 2 to penalties provided under Chapter 8 and to any civil penalties the commissioner may assess but is not subject to both prosecution under Section 3 and the penalties. Article 2.06(5) Prohibits blind advertising. SECTION 3 - Article 2.07, Title 79, Revised Statutes (Art. 5069-2.06, V.T.C.S.) is amended as follows: Art. 2.07. Amends existing state law prohibiting certain types of discrimination in credit granting to make it identical to federal law. SECTION 4 - Article 8.06(a), Title 79, Revised Statutes, (Art. 5069-2.06, V.T.C.S.) is amended as follows: Article 8.06(a) Sets the penalty for unlawful discrimination in granting or denying credit the same as federal penalties and provides that both state and federal penalties may not be sought by an aggrieved person. SECTION 5 - Provides that this Act applies only to acts done and transactions entered into on or after the effective date.. SECTION 6 - Effective date. SECTION 7 - Emergency clause. EXPLANATION OF AMENDMENTS The amendment strikes language on page three of the original bill and makes the following changes: A first offense committed under this Article is amended to be a Class C misdemeanor instead of a Class A misdemeanor and future violations would be Class A misdemeanors; Originally, if a licensee committed a violation, they could punished for committing a criminal offense and penalized under Chapter 8 by requiring the forfeiture of principal or the repayment of treble damages, the amendment allows one form of punishment or another, not both; Any advertisement that purports to offer a credit service and is broadcast by radio or television must disclose the legal name of the advertiser and the phone number of the advertiser. SUMMARY OF COMMITTEE ACTION The committee considered HB 1992 in a public hearing on April 10, 1995. The following people testified in favor of the bill: Sam Kelley; Robert Duke; and Robert Schneider. The following person testified neutrally on the bill: Leslie Pettijohn. The committee considered an amendment to the bill which was adopted without objection. The bill was reported favorably as amended, with the recommendation that it do pass and be printed, by a record vote of: 8 Ayes, 0 Nays, 0 PNV, 1 Absent.