BILL ANALYSIS S.B. 870 By: Madla (Giddings) May 4, 1995 Committee Report (Unamended) BACKGROUND The Texas Legislature has directed the Office of Consumer Credit Commissioner to educate consumers in the use of credit. The office is funded by fees paid by regulated agencies, but the appropriation authority has not been sufficient to adequately address consumer credit education. Some of the funds are available from private foundations, but the office has been unable to apply for the grants because current law does not grant the office any express authority to receive the grants. PURPOSE As proposed, S.B. 870 authorizes the Consumer Credit Commissioner to accept money, gifts, or grants in the context of a judgment or settlement of a claim or for the purpose of consumer education. The bill prohibits a person not registered as a pawnbroker, a lender, or a creditor from advertising those services, and provides that offenses may be prosecuted under applicable state or federal law, but not both. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Article 5069-2.02A, V.T.C.S., by adding Section (12), as follows: (12)(a) Prohibits the Consumer Credit Commissioner (commissioner) from accepting or using money offered by an individual, firm, partnership, corporation, or association (entity) for investigating or prosecuting a matter or if that entity is affiliated with an industry under the regulatory jurisdiction of the Finance Commission. (b) Authorizes the commissioner to accept money, gifts, or grants on behalf of the state for consumer credit educational opportunities or to assist local governments in the exercise of police power unless prohibited under Subsection (a) or other law. Requires money received to be deposited in an account of the general revenue fund established to receive those funds and to be appropriated only for the purpose for which the money was given. Subjects acceptance and use of money under this subsection to the approval of the Finance Commission. (c) Provides that the commissioner is not prohibited from receiving and using money from persons under the jurisdiction of the commissioner if expressly authorized by law, notwithstanding Subsection (a). SECTION 2. Amends Article 5069-2.06, V.T.C.S., as follows: Art. 2.06. ADVERTISING. (1) Makes a conforming change. (2) Prohibits a person from advertising, offering, or otherwise performing any act or service that would cause another to believe that the person is offering to make, arrange, or negotiate a loan that is subject to Article 2.02A(1) of this code unless the person is authorized to offer that service as a credit service organization, pawnbroker, or authorized lender. (3) Provides that a person commits a Class A misdemeanor if the person violates Section (2) of this article. (4) Subjects a person who violates Section (2) to the penalties provided under Chapter 8 of this title and to any civil penalties the commissioner may assess. (5) Requires the advertiser to disclose the legal name and physical address of the advertiser's place of business unless the advertisement is located on the premises of the advertiser's place of business. Provides that this section does not apply to a federally insured depository or a person engaged in interstate commerce who advertises under a generally recognized trade name, abbreviated form of trade name, or logo. SECTION 3. Amends Article 5069-2.07, V.T.C.S., as follows: Art. 2.07. CREDIT AND LOANS TO INDIVIDUALS. Prohibits an authorized lender or other persons involved in transactions from denying an individual who has the capacity to contract credit loans or limit the credit or loan granted based on personal characteristics including marital status and age, or if the individual's income derives from a public assistance program or the individual has exercised any right under the Consumer Credit Protection Act. SECTION 4. Amends Section (a), Article 5069-8.06, V.T.C.S., as follows: (a) Provides that a person who violates Article 2.07 of this title is liable to the aggrieved individual for the actual damages caused by denial, punitive damages not to exceed $10,000 in an action brought by the aggrieved individual, and court costs. Provides that the liability of any person for a violation of Article 2.07 of this title is in lieu of and not in addition to that person's liability under Title VII of the Consumer Credit Protection Act. Authorizes the person aggrieved by a violation of Article 2.07 and federal law to bring action to recover monetary damages either under this Article or federal law, but not both. SECTION 5. Makes application of this Act prospective. SECTION 6. Effective date: September 1, 1995. SECTION 7. Emergency clause. SUMMARY OF COMMITTEE ACTION The committee considered SB 870 in a formal meeting on May 4, 1995. The bill was reported favorably without amendments, with the recommendation that it do pass and be printed, by a record vote of: 6 Ayes, 0 Nays, 0 PNV, 3 Absent.