By: Armbrister S.B. No. 1181
A BILL TO BE ENTITLED
AN ACT
1-1 relating to credit services organizations.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Section 18.03, Business & Commerce Code, is
1-4 amended to read as follows:
1-5 Sec. 18.03. Prohibited Conduct. A credit services
1-6 organization, a salesperson, agent, or representative of a credit
1-7 services organization, or an independent contractor who sells or
1-8 attempts to sell the services of a credit services organization may
1-9 not:
1-10 (1) charge a buyer or receive from a buyer money or
1-11 other valuable consideration before completing performance of all
1-12 services the credit services organization has agreed to perform for
1-13 the buyer, unless the credit services organization has obtained in
1-14 accordance with Section 18.04 of this code a surety bond for each
1-15 of its locations, in the amount required by Section 18.04(e) issued
1-16 by a surety company authorized to do business in this state or
1-17 established and maintained a surety account for each of its
1-18 locations at a federally insured bank or savings and loan
1-19 association located in this state in which the amount required by
1-20 Section 18.04(e) is held in trust as required by Section 18.04(c);
1-21 (2) charge a buyer or receive from a buyer money or
1-22 other valuable consideration solely for referral of the buyer to a
1-23 retail seller who will or may extend credit to the buyer if the
1-24 credit that is or will be extended to the buyer is substantially
2-1 the same as that available to the general public;
2-2 (3) make or use a false or misleading representation
2-3 in the offer or sale of the services of a credit services
2-4 organization, including:
2-5 (A) guaranteeing to "erase bad credit" or words
2-6 to that effect unless the representation clearly discloses that
2-7 this can be done only if the credit history is inaccurate or
2-8 obsolete; and
2-9 (B) guaranteeing an extension of credit
2-10 regardless of the person's previous credit problem or credit
2-11 history unless the representation clearly discloses the eligibility
2-12 requirements for obtaining an extension of credit;
2-13 (4) engage, directly or indirectly, in a fraudulent or
2-14 deceptive act, practice, or course of business in connection with
2-15 the offer or sale of the services of a credit services
2-16 organization;
2-17 (5) make, or advise a buyer to make, a statement with
2-18 respect to a buyer's credit worthiness, credit standing, or credit
2-19 capacity that is false or misleading or that should be known by the
2-20 exercise of reasonable care to be false or misleading, to a
2-21 consumer reporting agency or to a person who has extended credit to
2-22 a buyer or to whom a buyer is applying for an extension of credit;
2-23 or
2-24 (6) advertise or cause to be advertised, in any manner
2-25 whatsoever, the services of a credit services organization without
2-26 filing a registration statement with the secretary of state, unless
2-27 otherwise provided by this chapter.
3-1 SECTION 2. Subsections (e) and (f), Section 18.05, Business
3-2 & Commerce Code, are amended to read as follows:
3-3 (e) A certificate of registration issued under this chapter
3-4 is valid for one year from the date of issuance. A registered
3-5 credit services organization may renew the registration by filing a
3-6 renewal application in the form prescribed by the secretary of
3-7 state, accompanied by the renewal fee.
3-8 (f) The secretary of state may charge each credit services
3-9 organization that files a registration statement or a renewal
3-10 statement with the secretary of state a reasonable fee not to
3-11 exceed $100 to cover the cost of filing. The secretary of state
3-12 may not require a credit services organization to provide
3-13 information other than that provided in the registration statement.
3-14 (g) <(f)> The bond or surety account shall be maintained
3-15 until two years after the date that the credit services
3-16 organization ceases operations.
3-17 SECTION 3. This Act takes effect September 1, 1995.
3-18 SECTION 4. The importance of this legislation and the
3-19 crowded condition of the calendars in both houses create an
3-20 emergency and an imperative public necessity that the
3-21 constitutional rule requiring bills to be read on three several
3-22 days in each house be suspended, and this rule is hereby suspended.
3-23 COMMITTEE AMENDMENT NO. 1
3-24 Amend SECTION 1 as follows:
3-25 SECTION 1. Section 18.02 Business & Commerce Code is amended
3-26 by amending Subsection (b)(1) to read as follows:
3-27 Sec. 18.02. Credit Services Organization
4-1 (b) The following are exempt from this Chapter:
4-2 (1) A person authorized to make loans or extensions of
4-3 credit under the laws of this state or the United States who is
4-4 subject to regulation and supervision by this state or the United
4-5 States, or a lender approved by the United States Secretary of
4-6 Housing and Urban Development for participation in a mortgage
4-7 insurance program under the National Housing Act (12 U.S.C. Section
4-8 1701, et seq.) or a person or entity qualified under an existing
4-9 contract to sell or broker a mortgage loan to a person or entity
4-10 otherwise eligible to make a loan under this Article;
4-11 Renumber all subsequent Sections accordingly.
4-12 Elkins