By:  Armbrister                                       S.B. No. 1181
                                 A BILL TO BE ENTITLED
                                        AN ACT
    1-1  relating to credit services organizations.
    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