1-1     By Woolley                                            H.B. No. 2105

 1-2     75R7342 LJR-F                           

 1-3                                   AN ACT

 1-4     relating to the regulation of credit service organizations.


 1-6           SECTION 1.  Section 18.03, Business & Commerce Code, is

 1-7     amended to read as follows:

 1-8           Sec. 18.03.  PROHIBITED CONDUCT.  A credit services

 1-9     organization, a salesperson, agent, or representative of a credit

1-10     services organization, or an independent contractor who sells or

1-11     attempts to sell the services of a credit services organization may

1-12     not:

1-13                 (1)  charge a buyer or receive from a buyer money or

1-14     other valuable consideration before completing performance of all

1-15     services the credit services organization has agreed to perform for

1-16     the buyer, unless the credit services organization has obtained in

1-17     accordance with Section 18.04 of this code a surety bond for each

1-18     of its locations in the amount required by Section 18.04(e) issued

1-19     by a surety company authorized to do business in this state or

1-20     established and maintained a surety account for each of its

1-21     locations at a federally insured bank or savings and loan

1-22     association located in  this state in which the amount required by

1-23     Section 18.04(e) is held in trust as required by Section 18.04(c);

1-24                 (2)  charge a buyer or receive from a buyer money or

1-25     other valuable consideration solely for referral of the buyer to a

1-26     retail seller who will or may extend credit to the buyer if the

1-27     credit that is or will be extended to the buyer is substantially

1-28     the same as that available to the general public;

1-29                 (3)  make or use a false or misleading representation

1-30     in the offer or sale of the services of a credit services

1-31     organization, including:

1-32                       (A)  guaranteeing to "erase bad credit" or words

1-33     to that effect unless the representation clearly discloses that

 2-1     this can be done only if the credit history is inaccurate or

 2-2     obsolete; and

 2-3                       (B)  guaranteeing an extension of credit

 2-4     regardless of the person's previous credit problem or credit

 2-5     history unless the representation clearly discloses the eligibility

 2-6     requirements for obtaining an extension of credit;

 2-7                 (4)  engage, directly or indirectly, in a fraudulent or

 2-8     deceptive act, practice, or course of business in connection with

 2-9     the offer or sale of the services of a credit services

2-10     organization;

2-11                 (5)  make, or advise a buyer to make, a statement with

2-12     respect to a buyer's credit worthiness, credit standing, or credit

2-13     capacity that is false or misleading or that should be known by the

2-14     exercise of reasonable care to be false or misleading, to a

2-15     consumer reporting agency or to a person who has extended credit to

2-16     a buyer or to whom a buyer is applying for an extension of credit;

2-17     or

2-18                 (6)  advertise or cause to be advertised, in any manner

2-19     whatsoever, the services of a credit services organization without

2-20     filing a registration statement with the secretary of state, unless

2-21     otherwise provided by this chapter.

2-22           SECTION 2.  Section 18.05, Business & Commerce Code, is

2-23     amended by amending and redesignating Subsections (e) and (f) as

2-24     Subsections (f) and (g) and adding a new Subsection (e) to read as

2-25     follows:

2-26           (e)  A certificate of registration issued under this chapter

2-27     is valid for one year after its date of issuance.  A registered

2-28     credit services organization may renew its registration by filing

2-29     an application for renewal in the form prescribed by the secretary

2-30     of state accompanied by the renewal fee.

2-31           (f)  The secretary of state may charge each credit services

2-32     organization that files a registration statement or a renewal

2-33     application with the secretary of state a reasonable fee not to

2-34     exceed $100 to cover the cost of filing.  The secretary of state

 3-1     may not require a credit services organization to provide

 3-2     information other than that provided in the registration statement.

 3-3           (g) [(f)]  The bond or surety account shall be maintained

 3-4     until two years after the date that the credit services

 3-5     organization ceases operations.

 3-6           SECTION 3.  (a)  Notwithstanding Section 18.05, Business &

 3-7     Commerce Code, as amended by this Act, a registration statement

 3-8     under Chapter 18, Business & Commerce Code, that is in effect on

 3-9     the effective date of this Act is valid until September 1, 1998.

3-10             (b)  The secretary of state may provide that registration

3-11     statements that are renewed on September 1, 1998, expire on

3-12     different dates during the year.  If the secretary of state changes

3-13     an expiration date, the secretary of state shall prorate the

3-14     registration fee payable on or before September 1 so that the

3-15     registrant is required to pay only that portion of the fee that is

3-16     allocable to the number of months during which the registration is

3-17     valid.  The total renewal registration fee is payable when the

3-18     registration is renewed on the new expiration date.

3-19           SECTION 4.  This Act takes effect September 1, 1997.

3-20           SECTION 5.  The importance of this legislation and the

3-21     crowded condition of the calendars in both houses create an

3-22     emergency and an imperative public necessity that the

3-23     constitutional rule requiring bills to be read on three several

3-24     days in each house be suspended, and this rule is hereby suspended.