By Woolley                                      H.B. No. 2105

      75R7342 LJR-F                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to the regulation of credit service organizations.


 1-4           SECTION 1.  Section 18.03, Business & Commerce Code, is

 1-5     amended to read as follows:

 1-6           Sec. 18.03.  PROHIBITED CONDUCT.  A credit services

 1-7     organization, a salesperson, agent, or representative of a credit

 1-8     services organization, or an independent contractor who sells or

 1-9     attempts to sell the services of a credit services organization may

1-10     not:

1-11                 (1)  charge a buyer or receive from a buyer money or

1-12     other valuable consideration before completing performance of all

1-13     services the credit services organization has agreed to perform for

1-14     the buyer, unless the credit services organization has obtained in

1-15     accordance with Section 18.04 of this code a surety bond for each

1-16     of its locations in the amount required by Section 18.04(e) issued

1-17     by a surety company authorized to do business in this state or

1-18     established and maintained a surety account for each of its

1-19     locations at a federally insured bank or savings and loan

1-20     association located in  this state in which the amount required by

1-21     Section 18.04(e) is held in trust as required by Section 18.04(c);

1-22                 (2)  charge a buyer or receive from a buyer money or

1-23     other valuable consideration solely for referral of the buyer to a

1-24     retail seller who will or may extend credit to the buyer if the

 2-1     credit that is or will be extended to the buyer is substantially

 2-2     the same as that available to the general public;

 2-3                 (3)  make or use a false or misleading representation

 2-4     in the offer or sale of the services of a credit services

 2-5     organization, including:

 2-6                       (A)  guaranteeing to "erase bad credit" or words

 2-7     to that effect unless the representation clearly discloses that

 2-8     this can be done only if the credit history is inaccurate or

 2-9     obsolete; and

2-10                       (B)  guaranteeing an extension of credit

2-11     regardless of the person's previous credit problem or credit

2-12     history unless the representation clearly discloses the eligibility

2-13     requirements for obtaining an extension of credit;

2-14                 (4)  engage, directly or indirectly, in a fraudulent or

2-15     deceptive act, practice, or course of business in connection with

2-16     the offer or sale of the services of a credit services

2-17     organization;

2-18                 (5)  make, or advise a buyer to make, a statement with

2-19     respect to a buyer's credit worthiness, credit standing, or credit

2-20     capacity that is false or misleading or that should be known by the

2-21     exercise of reasonable care to be false or misleading, to a

2-22     consumer reporting agency or to a person who has extended credit to

2-23     a buyer or to whom a buyer is applying for an extension of credit;

2-24     or

2-25                 (6)  advertise or cause to be advertised, in any manner

2-26     whatsoever, the services of a credit services organization without

2-27     filing a registration statement with the secretary of state, unless

 3-1     otherwise provided by this chapter.

 3-2           SECTION 2.  Section 18.05, Business & Commerce Code, is

 3-3     amended by amending and redesignating Subsections (e) and (f) as

 3-4     Subsections (f) and (g) and adding a new Subsection (e) to read as

 3-5     follows:

 3-6           (e)  A certificate of registration issued under this chapter

 3-7     is valid for one year after its date of issuance.  A registered

 3-8     credit services organization may renew its registration by filing

 3-9     an application for renewal in the form prescribed by the secretary

3-10     of state accompanied by the renewal fee.

3-11           (f)  The secretary of state may charge each credit services

3-12     organization that files a registration statement or a renewal

3-13     application with the secretary of state a reasonable fee not to

3-14     exceed $100 to cover the cost of filing.  The secretary of state

3-15     may not require a credit services organization to provide

3-16     information other than that provided in the registration statement.

3-17           (g) [(f)]  The bond or surety account shall be maintained

3-18     until two years after the date that the credit services

3-19     organization ceases operations.

3-20           SECTION 3.  (a)  Notwithstanding Section 18.05, Business &

3-21     Commerce Code, as amended by this Act, a registration statement

3-22     under Chapter 18, Business & Commerce Code, that is in effect on

3-23     the effective date of this Act is valid until September 1, 1998.

3-24             (b)  The secretary of state may provide that registration

3-25     statements that are renewed on September 1, 1998, expire on

3-26     different dates during the year.  If the secretary of state changes

3-27     an expiration date, the secretary of state shall prorate the

 4-1     registration fee payable on or before September 1 so that the

 4-2     registrant is required to pay only that portion of the fee that is

 4-3     allocable to the number of months during which the registration is

 4-4     valid.  The total renewal registration fee is payable when the

 4-5     registration is renewed on the new expiration date.

 4-6           SECTION 4.  This Act takes effect September 1, 1997.

 4-7           SECTION 5.  The importance of this legislation and the

 4-8     crowded condition of the calendars in both houses create an

 4-9     emergency and an imperative public necessity that the

4-10     constitutional rule requiring bills to be read on three several

4-11     days in each house be suspended, and this rule is hereby suspended.