By Giddings H.B. No. 562 76R3686 DWS-F A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to certain transactions subject to regulation as loans. 1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-4 SECTION 1. Subchapter A, Chapter 342, Finance Code, is 1-5 amended by adding Sections 342.007 and 342.008 to read as follows: 1-6 Sec. 342.007. DELAYED DEPOSIT OF CERTAIN INSTRUMENTS. (a) 1-7 In this section, "check" includes a negotiable order of withdrawal 1-8 or share draft. 1-9 (b) A transaction is a loan subject to this subtitle if the 1-10 transaction involves: 1-11 (1) a cash advance made in exchange for a check; and 1-12 (2) an agreement to delay or defer deposit or 1-13 negotiation of the check for a fixed period. 1-14 (c) A charge or other amount received by the person making a 1-15 cash advance in a transaction described by Subsection (b), other 1-16 than repayment of the amount of the cash advance, is interest 1-17 subject to this subtitle. 1-18 (d) A person may not avoid the application of this section 1-19 by any subterfuge or device, including a claim or contract 1-20 providing that a transaction described by Subsection (b) is a 1-21 retail sale or involves a service fee. This section does not apply 1-22 to a bona fide retail sale of merchandise that does not involve a 1-23 cash advance and an agreement to delay or defer deposit or 1-24 negotiation of a check. 2-1 Sec. 342.008. CERTAIN SALES OF PERSONAL PROPERTY. (a) A 2-2 sale or purported sale of personal property used primarily for 2-3 personal, family, or household use is a loan subject to this 2-4 subtitle if: 2-5 (1) the buyer agrees to lease the property back to the 2-6 seller for lease payments that in the aggregate equal or exceed the 2-7 price paid for the property by the buyer; 2-8 (2) the buyer agrees to resell the property to the 2-9 seller for an amount that equals or exceeds the price paid for the 2-10 property by the buyer; or 2-11 (3) the seller gives the buyer a check, negotiable 2-12 order of withdrawal, or share draft for an amount that equals or 2-13 exceeds the price paid for the property by the buyer and agrees 2-14 that the instrument may be deposited or negotiated if the seller 2-15 does not exercise a purchase option or make lease payments. 2-16 (b) If, in a transaction described by Subsection (a), the 2-17 total amount received by the buyer exceeds the price paid for the 2-18 property by the buyer, the excess amount is interest subject to 2-19 this subtitle. 2-20 (c) The purported taking of title to or a security interest 2-21 or other lien in property by a buyer in connection with a 2-22 transaction described by Subsection (a) is a deceptive trade 2-23 practice under Subchapter E, Chapter 17, Business & Commerce Code. 2-24 Title to the property is not transferred and the security interest 2-25 or other lien does not attach. 2-26 (d) This section does not apply to a sale or purported sale 2-27 of personal property used for business, commercial, investment, 3-1 agricultural, or similar purposes. 3-2 SECTION 2. Subchapter D, Chapter 392, Finance Code, is 3-3 amended by adding Section 392.307 to read as follows: 3-4 Sec. 392.307. THREATENING OR PURSUING ACTION TO COLLECT 3-5 CERTAIN CHECKS. (a) In this section, "check" includes a 3-6 negotiable order of withdrawal or share draft. 3-7 (b) A person may not file or threaten to file a charge, 3-8 complaint, or a criminal prosecution under Section 31.03, 31.04, or 3-9 32.41, Penal Code, based on nonpayment of a check if: 3-10 (1) the person from whom collection is sought gave the 3-11 check in exchange for a cash advance; and 3-12 (2) the person making the advance did not, before the 3-13 fourth business day after the date that the person received the 3-14 check, deposit the check in a financial institution or present the 3-15 check for payment. 3-16 SECTION 3. This Act takes effect September 1, 1999. 3-17 SECTION 4. The importance of this legislation and the 3-18 crowded condition of the calendars in both houses create an 3-19 emergency and an imperative public necessity that the 3-20 constitutional rule requiring bills to be read on three several 3-21 days in each house be suspended, and this rule is hereby suspended.