By Tillery H.B. No. 3622
76R9165 DWS-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of deferred presentment transactions.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Chapter 342, Finance Code, is amended by adding
1-5 Subchapter M to read as follows:
1-6 SUBCHAPTER M. DEFERRED PRESENTMENT TRANSACTIONS
1-7 Sec. 342.701. DEFINITIONS. In this subchapter:
1-8 (1) "Check" has the meaning assigned by Section 3.104,
1-9 Business & Commerce Code.
1-10 (2) "Deferred presentment transaction" means a loan
1-11 agreement under which the borrower delivers to the lender a check
1-12 and agrees with the lender that the lender will defer presentment
1-13 or negotiation of the check for a period not to exceed 31 days.
1-14 (3) "Fee" means, except in reference to a license fee,
1-15 an amount charged by a lender under Section 342.706.
1-16 (4) "Renewal" means the termination of an existing
1-17 deferred presentment transaction solely for the payment of fees
1-18 then due the lender and substitution of a new check drawn by the
1-19 borrower pursuant to a new deferred presentment transaction.
1-20 Sec. 342.702. RULES. The commissioner may adopt reasonable
1-21 rules to enforce this subchapter.
1-22 Sec. 342.703. LICENSE REQUIRED. (a) A person may not
1-23 engage in a deferred presentment transaction as the lender unless
1-24 the person holds a license issued under this chapter.
2-1 (b) Notwithstanding any other provision of this chapter, the
2-2 annual license fee for a license issued under this chapter to a
2-3 person who engages in a deferred presentment transaction is $200.
2-4 Sec. 342.704. WRITTEN AGREEMENT REQUIRED. The agreement for
2-5 a deferred presentment transaction must be in writing and signed by
2-6 the borrower.
2-7 Sec. 342.705. DISCLOSURE. (a) Before consummation of the
2-8 agreement for a deferred presentment transaction, the lender shall
2-9 provide the borrower a written disclosure, in clear, understandable
2-10 language, itemizing all fees to be charged in relation to the
2-11 transaction and the date on which presentment or negotiation of the
2-12 check will be made.
2-13 (b) The commissioner shall adopt rules establishing a
2-14 standardized disclosure form and procedure for execution of the
2-15 form that must be used under Subsection (a). The form and
2-16 procedure for execution must be designed to conform to federal
2-17 truth-in-lending laws and to ensure that the borrower, before
2-18 entering the transaction, receives and acknowledges notice of all
2-19 fees that could be charged in relation to the transaction.
2-20 (c) The commissioner may adopt rules establishing additional
2-21 requirements to ensure complete and accurate disclosure.
2-22 Sec. 342.706. LOAN AMOUNT, NUMBER, AND FEE LIMIT. (a) The
2-23 principal amount of the loan under a deferred presentment
2-24 transaction may not exceed $500.
2-25 (b) A lender may not be a party to more than one deferred
2-26 presentment transaction with the same borrower at one time. A
2-27 deferred presentment transaction may not be renewed more than
3-1 twice.
3-2 (c) On a deferred presentment transaction the lender may
3-3 charge a fee not to exceed:
3-4 (1) $15 for the first $100 of the loan;
3-5 (2) $14 for the second $100 of the loan;
3-6 (3) $13 for the third $100 of the loan;
3-7 (4) $12 for the fourth $100 of the loan;
3-8 (5) $11 for the fifth $100 of the loan; and
3-9 (6) for each increment of less than $100, a prorated
3-10 amount based on the schedule established by Subdivisions (1)-(5),
3-11 as determined by the commissioner.
3-12 (d) Nothing in this chapter prohibits a lender from being a
3-13 party, with the same borrower at the same time, to a deferred
3-14 presentment transaction and a loan authorized by this chapter other
3-15 than a deferred presentment transaction.
3-16 Sec. 342.707. PRESENTMENT, NEGOTIATION, REDEMPTION. (a) A
3-17 lender may not make presentment or negotiation of a check received
3-18 in a deferred payment transaction unless the lender endorses the
3-19 check with the name under which the lender does business.
3-20 (b) The borrower is entitled to redeem the check before the
3-21 date of presentment or negotiation stated in the agreement on
3-22 payment to the lender of the amount of the check in cash or its
3-23 equivalent.
3-24 (c) Except as provided by Section 342.710, on dishonor of
3-25 the check because of insufficient funds, a closed account, or a
3-26 stop payment order, the lender may use all means available under
3-27 law to collect the amount of the check and is entitled to recover
4-1 any amounts charged the lender by a financial institution related
4-2 to dishonor of the check.
4-3 Sec. 342.708. LENDER CONDUCT. In relation to a deferred
4-4 presentment transaction, a lender:
4-5 (1) shall comply with all state and federal laws
4-6 regarding cash transactions and reporting of cash transactions;
4-7 (2) may not alter or delete the date on any check or
4-8 accept a check that is undated or dated with a date other than the
4-9 date the lender received the check; and
4-10 (3) may not require a borrower to provide security or
4-11 obtain a guaranty for the deferred presentment transaction.
4-12 Sec. 342.709. RECORDS. A license holder shall keep, and use
4-13 in its business, books and other records the commissioner requires
4-14 to carry out this subchapter and rules adopted under this
4-15 subchapter. The license holder shall preserve its books and other
4-16 records for at least four years.
4-17 Sec. 342.710. LIMITATION ON ACTION AGAINST BORROWER. (a) A
4-18 borrower may not be prosecuted under Section 31.03, 31.04, or
4-19 32.41, Penal Code, for nonpayment of a check drawn as part of a
4-20 deferred presentment transaction.
4-21 (b) A statement of the provisions of Subsection (a) must be
4-22 included in bold-faced print in English and Spanish in the
4-23 disclosure required under Section 342.705.
4-24 SECTION 2. This Act takes effect September 1, 1999.
4-25 SECTION 3. The importance of this legislation and the
4-26 crowded condition of the calendars in both houses create an
4-27 emergency and an imperative public necessity that the
5-1 constitutional rule requiring bills to be read on three several
5-2 days in each house be suspended, and this rule is hereby suspended.