1-1 By: Denny, Giddings (Senate Sponsor - Carona) H.B. No. 1166
1-2 (In the Senate - Received from the House March 21, 2001;
1-3 March 22, 2001, read first time and referred to Committee on
1-4 Business and Commerce; May 3, 2001, reported adversely, with
1-5 favorable Committee Substitute by the following vote: Yeas 7, Nays
1-6 0; May 3, 2001, sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR H.B. No. 1166 By: Carona
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to regulation of the business of selling checks, including
1-11 electronic checks.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Section 152.002, Finance Code, is amended to read
1-14 as follows:
1-15 Sec. 152.002. DEFINITIONS. In this chapter:
1-16 (1) "Business of selling checks" means the activity of
1-17 receiving money by any means from a purchaser for the purpose of
1-18 subsequently transferring the money in the form of a check payable
1-19 by the seller to a person designated by the purchaser, for direct
1-20 or indirect compensation, including earnings from money received
1-21 from the purchaser or the purchaser's agent and held pending
1-22 disbursement on a check sold to the purchaser, whether or not the
1-23 activity is conducted on a regular basis or as an organized
1-24 business concern.
1-25 (2) "Check" means an instrument, service, or device
1-26 for the transmission or payment of money, including a draft,
1-27 traveler's check, or money order, or an electronic equivalent to a
1-28 draft, traveler's check, or money order, including an automated
1-29 clearinghouse transfer. The term does not include an instrument,
1-30 service, or device that:
1-31 (A) transfers money directly from the purchaser
1-32 to a creditor of the purchaser or to an agent of the creditor;
1-33 (B) is redeemed by the issuer in goods or
1-34 services under circumstances not designed to evade the obligations
1-35 and responsibilities imposed by this chapter; or
1-36 (C) transfers money in the form of currency to
1-37 another person in a transmission or transportation transaction
1-38 subject to Chapter 153. [The term also includes an instrument for
1-39 the transmission or payment of money in which the purchaser or
1-40 remitter of the instrument appoints or purports to appoint the
1-41 seller as its agent for the receipt, transmission, or handling of
1-42 money, regardless of who signs the instrument.]
1-43 (3) [(2)] "Commission" means the Finance Commission of
1-44 Texas.
1-45 (4) [(3)] "Commissioner" means the banking
1-46 commissioner of Texas.
1-47 (5) [(4)] "Deliver" means to deliver a check to the
1-48 first person who in payment for the check remits or purports to
1-49 remit the face amount of the check or makes a remittance or
1-50 purported remittance against the face amount, regardless of whether
1-51 the person who delivers the check:
1-52 (A) signs the check or is otherwise directly
1-53 liable for obligations evidenced by the check; or
1-54 (B) charges a fee in addition to the face
1-55 amount.
1-56 (6) [(5)] "Department" means the Texas Department of
1-57 Banking.
1-58 (7) "Financial institution" has the meaning assigned
1-59 by Section 201.101.
1-60 (8) "License holder" means a person holding a current
1-61 license issued under Section 152.209. The term includes a person
1-62 exempt from licensing under Section 152.202 to the extent the
1-63 obligations and responsibilities of a license holder under this
1-64 chapter are imposed on the person as a condition of exemption.
2-1 (9) "Money" means a medium of exchange authorized or
2-2 adopted by a domestic or foreign government and includes a monetary
2-3 unit of account established by an intergovernmental organization or
2-4 by agreement between two or more nations. The term also includes
2-5 money represented in digital electronic format, whether or not
2-6 specially encrypted, and stored or capable of storage on electronic
2-7 media in a manner that is retrievable and transferable
2-8 electronically.
2-9 (10) [(6)] "Permissible investment" means:
2-10 (A) cash in demand or interest-bearing accounts
2-11 with a federally insured financial institution, including
2-12 certificates of deposit;
2-13 (B) a marketable [an] investment security
2-14 consisting of [that is an obligation]:
2-15 (i) bonds and other legally created
2-16 general obligations of a state, an agency or political subdivision
2-17 of a state, the United States, or an instrumentality of the United
2-18 States; or
2-19 (ii) obligations that a state or an agency
2-20 or political subdivision [the principal and interest] of a state,
2-21 or [which are fully guaranteed by] the United States or an
2-22 instrumentality of the United States has unconditionally agreed to
2-23 purchase, insure, or guarantee; or
2-24 [(iii) of a state or a political
2-25 subdivision of a state; or]
2-26 (C) other assets or securities that may be
2-27 permitted by rule or [any other investment] approved by the
2-28 commissioner.
2-29 (11) "Principal," in connection with management of a
2-30 license holder or applicant, means a person who performs executive
2-31 functions or otherwise controls the executive affairs of a license
2-32 holder, including an owner, officer, director, partner, trustee, or
2-33 manager of the license holder.
2-34 (12) [(7) "Person" means an individual, partnership,
2-35 joint stock or other association, trust, or corporation. The term
2-36 does not include the United States or this state.]
2-37 [(8)] "Sell" includes issue, transmit, or deliver.
2-38 [(9) "Traveler's check" means a type of check that:]
2-39 [(A) is a multiple of a denomination;]
2-40 [(B) provides for the purchaser's signature to
2-41 be completed at the time the instrument is purchased; and]
2-42 [(C) provides for the purchaser's
2-43 countersignature to be completed when the instrument is
2-44 negotiated.]
2-45 SECTION 2. Subchapter B, Chapter 152, Finance Code, is
2-46 amended to read as follows:
2-47 SUBCHAPTER B. POWERS AND DUTIES OF DEPARTMENT AND COMMISSION
2-48 Sec. 152.101. ADMINISTRATION. The department shall
2-49 administer this chapter.
2-50 Sec. 152.102. RULES. [(a)] The commission may adopt rules
2-51 necessary to enforce and administer this chapter, including rules
2-52 [relating] to:
2-53 (1) implement and clarify this chapter;
2-54 (2) establish fees for applications, licenses,
2-55 notices, and examinations to defray the cost of administering this
2-56 chapter;
2-57 (3) create additional exemptions or reduced
2-58 requirements applicable to specific circumstances, if the exemption
2-59 or reduction is in the public interest and subject to appropriate
2-60 requirements or conditions;
2-61 (4) identify additional permissible investments
2-62 subject to appropriate investment limits; and
2-63 (5) protect the interests of check purchasers [an
2-64 application for a license].
2-65 [(b) The commissioner may adopt and enforce reasonable rules
2-66 to prevent unsafe and unsound practices with respect to a
2-67 permissible investment required by this chapter.]
2-68 Sec. 152.103. EXAMINATIONS [EXCEPTIONS TO REQUIREMENTS. The
2-69 commissioner by rule may exempt a person from this chapter or
3-1 reduce a requirement of Section 152.102(b), 152.104, 152.205,
3-2 152.206, 152.207, 152.208(a), 152.209, 152.304(b), 152.305,
3-3 152.403, 152.503, or 152.504 if:]
3-4 [(1) the person does not engage in the business of
3-5 selling checks to the public and the sale of checks by the person
3-6 is:]
3-7 [(A) ancillary to the person's business; and]
3-8 [(B) limited to commercial contracts in
3-9 interstate commerce; and]
3-10 [(2) the commissioner determines that the exemption or
3-11 reduced requirement is in the public interest.]
3-12 [Sec. 152.104. ANNUAL AUDIT]. (a) The commissioner shall
3-13 examine each license holder annually, on a periodic basis as
3-14 required by any rules adopted under this chapter, or more often as
3-15 the commissioner considers necessary to efficiently enforce this
3-16 chapter and other applicable law [shall conduct a financial audit
3-17 of each license holder at the cost of the license holder].
3-18 (b) The commissioner, in the exercise of discretion and as
3-19 necessary for the efficient enforcement of this chapter or other
3-20 applicable law, may:
3-21 (1) examine a license holder at its primary place of
3-22 business;
3-23 (2) examine off-site documents that the license holder
3-24 furnishes to the department; and
3-25 (3) defer a required examination for not more than six
3-26 months.
3-27 (c) Information in a report of an examination under this
3-28 section is confidential and may be disclosed only under the
3-29 circumstances provided by Section 152.105.
3-30 (d) Disclosure of information to the commissioner under an
3-31 examination request does not waive or otherwise affect or diminish
3-32 a privilege to which the information is otherwise subject [Instead
3-33 of conducting that audit, the commissioner may accept an annual
3-34 report and audit of the affairs of a license holder under this
3-35 chapter made by a nationally recognized certified public accounting
3-36 firm or by a bank commissioner or comparable officer of another
3-37 state].
3-38 Sec. 152.104. REGULATORY COOPERATION. (a) To efficiently
3-39 carry out the purposes of this chapter and reduce the regulatory
3-40 burden on license holders, the commissioner may:
3-41 (1) enter into cooperative, coordinating, or
3-42 information-sharing agreements with another federal, state, or
3-43 foreign governmental agency that regulates persons engaged in the
3-44 business of selling checks or that otherwise has concurrent
3-45 regulatory or supervisory jurisdiction with respect to license
3-46 holders under this chapter;
3-47 (2) with respect to periodic examination or other
3-48 supervision or investigation, accept reports of examination or
3-49 investigation by, and reports submitted to, an agency described by
3-50 Subdivision (1) instead of conducting examinations or
3-51 investigations or receiving reports as might otherwise be required
3-52 or permissible under this chapter;
3-53 (3) enter into contracts with an agency described by
3-54 Subdivision (1) to engage the services of the agency for reasonable
3-55 compensation to assist in connection with the commissioner's
3-56 performance of official duties under this chapter or other law, or
3-57 to provide services to the agency for reasonable compensation in
3-58 connection with the agency's performance of official duties under
3-59 law, except that Chapter 2254, Government Code, does not apply to
3-60 contracts under this subdivision; and
3-61 (4) enter into joint examinations or joint enforcement
3-62 actions with an agency described by Subdivision (1), provided that
3-63 the commissioner may not waive the ability to independently take
3-64 action under this chapter if the commissioner determines that the
3-65 action is necessary to carry out the commissioner's
3-66 responsibilities under this chapter or to enforce compliance with
3-67 the laws of this state.
3-68 (b) Supervisory or examination fees assessed in accordance
3-69 with this chapter may be shared with another federal, state, or
4-1 foreign governmental agency that regulates the activities described
4-2 in this chapter or that otherwise has concurrent regulatory or
4-3 supervisory jurisdiction with respect to license holders under this
4-4 chapter in accordance with an agreement between the commissioner
4-5 and the agency. The commissioner may also receive a portion of
4-6 supervisory or examination fees assessed by a federal, state, or
4-7 foreign governmental agency in accordance with an agreement between
4-8 the commissioner and the agency.
4-9 Sec. 152.105. CONFIDENTIAL INFORMATION; DISCLOSURE. (a)
4-10 Except as provided by Subsection (b), information obtained by the
4-11 commissioner [or the commission] under this chapter and any [from a
4-12 person who holds a license under this chapter or through an
4-13 examination or a] file or record of the department relating to that
4-14 information is confidential and may not be disclosed if the
4-15 information, as determined by the commissioner:
4-16 (1) relates to the financial condition of the license
4-17 holder, a license applicant, a person exempt from licensing under
4-18 Section 152.202, or an affiliate or principal of a person exempt
4-19 from licensing under Section 152.202; [or]
4-20 (2) is proprietary information of the license holder;
4-21 or
4-22 (3) is personal or private information relating to a
4-23 specific purchaser that identifies or can otherwise be associated
4-24 with the purchaser [, as determined by the commissioner].
4-25 (b) The commissioner may release confidential information
4-26 if:
4-27 (1) the commissioner finds that immediate and
4-28 irreparable harm is threatened to a purchaser or potential
4-29 purchaser of a check, or to the public;
4-30 (2) the license holder consents to the release of
4-31 information, other than information described by Subsection (a)(3),
4-32 or has published the information contained in the release;
4-33 (3) the commissioner finds that release of the
4-34 information is required for an administrative hearing, in which
4-35 case the information may be released to the parties to the hearing
4-36 by an order of the hearings officer that requires the parties to
4-37 maintain confidentiality; or
4-38 (4) the commissioner finds that release of the
4-39 information is reasonably necessary to protect the public and is in
4-40 the interest of justice, in which case the information may be
4-41 released only to a representative of an agency, department, or
4-42 instrumentality of this or another state, [or] the United States,
4-43 or a foreign government with whom the United States currently
4-44 maintains diplomatic relations.
4-45 (c) Before releasing information the commissioner determines
4-46 is not proprietary under Subsection (a)(2), the commissioner shall
4-47 notify the license holder unless the notification is prohibited by
4-48 other law.
4-49 SECTION 3. Subchapter C, Chapter 152, Finance Code, is
4-50 amended to read as follows:
4-51 SUBCHAPTER C. APPLICATION FOR AND ISSUANCE OF LICENSE
4-52 Sec. 152.201. LICENSE REQUIRED. (a) Except as provided by
4-53 Section 152.202, a person must hold a license issued under this
4-54 chapter to [:]
4-55 [(1)] engage in the business of selling checks to
4-56 purchasers:
4-57 (1) located in this state [, as a service or for
4-58 consideration]; or
4-59 (2) wherever located if the seller is located in this
4-60 state.
4-61 (b) For purposes of this section, a seller is located in
4-62 this state if the seller:
4-63 (1) employs or otherwise uses an agent that is located
4-64 in this state; or
4-65 (2) maintains, uses [maintain, use], or otherwise
4-66 controls [control] an account at a financial institution office
4-67 located in this state for the purpose of engaging in the business
4-68 of selling checks.
4-69 Sec. 152.202. EXEMPTIONS FROM LICENSING. (a) Section
5-1 152.201 does not apply to:
5-2 (1) a federally insured financial institution [, as
5-3 that term is defined by Section 201.101, if the institution does
5-4 not sell checks, other than traveler's checks, through an agent who
5-5 is not directly or indirectly owned by the institution unless the
5-6 agent is also a federally insured financial institution];
5-7 (2) an agent [or subagent] of a license holder unless
5-8 the agent [or subagent sells the license holder's checks
5-9 over-the-counter to the public and in the regular conduct of that
5-10 business] receives or at any time has access to [:]
5-11 [(A)] a record [check] of the license holder
5-12 that contains information pertaining to [is returned after] payment
5-13 of the license holder's obligations under checks sold by the agent
5-14 for purposes of verification, reconciliation, or accounting; [or]
5-15 [(B) a bank statement relating to a returned
5-16 check;]
5-17 (3) a title company or attorney that issues an escrow
5-18 or trust fund check;
5-19 (4) a state, an agency, political subdivision, or
5-20 instrumentality of a state, the United States, or an agency or
5-21 instrumentality of the United States, including the United States
5-22 Postal Service; [or]
5-23 (5) with the commissioner's prior written consent, a
5-24 person that [who]:
5-25 (A) holds a license issued under Chapter 153;
5-26 (B) [has a net worth of at least $250,000 and]
5-27 meets the licensing requirements of this chapter, including a
5-28 demonstration of net worth as reflected by the financial statements
5-29 required by Section 152.205;
5-30 (C) maintains a bond payable to the commissioner
5-31 or an amount deposited with the commissioner, for the purposes
5-32 specified in both this chapter and Chapter 153, in an amount equal
5-33 to the greater of the amount of bond required by [under] Section
5-34 152.206 or Chapter 153; [in the minimum principal amount of
5-35 $350,000; and]
5-36 (D) sells checks only in conjunction with [a]
5-37 currency exchange or transmission transactions subject to
5-38 [transaction, as defined by] Chapter 153, and separately accounts
5-39 for [separates all] proceeds from transactions under Chapter 153
5-40 and this chapter; and
5-41 (E) complies with Subsection (b);
5-42 (6) with the commissioner's prior written
5-43 determination that the exemption is in the public interest, a
5-44 person that:
5-45 (A) incidentally engages in the sale of checks
5-46 only to the extent reasonable and necessary to accomplish a primary
5-47 business objective that is unrelated to the sale of checks;
5-48 (B) does not advertise or offer to sell checks
5-49 to the public except to the extent reasonable and necessary to
5-50 fairly advertise or offer its primary business services; and
5-51 (C) either:
5-52 (i) sells checks exclusively in connection
5-53 with commercial contracts in interstate commerce; or
5-54 (ii) does not charge a fee for the sale of
5-55 checks or sell checks without fee as an inducement for customer
5-56 participation in its primary business; or
5-57 (7) any other person exempted by rule [that
5-58 transaction from the sale of checks].
5-59 (b) A [Notwithstanding Subsection (a)(5), a] person who
5-60 meets the requirements of Subsection (a)(5) [that subsection] is
5-61 subject to:
5-62 (1) all provisions [any other provision] of this
5-63 chapter other than the license requirement of Section 152.201 to
5-64 the extent the person engages in the business of selling checks;
5-65 and
5-66 (2) rules adopted under this chapter [by the
5-67 commissioner] to administer and carry out that subsection,
5-68 including rules to:
5-69 (A) define a term used in that subsection; and
6-1 (B) establish limits or requirements on the
6-2 bonding and net worth of the person and the person's activities
6-3 relating to the sale of checks other than those specified by that
6-4 subsection.
6-5 Sec. 152.203. QUALIFICATIONS FOR LICENSE. (a) Subject to
6-6 Subsection (b), to [To] qualify for a license under this chapter, a
6-7 person:
6-8 (1) must have a net worth of at least $500,000,
6-9 computed according to generally accepted accounting principles, as
6-10 reflected by the financial statements required by Section 152.205;
6-11 (2) must be in a financial condition that will enable
6-12 the person to safely and soundly engage in the business of selling
6-13 checks;
6-14 (3) [if an individual, may not have been convicted of
6-15 a felony or a crime involving moral turpitude that is reasonably
6-16 related to the person's fitness to hold the license, regardless of
6-17 whether the punishment received was a suspended sentence, community
6-18 supervision, or nonadjudicated conviction;]
6-19 [(4) must respond truthfully and completely to any
6-20 request for information contained in the license application;]
6-21 [(5)] may not be indebted to any local, [this] state,
6-22 or federal government or political subdivision of the government
6-23 for delinquent taxes, fines, penalties, or fees [a fee or penalty
6-24 imposed under this chapter or a rule of the commission;]
6-25 [(6) if an individual, must have a good moral
6-26 character and reputation as a peaceful, law-abiding resident in the
6-27 community in which the person resides]; and
6-28 (4) [(7)] may not be engaged in an activity or
6-29 practice the commissioner finds adversely affects the person's
6-30 financial safety and soundness.
6-31 (b) A [To qualify for a] license may not be issued to an
6-32 applicant unless each person identified under Section
6-33 152.204(b)(1):
6-34 (1) possesses [,] the financial responsibility,
6-35 financial condition, business experience, character, and general
6-36 fitness that would [of the applicant must] reasonably warrant the
6-37 belief that issuance of the license will be in the public interest;
6-38 and
6-39 (2) has not been convicted during the preceding 10
6-40 years of an offense:
6-41 (A) under a state or federal law that involves
6-42 deception, dishonesty, or defalcation, or that relates to currency
6-43 exchange, transportation, or transmission, money laundering, or a
6-44 reporting requirement of the Bank Secrecy Act (12 U.S.C. Section
6-45 1951 et seq.); or
6-46 (B) under the laws of a foreign country that
6-47 involves deception, dishonesty, or defalcation, or that would be a
6-48 felony under state or federal law if committed in the United
6-49 States, unless the applicant demonstrates to the satisfaction of
6-50 the commissioner that the conviction was based on extenuating
6-51 circumstances unrelated to the person's reputation for honesty and
6-52 obedience to law.
6-53 Sec. 152.204. APPLICATION. (a) An application for a license
6-54 must be in writing, sworn to, and filed with the commissioner in
6-55 the form the commissioner prescribes.
6-56 (b) The application must:
6-57 (1) state the full legal name, federal taxpayer
6-58 identification number or social security number, and business
6-59 address of the applicant, and [: (1) the proprietor], if the
6-60 applicant is:
6-61 (A) an individual, the home address of the
6-62 applicant, and the full legal name and federal taxpayer
6-63 identification number or social security number of the applicant's
6-64 spouse; or
6-65 (B) a person other than an individual, the full
6-66 legal name, federal taxpayer identification number or social
6-67 security number, and the business address of:
6-68 (i) each individual who is a principal of
6-69 the applicant; and
7-1 (ii) each individual who is a principal of
7-2 any person that is a principal of the applicant;
7-3 (2) describe in detail the applicant's business plan
7-4 relating to the business of selling checks, including:
7-5 (A) method of operations;
7-6 (B) location of operations and outlets;
7-7 (C) projections regarding the anticipated growth
7-8 in volume of checks sold in dollars and in number of consumers
7-9 during the initial two-year period of operation; and
7-10 (D) other information sufficient to permit the
7-11 commissioner to evaluate the bonding requirements of Section
7-12 152.206 [each member, if the applicant is a partnership or
7-13 association other than an association described by Subdivision
7-14 (3)];
7-15 (3) include an undertaking to increase or supplement
7-16 the bond furnished with the application to equal the aggregate bond
7-17 required by the commissioner before the issuance of the license and
7-18 the start of operations [the association and each officer and
7-19 director of the association, if the applicant is a joint stock
7-20 association having at least 50 members]; and
7-21 (4) disclose any other information that may be
7-22 required by rule or reasonably requested by the commissioner [each
7-23 trustee and officer, if the applicant is a trust; and]
7-24 [(5) the corporation and each officer and director of
7-25 the corporation, if the applicant is a corporation].
7-26 Sec. 152.205. ACCOMPANYING FEE, STATEMENTS, AND BOND. An
7-27 application for a license must be accompanied by:
7-28 (1) a nonrefundable application [investigation] fee in
7-29 an amount established by rule [set by the commissioner] that is
7-30 sufficient to administer this chapter;
7-31 (2) audited financial statements of the applicant that
7-32 are reasonably satisfactory to the commissioner; and
7-33 (3) [a list of the locations at which the business is
7-34 to be conducted; and]
7-35 [(4)] a surety bond or deposit in the amount of
7-36 $100,000, subject to the additional bonding or deposit [that meets
7-37 the] requirements of Section 152.206 or 152.207.
7-38 Sec. 152.206. SURETY BOND. (a) Except as provided by
7-39 Section 152.207, a license holder shall post a surety bond issued
7-40 by a bonding company or insurance company authorized to do business
7-41 in this state that is acceptable to the commissioner.
7-42 (b) The commissioner shall, on application and otherwise
7-43 from time to time, determine the amount of the surety bond but may
7-44 not determine the amount to be less than $100,000 or greater than
7-45 $1 million. In making a determination under this subsection, the
7-46 commissioner shall consider:
7-47 (1) the nature and type of business the license holder
7-48 conducts;
7-49 (2) the license holder's financial condition in
7-50 relation to the dollar volume of the license holder's obligations
7-51 from time to time with respect to outstanding checks sold;
7-52 (3) the nature and degree of liquidity in assets
7-53 legally and beneficially owned by the license holder;
7-54 (4) the competence, character, general fitness, and
7-55 experience of management;
7-56 (5) the extent and adequacy of internal controls
7-57 maintained by the license holder;
7-58 (6) the presence or absence of annual unqualified
7-59 audits by an independent certified public accountant; and
7-60 (7) the existence and adequacy of other insurance
7-61 obtained or held by the license holder to protect its customers.
7-62 [The surety bond must be:]
7-63 [(1) in an amount, except as provided by Subsection
7-64 (c), computed by adding:]
7-65 [(A) $100,000 for the first location at which
7-66 the applicant proposes to sell checks; and]
7-67 [(B) $50,000 for each additional location at
7-68 which the applicant proposes to sell checks, not to exceed
7-69 $400,000;]
8-1 [(2) in a form satisfactory to the commissioner; and]
8-2 [(3) issued by a bonding company or insurance company
8-3 authorized to do business in this state.]
8-4 (c) [(b)] The bond represents money held in trust for the
8-5 benefit of check purchasers. The bond must be payable to the
8-6 commissioner [this state] on behalf of any claimants against the
8-7 license holder or the license holder's agent to secure the faithful
8-8 performance of the obligations of the license holder or agent with
8-9 respect to the receipt, handling, transmission, and payment of
8-10 money in connection with the sale of checks.
8-11 [(c) The commissioner may require a license holder to
8-12 provide the bond in an amount that exceeds the maximum but not more
8-13 than $1 million, taking into consideration the license holder's
8-14 financial condition in relation to the dollar volume of the license
8-15 holder's outstanding checks.]
8-16 (d) The aggregate liability of the bond's surety under this
8-17 chapter may not exceed the principal amount of the bond.
8-18 Sec. 152.207. ALTERNATIVE TO BOND. (a) Instead of
8-19 furnishing all or part of the amount of the surety bond required by
8-20 Section 152.206 [152.205(4)], an applicant or license holder may
8-21 deposit with the commissioner, or with a financial institution
8-22 possessing trust powers that is authorized to conduct a trust
8-23 business [bank, trust company, or national bank] in this state
8-24 [designated by the applicant] and is acceptable to [approved by]
8-25 the commissioner, an aggregate amount, including cash, certificates
8-26 of deposit, and interest-bearing securities, that equals the total
8-27 amount of the required bond or the remaining part of the bond. For
8-28 purposes of this subsection, the value of the securities is the
8-29 lesser of the principal amount or the market value of the
8-30 securities.
8-31 (b) The deposit shall be held in trust for the benefit of
8-32 check purchasers. The deposit secures the same obligations as the
8-33 surety bond. The license holder is entitled:
8-34 (1) to receive all income generated by the assets in
8-35 [interest and dividends on] the deposit; and
8-36 (2) with the commissioner's approval, to substitute
8-37 other permissible assets or securities for those deposited.
8-38 (c) On written order of the commissioner made for good cause
8-39 shown, the license holder shall substitute other assets or
8-40 securities for those deposited.
8-41 (d) In this section, "securities" means marketable
8-42 investment securities consisting of:
8-43 (1) [stocks,] bonds and [, notes, debentures, or]
8-44 other legally created general obligations of a state or an agency
8-45 or political subdivision of a state, or [:]
8-46 [(A) of] the United States or an instrumentality
8-47 of the United States;
8-48 [(B) of this state;]
8-49 [(C) of a municipality, county, school district,
8-50 or instrumentality of this state; or]
8-51 [(D) guaranteed by the United States or this
8-52 state; or]
8-53 (2) obligations that a state or an agency or political
8-54 subdivision of a state, or the United States or an instrumentality
8-55 of the United States has unconditionally agreed to purchase,
8-56 insure, or guarantee; or
8-57 (3) other securities specified by rule [similar
8-58 security devices acceptable to the commissioner].
8-59 Sec. 152.208. INVESTIGATION OF APPLICATION. (a) On the
8-60 filing of an application that meets the requirements of Sections
8-61 152.204 and 152.205, the commissioner shall investigate to
8-62 determine whether the qualifications prescribed by Section 152.203
8-63 have been met.
8-64 (b) To the extent considered advisable by the commissioner,
8-65 the commissioner may investigate and consider the qualifications of
8-66 principals [officers and directors] of an applicant in determining
8-67 whether the qualifications [qualification] prescribed by Section
8-68 152.203(b) have [has] been met.
8-69 Sec. 152.209. ISSUANCE OF LICENSE. (a) The commissioner
9-1 shall issue a license to the applicant if the commissioner[:]
9-2 [(1)] finds that the qualifications prescribed by
9-3 Section 152.203 are met, based on the application and
9-4 investigation, [;]
9-5 [(2) approves the documents;] and
9-6 [(3)] receives an acceptable [finds that the] bond or
9-7 bonds and deposits aggregating to [is in] the [prescribed] amount
9-8 required by the commissioner.
9-9 (b) The applicant on request is entitled to a hearing on the
9-10 denial of the application, to be held not later than the 60th day
9-11 after the date the commissioner receives the request.
9-12 [Sec. 152.210. DENIAL OF LICENSE; HEARING. (a) A hearing
9-13 must be held before a license may be denied.]
9-14 [(b) The commissioner shall give the applicant notice of the
9-15 hearing.]
9-16 SECTION 4. Sections 152.301(b) and (c), Finance Code, are
9-17 amended to read as follows:
9-18 (b) A surety bond or letter of credit required under
9-19 Subsection (a)(3) must be:
9-20 (1) in addition to any other bond or security required
9-21 by this chapter;
9-22 (2) issued by a bonding company or insurance company
9-23 authorized to do business in this state and acceptable to the
9-24 commissioner, in the case of a surety bond;
9-25 (3) issued by a federally insured financial
9-26 institution[, as that term is defined by Section 201.101,] that has
9-27 its main office or a branch in this state and is acceptable to the
9-28 commissioner, in the case of a letter of credit; and
9-29 (4) payable to the commissioner on behalf of any
9-30 claimants against the license holder to secure the faithful
9-31 performance of the obligations of the license holder with respect
9-32 to the receipt, handling, and payment of money in connection with
9-33 the sale of checks.
9-34 (c) The net worth of the license holder for purposes of
9-35 Subsection (a) [(a)(3)] is shown by an audited financial statement
9-36 reasonably satisfactory to the commissioner.
9-37 SECTION 5. Section 152.304(a), Finance Code, is amended to
9-38 read as follows:
9-39 (a) Not later than June 30 [April 15] of each year, a
9-40 license holder shall pay to the commissioner a license renewal fee
9-41 in an amount established by rule [of $500].
9-42 SECTION 6. Section 152.305, Finance Code, is amended to read
9-43 as follows:
9-44 Sec. 152.305. FINANCIAL STATEMENTS AND REPORTS. (a) Unless
9-45 waived by the commissioner, not later than the 45th day after the
9-46 last day of each quarter of the license holder's fiscal year, a
9-47 license holder shall file with the commissioner a certification of
9-48 net worth and a report regarding maintaining permissible
9-49 investments under Section [Sections] 152.301 [and 152.3015] for the
9-50 preceding quarter submitted on forms furnished by the commissioner.
9-51 (b) Not later than June 30 [April 15] of each year, or a
9-52 later date the commissioner approves in writing for good cause
9-53 shown, a license holder shall file an annual audited unconsolidated
9-54 financial statement dated as of the last day of the license
9-55 holder's fiscal year that ended in the immediately preceding
9-56 calendar year.
9-57 SECTION 7. Section 152.307(a), Finance Code, is amended to
9-58 read as follows:
9-59 (a) The commissioner shall give a license holder an
9-60 opportunity for a [A] hearing [must be held] before a license may
9-61 be revoked.
9-62 SECTION 8. Section 152.401, Finance Code, is amended to read
9-63 as follows:
9-64 Sec. 152.401. BUSINESS CONDUCTED BY AGENT [OR SUBAGENT]. (a)
9-65 A license holder may conduct the [license holder's] business of
9-66 selling checks under this chapter from any location within or
9-67 outside of [at one or more locations in] this state, either
9-68 directly or through an agent [or subagent] appointed by the license
9-69 holder.
10-1 (b) A rule adopted under Section 152.102 [152.102(a)] may
10-2 not directly apply to a license holder's agent [or subagent].
10-3 (c) Subject to compliance with this chapter, a license
10-4 holder or the license holder's agent may sell checks through
10-5 physical facilities, electronic facilities, including the Internet,
10-6 or telephonic facilities and may charge a different price for
10-7 checks based on the type of facility used in the transaction. A
10-8 price differential based on the type of facility used does not
10-9 constitute a surcharge subject to Section 339.001 if:
10-10 (1) the price charged for checks paid for by credit
10-11 card is not greater than the price charged for checks paid for by
10-12 another form of payment accepted within the same type of facility;
10-13 and
10-14 (2) the license holder or agent does not refuse to
10-15 sell checks to a customer who intends to pay by credit card through
10-16 one type of facility, at which credit cards are ordinarily
10-17 accepted, by redirecting the customer to use a credit card at
10-18 another type of facility.
10-19 SECTION 9. Section 152.402, Finance Code, is amended to read
10-20 as follows:
10-21 Sec. 152.402. DISCLOSURE OF RESPONSIBILITY. Each check sold
10-22 by a license holder, directly or through an agent, must:
10-23 (1) include the name and mailing address or telephone
10-24 number of the license holder clearly printed or displayed on or in
10-25 connection with sale of the check; or
10-26 (2) be accompanied by a written notice displayed or
10-27 delivered to the purchaser at the time of sale containing that
10-28 information.
10-29 SECTION 10. Section 152.404(b), Finance Code, is amended to
10-30 read as follows:
10-31 (b) Notwithstanding Subsection (a), a license holder's agent
10-32 may remit to the license holder all money due from the sale of a
10-33 check at a later date if the agent maintains on deposit with an
10-34 office of a federally insured financial institution [bank, savings
10-35 and loan association, or savings bank] located in the United States
10-36 an amount that:
10-37 (1) is in an account solely in the name of the license
10-38 holder; and
10-39 (2) for each day by which the period before which the
10-40 remittance is made exceeds 10 business days, is not less than the
10-41 outstanding obligations of the license holder represented by
10-42 [aggregate face amount of] checks issued by the license holder that
10-43 the agent usually sells daily.
10-44 SECTION 11. Section 152.405, Finance Code, is amended to read
10-45 as follows:
10-46 Sec. 152.405. LIABILITY FOR PAYMENT OF CHECK. (a) Except as
10-47 provided by Subsection (b), a [A] license holder that sells a
10-48 check, directly or through an agent, is liable for the payment of
10-49 the check in the same manner as a [the] maker or drawer of a
10-50 negotiable instrument subject to Chapter 3, Business & Commerce
10-51 Code, regardless of whether the license holder signed or assumed
10-52 primary liability for obligations evidenced by the check [as the
10-53 maker or drawer].
10-54 (b) For purposes of determining liability to the holder of a
10-55 check on which payment has been stopped by the license holder at
10-56 the request of its purchaser, the license holder is liable in the
10-57 same manner as a drawee, and the purchaser of the check is liable
10-58 in the same manner as a drawer of a negotiable instrument subject
10-59 to Chapter 3, Business & Commerce Code.
10-60 SECTION 12. This Act takes effect September 1, 2001.
10-61 * * * * *