By Menendez H.B. No. 2478
77R7633 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. 342.601. DEFINITIONS. In this subchapter:
1-8 (1) "Check" includes a draft, share draft, or other
1-9 instrument for the payment of money.
1-10 (2) "Deferred presentment transaction" means a
1-11 transaction, regardless of whether the transaction is called a
1-12 payday loan, payday advance, deferred deposit loan, or another
1-13 name, in which:
1-14 (A) a cash advance is made in exchange for the
1-15 consumer's personal check or for the consumer's authorization to
1-16 debit the consumer's deposit account, in the amount of the advance
1-17 plus a fee; and
1-18 (B) the parties agree that the check will not be
1-19 cashed or deposited, or that the consumer's deposit account will
1-20 not be debited, until a designated future date.
1-21 Sec. 342.602. DEFERRED PRESENTMENT TRANSACTION AUTHORIZED.
1-22 (a) A licensee under this chapter may engage in a deferred
1-23 presentment transaction under this chapter and subject to
1-24 Subchapter F. A deferred presentment transaction is a loan of
2-1 money. The check given in the transaction may serve as security for
2-2 the payment of the loan.
2-3 (b) A person who negotiates, arranges, or acts as an agent
2-4 for a licensee in a deferred presentment transaction that has an
2-5 effective annual rate of greater than 10 percent is required to be
2-6 licensed under this chapter.
2-7 Sec. 342.603. MAXIMUM CHARGE. A licensee may charge in a
2-8 deferred presentment transaction an amount that does not exceed the
2-9 rates authorized by Subchapter F. The prohibitions of Section
2-10 342.254 apply to the transaction.
2-11 Sec. 342.604. MINIMUM TERM. A deferred presentment
2-12 transaction must have a term of not less than seven days.
2-13 Sec. 342.605. PROCEDURES. (a) If a check is accepted in a
2-14 deferred presentment transaction, the licensee must require that
2-15 the check be made payable to the name of the licensee printed on
2-16 the license and be dated the day the loan is made.
2-17 (b) The transaction must be documented by a written
2-18 agreement signed by the consumer and the licensee. The agreement
2-19 must contain:
2-20 (1) the name of the licensee;
2-21 (2) the transaction date;
2-22 (3) the amount of the check;
2-23 (4) a statement of the total amount charged, expressed
2-24 both as a dollar amount and as an annual percentage rate;
2-25 (5) the earliest date on which the check may be
2-26 deposited; and
2-27 (6) a notice of the name and address of the Office of
3-1 Consumer Credit Commissioner and the telephone number of the
3-2 consumer help line.
3-3 (c) The licensee shall provide a notice to the consumer that
3-4 reads as follows: "This cash advance is not intended to meet
3-5 long-term financial needs. This loan should only be used to meet
3-6 immediate short-term cash needs. Renewing the loan rather than
3-7 paying the debt in full when due will require the payment of
3-8 additional charges."
3-9 (d) The consumer may prepay the loan and redeem the check at
3-10 any time before the due date. If the loan is prepaid in full, the
3-11 licensee shall refund any unearned finance charges.
3-12 (e) A check held for more than 31 days may not be presented
3-13 to the bank for payment.
3-14 (f) The licensee shall post a notice of the fee schedule for
3-15 a deferred presentment transaction.
3-16 Sec. 342.606. DUPLICATE OR MULTIPLE TRANSACTIONS. Section
3-17 342.501 applies to deferred presentment transactions.
3-18 Sec. 342.607. RENEWAL. (a) A licensee and a consumer may
3-19 renew a deferred presentment transaction if the loan is converted
3-20 from a single payment balloon loan to a declining balance
3-21 installment note, or a deferred presentment transaction may be
3-22 renewed without limitation to the number of renewals if the total
3-23 amount of charge would not exceed the total amount authorized by
3-24 Section 342.252, with due regard for the amount of the cash advance
3-25 and the time the cash advance is outstanding.
3-26 (b) An acquisition charge may be earned only once a month,
3-27 and an installment account handling charge may continue to be
4-1 earned on an equivalent daily charge basis in accordance with the
4-2 limitations of Subchapter F.
4-3 (c) Instead of a renewal, a licensee and a consumer may
4-4 agree to extend the maturity date of an existing deferred
4-5 presentment transaction.
4-6 Sec. 342.608. COLLECTION PRACTICES. A deferred presentment
4-7 transaction is a credit relationship for all purposes, including
4-8 collection. If a consumer defaults, including by the return of the
4-9 check to the licensee from a financial institution due to
4-10 insufficient funds, closed account, or stop payment order, the
4-11 licensee may pursue all legally available civil means to collect
4-12 the debt. Collection practices must comply with this chapter and
4-13 Chapter 392.
4-14 Sec. 342.609. FAIR LENDING. A licensee shall make a good
4-15 faith effort to assess the consumer's ability to repay the loan
4-16 under the loan terms.
4-17 SECTION 2. This Act takes effect September 1, 2001.