C.S.S.B. 533 78(R)    BILL ANALYSIS


C.S.S.B. 533
By: Carona
Financial Institutions
Committee Report (Substituted)


BACKGROUND AND PURPOSE 

Chapter 20, Business & Commerce Code regulates credit bureaus while
Chapter 392, Finance Code regulates both debt collectors and credit
bureaus.  This can cause confusion in enforcement. C.S.S.B. 533 deletes
superfluous references to credit bureaus from Chapter 392, Finance Code so
that they are regulated principally by Chapter 20, Business & Commerce
Code.  The bill also requires a debt collector to make a written record of
a dispute, report it to a credit bureau, and investigate the dispute or
cease collection efforts.  Additionally, the bill requires a debt
collector to inform a consumer during an initial conversation that
information obtained will be used to collect a debt and in subsequent
communication to state that the communication is from a debt collector. 

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency, or
institution.  

ANALYSIS

C.S.S.B. 533 amends Section 392.202, require a third-party debt collector
("collector") to make a written record of a dispute regarding the accuracy
of a debt being collected.  The collector shall cease collection efforts
until an investigation determines the accurate amount of the debt, if the
collector does not report the dispute to a credit bureau.  The collector
shall initiate an investigation of the dispute and cease collection
efforts until the investigation determines the accurate amount of the
debt, if the collector reports the dispute to a credit bureau.  Following
an investigation, the collector shall cease further collection efforts on
any portion of the debt found to be inaccurate.  The provisions of Section
392.202 do not apply to a collector subject to Chapter 20, Business &
Commerce Code.  The bill also deletes several superfluous references to
"credit bureaus" in Section 392.202. 

The bill amends Section 392.204, Finance Code to prohibit a collector from
failing to disclose that any information obtained from a debtor may be
used for the purpose of collecting the debt or that the communication is
from a collector.  These prohibitions do not apply to a formal pleading
made in connection with a legal action.  

The bill amends Section 20.06, Business & Commerce Code to require a
consumer reporting agency to provided a revised consumer report to each
person who requested the consumer's report in the previous six months,
regardless of whether such action is requested by the consumer. 

EFFECTIVE DATE

September 1, 2003.

COMPARISON OF ORIGINAL TO SUBSTITUTE

The substitute clarifies that collection efforts must cease until an
investigation determines the accurate amount of the debt, if any, as
opposed to the accuracy of the debt.