SRC-AMY S.B. 533 78(R)   BILL ANALYSIS


Senate Research Center   S.B. 533
78R4966 DWS-DBy: Carona
Business & Commerce
3/7/2003
As Filed


DIGEST AND PURPOSE 

Currently, Chapter 20 of the Business & Commerce Code regulated credit
bureaus and Chapter 392 of the Finance Code regulates both debt collectors
and credit bureaus, which can cause confusion in enforcement and clarity
of parties' responsibilities in a dispute.  As proposed, S.B. 533 deletes
all references to credit bureaus from Chapter 392 of the Finance Code.
S.B. 533 also requires a debt collector to make a written record of a
dispute and 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

This bill does not expressly grant any additional rulemaking authority to
a state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 392.202, Finance Code, as follows:

Sec. 392.202.  CORRECTION OF THIRD-PARTY DEBT COLLECTOR'S OR CREDIT
BUREAU'S FILES.  (a) Authorizes an individual to notify the third-party
debt collector in writing about a disputed item in a third-party debt
collector's or credit bureau's file that relates to a debt being collected
by the third-party debt collector. Deletes text referring to the credit
bureau as an alternative recipient for the written notification of the
alleged inaccuracy.  Requires the third-party debt collector to make a
written record of the dispute.  Requires the third-party debt collector to
cease collection efforts if it does not inform the credit bureau of the
dispute. Requires the third-party debt collector to initiate an
investigation if it does inform the credit bureau of the dispute.  Deletes
text requiring the third-party debt collector or credit bureau to provide
forms for and assistance with the notice. 

(b) Requires a third-party debt collector initiating an investigation to
send a written statement to the individual not later than the 30th day
after the date the inaccuracy is received.  Makes conforming changes. 

(c) Requires the third-party debt collector, if it admits the item is
inaccurate under Subsection (b), to correct the item within five days and
to immediately cease collection efforts.  Deletes text requiring the
third-party debt collector to send an accurate report to all previous
recipients of the inaccurate report.  Makes conforming changes. 

(d) Requires the third-party debt collector to change the item as
requested and cease collection efforts, deletes specification of the item
involving debt,  if the third-party debt collector contends that there has
not been sufficient time to conduct and investigation. Makes conforming
changes. 

 (e) Makes conforming changes.

SECTION 2.  Amends Section 392.304(a), Finance Code, to prohibit, unless
in a formal pleading in connection with a legal action, the third-party
debt collector from failing to disclose that the debt collector is
attempting to collect a debt and that any information obtained will be
used for that purpose, if it is the initial communication with the debtor,
or that the communication is from a debt collector if it is subsequent to
written or oral communication. 

SECTION 3.  Effective date: September 1, 2003.