79R7367 ATP-F
By: Zaffirini S.B. No. 1030
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of tax refund anticipation loans;
imposing an administrative penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle B, Title 4, Finance Code, is amended by
adding Chapter 350 to read as follows:
CHAPTER 350. TAX REFUND ANTICIPATION LOANS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 350.001. PURPOSE; CONSTRUCTION. (a) The purposes of
this chapter are:
(1) to protect consumers who enter into refund
anticipation loans or refund anticipation check transactions from
abuses; and
(2) to ensure that consumers are fully informed of the
costs and consequences of refund anticipation loans and checks.
(b) This chapter shall be liberally construed to accomplish
its purposes.
Sec. 350.002. DEFINITIONS. In this chapter:
(1) "Applicant" means a person who applies for
registration as a facilitator.
(2) "Consumer" means an individual who singly or
jointly with another consumer is solicited for, applies for, or
receives the proceeds of a refund anticipation loan or check.
(3) "Creditor" means a person who makes a refund
anticipation loan or who takes an assignment of a refund
anticipation loan.
(4) "Facilitator" means a person who processes,
receives, or accepts for delivery an application for a refund
anticipation loan, delivers a check in payment of refund
anticipation loan proceeds, or in any other manner acts to allow the
making of a refund anticipation loan. "Facilitator" does not
include:
(A) a bank, thrift, savings association,
industrial bank, or credit union operating under the laws of the
United States or this state;
(B) a servicer of a person described by Paragraph
(A) that operates under that person's name; or
(C) any person who acts solely as an intermediary
and does not deal with a taxpayer in the making of the refund
anticipation loan.
(5) "Refund anticipation check" means a check or other
payment mechanism:
(A) that represents the proceeds of a consumer's
tax refund;
(B) that is issued by a depository institution or
other person who receives a direct deposit of the consumer's tax
refund; and
(C) for which the consumer pays a fee or other
consideration.
(6) "Refund anticipation loan" means a loan that is
secured by the proceeds of a consumer's income tax refund or tax
credits or that the creditor arranges to be repaid directly or
indirectly from the proceeds of a consumer's income tax refund. A
refund anticipation loan includes the sale, assignment, or purchase
of a consumer's tax refund at a discount, whether or not the
consumer is required to repay the purchaser or assignee if the
Internal Revenue Service denies or reduces the consumer's tax
refund.
(7) "Registrant" means a person registered as a
facilitator under this chapter or an officer, agent, employee, or
representative of a person registered as a facilitator under this
chapter.
Sec. 350.003. RESTRICTION ON FACILITATING REFUND
ANTICIPATION LOANS OR CHECKS. (a) A person may not, individually
or in cooperation with another person, solicit the execution of or
process, receive, or accept an application or agreement for a
refund anticipation loan or check or in any other manner facilitate
the making of a refund anticipation loan or check unless the person
has complied with this chapter.
(b) A person may not use any device, subterfuge, or pretense
to evade the application of this chapter.
Sec. 350.004. RULES. The commissioner may adopt rules as
necessary to accomplish the purposes of this chapter and assist
facilitators in interpreting this chapter.
[Sections 350.005-350.050 reserved for expansion]
SUBCHAPTER B. REGISTRATION
Sec. 350.051. REGISTRATION REQUIRED; EXCEPTIONS. (a) A
facilitator shall register as provided by this subchapter.
(b) The commissioner shall maintain a list of registrants
that is available to interested persons and the public.
(c) A bank, credit union, or savings and loan association is
not required to register under this subchapter.
Sec. 350.052. APPLICATION FOR REGISTRATION. (a) An
applicant for registration as a facilitator must file a written
application with the commissioner accompanied by an application fee
in an amount determined by the commissioner. An applicant shall pay
a separate fee for each office at which the applicant intends to act
as a facilitator of a refund anticipation loan or check.
(b) An application must:
(1) be made under oath on a form prescribed by the
commissioner;
(2) contain all information required by the
commissioner; and
(3) identify each office at which the applicant
intends to act as a facilitator of a refund anticipation loan or
check.
Sec. 350.053. BOND. (a) The commissioner may require that
an applicant file a bond with the application. The bond must be:
(1) satisfactory to the commissioner;
(2) in the amount set by the commissioner; and
(3) issued by a surety qualified to do business in this
state.
(b) The aggregate liability of the surety may not exceed the
amount of the bond.
(c) The bond must be in favor of this state for the use of
this state and the use of a person who has a cause of action under
this chapter against the facilitator.
(d) The bond must be conditioned on:
(1) the facilitator's compliance with this chapter and
rules adopted under this chapter; and
(2) the payment of all amounts that become due to this
state or to another person under this chapter.
Sec. 350.054. CERTIFICATE OF REGISTRATION. (a) In a timely
manner, the commissioner shall register an applicant and shall
issue a certificate attesting to the registration if the
commissioner finds that the responsibility and general fitness of
an applicant commands the confidence of the community and warrants
belief that the business of facilitating refund anticipation loans
or checks will be operated according to the purposes of this
chapter.
(b) If the commissioner does not make the findings required
by Subsection (a), the commissioner may not register the applicant
and shall notify the applicant, stating the reason for the denial.
(c) On receiving a certificate of registration, the
applicant may act as a facilitator at each office identified on the
application for registration.
Sec. 350.055. EXPIRATION OF REGISTRATION; RENEWAL. (a)
Registration as a facilitator expires on the first December 31
following the date the certificate of registration was issued.
(b) A registrant may renew a registration before the
registration expires by filing with the commissioner an application
for renewal in the form prescribed by the commissioner. An
application to renew a registration must contain all information
required by the commissioner and be accompanied by a fee in an
amount determined by the commissioner. A registrant shall pay a
separate renewal fee for each office at which the registrant
intends to facilitate a refund anticipation loan or check during
the succeeding year.
(c) The commissioner shall renew a registration on
receiving an application for renewal that complies with Subsection
(b) unless the commissioner finds that the registrant has violated
this chapter or that the fitness of the registrant or the operations
of the registrant would not support registration as a facilitator
under Section 350.054. If the commissioner denies an application
for renewal, the commissioner shall notify the registrant, stating
the reason for the denial.
Sec. 350.056. HEARING ON DENIAL OF REGISTRATION OR RENEWAL.
(a) An applicant or registrant is entitled to a hearing on written
request made to the commissioner not later than the fifth day after
the date the applicant or registrant receives notice of the
commissioner's denial of an application for registration or
renewal.
(b) The commissioner shall hold an informal hearing
promptly after the commissioner receives the request.
(c) If the commissioner determines after the hearing that
the responsibility and general fitness of an applicant or
registrant commands the confidence of the community and warrants
belief that the business of facilitating refund anticipation loans
or checks will be operated according to the purposes of this chapter
or that the registrant has not violated this chapter, the
commissioner shall register the applicant or renew the registrant's
registration. If the commissioner does not make the findings
required by this subsection, the commissioner may not register the
applicant or renew the registrant's registration.
[Sections 350.057-350.100 reserved for expansion]
SUBCHAPTER C. INTEREST AND FEES
Sec. 350.101. FEES FOR REFUND ANTICIPATION LOANS OR CHECKS.
(a) Except as provided by Subsection (b) or (c), a fee or other
consideration charged by a creditor or facilitator for making a
refund anticipation loan is considered a refund anticipation loan
fee, and a fee or other consideration charged by a facilitator for
issuing a refund anticipation check is considered a refund
anticipation check fee.
(b) A fee or other consideration charged by a facilitator in
the ordinary course of business, including a fee for preparing or
electronically filing a tax return, is not a refund anticipation
loan fee or a refund anticipation check fee if the facilitator
charges the same fee in the same amount to a customer who does not
receive a refund anticipation loan or check.
(c) A fee or other consideration charged for a deposit
account used for receiving a consumer's tax refund to repay the
amount owed on the refund anticipation loan is not a refund
anticipation loan fee.
Sec. 350.102. COMPUTATION OF INTEREST. (a) Interest on a
refund anticipation loan is computed on an annualized basis.
(b) A refund anticipation loan fee is included in the
computation of the refund anticipation loan interest rate.
(c) If a deposit account is established or maintained wholly
or partly for the purpose of receiving a consumer's tax refund to
repay the amount owed on a refund anticipation loan:
(1) the loan matures for purposes of determining the
refund anticipation loan interest rate on the estimated date the
tax refund will be deposited in the deposit account; and
(2) a fee charged to the consumer for the deposit
account is included in the computation of the refund anticipation
loan interest rate.
Sec. 350.103. MAXIMUM INTEREST AND FEES. A facilitator may
charge interest on a refund anticipation loan in an amount that does
not exceed 40 percent a year.
Sec. 350.104. FILING OF FEE SCHEDULE. (a) On or before
January 1 of each year, a facilitator shall file with the
commissioner a schedule of the fees the facilitator will collect on
behalf of the creditor for making a refund anticipation loan and
issuing a refund anticipation check during the succeeding year.
(b) If a facilitator changes a fee collected for making a
refund anticipation loan or issuing a refund anticipation check
during a calendar year, the facilitator shall file an amendment
with the commissioner setting forth the change.
(c) For purposes of this section, filing is effective on the
date received by the commissioner.
(d) The commissioner may not make public a schedule of fees
filed under this section before the date on which the Internal
Revenue Service begins accepting electronically filed tax returns.
Sec. 350.105. CERTAIN CHARGES PROHIBITED. (a) A
facilitator may directly or indirectly charge or arrange for the
charging of interest, a fee, or another charge related to a refund
anticipation loan or check only if the charge is specifically
authorized by this chapter.
(b) A facilitator may not, in connection with making a
refund anticipation loan or issuing a refund anticipation check,
directly or indirectly charge or arrange for the charging of:
(1) fees for insurance;
(2) attorney's fees; or
(3) collection costs.
[Sections 350.106-350.150 reserved for expansion]
SUBCHAPTER D. REQUIRED POSTINGS AND DISCLOSURES
Sec. 350.151. DISPLAY OF CERTIFICATE. A registrant shall
prominently display a certificate issued under this chapter in each
place of business in this state where the registrant facilitates
refund anticipation loans or checks.
Sec. 350.152. FEE SCHEDULE POSTING. (a) A facilitator
shall display schedules showing the fees for:
(1) a refund anticipation loan or check, currently
charged by the facilitator at that place of business; and
(2) electronically filing a taxpayer's tax return.
(b) A schedule required by Subsection (a) must be displayed
in a manner and in a format approved by the commissioner.
(c) A facilitator may facilitate a refund anticipation loan
or check only if:
(1) the facilitator displays the schedules as required
by this section;
(2) the fee actually charged for the refund
anticipation loan or check is the same as:
(A) the fee displayed on the schedule; and
(B) the fee filed with the commissioner under
Section 350.104; and
(3) the interest rate actually charged is the same as
the rate displayed on the schedule.
Sec. 350.153. APPLICATION DISCLOSURES. (a) At the time a
consumer applies for a refund anticipation loan or check, the
facilitator shall disclose to the consumer on a form separate from
the application:
(1) the fee for the refund anticipation loan or check;
(2) the fee for electronically filing a tax return;
(3) the time in which the proceeds of the refund
anticipation loan or check will be paid to the consumer if the loan
or check is approved;
(4) for refund anticipation loans:
(A) the following title centered on the page in
bold-faced capital letters and 18-point type: "NOTICE";
(B) the following statement: "This is a loan.
This loan is borrowing money against your tax refund. If your tax
refund is less than expected, you must still repay the entire amount
of the loan. If your refund is delayed, you may have to pay
additional costs. YOU CAN GET YOUR REFUND IN ABOUT 10-14 DAYS if
you file your return electronically and have the Internal Revenue
Service send your refund to your own bank account, or in about 21
days if you file your return by mail. You can have your tax return
filed electronically and directly deposited into your own bank
account without obtaining a loan or other paid product.";
(C) disclosure of the annual percentage rate
computed as set forth in Section 350.102; and
(D) the estimated total cost to the borrower for
the loan; and
(5) for refund anticipation checks:
(A) the following title centered on the page in
bold-faced capital letters and 18-point type: "NOTICE"; and
(B) the following statement: "You are paying
[amount of refund anticipation check fee] to get your refund
through [name of issuer of refund anticipation check]. YOU CAN
AVOID THIS FEE BY HAVING THE INTERNAL REVENUE SERVICE DIRECTLY
DEPOSIT YOUR REFUND INTO YOUR OWN BANK ACCOUNT. If you do not have a
bank account, you may wish to consider getting one. You can also
avoid this fee by having your tax refund paid with a check.".
(b) A disclosure under this section must be written:
(1) in 14-point type unless otherwise noted; and
(2) in English and in any other language in which the
refund anticipation loan or check is negotiated.
(c) The commissioner may prescribe an alternate disclosure
that may be used instead of the disclosure prescribed by this
section. The alternate disclosure must include all of the
information required by Subsection (a) and be in a format that is
more easily understood by the consumer than the disclosure
prescribed by this section.
[Sections 350.154-350.200 reserved for expansion]
SUBCHAPTER E. ADDITIONAL DUTIES OF AND RESTRICTIONS ON
FACILITATORS
Sec. 350.201. DECEPTIVE PRACTICES PROHIBITED. A
facilitator may not:
(1) engage in unfair, deceptive, or fraudulent
practices in facilitating a refund anticipation loan or check,
including misrepresenting a material factor or condition of the
loan or check or making an oral statement contradicting information
required to be disclosed under Subchapter D;
(2) engage in a transaction, practice, or course of
business in connection with a refund anticipation loan or check
that operates a fraud on a person;
(3) misrepresent a material fact in obtaining or
attempting to obtain a registration as a facilitator;
(4) engage in conduct that violates Subchapter E,
Chapter 17, Business & Commerce Code; or
(5) threaten to take an action prohibited by this
chapter.
Sec. 350.202. DUTY TO ARRANGE TRANSACTION OR NOTIFY OF
REJECTION. Promptly after a consumer applies for a refund
anticipation loan or check, a facilitator shall arrange for the
loan or check or notify the consumer that the application is
rejected.
Sec. 350.203. COPIES OF APPLICATION AND AGREEMENT. At the
time a refund anticipation loan is closed or a refund anticipation
check transaction is completed, a facilitator shall give the
consumer copies of the complete loan or check application and
agreement, in a form that can be kept by the consumer.
Sec. 350.204. PROHIBITED PROVISIONS. (a) A facilitator
may not include in a document provided in connection with a refund
anticipation loan or check:
(1) a hold harmless clause;
(2) a confession of judgment clause;
(3) an assignment of or order for payment of wages or
other compensation for services;
(4) a provision in which the consumer agrees not to
assert a claim or defense arising out of the contract;
(5) a waiver of any provision of this chapter,
including the right to seek actual damages, statutory damages, and
attorney's fees and costs under Section 350.256 or the right to
injunctive, declaratory, or other equitable relief or relief on a
class-wide basis; or
(6) a provision requiring that any provision of a
dispute resolution between the parties to a refund anticipation
loan or check agreement be kept confidential.
(b) Subsection (a)(6) does not affect the rights of the
parties to a refund anticipation loan or check agreement to agree
that certain specified information is a trade secret or otherwise
confidential or to agree after a dispute arises to keep the dispute
resolution confidential.
Sec. 350.205. ADDITIONAL SECURITY INTEREST PROHIBITED. A
facilitator may not take or arrange for a creditor to take a
security interest in a consumer's property other than the proceeds
of the consumer's tax refund to secure payment of a refund
anticipation loan.
Sec. 350.206. CERTAIN ACTIONS WITH RESPECT TO OUTSTANDING
OR DELINQUENT REFUND ANTICIPATION LOANS PROHIBITED. A facilitator
may not engage in the collection of an outstanding or delinquent
refund anticipation loan using means prohibited by the Fair Debt
Collection Practices Act (15 U.S.C. Section 1692 et seq.) for debt
collectors.
Sec. 350.207. DELIVERY OF REFUND ANTICIPATION LOAN OR CHECK
PROCEEDS. A facilitator shall deliver to the consumer the proceeds
of an approved refund anticipation loan or check not later than the
48th hour after the delivery time promised by the facilitator when
the consumer applied for the loan or check.
Sec. 350.208. ANNUAL REPORTS. (a) On or before July 1 of
each year, the commissioner shall report to the legislature the
information solicited from facilitators and creditors, as
appropriate, described by Subsection (b).
(b) A facilitator shall file a report of information
solicited by the commissioner according to procedures established
by the commissioner. The report must include the following
information for the period beginning April 15 of the preceding year
and ending April 14 of the year the report is filed:
(1) the total number and dollar amount of refund
anticipation loans facilitated by the facilitator;
(2) the total number and dollar amount of refund
anticipation checks facilitated by the facilitator;
(3) the minimum, maximum, and average amount loaned
under refund anticipation loan transactions facilitated by the
facilitator;
(4) the minimum, maximum, and average amount issued
under refund anticipation check transactions facilitated by the
facilitator;
(5) the average interest rate of refund anticipation
loan transactions facilitated by the facilitator;
(6) the average number of days for which refund
anticipation loans facilitated by the facilitator were outstanding
before being repaid;
(7) the total number and dollar amount of refund
anticipation loans written off as a bad debt on the accounting books
of the facilitator; and
(8) the total number and dollar amount of refund
anticipation loans previously written off as a bad debt on the
accounting books of the facilitator that were recovered directly or
indirectly by the facilitator.
(c) The commissioner shall establish procedures for
obtaining information from facilitators and creditors to be
included in a report under this section.
[Sections 350.209-350.250 reserved for expansion]
SUBCHAPTER F. ENFORCEMENT
Sec. 350.251. HEARING. (a) If the commissioner believes or
has notice that an action of a facilitator may violate this chapter
or a rule adopted under this chapter, the commissioner shall give
the facilitator reasonable notice of the suspected violation and an
opportunity to be heard.
(b) The commissioner may make investigations, subpoena
witnesses, and require audits and reports in preparation for a
hearing under this section.
(c) A hearing under this section shall be open to the
public.
(d) After the hearing the commissioner shall make findings
of fact and conclusions of law.
Sec. 350.252. CEASE AND DESIST ORDER. (a) If the
commissioner finds under Section 350.251(d) that an action of a
facilitator violates this chapter or a rule adopted under this
chapter, the commissioner shall order the facilitator to cease and
desist from the action.
(b) If a facilitator continues to engage in an action in
violation of the commissioner's cease and desist order, the
commissioner may impose on the facilitator an administrative
penalty of $1,000 for each action of the facilitator that violates
the commissioner's order.
Sec. 350.253. REVOCATION OR SUSPENSION OF REGISTRATION.
(a) If the commissioner finds under Section 350.251(d) that a
registrant has engaged in a course of conduct that violates this
chapter or a rule adopted under this chapter or has continued to
engage in an action in violation of a cease and desist order of the
commissioner that has not been stayed on application of the
registrant, the commissioner may revoke or suspend the registration
of the registrant.
(b) The revocation, suspension, or surrender of a
facilitator's registration does not relieve a registrant from civil
or criminal liability for an action committed before the
revocation, suspension, or surrender.
Sec. 350.254. COMPLAINT PROCEDURE. (a) The commissioner
shall establish a complaint procedure that enables an aggrieved
consumer or a member of the public to file a complaint against a
registrant or nonregistrant who violates a provision of this
chapter. The commissioner shall maintain a toll-free number that a
consumer may use to obtain information about registrants and
complaint forms.
(b) Except as provided by this subsection, a complaint is a
public record under Chapter 552, Government Code. A complainant's
name, address, and other personal identifying information may not
be disclosed to the public.
(c) On the request of a party to a complaint, the
commissioner shall hold a hearing as provided by Section 350.251.
After the hearing, the commissioner may issue a cease and desist
order under Section 350.252 or suspend or revoke a registration as
provided by Section 350.253.
Sec. 350.255. DECEPTIVE TRADE PRACTICES. A violation of
this chapter is a deceptive trade practice under Subchapter E,
Chapter 17, Business & Commerce Code.
Sec. 350.256. CIVIL ACTION. (a) A facilitator who engages
in an activity prohibited by Subchapter E in connection with a
refund anticipation loan or check is liable to the consumer for:
(1) actual and consequential damages;
(2) the greater of:
(A) $2,000; or
(B) three times the amount of the refund
anticipation loan fee, refund anticipation check fee, or other
unauthorized charge; and
(3) reasonable attorney's fees and costs.
(b) A facilitator who violates Section 350.207 is liable to
the consumer for an amount equal to the refund anticipation loan fee
or refund anticipation check fee.
(c) A consumer may sue for injunctive or other appropriate
equitable relief to stop a person from violating this chapter.
(d) A consumer may bring a class action suit to enforce this
chapter.
(e) The remedies provided in this section are cumulative and
are not intended to be the exclusive remedies available to a
consumer. A consumer is not required to exhaust any administrative
remedies provided by this chapter or other applicable law.
(f) This section applies to a facilitator regardless of
whether the facilitator registers as required by this chapter.
SECTION 2. The consumer credit commissioner shall make the
first report to the legislature as required by Section 350.208,
Finance Code, as added by this Act, not later than July 1, 2007.
SECTION 3. This Act takes effect September 1, 2005.