80R6991 ATP-D

By: Chavez H.B. No. 1867

A BILL TO BE ENTITLED

AN ACT

relating to the regulation of a person who offers, services, or brokers a deferred presentment transaction.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subchapter M, Chapter 342, Finance Code, is amended by adding Sections 342.606, 342.607, and 342.608 to read as follows:

Sec. 342.606. DEFERRED PRESENTMENT TRANSACTION DATA COLLECTION SYSTEM. (a) A person who offers, services, or brokers a deferred presentment transaction, including a credit services organization to which Chapter 393 applies and a person registered or licensed to do business in this state, who offers deferred presentment transactions on the Internet, shall submit data to a database established by a database provider selected by the commissioner.

(b) The commissioner shall contract with a person to establish a database for the compilation of information from persons who offer, service, or broker deferred presentment transactions. In selecting a database provider, the commissioner shall ensure that the database provided by the person:

(1) provides access to the database by persons required to submit information, through an Internet connection and alternative methods, including by telephone, that enables the persons to submit information as required by this section;

(2) provides real-time access by the commissioner to information contained in the database;

(3) allows a person submitting information to access only information relating to:

(A) that person; and

(B) the eligibility of an individual to enter into a deferred presentment transaction under this chapter or rules adopted under this chapter; and

(4) contains safeguards to ensure that confidential information contained in the database may not be accessed by an unauthorized person.

(c) A person required to submit data under this subchapter shall weekly submit to the database provider:

(1) the amount of cash advanced under each deferred presentment transaction made, serviced, or brokered by the person during the preceding week;

(2) the amount of transactions made, serviced, or brokered by the person that were outstanding on the last day of the preceding week;

(3) the total number of transactions renewed during the preceding week;

(4) whether the person offers alternative payment arrangements;

(5) the average monthly income of an individual to whom a cash advance is made under a deferred presentment transaction, if the person collects that information from individuals; and

(6) the total amount of interest, fees, or charges collected by the person during the preceding week for making, servicing, or brokering a deferred presentment transaction.

(d) The commissioner shall analyze the data reported under this subchapter and prepare a report to the legislature. The commissioner shall submit the report not later than February 1 of each year.

(e) Information submitted to the database is the property of the office of the consumer credit commissioner. Information that personally identifies an individual is not subject to disclosure under Chapter 552, Government Code.

(f) The finance commission may adopt rules as necessary to implement this section.

Sec. 342.607. CERTIFICATION REQUIRED. (a) A person may not offer, service, or broker a deferred presentment transaction unless the person is certified by the commissioner. The requirement of certification under this section is in addition to any license required under this chapter or other law.

(b) To be certified by the commissioner, a person must:

(1) submit an application to the commissioner on a form prescribed by the commissioner;

(2) submit an investigation fee of $2,500 to the commissioner, if the person has not previously been certified by the commissioner;

(3) submit a certification fee of $1,000 for the initial or renewal certification;

(4) have not less than $1 million in assets, calculated according to generally accepted accounting principles; and

(5) submit a bond as required by Section 342.608.

(c) A person must annually renew the person's certification under this section.

(d) The commissioner shall use proceeds from the fees imposed under this section for the regulation of persons who offer, service, or broker deferred presentment transactions, including the monitoring and analysis of data submitted to the database under Section 342.606.

Sec. 342.608. BOND REQUIRED. (a) In addition to any other bond required by this chapter or other law, a person who offers, services, or brokers a deferred presentment transaction shall file with the application for certification a bond that is:

(1) in the amount of $1 million; and

(2) issued by a surety company qualified to do business as a surety in this state.

(b) The bond must be in favor of this state for the use of this state and the use of another person who has a cause of action under this chapter against the person.

(c) The bond must be conditioned on:

(1) the person's faithful performance under this chapter and rules adopted under this chapter; and

(2) the payment of all amounts that become due to the state or another person under this chapter during the calendar year for which the bond is given.

(d) The aggregate liability of a surety to all persons damaged by the license holder's violation of this chapter may not exceed the amount of the bond.

SECTION 2. (a) The consumer credit commissioner shall select a database provider under Section 342.606, Finance Code, as added by this Act, not later than January 1, 2008, and shall set the date on which a person who offers, services, or brokers a deferred presentment transaction must begin submitting data as provided by that section.

(b) A person who offers, services, or brokers a deferred presentment transaction is required to be certified and file a bond under Sections 342.607 and 342.608, Finance Code, as added by this Act, not later than January 1, 2008. The consumer credit commissioner shall prescribe an application for certification under Section 342.607, Finance Code, as added by this Act, not later than November 1, 2007.

SECTION 3. This Act takes effect September 1, 2007.