81R8436 KFF-D

By: Davis of Dallas H.B. No. 3529

A BILL TO BE ENTITLED

AN ACT

relating to the regulation of debt collection agencies and credit bureaus.

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

SECTION 1. Chapter 20, Business & Commerce Code, is amended by adding Section 20.055 to read as follows:

Sec. 20.055. NOTIFICATION RELATING TO REPORTING OF ADVERSE INFORMATION. Not later than the 10th day after the date adverse information is added to a consumer's file, the consumer reporting agency shall notify the consumer in writing that the information has been added to the consumer's file. The notice must include:

(1) a brief description of the adverse information;

(2) the name, address, and telephone number of the person who provided the information;

(3) an explanation regarding the actions a consumer may take to dispute the adverse information if the information is inaccurate; and

(4) the information described by Section 20.03(a)(3).

SECTION 2. Sections 20.06(a), (b), (c), (d), and (e), Business & Commerce Code, are amended to read as follows:

(a) If the completeness or accuracy of information contained in a consumer's file is disputed by the consumer and the consumer notifies the consumer reporting agency of the dispute, the agency shall reinvestigate the disputed information free of charge [and record the current status of the disputed information] not later than the 30th business day after the date on which the agency receives the notice and, pending the results of the reinvestigation, promptly delete the disputed information from the consumer's file. The consumer reporting agency shall provide the consumer with the option of notifying the agency of a dispute concerning the consumer's file by speaking directly to a representative of the agency during normal business hours.

(b) Not later than the fifth business day after the date on which a consumer reporting agency receives notice of a dispute from a consumer in accordance with Subsection (a), the agency shall provide notice of the dispute to:

(1) each person who provided any information related to the dispute; and

(2) each person who requested a copy of the consumer's report during the six-month period preceding the date of the dispute.

(c) A consumer reporting agency may terminate a reinvestigation of information disputed by a consumer under Subsection (a) if the agency reasonably determines that the dispute is frivolous or irrelevant. An agency that terminates a reinvestigation of disputed information under this subsection shall promptly notify the consumer of the termination and the reasons for the termination by mail, or if authorized by the consumer, by telephone and shall promptly reinsert the information into the consumer's file. The presence of contradictory information in a consumer's file does not by itself constitute reasonable grounds for determining that the dispute is frivolous or irrelevant.

(d) If disputed information is found to be accurate [inaccurate or cannot be verified] after a reinvestigation under Subsection (a), the consumer reporting agency[, unless otherwise directed by the consumer,] shall promptly reinsert [delete] the information into [from] the consumer's file[, revise the consumer file, and provide the revised consumer report to the consumer and to each person who requested the consumer report within the preceding six months]. The consumer reporting agency may not report in subsequent reports disputed information found, after a reinvestigation under Subsection (a), to be [the] inaccurate or unverifiable [unverified information in subsequent reports].

(e) Information deleted under Subsection (a) that is found to be inaccurate or unverifiable by the agency's reinvestigation under that subsection [(d)] may not be reinserted in the consumer's file unless the person who furnishes the information to the consumer reporting agency reinvestigates and states in writing or by electronic record to the agency that the information is complete and accurate.

SECTION 3. Sections 392.101(a) and (c), Finance Code, are amended to read as follows:

(a) A third-party debt collector or credit bureau may not engage in debt collection unless the third-party debt collector or credit bureau has obtained a surety bond issued by a surety company authorized to do business in this state as prescribed by this section. A copy of the bond for a credit bureau must be filed with the secretary of state. A copy of the bond for a third-party debt collector must be filed with the Texas Department of Licensing and Regulation.

(c) The bond must be in the amount of $500,000 [$10,000].

SECTION 4. Section 392.202, Finance Code, is amended by amending Subsections (a), (c), and (d) and adding Subsection (a-1) to read as follows:

(a) An individual who disputes the accuracy of an item that is in a third-party debt collector's or credit bureau's file on the individual and that relates to a debt being collected by the third-party debt collector may notify in writing the third-party debt collector of the inaccuracy. The third-party debt collector shall:

(1) make a written record of the dispute;

(2) notify each credit bureau, if any, to which the collector has reported the item that the individual disputes the accuracy of the item;

(3) initiate an investigation of the dispute described by Subsections (b)-(e), if the collector reports information related to the dispute to a credit bureau; and

(4) [. If the third-party debt collector does not report information related to the dispute to a credit bureau, the third-party debt collector shall] cease collection efforts until an investigation of the dispute described by Subsections (b)-(e) determines the accurate amount of the debt, if any.

(a-1) [If the third-party debt collector reports information related to the dispute to a credit bureau, the reporting third-party debt collector shall initiate an investigation of the dispute described by Subsections (b)-(e) and shall cease collection efforts until the investigation determines the accurate amount of the debt, if any.] This section does not affect the application of Chapter 20, Business & Commerce Code, to a third-party debt collector subject to that chapter.

(c) If the third-party debt collector admits that the item is inaccurate under Subsection (b), the third-party debt collector shall:

(1) not later than the fifth business day after the date of the admission:

(A)[,] correct the item in the relevant file; and

(B) notify any credit bureau informed of the dispute under Subsection (a) that the item is inaccurate; and

(2) immediately cease collection efforts related to the portion of the debt that was found to be inaccurate and on correction of the item send, to each person who has previously received a report from the third-party debt collector containing the inaccurate information, notice of the inaccuracy and a copy of an accurate report.

(d) If the third-party debt collector states that there has not been sufficient time to complete an investigation, the third-party debt collector shall immediately:

(1) change the item in the relevant file as requested by the individual;

(2) notify any credit bureau informed of the dispute under Subsection (a) that the third-party debt collector has not completed an investigation;

(3) [(2)] send to each person who previously received the report containing the information a notice that is equivalent to a notice under Subsection (c) and a copy of the changed report; and

(4) [(3)] cease collection efforts.

SECTION 5. Sections 392.403(a), (b), and (e), Finance Code, are amended to read as follows:

(a) A person may sue for:

(1) injunctive relief to prevent or restrain a violation of this chapter; [and]

(2) subject to Subsection (e), damages in an amount equal to the greater of:

(A) actual damages sustained as a result of a violation of this chapter; or

(B) $1,000 or, if the person is 65 years of age or older, $5,000 for each violation of the same nature; or

(3) both injunctive relief and damages.

(b) A person who successfully maintains an action under Subsection (a) is entitled to attorney's fees reasonably related to the amount of work performed and costs, including court costs.

(e) The court may increase an amount of actual damages in an action brought under Subsection (a) to an amount not to exceed three times the amount of actual damages sustained if the court finds that:

(1) the violation has occurred with sufficient frequency to constitute a pattern or practice; or

(2) the debt collector or third-party debt collector wilfully and knowingly committed the violation. [A person who successfully maintains an action under this section for violation of Section 392.101, 392.202, or 392.301(a)(3) is entitled to not less than $100 for each violation of this chapter.]

SECTION 6. Chapter 392, Finance Code, is amended by adding Subchapter F to read as follows:

SUBCHAPTER F. LICENSING OF THIRD-PARTY DEBT COLLECTORS

Sec. 392.501. DEFINITIONS. In this subchapter:

(1) "Commission" means the Texas Commission of Licensing and Regulation.

(2) "Department" means the Texas Department of Licensing and Regulation.

Sec. 392.502. LICENSE REQUIRED. A person may not act as a third-party debt collector under this chapter unless the person holds a license issued under this subchapter.

Sec. 392.503. EXEMPTIONS. This subchapter does not apply to:

(1) a real estate broker or salesperson licensed under Chapter 1101, Occupations Code, who is acting within the course and scope of that license;

(2) a financial institution, as defined by Section 201.101; and

(3) an insurance company authorized to do business in this state.

Sec. 392.504. APPLICATION REQUIREMENTS. (a) The application for a license under this subchapter must:

(1) be under oath;

(2) contain the name of the applicant and if the applicant is:

(A) a corporation, a list of the names and addresses of its officers and directors;

(B) a partnership, a list of the names and addresses of its partners; or

(C) a limited liability company, a list of the names and addresses of its members and managers;

(3) contain the street address of the applicant's principal place of business;

(4) contain all names under which the applicant engages in debt collection activities;

(5) contain the names of all persons with which the applicant is affiliated, and the principal place of business of each affiliate; and

(6) contain any other relevant information that the department determines appropriate.

(b) On the filing of a license application, the applicant shall pay to the commission:

(1) an investigation fee not to exceed $200; and

(2) an application fee in an amount determined as provided by Section 392.505.

Sec. 392.505. GENERAL POWERS AND DUTIES OF COMMISSION; FEES. The commission shall:

(1) adopt necessary rules to administer and enforce this subchapter; and

(2) set application, licensing, and renewal fees in an amount reasonable and necessary to cover the cost of administering and enforcing this subchapter.

Sec. 392.506. ADMINISTRATION BY DEPARTMENT. (a) The department shall administer and enforce this subchapter.

(b) The department may recommend proposed rules to the commission.

Sec. 392.507. FINANCIAL STATEMENT. (a) An applicant for a license under this subchapter must file with the application a financial statement that shows the assets and liabilities of the applicant.

(b) The financial statement must be sworn to by the applicant if the applicant is an individual or by a partner, officer, or manager if the applicant is a partnership, corporation, trust, joint-stock company, foundation, or association of individuals.

(c) Information contained in a financial statement filed under this section is confidential and not public information but is admissible in evidence at a hearing held or an action instituted under this chapter.

Sec. 392.508. INVESTIGATION OF APPLICATION. On the filing of an application and payment of the required fees, the department shall conduct an investigation to determine whether to issue the license.

Sec. 392.509. APPROVAL OR DENIAL OF APPLICATION. (a) The department shall approve the application and issue to the applicant a license under this subchapter if the department finds that:

(1) the applicant meets the application requirements of Section 392.504;

(2) the financial responsibility, experience, character, and general fitness of the applicant are sufficient to:

(A) command the confidence of the public; and

(B) warrant the belief that the business will be operated lawfully and fairly, within the purposes of this chapter; and

(3) the applicant has obtained a surety bond as required by Section 392.101.

(b) If the department does not find the eligibility requirements of Subsection (a), the department shall notify the applicant.

(c) If an applicant requests a hearing on the application not later than the 30th day after the date of notification under Subsection (b), the applicant is entitled to a hearing not later than the 60th day after the date of the request.

(d) The department shall approve or deny the application not later than the 60th day after the date of the filing of a completed application with payment of the required fees, or if a hearing is held, after the date of the completion of the hearing on the application. The department and the applicant may agree to a later date in writing.

Sec. 392.510. DISPOSITION OF FEES ON DENIAL OF APPLICATION. If the department denies the application, the department shall retain the investigation fee.

Sec. 392.511. ANNUAL LICENSE FEE. Not later than December 1, a license holder shall pay to the department an annual fee for the year beginning the next January 1, in an amount determined as provided by Section 392.505.

Sec. 392.512. EXPIRATION OF LICENSE ON FAILURE TO PAY ANNUAL FEE. If the annual fee for a license is not paid before the 16th day after the date on which the written notice of delinquency of payment has been given to the license holder, the license expires on the later of:

(1) that day; or

(2) December 31 of the last year for which an annual fee was paid.

Sec. 392.513. LICENSE SUSPENSION OR REVOCATION. After notice and a hearing the department may suspend or revoke a license if the department finds that:

(1) the license holder failed to pay the annual license fee, an examination fee, or another fee imposed by the department;

(2) the license holder, knowingly or without the exercise of due care, has committed multiple violations of this chapter or a rule adopted or order issued under this chapter; or

(3) a fact or condition exists that, if it had existed or had been known to exist at the time of the original application for the license, clearly would have justified the department's denial of the application.

Sec. 392.514. REINSTATEMENT OF SUSPENDED LICENSE; ISSUANCE OF NEW LICENSE AFTER REVOCATION. The department may reinstate a suspended license or issue a new license on application to a person whose license has been revoked if at the time of the reinstatement or issuance no fact or condition exists that clearly would have justified the department's denial of an original application for the license.

Sec. 392.515. SURRENDER OF LICENSE. A license holder may surrender a license issued under this subchapter by delivering to the department:

(1) the license; and

(2) a written notice of the license's surrender.

Sec. 392.516. TRANSFER OR ASSIGNMENT OF LICENSE PROHIBITED. A license may not be transferred or assigned.

SECTION 7. Section 392.403, Finance Code, as amended by this Act, applies only to a cause of action that accrues on or after the effective date of this Act. A cause of action that accrues before the effective date of this Act is governed by the law as it existed immediately before the effective date of this Act, and the former law is continued in effect for that purpose.

SECTION 8. Not later than October 1, 2009, the Texas Commission of Licensing and Regulation shall adopt rules required by Section 392.505, Finance Code, as added by this Act.

SECTION 9. A person is not required to obtain a license under Subchapter F, Chapter 392, Finance Code, as added by this Act, until January 1, 2010.

SECTION 10. This Act takes effect September 1, 2009.