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A BILL TO BE ENTITLED
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AN ACT
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relating to notice and disclosure requirements for certain credit |
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services organizations regarding charges and consumer borrowing. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 393, Finance Code, is amended by adding |
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Subchapter C-1 to read as follows: |
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SUBCHAPTER C-1. NOTICE AND DISCLOSURE REQUIREMENTS FOR CERTAIN |
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CREDIT SERVICES ORGANIZATIONS |
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Sec. 393.221. DEFINITIONS. In this subchapter: |
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(1) "Credit access business" means a credit services |
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organization that obtains for a consumer or assists a consumer in |
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obtaining an extension of consumer credit in the form of a deferred |
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presentment transaction or a motor vehicle certificate of title |
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loan. |
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(2) "Deferred presentment transaction" has the |
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meaning assigned by Section 341.001. The term is also referred to |
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as a payday loan. |
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(3) "Motor vehicle certificate of title loan" or "auto |
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title loan" means a loan in which a motor vehicle certificate of |
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title is given as security for the loan. The term does not include a |
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retail installment transaction under Chapter 348 or another loan |
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made to finance the purchase of a motor vehicle. |
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Sec. 393.222. POSTING OF FEE SCHEDULE; NOTICES. (a) A |
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credit access business shall post, in a conspicuous location in an |
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area of the business accessible to consumers: |
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(1) a schedule of all fees to be charged for services |
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performed by the credit access business in connection with deferred |
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presentment transactions and motor vehicle certificate of title |
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loans, as applicable; |
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(2) a notice of the name and address of the Office of |
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Consumer Credit Commissioner and the telephone number of the |
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office's consumer helpline; and |
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(3) a notice that reads as follows: |
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"An advance of money obtained through a payday loan or auto |
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title loan is not intended to meet long-term financial needs. A |
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payday loan or auto title loan should only be used to meet |
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intermediate short-term cash needs. Refinancing the loan rather |
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than paying the debt in full when due will require the payment of |
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additional charges." |
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(b) The Finance Commission of Texas may adopt rules to |
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implement this section. |
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Sec. 393.223. CONSUMER TRANSACTION INFORMATION. (a) |
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Before performing services described by Section 393.221(1), a |
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credit access business must provide to a consumer a disclosure |
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adopted by rule of the Finance Commission of Texas that discloses |
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the following: |
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(1) the interest, fees, and annual percentage rates, |
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as applicable, to be charged on a deferred presentment transaction |
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or on a motor vehicle certificate of title loan, as applicable, in |
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comparison to: |
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(A) interest, fees, and annual percentage rates |
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to be charged on other alternative financial products that a |
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consumer might consider, such as credit card finance charges or |
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pawn service charges; and |
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(B) late charge fees or other typical costs that |
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a consumer considering a deferred presentment transaction or a |
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motor vehicle certificate of title loan may otherwise incur in lieu |
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of the transaction or loan, including a bank overdraft charge or a |
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late charge on a utility service bill; |
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(2) a comparison of the amount of accumulated fees a |
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consumer would incur in obtaining and refinancing a deferred |
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presentment transaction or motor vehicle certificate of title loan |
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in various sample amounts that remain outstanding for a period of |
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two weeks, one month, two months, and three months to the amount of |
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equivalent fees the consumer would incur in borrowing the same |
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amounts on a credit card for those same extended periods; and |
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(3) information regarding the typical pattern of |
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repayment of deferred presentment transactions and motor vehicle |
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certificate of title loans. |
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(b) If a credit access business obtains or assists a |
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consumer in obtaining a motor vehicle certificate of title loan, |
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the credit access business shall provide to the consumer a notice |
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warning the consumer that in the event of default the consumer may |
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be required to surrender possession of the motor vehicle to the |
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lender or other person to satisfy the consumer's outstanding |
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obligations under the loan. |
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(c) The Finance Commission of Texas shall adopt rules to |
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implement this section. |
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SECTION 2. This Act takes effect January 1, 2012. |