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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 credit services |
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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. Section 393.001, Finance Code, is amended by |
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adding Subdivisions (3-a) and (5) to read as follows: |
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(3-a) "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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(5) "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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SECTION 2. The heading to Subchapter B, Chapter 393, |
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Finance Code, is amended to read as follows: |
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SUBCHAPTER B. REGISTRATION; [AND] DISCLOSURE STATEMENTS AND OTHER |
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REQUIREMENTS |
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SECTION 3. Subchapter B, Chapter 393, Finance Code, is |
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amended by adding Sections 393.107 and 393.108 to read as follows: |
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Sec. 393.107. POSTING OF FEE SCHEDULE; NOTICES. (a) A |
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credit services organization shall post, in a conspicuous location |
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in an area of the organization 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 services organization, including fees to be |
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charged in connection with deferred presentment transactions and |
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motor vehicle certificate of title loans; |
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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. Renewing the loan rather than |
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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. 393.108. CONSUMER BORROWING INFORMATION. (a) A |
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credit services organization shall provide to consumers the |
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following: |
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(1) a disclosure of the annual percentage rate of all |
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interest and fees to be charged on a deferred presentment |
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transaction and on a motor vehicle certificate of title loan, in |
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comparison to the annual percentage rate of all interest and fees to |
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be charged on other similar financial products; |
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(2) a disclosure of the amount of accumulated fees a |
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consumer would incur for having a $300 deferred presentment |
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transaction or a $300 motor vehicle certificate of title loan, by |
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way of example, outstanding for a period of two weeks, one month, |
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two months, and three months in comparison to the amount of |
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equivalent fees incurred for borrowing the same amount on a credit |
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card for those extended periods; and |
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(3) information regarding the typical profile 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) The Finance Commission of Texas may adopt rules to |
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implement this section. |
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SECTION 4. This Act takes effect September 1, 2011. |