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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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providing an administrative penalty. |
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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 title loan. |
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(2) "Deferred presentment transaction" has the |
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meaning assigned by Section 341.001. For purposes of this chapter, |
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this definition does not preclude repayment in more than one |
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installment. The term is also referred to as a payday loan. |
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(3) "Motor vehicle title loan" or "auto title loan" |
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means a loan in which an unencumbered motor vehicle is given as |
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security for the loan. The term does not include a retail |
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installment transaction under Chapter 348 or another loan made to |
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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 and on any Internet |
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website, including a social media site, maintained by the credit |
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access business: |
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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 title loans, as |
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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 immediate |
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short-term cash needs. Refinancing the loan rather than paying the |
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debt in full when due will require the payment of additional |
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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 in a form prescribed by the commission: |
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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 title loan, as applicable, in comparison to |
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interest, fees, and annual percentage rates to be charged on other |
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alternative forms of consumer debt; |
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(2) the amount of accumulated fees a consumer would |
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incur by renewing or refinancing a deferred presentment transaction |
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or motor vehicle title loan that remains outstanding for a period of |
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two weeks, one month, two months, and three months; 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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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 title loan, the credit access |
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business shall provide to the consumer a notice warning the |
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consumer that in the event of default the consumer may be required |
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to surrender possession of the motor vehicle to the lender or other |
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person to satisfy the consumer's outstanding obligations under the |
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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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Sec. 393.224. ADMINISTRATIVE PENALTY. The consumer credit |
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commissioner, in accordance with rules adopted by the Finance |
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Commission of Texas, may assess an administrative penalty against a |
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credit access business that knowingly and wilfully violates this |
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subchapter or a rule adopted under this subchapter in the manner |
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provided by Subchapter F, Chapter 14. |
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SECTION 2. Notwithstanding Section 393.223(a), Finance |
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Code, as added by this Act, a credit access business is not required |
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to comply with that section until the Finance Commission of Texas |
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prescribes the form required by that section. |
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SECTION 3. This Act takes effect January 1, 2012. |
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