By: Truitt, Rodriguez, Harless, Farias, H.B. No. 2594
      McClendon, et al.
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the licensing and regulation of certain credit services
  organizations and the regulation of certain extensions of consumer
  credit obtained by those organizations or with regard to which the
  organizations provide assistance; providing an administrative
  penalty.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 393.201, Finance Code, is amended by
  adding Subsection (c) to read as follows:
         (c)  A contract with a credit access business, as defined by
  Section 393.601, for the performance of services described by
  Section 393.602(a) must, in addition to the requirements of
  Subsection (b) and Section 393.302:
               (1)  contain a statement that there is no prepayment
  penalty;
               (2)  contain a statement that a credit access business
  must comply with Chapter 392 and the federal Fair Debt Collection
  Practices Act (15 U.S.C. Section 1692 et seq.) with respect to an
  extension of consumer credit described by Section 393.602(a);
               (3)  contain a statement that a person may not threaten
  or pursue criminal charges against a consumer related to a check or
  other debit authorization provided by the consumer as security for
  a transaction in the absence of forgery, fraud, theft, or other
  criminal conduct;
               (4)  contain a statement that a credit access business
  must comply, to the extent applicable, with 10 U.S.C. Section 987
  and any regulations adopted under that law with respect to an
  extension of consumer credit described by Section 393.602(a);
               (5)  disclose to the consumer:
                     (A)  the lender from whom the extension of
  consumer credit is obtained;
                     (B)  the interest paid or to be paid to the lender;
  and
                     (C)  the specific fees that will be paid to the
  credit access business for the business's services; and
               (6)  the name and address of the Office of Consumer
  Credit Commissioner and the telephone number of the office's
  consumer helpline.
         SECTION 2.  Chapter 393, Finance Code, is amended by adding
  Subchapter G to read as follows:
  SUBCHAPTER G. LICENSING AND REGULATION OF CERTAIN CREDIT SERVICES
  ORGANIZATIONS
         Sec. 393.601.  DEFINITIONS. In this subchapter:
               (1)  "Commissioner" means the consumer credit
  commissioner.
               (2)  "Credit access business" means a credit services
  organization that obtains for a consumer or assists a consumer in
  obtaining an extension of consumer credit in the form of a deferred
  presentment transaction or a motor vehicle
  title loan.
               (3)  "Deferred presentment transaction" has the
  meaning assigned by Section 341.001.
               (4)  "Finance commission" means the Finance Commission
  of Texas.
               (5)  "Motor vehicle title loan" means a loan in which an
  unencumbered motor vehicle is given as security for the loan. The
  term does not include a retail installment transaction under
  Chapter 348 or another loan made to finance the purchase of a motor
  vehicle.
               (6)  "Office" means the Office of Consumer Credit
  Commissioner.
         Sec. 393.602.  APPLICABILITY. (a) This subchapter applies
  only to a credit services organization that obtains for a consumer
  or assists a consumer in obtaining an extension of consumer credit
  in the form of:
               (1)  a deferred presentment transaction; or
               (2)  a motor vehicle title loan.
         (b)  Any usury violation by a lender with respect to an
  extension of consumer credit described by Subsection (a) is subject
  to Chapter 349. In connection with a determination of usury, the
  fees charged by a credit access business conducting business under
  this chapter do not constitute interest.
         (c)  A person may not use a device, subterfuge, or pretense
  to evade the application of this subchapter.  A lawful transaction
  governed under another statute, including Title 1, Business &
  Commerce Code, does not violate this subsection and may not be
  considered a device, subterfuge, or pretense to evade the
  application of this subchapter.
         Sec. 393.603.  LICENSE REQUIRED. A credit services
  organization must obtain a license under this subchapter for each
  location at which the organization operates as a credit access
  business in performing services described by Section 393.602(a).
         Sec. 393.604.  APPLICATION FOR LICENSE. (a) An application
  for a license under this subchapter must:
               (1)  be under oath;
               (2)  give the approximate location from which the
  business is to be conducted;
               (3)  identify the business's principal parties in
  interest;
               (4)  contain the name, physical address, and telephone
  number of all third-party lender organizations with which the
  business contracts to provide services described by Section
  393.602(a) or from which the business arranges extensions of
  consumer credit described by Section 393.602(a); and
               (5)  contain other relevant information that the
  commissioner requires for the findings required under Section
  393.607.
         (b)  On the filing of one or more license applications, the
  applicant shall pay to the commissioner an investigation fee of
  $200. Except for good cause as determined by the finance
  commission, a separate investigation fee is not required for
  multiple license applications.
         (c)  On the filing of each license application, the applicant
  shall pay to the commissioner for the license's year of issuance a
  license fee in an amount determined as provided by Section 14.107.
         Sec. 393.605.  BOND. (a) If the commissioner requires, an
  applicant for a license under this subchapter shall file with the
  application a bond that is:
               (1)  in an amount satisfactory to the commissioner that
  does not exceed the lesser of:
                     (A)  $10,000 for the first license and $10,000 for
  each additional license; or
                     (B)  $2,500,000; 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 a person who has a cause of action under
  this subchapter against the license holder.
         (c)  The bond must be conditioned on:
               (1)  the license holder's faithful performance under
  this subchapter and rules adopted under this subchapter; and
               (2)  the payment of all amounts that become due to this
  state or another person under this subchapter 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 subchapter may
  not exceed the amount of the bond.
         (e)  A credit access business that files a bond under this
  section is not required to file a bond under Subchapter E.
         (f)  A credit access business, instead of obtaining a surety
  bond, may satisfy the requirements of this section by depositing an
  amount described by Subsection (a)(1) in a surety account held in
  trust at a federally insured bank or savings association located in
  this state. The name of the depository, trustee, and account number
  of the surety account must be filed with the office.
         Sec. 393.606.  INVESTIGATION OF APPLICATION. On the filing
  of an application and a bond, if required under Section 393.605, and
  on payment of the required fees, the commissioner shall conduct an
  investigation to determine whether to issue the license.
         Sec. 393.607.  APPROVAL OR DENIAL OF APPLICATION. (a) The
  commissioner shall approve the application and issue to the
  applicant a license to operate as a credit access business for
  purposes of engaging in the activity to which this subchapter
  applies if the commissioner finds that:
               (1)  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
  subchapter; and
               (2)  the applicant has net assets of at least $25,000
  available for the operation of the business as determined in
  accordance with Section 393.611.
         (b)  If the commissioner does not find the eligibility
  requirements of Subsection (a) have been met, the commissioner
  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 30th day after the date of the request.
         (d)  The commissioner shall approve or deny the application
  not later than the 30th 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 commissioner and the applicant may agree to a
  later date in writing.
         Sec. 393.608.  DISPOSITION OF FEES ON DENIAL OF APPLICATION.
  If the commissioner denies the application, the commissioner shall
  retain the investigation fee and shall return to the applicant the
  license fee submitted with the application.
         Sec. 393.609.  NAME AND PLACE OF LICENSE. (a) A license
  issued under this subchapter must state:
               (1)  the name of the license holder; and
               (2)  the address of the office from which the business
  is to be conducted, except as provided by Subsection (c).
         (b)  A license holder may not conduct business under this
  subchapter under a name other than the name stated on the license.
         (c)  A license holder may not conduct business at a location
  other than the address stated on the license, except that a license
  holder:
               (1)  is not required to have an office in this state;
  and
               (2)  may operate using e-commerce methods, including
  the Internet.
         Sec. 393.610.  LICENSE DISPLAY. A license holder shall
  display a license at the place of business provided on the license.
  With respect to business conducted through the Internet, this
  requirement may be satisfied by displaying the license on the
  business's Internet website.
         Sec. 393.611.  MINIMUM ASSETS FOR LICENSE. A license holder
  shall maintain net assets used or readily available for use in
  conducting the business of each of the offices for which a license
  is held under this subchapter, in an amount that is not less than
  the lesser of:
               (1)  $25,000 for each office; or
               (2)  $2,500,000 in the aggregate.
         Sec. 393.612.  ANNUAL LICENSE FEE. Not later than December
  1, a license holder shall pay to the commissioner for each license
  held an annual fee for the year beginning the next January 1, in an
  amount determined as provided by Section 14.107.
         Sec. 393.613.  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. 393.614.  LICENSE SUSPENSION OR REVOCATION. (a) After
  notice and a hearing the commissioner may suspend or revoke a
  license if the commissioner finds that:
               (1)  the license holder failed to pay the annual
  license fee, an examination fee, an investigation fee, or another
  charge imposed by the commissioner under this subchapter;
               (2)  the license holder, knowingly or without the
  exercise of due care, violated 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 commissioner's
  denial of the application.
         (b)  If in a three-year period the commissioner suspends or
  revokes under this section the licenses of five or more credit
  access businesses owned or controlled by the same person, including
  a corporation that owns multiple businesses, the commissioner may
  suspend or revoke the licenses of all credit access businesses
  owned or controlled by that person.
         Sec. 393.615.  LICENSE SUSPENSION OR REVOCATION FILED WITH
  PUBLIC RECORDS. The decision of the commissioner on the suspension
  or revocation of a license and the evidence considered by the
  commissioner in making the decision shall be filed in the public
  records of the commissioner.
         Sec. 393.616.  REINSTATEMENT OF SUSPENDED LICENSE; ISSUANCE
  OF NEW LICENSE AFTER REVOCATION. The commissioner 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 commissioner's denial of an original application for
  the license.
         Sec. 393.617.  SURRENDER OF LICENSE. A license holder may
  surrender a license issued under this subchapter by delivering to
  the commissioner:
               (1)  the license; and
               (2)  a written notice of the license's surrender.
         Sec. 393.618.  EFFECT OF LICENSE SUSPENSION, REVOCATION, OR
  SURRENDER. (a) The suspension, revocation, or surrender of a
  license issued under this subchapter does not affect the obligation
  of a contract between the license holder and a consumer entered into
  before the revocation, suspension, or surrender.
         (b)  Surrender of a license does not affect the license
  holder's civil or criminal liability for an act committed before
  surrender.
         Sec. 393.619.  MOVING AN OFFICE. (a) A license holder shall
  give written notice to the commissioner before the 30th day before
  the date the license holder moves an office from the location
  provided on the license.
         (b)  The commissioner shall amend a license holder's license
  accordingly.
         Sec. 393.620.  TRANSFER OR ASSIGNMENT OF LICENSE. A license
  may be transferred or assigned only with the approval of the
  commissioner.
         Sec. 393.621.  ADMINISTRATION. The office shall administer
  this subchapter.
         Sec. 393.622.  RULES. (a) The finance commission may:
               (1)  adopt rules necessary to enforce and administer
  this subchapter;
               (2)  adopt rules with respect to the quarterly
  reporting by a credit access business licensed under this
  subchapter of summary business information relating to extensions
  of consumer credit described by Section 393.602(a); and
               (3)  adopt rules with respect to periodic examination
  by the office relating to extensions of consumer credit described
  by Section 393.602(a), including rules related to charges for
  defraying the reasonable cost of conducting the examinations.
         (b)  The finance commission may adopt rules under this
  section to allow the commissioner to review, as part of a periodic
  examination, any relevant contracts between the credit access
  business and the third-party lender organizations with which the
  credit access business contracts to provide services described by
  Section 393.602(a) or from which the business arranges extensions
  of consumer credit described by Section 393.602(a). A contract or
  information obtained by the commissioner under this section is
  considered proprietary and confidential to the respective parties
  to the contract, and is not subject to disclosure under Chapter 552,
  Government Code.
         (c)  In adopting rules under this section, the finance
  commission may not establish limits on the fees charged by a credit
  access business and may not authorize the commissioner to establish
  such limits.
         Sec. 393.623.  PROVIDING OR ADVERTISING SERVICES WITHOUT
  LICENSE PROHIBITED. A credit access business or a representative
  of the business may not provide or advertise the services of the
  business if the business is not licensed under this subchapter.
         Sec. 393.624.  RESTRICTIONS ON OFF-SITE ADVERTISING. (a) A
  credit access business may not advertise on the premises of a
  nursing facility, assisted living facility, group home,
  intermediate care facility for persons with mental retardation, or
  other similar facility subject to regulation by the Department of
  Aging and Disability Services.
         (b)  The finance commission may adopt rules to implement this
  section.
         Sec. 393.625.  MILITARY BORROWERS.  An extension of consumer
  credit described by Section 393.602(a) that is obtained by a credit
  access business for a member of the United States military or a
  dependent of a member of the United States military or that the
  business assisted that person in obtaining must comply with 10
  U.S.C. Section 987 and any regulations adopted under that law, to
  the extent applicable.
         Sec. 393.626.  DEBT COLLECTION PRACTICES. A violation of
  Chapter 392 by a credit access business with respect to an extension
  of consumer credit described by Section 393.602(a) constitutes a
  violation of this subchapter.
         Sec. 393.627.  QUARTERLY REPORT TO COMMISSIONER. A credit
  access business shall file a quarterly report with the commissioner
  on a form prescribed by the commissioner that provides the
  following information relating to extensions of consumer credit
  described by Section 393.602(a) during the preceding quarter:
               (1)  the number of consumers for whom the business
  obtained or assisted in obtaining those extensions of consumer
  credit;
               (2)  the number of those extensions of consumer credit
  obtained by the business or that the business assisted consumers in
  obtaining;
               (3)  the number of refinancing transactions of the
  extensions of consumer credit described by Subdivision (2);
               (4)  the number of consumers refinancing the extensions
  of consumer credit described by Subdivision (2);
               (5)  the number of consumers refinancing more than once
  the extensions of consumer credit described by Subdivision (2);
               (6)  the average amount of the extensions of consumer
  credit described by Subdivision (2);
               (7)  the total amount of fees charged by the business
  for the activities described by Subdivision (1);
               (8)  the number of vehicles surrendered or repossessed
  under the terms of an extension of consumer credit in the form of a
  motor vehicle title loan obtained by the business or that the
  business assisted a consumer in obtaining;
               (9)  the mean, median, and mode of the number of
  extensions of consumer credit obtained by consumers as a result of
  entering into the extensions of consumer credit described by
  Subdivision (2); and
               (10)  any related information the commissioner
  determines necessary.
         Sec. 393.628.  TEXAS FINANCIAL EDUCATION ENDOWMENT. (a) As
  part of the licensing fee and procedures described under this
  subchapter, each license holder shall pay to the commissioner an
  annual assessment to improve consumer credit, financial education,
  and asset-building opportunities in this state. The annual
  assessment may not exceed $200 for each license as specified by the
  finance commission.
         (b)  The Texas Financial Education Endowment shall be
  administered by the finance commission to support statewide
  financial education and consumer credit building activities and
  programs, including:
               (1)  production and dissemination of approved
  financial education materials at licensed locations;
               (2)  advertising, marketing, and public awareness
  campaigns to improve the credit profiles and credit scores of
  consumers in this state;
               (3)  school and youth-based financial literacy and
  capability;
               (4)  credit building and credit repair;
               (5)  financial coaching and consumer counseling;
               (6)  bank account enrollment and incentives for
  personal savings; and
               (7)  other consumer financial education and
  asset-building initiatives as considered appropriate by the
  finance commission.
         (c)  In implementing this section, the finance commission
  may solicit gifts, grants, and donations for this purpose.
         (d)  The finance commission may partner with other state
  agencies and entities to implement this section.
         (e)  The finance commission shall adopt rules to administer
  this section.
         SECTION 3.  Section 14.101, Finance Code, is amended to read
  as follows:
         Sec. 14.101.  GENERAL DUTIES OF COMMISSIONER. The
  commissioner shall enforce this chapter, Subtitles B and C of Title
  4, Chapter 393 with respect to a credit access business, and Chapter
  394 in person or through an assistant commissioner, examiner, or
  other employee of the office.
         SECTION 4.  Section 14.107, Finance Code, is amended to read
  as follows:
         Sec. 14.107.  FEES. (a)  The finance commission shall
  establish reasonable and necessary fees for carrying out the
  commissioner's powers and duties under this chapter, Title 4,
  Chapter 393 with respect to a credit access business, and Chapters
  371, 392, and 394 and under Chapters 51, 302, 601, and 621, Business &
  Commerce Code.
         (b)  The finance commission by rule shall set the fees for
  licensing and examination under Chapter 393 with respect to a
  credit access business or Chapter 342, 347, 348, 351, or 371 at
  amounts or rates necessary to recover the costs of administering
  those chapters.  The rules may provide that the amount of a fee
  charged to a license holder is based on the volume of the license
  holder's regulated business and other key factors.  The
  commissioner may provide for collection of a single annual fee from
  a person licensed under Subchapter G of Chapter 393 or Chapter 342,
  347, 348, 351, or 371 to include amounts due for both licensing and
  examination.
         SECTION 5.  Section 14.201, Finance Code, is amended to read
  as follows:
         Sec. 14.201.  INVESTIGATION AND ENFORCEMENT AUTHORITY.
  Investigative and enforcement authority under this subchapter
  applies only to this chapter, Subtitles B and C of Title 4, Chapter
  393 with respect to a credit access business, and Chapter 394.
         SECTION 6.  Section 14.2015(a), Finance Code, is amended to
  read as follows:
         (a)  Except as provided by Subsection (b), information or
  material obtained or compiled by the commissioner in relation to an
  examination by the commissioner or the commissioner's
  representative of a license holder or registrant under Subtitle B
  or C, Title 4, Subchapter G of Chapter 393, or Chapter 394 is
  confidential and may not be disclosed by the commissioner or an
  officer or employee of the Office of Consumer Credit Commissioner,
  including:
               (1)  information obtained from a license holder or
  registrant under Subtitle B or C, Title 4, Subchapter G of Chapter
  393, or Chapter 394;
               (2)  work performed by the commissioner or the
  commissioner's representative on information obtained from a
  license holder or registrant for the purposes of an examination
  conducted under Subtitle B or C, Title 4, Chapter 393 with respect
  to a credit access business, or Chapter 394;
               (3)  a report on an examination of a license holder or
  registrant conducted under Subtitle B or C, Title 4, Chapter 393
  with respect to a credit access business, or Chapter 394; and
               (4)  any written communications between the license
  holder or registrant, as applicable, and the commissioner or the
  commissioner's representative relating to or referencing an
  examination conducted under Subtitle B or C, Title 4, Chapter 393
  with respect to a credit access business, or Chapter 394.
         SECTION 7.  Section 14.251, Finance Code, is amended by
  adding Subsection (a-1) and amending Subsection (b) to read as
  follows:
         (a-1)  The commissioner shall assess an administrative
  penalty against a credit access business who knowingly and wilfully
  violates or causes a violation of Chapter 393, or a rule adopted
  under Chapter 393.
         (b)  The commissioner may order a person who violates or
  causes a violation of this chapter, Chapter 394, or Subtitle B,
  Title 4, or a rule adopted under this chapter, Chapter 394, or
  Subtitle B, Title 4, or a credit access business who violates or
  causes a violation of Chapter 393 or a rule adopted under Chapter
  393, to make restitution to an identifiable person injured by the
  violation.
         SECTION 8.  Section 14.261(a), Finance Code, is amended to
  read as follows:
         (a)  In administering this chapter, the commissioner may
  accept assurance of voluntary compliance from a person who is
  engaging in or has engaged in an act or practice in violation of:
               (1)  this chapter or a rule adopted under this chapter;
               (2)  Chapter 393, if the person is a credit access
  business, or Chapter 394; or
               (3)  Subtitle B, Title 4, or a rule adopted under
  Subtitle B, Title 4.
         SECTION 9.  Section 14.262, Finance Code, is amended to read
  as follows:
         Sec. 14.262.  EFFECT OF ASSURANCE. (a) An assurance of
  voluntary compliance is not an admission of a violation of:
               (1)  this chapter or a rule adopted under this chapter;
               (2)  Chapter 393 with respect to a credit access
  business or Chapter 394; or
               (3)  Subtitle B, Title 4, or a rule adopted under
  Subtitle B, Title 4.
         (b)  Unless an assurance of voluntary compliance is
  rescinded by agreement or voided by a court for good cause, a
  subsequent failure to comply with the assurance is prima facie
  evidence of a violation of:
               (1)  this chapter or a rule adopted under this chapter;
               (2)  Chapter 393 with respect to a credit access
  business or Chapter 394; or
               (3)  Subtitle B, Title 4, or a rule adopted under
  Subtitle B, Title 4.
         SECTION 10.  This Act takes effect January 1, 2012.