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A BILL TO BE ENTITLED
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AN ACT
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relating to extensions of consumer credit a credit services |
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organization obtains for a consumer or assists a consumer in |
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obtaining. |
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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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amending Subdivision (3) and adding Subdivisions (3-a) and (5) to |
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read as follows: |
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(3) "Credit services organization" means a person who |
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provides, or represents that the person can or will provide, for the |
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payment of valuable consideration any of the following services |
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with respect to the extension of consumer credit by others: |
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(A) improving a consumer's credit history or |
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rating; |
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(B) obtaining an extension of consumer credit for |
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a consumer in the form of a deferred presentment transaction or |
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motor vehicle title loan; or |
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(C) providing advice or assistance to a consumer |
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with regard to Paragraph (A) or (B). |
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(3-a) "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. |
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(5) "Motor vehicle title loan" means a loan in which an |
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unencumbered motor vehicle is given as security for the loan. The |
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term does not include a retail installment transaction under |
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Chapter 348 or another loan made to finance the purchase of a motor |
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vehicle. |
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SECTION 2. Subchapter D, Chapter 393, Finance Code, is |
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amended by adding Section 393.308 to read as follows: |
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Sec. 393.308. PROHIBITION ON OBTAINING CERTAIN LOANS OR |
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EXTENSIONS OF CREDIT. A credit services organization may not: |
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(1) obtain for a consumer or assist a consumer in |
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obtaining a loan or other extension of credit that is not in the |
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form of a deferred presentment transaction or motor vehicle title |
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loan; or |
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(2) charge or receive from a consumer a fee or other |
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valuable consideration in connection with a loan or other extension |
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of credit that is not a deferred presentment transaction or motor |
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vehicle title loan. |
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SECTION 3. Section 393.201(c), Finance Code, is amended to |
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read as follows: |
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(c) A contract with a credit access business, as defined by |
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Section 393.601, [for the performance of services described by
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Section 393.602(a)] must, in addition to the requirements of |
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Subsection (b) and Section 393.302: |
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(1) contain a statement that there is no prepayment |
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penalty; |
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(2) contain a statement that a credit access business |
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must comply with Chapter 392 and the federal Fair Debt Collection |
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Practices Act (15 U.S.C. Section 1692 et seq.) with respect to an |
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extension of consumer credit [described by Section 393.602(a)]; |
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(3) contain a statement that a person may not threaten |
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or pursue criminal charges against a consumer related to a check or |
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other debit authorization provided by the consumer as security for |
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a transaction in the absence of forgery, fraud, theft, or other |
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criminal conduct; |
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(4) contain a statement that a credit access business |
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must comply, to the extent applicable, with 10 U.S.C. Section 987 |
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and any regulations adopted under that law with respect to an |
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extension of consumer credit [described by Section 393.602(a)]; |
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(5) disclose to the consumer: |
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(A) the lender from whom the extension of |
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consumer credit is obtained; |
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(B) the interest paid or to be paid to the lender; |
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and |
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(C) the specific fees that will be paid to the |
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credit access business for the business's services; and |
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(6) contain 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. |
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SECTION 4. Section 393.221, Finance Code, is amended to |
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read as follows: |
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Sec. 393.221. DEFINITION [DEFINITIONS]. In this |
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subchapter, "credit access business" [:
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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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SECTION 5. Section 393.601(2), Finance Code, is amended to |
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read as follows: |
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(2) "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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SECTION 6. Sections 393.602(a) and (b), Finance Code, are |
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amended to read as follows: |
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(a) This subchapter applies only to 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:
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[(1) a deferred presentment transaction; or
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[(2) a motor vehicle title loan]. |
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(b) A credit access business may assess fees as agreed to |
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between the parties for [its] services performed to obtain an |
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extension of consumer credit for a consumer or assist a consumer in |
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obtaining an extension of consumer credit [as agreed to between the
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parties]. A credit access business fee may be calculated daily, |
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biweekly, monthly, or on another periodic basis. A credit access |
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business is permitted to charge amounts allowed by other laws, as |
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applicable. A fee may not be charged unless it is disclosed. |
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SECTION 7. Section 393.603, Finance Code, is amended to |
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read as follows: |
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Sec. 393.603. LICENSE REQUIRED. A credit services |
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organization must obtain a license under this subchapter for each |
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location at which the organization operates as a credit access |
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business in performing services described by Section 393.001(3)(B) |
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[393.602(a)]. |
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SECTION 8. Section 393.604(a), Finance Code, is amended to |
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read as follows: |
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(a) An application for a license under this subchapter must: |
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(1) be under oath; |
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(2) give the approximate location from which the |
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business is to be conducted; |
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(3) identify the business's principal parties in |
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interest; |
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(4) contain the name, physical address, and telephone |
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number of all third-party lender organizations: |
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(A) with which the business contracts to provide |
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services described by Section 393.001(3)(B); [393.602(a)] or |
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(B) from which the business arranges extensions |
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of consumer credit [described by Section 393.602(a)]; and |
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(5) contain other relevant information that the |
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commissioner requires for the findings required under Section |
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393.607. |
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SECTION 9. Sections 393.622(a) and (b), Finance Code, are |
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amended to read as follows: |
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(a) The finance commission may: |
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(1) adopt rules necessary to enforce and administer |
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this subchapter; |
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(2) adopt rules with respect to the quarterly |
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reporting by a credit access business licensed under this |
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subchapter of summary business information relating to extensions |
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of consumer credit the business obtained for a consumer or assisted |
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a consumer in obtaining [described by Section 393.602(a)]; and |
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(3) adopt rules with respect to periodic examination |
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by the office relating to extensions of consumer credit the |
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business obtained for a consumer or assisted a consumer in |
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obtaining [described by Section 393.602(a)], including rules |
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related to charges for defraying the reasonable cost of conducting |
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the examinations. |
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(b) The finance commission may adopt rules under this |
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section to allow the commissioner to review, as part of a periodic |
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examination, any relevant contracts between the credit access |
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business and the third-party lender organizations with which the |
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credit access business contracts to provide services described by |
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Section 393.001(3)(B) [393.602(a)] or from which the business |
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arranges extensions of consumer credit [described by Section
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393.602(a)]. A contract or information obtained by the |
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commissioner under this section is considered proprietary and |
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confidential to the respective parties to the contract, and is not |
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subject to disclosure under Chapter 552, Government Code. |
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SECTION 10. Section 393.625, Finance Code, is amended to |
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read as follows: |
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Sec. 393.625. MILITARY BORROWERS. An extension of |
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consumer credit [described by Section 393.602(a)] that is obtained |
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by a credit access business for a member of the United States |
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military or a dependent of a member of the United States military or |
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that the business assisted that person in obtaining must comply |
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with 10 U.S.C. Section 987 and any regulations adopted under that |
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law, to the extent applicable. |
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SECTION 11. Section 393.626, Finance Code, is amended to |
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read as follows: |
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Sec. 393.626. DEBT COLLECTION PRACTICES. A violation of |
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Chapter 392 by a credit access business with respect to obtaining |
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for a consumer or assisting a consumer in obtaining an extension of |
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consumer credit [described by Section 393.602(a)] constitutes a |
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violation of this subchapter. |
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SECTION 12. Section 393.627, Finance Code, is amended to |
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read as follows: |
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Sec. 393.627. QUARTERLY REPORT TO COMMISSIONER. A credit |
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access business shall file a quarterly report with the commissioner |
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on a form prescribed by the commissioner that provides the |
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following information relating to extensions of consumer credit |
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[described by Section 393.602(a)] during the preceding quarter: |
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(1) the number of consumers for whom the business |
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obtained or assisted in obtaining those extensions of consumer |
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credit; |
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(2) the number of those extensions of consumer credit |
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obtained by the business or that the business assisted consumers in |
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obtaining; |
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(3) the number of refinancing transactions of the |
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extensions of consumer credit described by Subdivision (2); |
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(4) the number of consumers refinancing the extensions |
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of consumer credit described by Subdivision (2); |
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(5) the number of consumers refinancing more than once |
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the extensions of consumer credit described by Subdivision (2); |
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(6) the average amount of the extensions of consumer |
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credit described by Subdivision (2); |
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(7) the total amount of fees charged by the business |
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for the activities described by Subdivision (1); |
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(8) the number of vehicles surrendered or repossessed |
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under the terms of an extension of consumer credit in the form of a |
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motor vehicle title loan obtained by the business or that the |
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business assisted a consumer in obtaining; |
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(9) the mean, median, and mode of the number of |
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extensions of consumer credit obtained by consumers as a result of |
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entering into the extensions of consumer credit described by |
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Subdivision (2); and |
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(10) any related information the commissioner |
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determines necessary. |
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SECTION 13. Sections 393.601(3) and (5), Finance Code, are |
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repealed. |
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SECTION 14. Section 393.308, Finance Code, as added by this |
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Act, applies only to an extension of credit made on or after the |
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effective date of this Act. An extension of credit made before the |
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effective date of this Act is governed by the law in effect on the |
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date the extension of credit was made, and the former law is |
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continued in effect for that purpose. |
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SECTION 15. This Act takes effect September 1, 2013. |