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A BILL TO BE ENTITLED
|
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AN ACT
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relating to credit services organizations and extensions of |
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consumer credit facilitated by credit services organizations; |
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providing civil and administrative penalties. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 392.301(a), Finance Code, is amended to |
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read as follows: |
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(a) In debt collection, a debt collector may not use |
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threats, coercion, or attempts to coerce that employ any of the |
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following practices: |
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(1) using or threatening to use violence or other |
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criminal means to cause harm to a person or property of a person; |
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(2) accusing falsely or threatening to accuse falsely |
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a person of fraud or any other crime; |
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(3) representing or threatening to represent to any |
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person other than the consumer that a consumer is wilfully refusing |
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to pay a nondisputed consumer debt when the debt is in dispute and |
|
the consumer has notified in writing the debt collector of the |
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dispute; |
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(4) threatening to sell or assign to another the |
|
obligation of the consumer and falsely representing that the result |
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of the sale or assignment would be that the consumer would lose a |
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defense to the consumer debt or would be subject to illegal |
|
collection attempts; |
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(5) threatening that the debtor will be arrested for |
|
nonpayment of a consumer debt without proper court proceedings; |
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(6) threatening to file a charge, complaint, or |
|
criminal action against a debtor when the debtor has not violated a |
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criminal law; |
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(7) threatening that nonpayment of a consumer debt |
|
will result in the seizure, repossession, or sale of the person's |
|
property without proper court proceedings; |
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(8) referencing a certification signed by the consumer |
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as required by Section 393.630(b) or any penalties associated with |
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a violation of that section; or |
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(9) [(8)] threatening to take an action prohibited by |
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law. |
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SECTION 2. Section 393.001, Finance Code, is amended by |
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amending Subdivisions (1) and (3) and adding Subdivisions (1-a), |
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(2-a), (3-a), (4-a), (5), (6), (7), (8), (9), (10), (11), (12), and |
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(13) to read as follows: |
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(1) "Commissioner" means the consumer credit |
|
commissioner. |
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(1-a) "Consumer" means an individual who is solicited |
|
to purchase or who purchases the services of a credit services |
|
organization. |
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(2-a) "Credit access business" means a credit services |
|
organization that obtains for a consumer or assists a consumer in |
|
obtaining an extension of consumer credit. |
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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 |
|
a consumer in the form of a single-payment deferred presentment |
|
transaction, a multiple-payment deferred presentment transaction, |
|
a single-payment motor vehicle title loan, or a multiple-payment |
|
motor vehicle title loan; or |
|
(C) providing advice or assistance to a consumer |
|
with regard to Paragraph (A) or (B). |
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(3-a) "Deferred presentment transaction" means a |
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single-payment or multiple-payment transaction defined as a |
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deferred presentment transaction by Section 341.001 in connection |
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with which the consumer is not required to provide real or personal |
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property as security. |
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(4-a) "Finance commission" means the Finance |
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Commission of Texas. |
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(5) "Military borrower" includes a "covered member" or |
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a "dependent" of a covered member, as those terms are defined by 10 |
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U.S.C. Section 987 or a successor statute. |
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(6) "Motor vehicle title loan" means a single-payment |
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or multiple-payment loan in which an unencumbered motor vehicle is |
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given as the only security for the loan. The term does not include a |
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retail installment transaction under Chapter 348 or another loan |
|
made to finance the purchase of a motor vehicle. |
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(7) "Multiple-payment deferred presentment |
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transaction" means a deferred presentment transaction that is not a |
|
single-payment deferred presentment transaction. |
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(8) "Multiple-payment motor vehicle title loan" means |
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a motor vehicle title loan that is not a single-payment motor |
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vehicle title loan. |
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(9) "Office" means the Office of Consumer Credit |
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Commissioner. |
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(10) "Refinance" means a rollover, renewal, or other |
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type of transaction in which all or a portion of the principal, |
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fees, or interest due under an outstanding extension of consumer |
|
credit becomes due on a later date. The term does not include an |
|
extended payment plan described by Section 393.636. The term |
|
includes a new extension of consumer credit that: |
|
(A) consists of debt arising from principal, |
|
fees, or interest that was not paid in full under an outstanding or |
|
previous extension of consumer credit; or |
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(B) is made on or before the seventh day after the |
|
date a previous extension of consumer credit that a credit access |
|
business obtained for a consumer or assisted a consumer in |
|
obtaining was paid in full. |
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(11) "Service" means an act, conduct, or activity that |
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is performed or to be performed for a consumer's benefit or that |
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involves assisting a consumer in obtaining an extension of consumer |
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credit, including: |
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(A) negotiating or closing a loan or other |
|
extension of consumer credit; |
|
(B) issuing a guaranty, letter of credit, or |
|
other credit enhancement; and |
|
(C) servicing an extension of consumer credit. |
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(12) "Single-payment deferred presentment |
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transaction" means a deferred presentment transaction for which the |
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entire cash advance, interest, and fees are required under the |
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terms of the transaction to be payable in a single payment. |
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(13) "Single-payment motor vehicle title loan" means a |
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motor vehicle title loan for which the entire principal, interest, |
|
and fees are required under the terms of the loan to be payable in a |
|
single payment. |
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SECTION 3. Section 393.201, Finance Code, is amended by |
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amending Subsections (b) and (c) and adding Subsection (d) to read |
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as follows: |
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(b) In addition to the notice required by Section 393.202, |
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the contract must: |
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(1) contain the payment terms, including the total |
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payments to be made by the consumer, whether to the organization or |
|
to another person; |
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(2) fully describe the services the organization shall |
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[is to] perform for the consumer or on behalf of a third party, |
|
including each guarantee and each promise of a full or partial |
|
refund and the estimated period for performing and completing all |
|
of the services, not to exceed 180 days or the period permitted |
|
under an extended payment plan authorized by Subchapter G; |
|
(3) contain the address of the organization's |
|
principal place of business; and |
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(4) contain the name and address of the organization's |
|
agent in this state authorized to receive service of process. |
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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 |
|
Subsection (b) and Section 393.302: |
|
(1) contain a statement that there is no prepayment |
|
penalty; |
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(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 |
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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 |
|
criminal conduct; |
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(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)]; |
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(5) disclose to the consumer: |
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(A) the lender from whom the extension of |
|
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 |
|
credit access business for the business's services and to any third |
|
party; [and] |
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(6) contain the name and address of the office, the |
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office's website address, [Office of Consumer Credit Commissioner] |
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and the telephone number of the office's consumer helpline; and |
|
(7) use model contract clauses adopted by rule of the |
|
finance commission. |
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(d) The finance commission shall adopt rules to implement |
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this section. |
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SECTION 4. Section 393.203, Finance Code, is amended to |
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read as follows: |
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Sec. 393.203. ISSUANCE OF CONTRACT AND OTHER DOCUMENTS. |
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(a) A credit services organization shall give to the consumer, when |
|
the document is signed, a copy of the completed contract and any |
|
other document the organization requires the consumer to sign. |
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(b) The contract and other documents provided by a credit |
|
access business to a consumer under this section in relation to an |
|
extension of consumer credit must be: |
|
(1) provided, before signing, wholly written in both |
|
English and Spanish; |
|
(2) written in plain language designed to be easily |
|
understood by the average consumer; and |
|
(3) printed in an easily readable font and type size. |
|
(c) The finance commission shall adopt rules to implement |
|
this section. |
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SECTION 5. Section 393.223(a), Finance Code, is amended to |
|
read as follows: |
|
(a) Before performing services described by Section |
|
393.001(2-a) [393.221(1)], a credit access business must provide to |
|
a consumer a disclosure adopted by rule of the finance commission |
|
[Finance Commission of Texas] that discloses the following in a |
|
form prescribed by the commission: |
|
(1) the interest, fees, and annual percentage rates, |
|
as applicable, to be charged on a deferred presentment transaction |
|
or on a motor vehicle title loan, as applicable, in comparison to |
|
interest, fees, and annual percentage rates to be charged on other |
|
alternative forms of consumer debt; |
|
(2) the amount of accumulated fees a consumer would |
|
incur by renewing or refinancing a deferred presentment transaction |
|
or motor vehicle title loan that remains outstanding for a period of |
|
two weeks, one month, two months, and three months; and |
|
(3) information regarding the typical pattern of |
|
repayment of deferred presentment transactions and motor vehicle |
|
title loans. |
|
SECTION 6. Subchapter D, Chapter 393, Finance Code, is |
|
amended by adding Section 393.308 to read as follows: |
|
Sec. 393.308. EVASION OF MUNICIPAL ORDINANCE PROHIBITED. |
|
(a) A credit access business that is subject to the regulation of a |
|
municipal ordinance may not, to evade the municipal ordinance: |
|
(1) require, as a condition of obtaining for a |
|
consumer or assisting a consumer in obtaining an extension of |
|
consumer credit in the form of a deferred presentment transaction |
|
or motor vehicle title loan or a renewal, rollover, or refinance of |
|
such an extension of consumer credit, that any part of the |
|
transaction occur in a location outside the municipality; or |
|
(2) transfer the business's obligations and rights |
|
under a contract to obtain for a consumer or assist a consumer in |
|
obtaining an extension of consumer credit in the form of a deferred |
|
presentment transaction or motor vehicle title loan or a renewal, |
|
rollover, or refinance of such an extension of consumer credit to a |
|
branch of the business or another business located outside the |
|
municipality. |
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(b) For purposes of Subsection (a), "renewal," "rollover," |
|
or "refinance" have any meanings assigned to those terms by the |
|
municipal ordinance. |
|
(c) If a credit access business violates Subsection (a), the |
|
contract between the business and the consumer for the performance |
|
of services to which the violation relates is void and |
|
unenforceable, including any requirement under the contract that |
|
the consumer pay fees or other consideration. |
|
SECTION 7. Sections 393.602(a) and (b), Finance Code, are |
|
amended to read as follows: |
|
(a) This subchapter applies only to a credit services |
|
organization that, with respect to a consumer who is a resident of |
|
this state or is located in this state at the time of the |
|
transaction, 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
|
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[(2) a motor vehicle title loan]. |
|
(b) A credit access business may assess fees as agreed to |
|
between the parties for [its] services performed to obtain an |
|
extension of consumer credit for a consumer or assist a consumer in |
|
obtaining an extension of consumer credit in the form of a deferred |
|
presentment transaction or motor vehicle title loan or a refinance |
|
of such an extension of consumer credit [as agreed to between the
|
|
parties]. A credit access business fee may be calculated daily, |
|
biweekly, monthly, or on another periodic basis. A credit access |
|
business is permitted to charge amounts allowed by other laws, as |
|
applicable. A fee may not be charged unless it is disclosed. |
|
SECTION 8. Section 393.604(a), Finance Code, is amended to |
|
read as follows: |
|
(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: |
|
(A) with which the business contracts to provide |
|
services; [described by Section 393.602(a)] or |
|
(B) from which the business arranges extensions |
|
of consumer credit [described by Section 393.602(a)]; [and] |
|
(5) include a copy of each agreement between the |
|
business and a third-party lender organization: |
|
(A) with which the business contracts to provide |
|
services; or |
|
(B) from which the business arranges extensions |
|
of consumer credit; and |
|
(6) contain other relevant information that the |
|
commissioner requires for the findings required under Section |
|
393.607. |
|
SECTION 9. Sections 393.622(a) and (b), Finance Code, are |
|
amended to read as follows: |
|
(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 licensed credit access business under Section |
|
393.627 [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 the |
|
business obtained for a consumer or assisted a consumer in |
|
obtaining [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. |
|
SECTION 10. Section 393.625, Finance Code, is amended to |
|
read as follows: |
|
Sec. 393.625. MILITARY BORROWERS. (a) An extension of |
|
consumer credit [described by Section 393.602(a)] that is obtained |
|
by a credit access business for a military borrower [member of the
|
|
United States military or a dependent of a member of the United
|
|
States military] or that the business assisted a military borrower |
|
[that person] in obtaining must comply with 10 U.S.C. Section 987 |
|
and any regulations adopted under that law, to the extent |
|
applicable. |
|
(b) The term of an extension of consumer credit, including |
|
all renewals and refinances, obtained for a military borrower by a |
|
credit access business or that a credit access business assists a |
|
military borrower in obtaining may not exceed: |
|
(1) 90 days, if the debt is a deferred presentment |
|
transaction or single-payment motor vehicle title loan; or |
|
(2) 180 days, if the debt is a multiple-payment motor |
|
vehicle title loan. |
|
(c) The finance commission shall adopt a disclosure |
|
relating to the provisions of state and federal law applicable to a |
|
military borrower who obtains an extension of consumer credit from |
|
or with the assistance of a credit access business. A credit access |
|
business shall provide this disclosure to military borrowers for |
|
whom the credit access business seeks to obtain an extension of |
|
consumer credit. |
|
(d) Notwithstanding Section 14.252, the commissioner may |
|
assess an administrative penalty in an amount not to exceed $5,000 |
|
for each violation against a credit access business that violates |
|
this section, regardless of whether the violation is knowing or |
|
wilful. |
|
SECTION 11. Section 393.626, Finance Code, is amended to |
|
read as follows: |
|
Sec. 393.626. DEBT COLLECTION PRACTICES. A violation of |
|
Chapter 392 by a credit access business with respect to obtaining |
|
for a consumer or assisting a consumer in obtaining an extension of |
|
consumer credit [described by Section 393.602(a)] constitutes a |
|
violation of this subchapter. |
|
SECTION 12. Section 393.627, Finance Code, is amended to |
|
read as follows: |
|
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. |
|
SECTION 13. Subchapter G, Chapter 393, Finance Code, is |
|
amended by adding Sections 393.629 through 393.638 to read as |
|
follows: |
|
Sec. 393.629. GENERAL LIMITATIONS ON EXTENSIONS OF CONSUMER |
|
CREDIT; PAYMENT METHOD. (a) The provisions of this chapter |
|
applicable to a credit access business apply to any consumer |
|
physically located in this state at the time the extension of |
|
consumer credit is made, regardless of whether the extension of |
|
consumer credit was made in person in this state. |
|
(b) A credit access business shall accept a payment made in |
|
cash or by electronic transfer, cashier's check, teller's check, or |
|
money order offered by the consumer or another party, to retire or |
|
otherwise pay down debt incurred under an extension of consumer |
|
credit that a credit access business obtained for a consumer or |
|
assisted a consumer in obtaining under this chapter. For a motor |
|
vehicle title loan, a consumer may also grant a security interest in |
|
an authorized debit of a bank account. |
|
(c) The term of an extension of consumer credit obtained for |
|
a consumer by a credit access business or that a credit access |
|
business assists a consumer in obtaining may not exceed 180 days. |
|
If a term of less than 180 days for an extension of consumer credit |
|
is specified under this chapter, the shorter term applies. |
|
Sec. 393.630. LIMITATION ON OUTSTANDING DEBT. (a) A |
|
consumer may not have more than two outstanding debts from |
|
extensions of consumer credit that a credit access business |
|
obtained for the consumer or assisted the consumer in obtaining. |
|
(b) To obtain an extension of consumer credit facilitated |
|
through the services of a credit access business, a consumer must |
|
sign a written certification stating that the consumer at that time |
|
has not more than one other outstanding debt from an extension of |
|
consumer credit that any credit access business obtained for the |
|
consumer or assisted the consumer in obtaining. |
|
(c) A credit access business shall in good faith verify that |
|
a consumer is not falsifying the certification required by |
|
Subsection (b), to the best knowledge and ability of the person |
|
acting on behalf of the credit access business for that |
|
transaction. A person acting on behalf of a credit access business |
|
has satisfied this requirement if the person considers all |
|
information that the consumer shares with the person in negotiating |
|
the transaction and if the person makes a reasonable effort to |
|
verify the consumer's representations with any records that the |
|
credit access business typically consults in the normal course of |
|
its business. |
|
(d) A credit access business that violates this section is |
|
subject to a civil penalty in an amount not to exceed $1,000 for |
|
each violation. |
|
Sec. 393.631. CERTAIN LOCAL ORDINANCES NOT PREEMPTED. This |
|
chapter does not preempt a local ordinance regulating a credit |
|
access business or an extension of consumer credit obtained for a |
|
consumer by a credit access business or that a credit access |
|
business assists a consumer in obtaining, if the ordinance is |
|
compatible with and equal to or more stringent than a requirement |
|
prescribed by this chapter. |
|
Sec. 393.632. SINGLE-PAYMENT DEFERRED PRESENTMENT |
|
TRANSACTION. (a) The term of an original or refinanced extension |
|
of consumer credit in the form of a single-payment deferred |
|
presentment transaction that a credit access business obtains for a |
|
consumer or assists a consumer in obtaining may not be less than 10 |
|
days or longer than 35 days. |
|
(b) An extension of consumer credit in the form of a |
|
single-payment deferred presentment transaction that a credit |
|
access business obtains for a consumer or assists a consumer in |
|
obtaining may not be refinanced more than three times. |
|
(c) If a consumer who has not entered into an extended |
|
payment plan with the credit access business in the preceding 12 |
|
months refinances a single-payment deferred presentment |
|
transaction for the third time: |
|
(1) the credit access business must offer at least one |
|
extended payment plan to the consumer before initiating any debt |
|
collection activities; |
|
(2) the consumer may request, prior to the offer |
|
required by Subdivision (1) being made, an extended payment plan at |
|
any time on or after the date the consumer refinances the deferred |
|
presentment transaction for the third time and on or before the |
|
fifth day after the date on which the third refinance must be repaid |
|
in full; |
|
(3) to comply with the requirement of Subdivision (1), |
|
the credit access business shall send a written notice to the |
|
consumer disclosing the following: |
|
(A) the amount due under the current terms of the |
|
extension of consumer credit if the consumer declines an extended |
|
payment plan; |
|
(B) the amounts due on each of the installment |
|
dates of an extended payment plan; and |
|
(C) the date by which the consumer must accept |
|
the extended payment plan in writing, which date shall be at least |
|
five days after the date of such notice; |
|
(4) the credit access business may not initiate debt |
|
collection activities unless: |
|
(A) the consumer fails to accept the extended |
|
payment plan in writing on or before the deadline contained in the |
|
notice required by Subdivision (3); |
|
(B) the consumer declines the extended payment |
|
plan; or |
|
(C) the consumer fails to make a payment required |
|
by an extended payment plan that the consumer accepted; and |
|
(5) if the consumer declines an extended payment plan |
|
that a credit access business is required to offer under |
|
Subdivision (1), the consumer must sign an extended payment plan |
|
waiver on a form prescribed by the finance commission. |
|
(d) An extended payment plan required to be offered under |
|
Subsection (c) must comply with Section 393.636. |
|
(e) A credit access business may offer a consumer an |
|
extended payment plan that provides the consumer with additional |
|
time to repay the debts obtained through a single-payment deferred |
|
presentment transaction, either before or after the consumer |
|
refinances the single-payment deferred presentment transaction for |
|
the third time, more than once in a 12-month period so long as the |
|
credit access business does not assess additional fees under the |
|
extended payment plan and the credit access business fully |
|
describes the terms of the extended payment plan, including all due |
|
dates and the amount due on each due date, to the consumer before |
|
the consumer enters into the extended payment plan. An extended |
|
payment plan offered under this subsection is not required to |
|
comply with Section 393.636. |
|
(f) A credit access business shall accept a partial payment |
|
that complies with Section 393.629(b) paid by a consumer or on |
|
behalf of a consumer to pay down outstanding principal owed under a |
|
single-payment deferred presentment transaction that the credit |
|
access business obtained for the consumer or assisted the consumer |
|
in obtaining. |
|
Sec. 393.633. MULTIPLE-PAYMENT DEFERRED PRESENTMENT |
|
TRANSACTION. (a) An extension of consumer credit in the form of a |
|
multiple-payment deferred presentment transaction that a credit |
|
access business obtains for a consumer or assists a consumer in |
|
obtaining may not be payable by the consumer in more than 12 |
|
installments or have an original term of more than 180 days, and the |
|
loan agreement must specify the number, date, and total amount due |
|
with regard to each installment. |
|
(b) An original or refinanced extension of consumer credit |
|
in the form of a multiple-payment deferred presentment transaction |
|
that a credit access business obtains for a consumer or assists a |
|
consumer in obtaining must be payable on a fully amortizing, |
|
declining-principal-balance basis with substantially equal |
|
payments. If a credit access business precomputes its fees under a |
|
multiple-payment deferred presentment transaction and a consumer |
|
prepays in full the extension of consumer credit in that form, the |
|
credit access business shall refund any unearned fees to the |
|
consumer. |
|
(c) The first installment of an extension of consumer credit |
|
in the form of a multiple-payment deferred presentment transaction |
|
that a credit access business obtains for a consumer or assists a |
|
consumer in obtaining may not be due before the 10th day after the |
|
date the consumer enters into the loan agreement. An installment |
|
may not be due before the 14th day or after the 31st day after the |
|
date a previous installment is due. |
|
(d) An extension of consumer credit in the form of a |
|
multiple-payment deferred presentment transaction that a credit |
|
access business obtains for a consumer or assists a consumer in |
|
obtaining may not be refinanced, may not include more than 12 |
|
installments, and may not have a term that exceeds 180 days, |
|
excluding an extended payment plan offered in compliance with |
|
Section 393.636. |
|
(e) A credit access business may offer a consumer an |
|
extended payment plan if the extended payment plan complies with |
|
Section 393.636 and if the credit access business fully describes |
|
the terms of the extended payment plan, including all due dates and |
|
the amount due on each due date, to the consumer before the consumer |
|
enters into the extended repayment plan. |
|
Sec. 393.634. SINGLE-PAYMENT MOTOR VEHICLE TITLE LOAN. |
|
(a) The term of an original or refinanced extension of consumer |
|
credit in the form of a single-payment motor vehicle title loan that |
|
a credit access business obtains for a consumer or assists a |
|
consumer in obtaining may not be less than 30 days or longer than 35 |
|
days. |
|
(b) An extension of consumer credit in the form of a |
|
single-payment motor vehicle title loan that a credit access |
|
business obtains for a consumer or assists a consumer in obtaining |
|
may not be refinanced more than three times. The combined terms of |
|
the original extension of consumer credit and any refinanced |
|
extensions of consumer credit, excluding an extended payment plan |
|
offered in compliance with Subsection (e) or Section 393.636, may |
|
not exceed 90 days. The credit access business shall fully describe |
|
the terms of an extended payment plan, including all due dates and |
|
the amount due on each due date, to the consumer before the consumer |
|
enters into the extended payment plan. |
|
(c) If a consumer who has not entered into an extended |
|
payment plan with the credit access business in the preceding 12 |
|
months refinances a single-payment motor vehicle title loan for the |
|
third time: |
|
(1) the credit access business must offer at least one |
|
extended payment plan to the consumer before initiating any |
|
activities to repossess the vehicle securing the debt; |
|
(2) the consumer may request, prior to the offer |
|
required by Subdivision (1) being made, an extended payment plan at |
|
any time on or after the date the consumer refinances the motor |
|
vehicle title loan for the third time and on or before the fifth day |
|
after the date on which the third refinance must be repaid in full; |
|
(3) to comply with the requirement of Subdivision (1), |
|
the credit access business shall send a written notice to the |
|
consumer disclosing the following: |
|
(A) the amount due under the current terms of the |
|
extension of consumer credit if the consumer declines an extended |
|
payment plan; |
|
(B) the amounts due on each of the installment |
|
dates of an extended payment plan; and |
|
(C) the date by which the consumer must accept |
|
the extended payment plan in writing, which date shall be at least |
|
five days after the date of such notice; |
|
(4) the credit access business may not repossess the |
|
vehicle securing the debt unless: |
|
(A) the consumer fails to accept the extended |
|
payment plan in writing on or before the deadline contained in the |
|
notice required by Subdivision (3); |
|
(B) the consumer declines the extended payment |
|
plan; or |
|
(C) the consumer fails to make a payment required |
|
by an extended payment plan that the consumer accepted; and |
|
(5) if the consumer declines an extended payment plan |
|
that a credit access business is required to offer under |
|
Subdivision (1), the consumer must sign an extended payment plan |
|
waiver on a form prescribed by the finance commission. |
|
(d) An extended payment plan required to be offered under |
|
Subsection (c) must comply with Section 393.636. |
|
(e) A credit access business may offer a consumer an |
|
extended payment plan that provides the consumer with additional |
|
time to repay the debts obtained through a single-payment motor |
|
vehicle title loan, either before or after the consumer refinances |
|
the single-payment motor vehicle title loan for the third time, |
|
more than once in a 12-month period so long as the credit access |
|
business does not assess additional fees under the extended payment |
|
plan and the credit access business fully describes the terms of the |
|
extended payment plan, including all due dates and the amount due on |
|
each due date, to the consumer before the consumer enters into the |
|
extended payment plan. An extended payment plan offered under this |
|
subsection is not required to comply with Section 393.636. |
|
(f) A credit access business shall accept a partial payment |
|
that complies with Section 393.629(b) paid by a consumer or on |
|
behalf of a consumer to pay down outstanding principal owed under a |
|
single-payment motor vehicle title loan that the credit access |
|
business obtained for the consumer or assisted the consumer in |
|
obtaining. |
|
Sec. 393.635. MULTIPLE-PAYMENT MOTOR VEHICLE TITLE LOAN. |
|
(a) An extension of consumer credit in the form of a |
|
multiple-payment motor vehicle title loan that a credit access |
|
business obtains for a consumer or assists a consumer in obtaining |
|
must be payable on a fully amortizing, declining-principal-balance |
|
basis with substantially equal payments. If a credit access |
|
business precomputes its fees under a multiple-payment motor |
|
vehicle title loan and a consumer prepays the loan in full, the |
|
credit access business shall refund any unearned fees to the |
|
consumer. |
|
(b) An extension of consumer credit in the form of a |
|
multiple-payment motor vehicle title loan that a credit access |
|
business obtains for a consumer or assists a consumer in obtaining |
|
may not be payable by the consumer in more than six installments, |
|
and the loan agreement must specify the number, date, and total |
|
amount due with regard to each installment. |
|
(c) The first installment of an extension of consumer credit |
|
in the form of a multiple-payment motor vehicle title loan that a |
|
credit access business obtains for a consumer or assists a consumer |
|
in obtaining may not be due before the 10th day after the date the |
|
consumer enters into the loan agreement. A subsequent installment |
|
may not be due before the 28th day after the date the previous |
|
installment of the loan is due. |
|
(d) An extension of consumer credit in the form of a |
|
multiple-payment motor vehicle title loan that a credit access |
|
business obtains for a consumer or assists a consumer in obtaining |
|
may not be refinanced and the loan term may not exceed 180 days, |
|
except as provided by Subsection (e). |
|
(e) A credit access business may not initiate any activities |
|
to repossess the vehicle securing the debt under a multiple-payment |
|
motor vehicle title loan that a credit access business obtains for a |
|
consumer or assists a consumer in obtaining before offering the |
|
consumer at least one extended payment plan. An extended payment |
|
plan may cause the extension of consumer credit to extend beyond 180 |
|
days so long as the extended payment plan complies with Section |
|
393.636 and the credit access business fully describes the terms of |
|
the extended payment plan, including all due dates and the amount |
|
due on each due date, to the consumer before the consumer enters |
|
into the extended payment plan. |
|
(f) If the credit access business is required to offer a |
|
consumer an extended payment plan under Subsection (e), the credit |
|
access business shall send a written notice to the consumer |
|
disclosing the following: |
|
(1) the amount due under the current terms of the |
|
extension of consumer credit if the consumer declines an extended |
|
payment plan; |
|
(2) the amounts due on each of the installment dates of |
|
an extended payment plan; and |
|
(3) the date by which the consumer must accept the |
|
extended payment plan in writing, which date shall be at least five |
|
days after the date of such notice. |
|
(g) The credit access business may not repossess the vehicle |
|
securing the debt unless: |
|
(1) the consumer fails to accept the extended payment |
|
plan in writing on or before the deadline contained in the notice |
|
required by Subsection (f)(3); |
|
(2) the consumer declines the extended payment plan; |
|
or |
|
(3) the consumer fails to make a payment required by an |
|
extended payment plan that the consumer accepted. |
|
(h) If the consumer declines the extended payment plan, the |
|
consumer must sign an extended payment plan waiver on a form |
|
prescribed by the finance commission. |
|
Sec. 393.636. EXTENDED PAYMENT PLAN REQUIREMENTS. |
|
(a) This section applies to extended payment plans required to be |
|
offered under Sections 393.632, 393.633, 393.634, and 393.635. |
|
(b) An extended payment plan must provide for payment in at |
|
least: |
|
(1) four substantially equal installments, after |
|
which the outstanding balance will be paid in full, with respect to |
|
a single-payment deferred presentment transaction or |
|
single-payment motor vehicle title loan; or |
|
(2) two substantially equal installments added to the |
|
original and refinanced term of the extension of consumer credit, |
|
after which the outstanding balance, including only the fees that |
|
would have been due under the original extension of consumer |
|
credit, will be paid in full, with respect to a multiple-payment |
|
deferred presentment transaction or multiple-payment motor vehicle |
|
title loan. |
|
(c) The period between installment payments on an extended |
|
payment plan may not be shorter than: |
|
(1) 10 days, with respect to a single-payment deferred |
|
presentment transaction; or |
|
(2) 30 days, with respect to a multiple-payment |
|
deferred presentment transaction, a single-payment motor vehicle |
|
title loan, or a multiple-payment motor vehicle title loan. |
|
(d) The first payment owed under an extended payment plan |
|
may not be due before the 10th day after the date the consumer |
|
requests an extended payment plan. |
|
(e) A credit access business may not assess additional fees |
|
or assist a consumer in obtaining additional extensions of consumer |
|
credit if the consumer is paying an extension of credit under an |
|
extended payment plan. |
|
(f) A consumer may pay in full a debt subject to an extended |
|
payment plan at any time without prepayment penalties. |
|
(g) A person may not engage in debt collection or vehicle |
|
repossession activities for a debt subject to an extended payment |
|
plan if the consumer is in compliance with the extended payment |
|
plan. |
|
(h) A person may not use a device, subterfuge, or pretense |
|
to evade the extended payment plan requirements and limitations |
|
imposed on a credit access business under this subchapter. |
|
Sec. 393.637. REFINANCES. (a) Any refinance of an |
|
extension of consumer credit that a credit access business obtains |
|
for a consumer or assists a consumer in obtaining: |
|
(1) must be authorized under this subchapter; |
|
(2) must be in the same form as the original extension |
|
of consumer credit; and |
|
(3) must meet all the requirements applicable to the |
|
original extension of consumer credit, including the duration, |
|
transaction, and extended payment plan requirements under this |
|
subchapter, except as otherwise provided by this chapter. |
|
(b) For purposes of this section, a single-payment deferred |
|
presentment transaction, a multiple-payment deferred presentment |
|
transaction, a single-payment motor vehicle title loan, and a |
|
multiple-payment motor vehicle title loan are the different forms |
|
of extensions of consumer credit that a credit access business may |
|
obtain for a consumer or assist a consumer in obtaining. |
|
(c) The terms of a refinanced extension of consumer credit |
|
may be the same as or different from the terms of the original |
|
extension of consumer credit. |
|
(d) A person may not use a device, subterfuge, or pretense |
|
to evade the refinance requirements and limitations imposed on a |
|
credit access business under this subchapter. |
|
Sec. 393.638. RULES. The finance commission shall adopt |
|
any rules necessary to implement Sections 393.629-393.637. |
|
SECTION 14. Sections 393.221 and 393.601, Finance Code, are |
|
repealed. |
|
SECTION 15. The changes in law made by this Act apply only |
|
to an extension of consumer credit made on or after the effective |
|
date of this Act. An extension of consumer credit made before the |
|
effective date of this Act is governed by the law in effect on the |
|
date the extension of consumer credit was made, and the former law |
|
is continued in effect for that purpose. For purposes of this |
|
section, a refinance or renewal of an extension of consumer credit |
|
is considered made on the date the extension of consumer credit |
|
being refinanced or renewed was made. |
|
SECTION 16. Section 393.308, Finance Code, as added by this |
|
Act, applies only to a contract entered into on or after the |
|
effective date of this Act. A contract entered into before the |
|
effective date of this Act is governed by the law in effect when the |
|
contract was entered into, and the former law is continued in effect |
|
for that purpose. |
|
SECTION 17. This Act takes effect September 1, 2019. |