BILL ANALYSIS

Senate Research Center	H.B. 4238
89R13500 MLH-F	By: Meyer et al. (Zaffirini)
	Business & Commerce
	5/9/2025
	Engrossed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

Coerced debt, a type of identity theft in which an abuser incurs credit-related transactions using the identity of a victim without their consent, is an increasingly common form of economic abuse in family violence and human trafficking situations.

This abusive practice can substantially limit a victim's economic self� sufficiency or prevent them from leaving an abusive relationship. Even if a victim manages to escape from an abusive situation, the coerced debt follows, negatively impacting their finances. In 2021, the Texas Legislature passed H.B. 3529, which allowed victims to take legal action against the effects of debt incurred involuntarily by abusers. 

This process, however, can be complex and cost prohibitive, especially for victims of domestic violence or human trafficking and other vulnerable adults without the means to hire an attorney. H.B. 4238 seeks to address this issue by providing streamlined access to debt collection protections for certain victims of identity theft and coerced debt. 

H.B. 4238 amends current law relating to the collection of consumer debt incurred by certain individuals as a result of identity theft.

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Subchapter D, Chapter 392, Finance Code, by adding Section 392.308, as follows:

Sec. 392.308. CONSUMER VICTIM OF IDENTITY THEFT. (a) Defines "identity theft."

(b) Provides that this section does not apply to consumer debt that is a home loan, as defined by Chapter 343 (Home Loans), or to the collection of a judgment already obtained.

(c) Prohibits a creditor, debt collector, or third-party debt collector from attempting to collect a consumer debt or a portion of a consumer debt from a consumer if the consumer provides:

(1) a criminal complaint alleging the commission of an offense under Section 32.51 (Fraudulent Use or Possession of Identifying Information), Penal Code, or a substantially similar federal law or law in another state, for which the consumer was a victim, accompanied by a statement identifying the consumer debt or the portion of consumer debt that resulted from the offense;

(2) a court order issued under Section 521.103 (Issuance of Order; Contents), Business & Commerce Code, or a substantially similar federal law or law in another state, declaring the consumer a victim of identity theft; or

(3) a copy of a Federal Trade Commission identity theft victim's report, completed, signed, and filed by the consumer affirming that the consumer is a victim of identity theft and identifying the consumer debt or affected portion of the consumer debt incurred as a result of identity theft.

(d) Provides that a creditor, debt collector, or third-party debt collector who receives notice that a consumer debt is a result of identity theft from a victim of identity theft in accordance with Subsection (c) is:

(1) required to immediately cease efforts to collect the disputed debt or disputed portion of the debt from the victim of identity theft;

(2) required to send to each person who has previously received a report relating to that debt from the creditor, debt collector, or third-party debt collector notice that the debt is disputed under this section and not collectible from the victim of identity theft;

(3) prohibited from selling the debt or transferring it for consideration, except to collect the debt from the alleged perpetrator of identity theft or from a responsible person other than the victim of identity theft; and

(4) authorized, if the disputed debt or disputed portion of the debt is secured by tangible personal property, to enforce the security interest under Chapter 9 (Secured Transactions), Business & Commerce Code, but is prohibited from collecting or seeking to collect any deficiency from the victim of identity theft.

(e) Authorizes a creditor, debt collector, or third-party debt collector, if the creditor, debt collector, or third-party debt collector has a good faith reason to believe that a consumer has disputed a consumer debt or portion of a consumer debt under this section based on a material misrepresentation that the consumer is a victim of identity theft, to file suit in a court of competent jurisdiction to collect the debt from the consumer.

(f) Requires the creditor, debt collector, or third-party debt collector, in a suit under Subsection (e), to show by a preponderance of the evidence that the consumer is not a victim of identity theft.

(g) Provides that a creditor, debt collector, or third-party debt collector has standing to bring and is authorized to bring an action to exercise any right, seek any remedy, or use any lawful means to collect a consumer debt or a portion of consumer debt that is disputed under this section from an alleged perpetrator of identity theft who by means of identity theft obtained, used, or possessed the money, goods, services, or property of the consumer who is a victim of the alleged perpetrator's identity theft.

SECTION 2. Effective date: upon passage or September 1, 2025.