Texas Laws - Finance Code
FINANCE CODE
TITLE 5. PROTECTION OF CONSUMERS OF FINANCIAL SERVICES

TITLE 5. PROTECTION OF CONSUMERS OF FINANCIAL SERVICES (20418)(1-click HTML)

CHAPTER 391. FURNISHING FALSE CREDIT INFORMATION (20419)(1-click HTML)

Sec. 391.001. DEFINITION. (20420)(1-click HTML)

In this chapter, "credit reporting bureau" means a person who engages in the practice of assembling or reporting credit information about individuals for the purpose of furnishing the information to a third party. (20421)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20422)

Sec. 391.002. FURNISHING FALSE INFORMATION; PENALTY. (20423)(1-click HTML)

(a) A person commits an offense if the person knowingly furnishes false information about another person's creditworthiness, credit standing, or credit capacity to a credit reporting bureau. (20424)

(b) A credit reporting bureau commits an offense if the credit reporting bureau knowingly furnishes false information about a person's creditworthiness, credit standing, or credit capacity to a third party. (20425)

(c) An offense under this section is a misdemeanor punishable by a fine of not more than $200. (20426)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20427)

CHAPTER 392. DEBT COLLECTION (20428)(1-click HTML)

Sec. 392.001. DEFINITIONS. (20429)(1-click HTML)

In this chapter: (20430)

(1) "Consumer" means an individual who has a consumer debt. (20431)

(2) "Consumer debt" means an obligation, or an alleged obligation, primarily for personal, family, or household purposes and arising from a transaction or alleged transaction. (20432)

(3) "Creditor" means a party, other than a consumer, to a transaction or alleged transaction involving one or more consumers. (20433)

(4) "Credit bureau" means a person who, for compensation, gathers, records, and disseminates information relating to the creditworthiness, financial responsibility, and paying habits of, and similar information regarding, a person for the purpose of furnishing that information to another person. (20434)

(5) "Debt collection" means an action, conduct, or practice in collecting, or in soliciting for collection, consumer debts that are due or alleged to be due a creditor. (20435)

(6) "Debt collector" means a person who directly or indirectly engages in debt collection and includes a person who sells or offers to sell forms represented to be a collection system, device, or scheme intended to be used to collect consumer debts. (20436)

(7) "Third-party debt collector" means a debt collector, as defined by 15 U.S.C. Section 1692a(6), but does not include an attorney collecting a debt as an attorney on behalf of and in the name of a client unless the attorney has nonattorney employees who: (20437)

(A) are regularly engaged to solicit debts for collection; or (20438)

(B) regularly make contact with debtors for the purpose of collection or adjustment of debts. (20439)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. Amended by Acts 1999, 76th Leg., ch. 62, Sec. 7.42, eff. Sept. 1, 1999. (20440)

SUBCHAPTER B. SURETY BOND (20441)(1-click HTML)
Sec. 392.101. BOND REQUIREMENT. (20442)(1-click HTML)

(a) A third-party debt collector or credit bureau may not engage in debt collection unless the third-party debt collector or credit bureau has obtained a surety bond issued by a surety company authorized to do business in this state as prescribed by this section. A copy of the bond must be filed with the secretary of state. (20443)

(b) The bond must be in favor of: (20444)

(1) any person who is damaged by a violation of this chapter; and (20445)

(2) this state for the benefit of any person who is damaged by a violation of this chapter. (20446)

(c) The bond must be in the amount of $10,000. (20447)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20448)

Sec. 392.102. CLAIM AGAINST BOND. (20449)(1-click HTML)

A person who claims against a bond for a violation of this chapter may maintain an action against the third-party debt collector or credit bureau and against the surety. The aggregate liability of the surety to all persons damaged by a violation of this chapter may not exceed the amount of the bond. (20450)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20451)

SUBCHAPTER C. INFORMATION IN FILES OF CREDIT BUREAU OR DEBT COLLECTOR (20452)(1-click HTML)
Sec. 392.201. REPORT TO CONSUMER. (20453)(1-click HTML)

Not later than the 45th day after the date of the request, a credit bureau shall provide to a person in its registry a copy of all information contained in its files concerning that person. (20454)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20455)

Sec. 392.202. CORRECTION OF THIRD-PARTY DEBT COLLECTOR'S OR CREDIT BUREAU'S FILES. (20456)(1-click HTML)

(a) An individual who disputes the accuracy of an item that is in a third-party debt collector's or credit bureau's file on the individual and that relates to a debt being collected by the third-party debt collector may notify in writing the third-party debt collector of the inaccuracy. The third-party debt collector shall make a written record of the dispute. If the third-party debt collector does not report information related to the dispute to a credit bureau, the third-party debt collector shall cease collection efforts until an investigation of the dispute described by Subsections (b)-(e) determines the accurate amount of the debt, if any. If the third-party debt collector reports information related to the dispute to a credit bureau, the reporting third-party debt collector shall initiate an investigation of the dispute described by Subsections (b)-(e) and shall cease collection efforts until the investigation determines the accurate amount of the debt, if any. This section does not affect the application of Chapter 20, Business & Commerce Code, to a third-party debt collector subject to that chapter. (20457)

(b) Not later than the 30th day after the date a notice of inaccuracy is received, a third-party debt collector who initiates an investigation shall send a written statement to the individual: (20458)

(1) denying the inaccuracy; (20459)

(2) admitting the inaccuracy; or (20460)

(3) stating that the third-party debt collector has not had sufficient time to complete an investigation of the inaccuracy. (20461)

(c) If the third-party debt collector admits that the item is inaccurate under Subsection (b), the third-party debt collector shall: (20462)

(1) not later than the fifth business day after the date of the admission, correct the item in the relevant file; and (20463)

(2) immediately cease collection efforts related to the portion of the debt that was found to be inaccurate and on correction of the item send, to each person who has previously received a report from the third-party debt collector containing the inaccurate information, notice of the inaccuracy and a copy of an accurate report. (20464)

(d) If the third-party debt collector states that there has not been sufficient time to complete an investigation, the third-party debt collector shall immediately: (20465)

(1) change the item in the relevant file as requested by the individual; (20466)

(2) send to each person who previously received the report containing the information a notice that is equivalent to a notice under Subsection (c) and a copy of the changed report; and (20467)

(3) cease collection efforts. (20468)

(e) On completion by the third-party debt collector of the investigation, the third-party debt collector shall inform the individual of the determination of whether the item is accurate or inaccurate. If the third-party debt collector determines that the information was accurate, the third-party debt collector may again report that information and resume collection efforts. (20469)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. Amended by Acts 2003, 78th Leg., ch. 851, Sec. 1, eff. Sept. 1, 2003. (20470)

SUBCHAPTER D. PROHIBITED DEBT COLLECTION METHODS (20471)(1-click HTML)
Sec. 392.301. THREATS OR COERCION. (20472)(1-click HTML)

(a) In debt collection, a debt collector may not use threats, coercion, or attempts to coerce that employ any of the following practices: (20473)

(1) using or threatening to use violence or other criminal means to cause harm to a person or property of a person; (20474)

(2) accusing falsely or threatening to accuse falsely a person of fraud or any other crime; (20475)

(3) representing or threatening to represent to any person other than the consumer that a consumer is wilfully refusing to pay a nondisputed consumer debt when the debt is in dispute and the consumer has notified in writing the debt collector of the dispute; (20476)

(4) threatening to sell or assign to another the obligation of the consumer and falsely representing that the result of the sale or assignment would be that the consumer would lose a defense to the consumer debt or would be subject to illegal collection attempts; (20477)

(5) threatening that the debtor will be arrested for nonpayment of a consumer debt without proper court proceedings; (20478)

(6) threatening to file a charge, complaint, or criminal action against a debtor when the debtor has not violated a criminal law; (20479)

(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; or (20480)

(8) threatening to take an action prohibited by law. (20481)

(b) Subsection (a) does not prevent a debt collector from: (20482)

(1) informing a debtor that the debtor may be arrested after proper court proceedings if the debtor has violated a criminal law of this state; (20483)

(2) threatening to institute civil lawsuits or other judicial proceedings to collect a consumer debt; or (20484)

(3) exercising or threatening to exercise a statutory or contractual right of seizure, repossession, or sale that does not require court proceedings. (20485)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20486)

Sec. 392.302. HARASSMENT; ABUSE. (20487)(1-click HTML)

In debt collection, a debt collector may not oppress, harass, or abuse a person by: (20488)

(1) using profane or obscene language or language intended to abuse unreasonably the hearer or reader; (20489)

(2) placing telephone calls without disclosing the name of the individual making the call and with the intent to annoy, harass, or threaten a person at the called number; (20490)

(3) causing a person to incur a long distance telephone toll, telegram fee, or other charge by a medium of communication without first disclosing the name of the person making the communication; or (20491)

(4) causing a telephone to ring repeatedly or continuously, or making repeated or continuous telephone calls, with the intent to harass a person at the called number. (20492)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20493)

Sec. 392.303. UNFAIR OR UNCONSCIONABLE MEANS. (20494)(1-click HTML)

(a) In debt collection, a debt collector may not use unfair or unconscionable means that employ the following practices: (20495)

(1) seeking or obtaining a written statement or acknowledgment in any form that specifies that a consumer's obligation is one incurred for necessaries of life if the obligation was not incurred for those necessaries; (20496)

(2) collecting or attempting to collect interest or a charge, fee, or expense incidental to the obligation unless the interest or incidental charge, fee, or expense is expressly authorized by the agreement creating the obligation or legally chargeable to the consumer; or (20497)

(3) collecting or attempting to collect an obligation under a check, draft, debit payment, or credit card payment, if: (20498)

(A) the check or draft was dishonored or the debit payment or credit card payment was refused because the check or draft was not drawn or the payment was not made by a person authorized to use the applicable account; (20499)

(B) the debt collector has received written notice from a person authorized to use the account that the check, draft, or payment was unauthorized; and (20500)

(C) the person authorized to use the account has filed a report concerning the unauthorized check, draft, or payment with a law enforcement agency, as defined by Article 59.01, Code of Criminal Procedure, and has provided the debt collector with a copy of the report. (20501)

(b) Notwithstanding Subsection (a)(2), a creditor may charge a reasonable reinstatement fee as consideration for renewal of a real property loan or contract of sale, after default, if the additional fee is included in a written contract executed at the time of renewal. (20502)

(c) Subsection (a)(3) does not prohibit a debt collector from collecting or attempting to collect an obligation under a check, draft, debit payment, or credit card payment if the debt collector has credible evidence, including a document, video recording, or witness statement, that the report filed with a law enforcement agency, as required by Subsection (a)(3)(C), is fraudulent and that the check, draft, or payment was authorized. (20503)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20504)

Amended by: (20505)

Acts 2005, 79th Leg., Ch. 505 (H.B. 628), Sec. 1, eff. September 1, 2005. (20506)

Sec. 392.304. FRAUDULENT, DECEPTIVE, OR MISLEADING REPRESENTATIONS. (20507)(1-click HTML)

(a) Except as otherwise provided by this section, in debt collection or obtaining information concerning a consumer, a debt collector may not use a fraudulent, deceptive, or misleading representation that employs the following practices: (20508)

(1) using a name other than the: (20509)

(A) true business or professional name or the true personal or legal name of the debt collector while engaged in debt collection; or (20510)

(B) name appearing on the face of the credit card while engaged in the collection of a credit card debt; (20511)

(2) failing to maintain a list of all business or professional names known to be used or formerly used by persons collecting consumer debts or attempting to collect consumer debts for the debt collector; (20512)

(3) representing falsely that the debt collector has information or something of value for the consumer in order to solicit or discover information about the consumer; (20513)

(4) failing to disclose clearly in any communication with the debtor the name of the person to whom the debt has been assigned or is owed when making a demand for money; (20514)

(5) in the case of a third-party debt collector, failing to disclose, except in a formal pleading made in connection with a legal action: (20515)

(A) that the communication is an attempt to collect a debt and that any information obtained will be used for that purpose, if the communication is the initial written or oral communication between the third-party debt collector and the debtor; or (20516)

(B) that the communication is from a debt collector, if the communication is a subsequent written or oral communication between the third-party debt collector and the debtor; (20517)

(6) using a written communication that fails to indicate clearly the name of the debt collector and the debt collector's street address or post office box and telephone number if the written notice refers to a delinquent consumer debt; (20518)

(7) using a written communication that demands a response to a place other than the debt collector's or creditor's street address or post office box; (20519)

(8) misrepresenting the character, extent, or amount of a consumer debt, or misrepresenting the consumer debt's status in a judicial or governmental proceeding; (20520)

(9) representing falsely that a debt collector is vouched for, bonded by, or affiliated with, or is an instrumentality, agent, or official of, this state or an agency of federal, state, or local government; (20521)

(10) using, distributing, or selling a written communication that simulates or is represented falsely to be a document authorized, issued, or approved by a court, an official, a governmental agency, or any other governmental authority or that creates a false impression about the communication's source, authorization, or approval; (20522)

(11) using a seal, insignia, or design that simulates that of a governmental agency; (20523)

(12) representing that a consumer debt may be increased by the addition of attorney's fees, investigation fees, service fees, or other charges if a written contract or statute does not authorize the additional fees or charges; (20524)

(13) representing that a consumer debt will definitely be increased by the addition of attorney's fees, investigation fees, service fees, or other charges if the award of the fees or charges is subject to judicial discretion; (20525)

(14) representing falsely the status or nature of the services rendered by the debt collector or the debt collector's business; (20526)

(15) using a written communication that violates the United States postal laws and regulations; (20527)

(16) using a communication that purports to be from an attorney or law firm if it is not; (20528)

(17) representing that a consumer debt is being collected by an attorney if it is not; (20529)

(18) representing that a consumer debt is being collected by an independent, bona fide organization engaged in the business of collecting past due accounts when the debt is being collected by a subterfuge organization under the control and direction of the person who is owed the debt; or (20530)

(19) using any other false representation or deceptive means to collect a debt or obtain information concerning a consumer. (20531)

(b) Subsection (a)(4) does not apply to a person servicing or collecting real property first lien mortgage loans or credit card debts. (20532)

(c) Subsection (a)(6) does not require a debt collector to disclose the names and addresses of employees of the debt collector. (20533)

(d) Subsection (a)(7) does not require a response to the address of an employee of a debt collector. (20534)

(e) Subsection (a)(18) does not prohibit a creditor from owning or operating a bona fide debt collection agency. (20535)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. Amended by Acts 2003, 78th Leg., ch. 851, Sec. 2, eff. Sept. 1, 2003; Acts 2003, 78th Leg., 3rd C.S., ch. 3, Sec. 28.01, eff. Jan. 11, 2004. (20536)

Sec. 392.305. DECEPTIVE USE OF CREDIT BUREAU NAME. (20537)(1-click HTML)

A person may not use "credit bureau," "retail merchants," or "retail merchants association" in the person's business or trade name unless: (20538)

(1) the person is engaged in gathering, recording, and disseminating information, both favorable and unfavorable, relating to the creditworthiness, financial responsibility, and paying habits of, and similar information regarding, persons being considered for credit extension so that a prospective creditor can make a sound decision in the extension of credit; or (20539)

(2) the person is a nonprofit retail trade association that: (20540)

(A) consists of individual members; (20541)

(B) qualifies as a bona fide business league as defined by the United States Internal Revenue Service; and (20542)

(C) does not engage in the business of debt collection or credit reporting. (20543)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20544)

Sec. 392.306. USE OF INDEPENDENT DEBT COLLECTOR. (20545)(1-click HTML)

A creditor may not use an independent debt collector if the creditor has actual knowledge that the independent debt collector repeatedly or continuously engages in acts or practices that are prohibited by this chapter. (20546)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20547)

SUBCHAPTER E. DEFENSE, CRIMINAL PENALTY, AND CIVIL REMEDIES (20548)(1-click HTML)
Sec. 392.401. BONA FIDE ERROR. (20549)(1-click HTML)

A person does not violate this chapter if the action complained of resulted from a bona fide error that occurred notwithstanding the use of reasonable procedures adopted to avoid the error. (20550)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20551)

Sec. 392.402. CRIMINAL PENALTY. (20552)(1-click HTML)

(a) A person commits an offense if the person violates this chapter. (20553)

(b) An offense under this section is a misdemeanor punishable by a fine of not less than $100 or more than $500 for each violation. (20554)

(c) A misdemeanor charge under this section must be filed not later than the first anniversary of the date of the alleged violation. (20555)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20556)

Sec. 392.403. CIVIL REMEDIES. (20557)(1-click HTML)

(a) A person may sue for: (20558)

(1) injunctive relief to prevent or restrain a violation of this chapter; and (20559)

(2) actual damages sustained as a result of a violation of this chapter. (20560)

(b) A person who successfully maintains an action under Subsection (a) is entitled to attorney's fees reasonably related to the amount of work performed and costs. (20561)

(c) On a finding by a court that an action under this section was brought in bad faith or for purposes of harassment, the court shall award the defendant attorney's fees reasonably related to the work performed and costs. (20562)

(d) If the attorney general reasonably believes that a person is violating or is about to violate this chapter, the attorney general may bring an action in the name of this state against the person to restrain or enjoin the person from violating this chapter. (20563)

(e) A person who successfully maintains an action under this section for violation of Section 392.101, 392.202, or 392.301(a)(3) is entitled to not less than $100 for each violation of this chapter. (20564)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20565)

Sec. 392.404. REMEDIES UNDER OTHER LAW. (20566)(1-click HTML)

(a) A violation of this chapter is a deceptive trade practice under Subchapter E, Chapter 17, Business & Commerce Code, and is actionable under that subchapter. (20567)

(b) This chapter does not affect or alter a remedy at law or in equity otherwise available to a debtor, creditor, governmental entity, or other legal entity. (20568)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20569)

CHAPTER 393. CREDIT SERVICES ORGANIZATIONS (20570)(1-click HTML)

Sec. 393.001. DEFINITIONS. (20571)(1-click HTML)

In this chapter: (20572)

(1) "Consumer" means an individual who is solicited to purchase or who purchases the services of a credit services organization. (20573)

(2) "Consumer reporting agency" has the meaning assigned by Section 603(f), Fair Credit Reporting Act (15 U.S.C. Section 1681a(f)). (20574)

(3) "Credit services organization" means a person who provides, or represents that the person can or will provide, for the payment of valuable consideration any of the following services with respect to the extension of consumer credit by others: (20575)

(A) improving a consumer's credit history or rating; (20576)

(B) obtaining an extension of consumer credit for a consumer; or (20577)

(C) providing advice or assistance to a consumer with regard to Paragraph (A) or (B). (20578)

(4) "Extension of consumer credit" means the right to defer payment of debt offered or granted primarily for personal, family, or household purposes or to incur the debt and defer its payment. (20579)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20580)

Sec. 393.002. PERSONS NOT COVERED. (20581)(1-click HTML)

(a) This chapter does not apply to: (20582)

(1) a person: (20583)

(A) authorized to make a loan or grant an extension of consumer credit under the laws of this state or the United States; and (20584)

(B) subject to regulation and supervision by this state or the United States; (20585)

(2) a lender approved by the United States secretary of housing and urban development for participation in a mortgage insurance program under the National Housing Act (12 U.S.C. Section 1701 et seq.); (20586)

(3) a bank or savings association the deposits or accounts of which are eligible to be insured by the Federal Deposit Insurance Corporation or a subsidiary of the bank or association; (20587)

(4) a credit union doing business in this state; (20588)

(5) a nonprofit organization exempt from taxation under Section 501(c)(3), Internal Revenue Code of 1986 (26 U.S.C. Section 501(c)(3)); (20589)

(6) a real estate broker or salesperson licensed under Chapter 1101, Occupations Code, who is acting within the course and scope of that license; (20590)

(7) an individual licensed to practice law in this state who is acting within the course and scope of the individual's practice as an attorney; (20591)

(8) a broker-dealer registered with the Securities and Exchange Commission or the Commodity Futures Trading Commission acting within the course and scope of that regulation; (20592)

(9) a consumer reporting agency; (20593)

(10) a person whose primary business is making loans secured by liens on real property; (20594)

(11) a mortgage broker or loan officer licensed under Chapter 156, Finance Code, who is acting within the course and scope of that license; or (20595)

(12) an electronic return originator who: (20596)

(A) is an authorized Internal Revenue Service e-file provider; and (20597)

(B) makes, negotiates, arranges for, or transacts a loan that is based on a person's federal income tax refund on behalf of a bank, savings bank, savings and loan association, or credit union. (20598)

(b) In an action under this chapter, a person claiming an exemption under this section has the burden of proving the exemption. (20599)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. Amended by Acts 1999, 76th Leg., ch. 344, Sec. 2.036, eff. Sept. 1, 1999; Acts 1999, 76th Leg., ch. 1254, Sec. 3, eff. Sept. 1, 1999; Acts 2003, 78th Leg., ch. 135, Sec. 2, eff. Sept. 1, 2003; Acts 2003, 78th Leg., ch. 1276, Sec. 14A.775, eff. Sept. 1, 2003. (20600)

Sec. 393.003. WAIVER VOID. (20601)(1-click HTML)

A waiver of a provision of this chapter by a consumer is void. (20602)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20603)

SUBCHAPTER B. REGISTRATION AND DISCLOSURE STATEMENTS (20604)(1-click HTML)
Sec. 393.101. REGISTRATION STATEMENT. (20605)(1-click HTML)

(a) Before conducting business in this state, a credit services organization shall register with the secretary of state by filing a statement that: (20606)

(1) contains the name and address of: (20607)

(A) the organization; and (20608)

(B) each person who directly or indirectly owns or controls at least 10 percent of the outstanding shares of stock in the organization; and (20609)

(2) fully discloses any litigation or unresolved complaint relating to the operation of the organization filed with a governmental authority of this state or contains a notarized statement that there has been no litigation or unresolved complaint of that type. (20610)

(b) The organization shall keep a copy of the registration statement in its files. (20611)

(c) The secretary of state may not require an organization to provide information other than information contained in the registration statement. (20612)

(d) A registration certificate expires on the first anniversary of its date of issuance. A registered credit services organization may renew a registration certificate by filing a renewal application, in the form prescribed by the secretary of state, and paying the renewal fee. (20613)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. Amended by Acts 1999, 76th Leg., ch. 62, Sec. 7.44(a), eff. Sept. 1, 1999. (20614)

Sec. 393.102. UPDATE OF REGISTRATION STATEMENT. (20615)(1-click HTML)

A credit services organization shall update information contained in the registration statement not later than the 90th day after the date on which the information changes. (20616)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20617)

Sec. 393.103. INSPECTION OF REGISTRATION STATEMENT. (20618)(1-click HTML)

A credit services organization shall allow a consumer to inspect the registration statement on request. (20619)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20620)

Sec. 393.104. FILING FEE. (20621)(1-click HTML)

The secretary of state may charge a credit services organization a reasonable fee to cover the cost of filing a registration statement or renewal application in an amount not to exceed $100. (20622)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. Amended by Acts 1999, 76th Leg., ch. 62, Sec. 7.44(a), eff. Sept. 1, 1999. (20623)

Sec. 393.105. DISCLOSURE STATEMENT. (20624)(1-click HTML)

Before executing a contract with a consumer or receiving valuable consideration from a consumer, a credit services organization shall provide the consumer with a document containing: (20625)

(1) a complete and detailed description of the services to be performed by the organization for the consumer and the total cost of those services; (20626)

(2) an explanation of the consumer's right to proceed against the surety bond or account obtained under Section 393.302; (20627)

(3) the name and address of the surety company that issued the surety bond or the name and address of the depository and the trustee and the account number of the surety account, as appropriate; (20628)

(4) a complete and accurate statement of the consumer's right to review information on the consumer maintained in a file by a consumer reporting agency, as provided by the Fair Credit Reporting Act (15 U.S.C. Section 1681 et seq.); (20629)

(5) a statement that information in the consumer's file is available for review: (20630)

(A) without charge on request made to the consumer reporting agency not later than the 30th day after the date on which the agency receives notice the consumer has been denied credit; and (20631)

(B) for a minimal charge at any other time; (20632)

(6) a complete and accurate statement of the consumer's right to dispute directly with a consumer reporting agency the completeness or accuracy of an item contained in the consumer's file maintained by the agency; (20633)

(7) a statement that accurate information cannot be permanently removed from the files of a consumer reporting agency; (20634)

(8) a complete and accurate statement explaining: (20635)

(A) when consumer information becomes obsolete; and (20636)

(B) that a consumer reporting agency is prevented from issuing a report containing obsolete information; and (20637)

(9) a complete and accurate statement of the availability of nonprofit credit counseling services. (20638)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20639)

Sec. 393.106. COPY OF DISCLOSURE STATEMENT. (20640)(1-click HTML)

A credit services organization shall keep in its files a copy of a document required under Section 393.105, signed by the consumer, acknowledging receipt, until the second anniversary of the date on which the organization provides the document. (20641)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20642)

SUBCHAPTER C. CONTRACT FOR SERVICES (20643)(1-click HTML)
Sec. 393.201. FORM AND TERMS OF CONTRACT. (20644)(1-click HTML)

(a) Each contract for the purchase of the services of a credit services organization by a consumer must be in writing, dated, and signed by the consumer. (20645)

(b) In addition to the notice required by Section 393.202, the contract must: (20646)

(1) contain the payment terms, including the total payments to be made by the consumer, whether to the organization or to another person; (20647)

(2) fully describe the services the organization is to perform for the consumer, including each guarantee and each promise of a full or partial refund and the estimated period for performing the services, not to exceed 180 days; (20648)

(3) contain the address of the organization's principal place of business; and (20649)

(4) contain the name and address of the organization's agent in this state authorized to receive service of process. (20650)

(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: (20651)

(1) contain a statement that there is no prepayment penalty; (20652)

(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); (20653)

(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; (20654)

(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); (20655)

(5) disclose to the consumer: (20656)

(A) the lender from whom the extension of consumer credit is obtained; (20657)

(B) the interest paid or to be paid to the lender; and (20658)

(C) the specific fees that will be paid to the credit access business for the business's services; and (20659)

(6) the name and address of the Office of Consumer Credit Commissioner and the telephone number of the office's consumer helpline. (20660)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20661)

Amended by: (20662)

Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 1, eff. January 1, 2012. (20663)

Sec. 393.202. NOTICE OF CANCELLATION. (20664)(1-click HTML)

(a) The contract must conspicuously state the following, in type that is boldfaced, capitalized, underlined, or otherwise distinguished from the surrounding written material and in immediate proximity to the space reserved for the consumer's signature: "You, the buyer, may cancel this contract at any time before midnight of the third day after the date of the transaction. See the attached notice of cancellation form for an explanation of this right." (20665)

(b) The contract must have attached two easily detachable copies of a cancellation notice. The notice must be in boldfaced type and in the following form: (20666)

"Notice of Cancellation (20667)(1-click HTML)

You may cancel this contract, without any penalty or obligation, within three days after the date the contract is signed. (20668)

If you cancel, any payment made by you under this contract will be returned within 10 days after the date of receipt by the seller of your cancellation notice. (20669)

To cancel this contract, mail or deliver a signed dated copy of this cancellation notice, or other written notice, to: (20670)

(name of seller) at (address of seller)(place of business) not later than midnight (date) (20671)

I hereby cancel this transaction. (20672)

(date) (20673)

(purchaser's signature)" (20674)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20675)

Sec. 393.203. ISSUANCE OF CONTRACT AND OTHER DOCUMENTS. (20676)(1-click HTML)

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. (20677)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20678)

Sec. 393.204. BREACH OF CONTRACT. (20679)(1-click HTML)

The breach by a credit services organization of a contract under this chapter, or of an obligation arising from a contract under this chapter, is a violation of this chapter. (20680)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20681)

SUBCHAPTER C-1. NOTICE AND DISCLOSURE REQUIREMENTS FOR CERTAIN CREDIT SERVICES ORGANIZATIONS (20682)(1-click HTML)
Sec. 393.221. DEFINITIONS. (20683)(1-click HTML)

In this subchapter: (20684)

(1) "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. (20685)

(2) "Deferred presentment transaction" has the meaning assigned by Section 341.001. For purposes of this chapter, this definition does not preclude repayment in more than one installment. The term is also referred to as a payday loan. (20686)

(3) "Motor vehicle title loan" or "auto 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. (20687)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1301 (H.B. 2592), Sec. 1, eff. January 1, 2012. (20688)

Sec. 393.222. POSTING OF FEE SCHEDULE; NOTICES. (20689)(1-click HTML)

(a) A credit access business shall post, in a conspicuous location in an area of the business accessible to consumers and on any Internet website, including a social media site, maintained by the credit access business: (20690)

(1) a schedule of all fees to be charged for services performed by the credit access business in connection with deferred presentment transactions and motor vehicle title loans, as applicable; (20691)

(2) a notice of the name and address of the Office of Consumer Credit Commissioner and the telephone number of the office's consumer helpline; and (20692)

(3) a notice that reads as follows: (20693)

"An advance of money obtained through a payday loan or auto title loan is not intended to meet long-term financial needs. A payday loan or auto title loan should only be used to meet immediate short-term cash needs. Refinancing the loan rather than paying the debt in full when due will require the payment of additional charges." (20694)

(b) The Finance Commission of Texas may adopt rules to implement this section. (20695)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1301 (H.B. 2592), Sec. 1, eff. January 1, 2012. (20696)

Sec. 393.223. CONSUMER TRANSACTION INFORMATION. (20697)(1-click HTML)

(a) Before performing services described by Section 393.221(1), a credit access business must provide to a consumer a disclosure adopted by rule of the Finance Commission of Texas that discloses the following in a form prescribed by the commission: (20698)

(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; (20699)

(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 (20700)

(3) information regarding the typical pattern of repayment of deferred presentment transactions and motor vehicle title loans. (20701)

(b) If a credit access business obtains or assists a consumer in obtaining a motor vehicle title loan, the credit access business shall provide to the consumer a notice warning the consumer that in the event of default the consumer may be required to surrender possession of the motor vehicle to the lender or other person to satisfy the consumer's outstanding obligations under the loan. (20702)

(c) The Finance Commission of Texas shall adopt rules to implement this section. (20703)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1301 (H.B. 2592), Sec. 1, eff. January 1, 2012. (20704)

Sec. 393.224. ADMINISTRATIVE PENALTY. (20705)(1-click HTML)

The consumer credit commissioner, in accordance with rules adopted by the Finance Commission of Texas, may assess an administrative penalty against a credit access business that knowingly and wilfully violates this subchapter or a rule adopted under this subchapter in the manner provided by Subchapter F, Chapter 14. (20706)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1301 (H.B. 2592), Sec. 1, eff. January 1, 2012. (20707)

SUBCHAPTER D. PROHIBITIONS AND RESTRICTIONS (20708)(1-click HTML)
Sec. 393.301. REPRESENTATIVE. (20709)(1-click HTML)

In this subchapter, a representative of a credit services organization includes: (20710)

(1) a salesperson, agent, or other representative of the organization; and (20711)

(2) an independent contractor who sells or attempts to sell the services of the organization. (20712)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20713)

Sec. 393.302. CHARGE OR RECEIPT OF CONSIDERATION BEFORE COMPLETION OF SERVICES. (20714)(1-click HTML)

A credit services organization or a representative of the organization may charge or receive from a consumer valuable consideration before completely performing all the services the organization has agreed to perform for the consumer only if the organization has obtained a surety bond for each of its locations or established and maintained a surety account for each of its locations in accordance with Subchapter E. (20715)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. Amended by Acts 1999, 76th Leg., ch. 62, Sec. 7.43(a), eff. Sept. 1, 1999. (20716)

Sec. 393.303. CHARGE OR RECEIPT OF CONSIDERATION FOR REFERRAL. (20717)(1-click HTML)

A credit services organization or a representative of the organization may not charge or receive from a consumer valuable consideration solely for referring the consumer to a retail seller who will or may extend to the consumer credit that is substantially the same as that available to the public. (20718)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20719)

Sec. 393.304. FALSE OR MISLEADING REPRESENTATION OR STATEMENT. (20720)(1-click HTML)

A credit services organization or a representative of the organization may not: (20721)

(1) make or use a false or misleading representation in the offer or sale of the services of the organization, including: (20722)

(A) guaranteeing to "erase bad credit" or words to that effect unless the representation clearly discloses this can be done only if the credit history is inaccurate or obsolete; and (20723)

(B) guaranteeing an extension of consumer credit regardless of the person's credit history unless the representation clearly discloses the eligibility requirements for obtaining the extension; or (20724)

(2) make, or advise a consumer to make, a statement relating to a consumer's credit worthiness, credit standing, or credit capacity that the person knows, or should know by the exercise of reasonable care, to be false or misleading to a: (20725)

(A) consumer reporting agency; or (20726)

(B) person who has extended consumer credit to a consumer or to whom a consumer is applying for an extension of consumer credit. (20727)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20728)

Sec. 393.305. FRAUDULENT OR DECEPTIVE CONDUCT. (20729)(1-click HTML)

A credit services organization or a representative of the organization may not directly or indirectly engage in a fraudulent or deceptive act, practice, or course of business relating to the offer or sale of the services of the organization. (20730)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20731)

Sec. 393.306. ADVERTISING SERVICES WITHOUT FILING REGISTRATION STATEMENT. (20732)(1-click HTML)

A credit services organization or a representative of the organization may not advertise the services of the organization if the organization has not filed a registration statement required by Subchapter B. (20733)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20734)

Sec. 393.307. CAUSING WAIVER PROHIBITED. (20735)(1-click HTML)

A credit services organization may not attempt to cause a consumer to waive a right under this chapter. (20736)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20737)

SUBCHAPTER E. SURETY BOND; SURETY ACCOUNT (20738)(1-click HTML)
Sec. 393.401. SURETY BOND. (20739)(1-click HTML)

(a) The surety bond of a credit services organization must be issued by a surety company authorized to do business in this state. (20740)

(b) A copy of the bond shall be filed with the secretary of state. (20741)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20742)

Sec. 393.402. SURETY ACCOUNT. (20743)(1-click HTML)

(a) The surety account of a credit services organization must be held in trust at a federally insured bank or savings association located in this state. (20744)

(b) The name of the depository and the trustee and the account number of the surety account must be filed with the secretary of state. (20745)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. Amended by Acts 1999, 76th Leg., ch. 344, Sec. 2.037, eff. Sept. 1, 1999. (20746)

Sec. 393.403. AMOUNT OF SURETY BOND OR ACCOUNT. (20747)(1-click HTML)

The surety bond or account of a credit services organization must be in the amount of $10,000. (20748)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20749)

Sec. 393.404. BENEFICIARY OF SURETY BOND OR ACCOUNT. (20750)(1-click HTML)

The surety bond or account of a credit services organization must be in favor of: (20751)

(1) this state for the benefit of a person damaged by a violation of this chapter; and (20752)

(2) a person damaged by a violation of this chapter. (20753)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20754)

Sec. 393.405. CLAIM AGAINST SURETY BOND OR ACCOUNT. (20755)(1-click HTML)

(a) A person making a claim against a surety bond or account of a credit services organization for a violation of this chapter may file suit against: (20756)

(1) the organization; and (20757)

(2) the surety or trustee. (20758)

(b) A surety or trustee is liable only for actual damages, reasonable attorney's fees, and court costs awarded under Section 393.503(a). (20759)

(c) The aggregate liability of a surety or trustee for an organization's violation of this chapter may not exceed the amount of the surety bond or account. (20760)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20761)

Sec. 393.406. TERM OF SURETY BOND OR ACCOUNT. (20762)(1-click HTML)

The surety bond or account of a credit services organization must be maintained until the second anniversary of the date on which the organization ceases operations. (20763)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20764)

Sec. 393.407. PAYMENT OF MONEY IN SURETY ACCOUNT TO CREDIT SERVICES ORGANIZATION. (20765)(1-click HTML)

(a) A depository may not pay money in a surety account to the credit services organization that established the account or a representative of the organization unless the organization or representative presents a statement issued by the secretary of state indicating that the requirement of Section 393.406 has been satisfied in relation to the account. (20766)

(b) The secretary of state may conduct an investigation and require information to be submitted as necessary to enforce this section. (20767)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20768)

SUBCHAPTER F. CRIMINAL PENALTIES AND CIVIL REMEDIES (20769)(1-click HTML)
Sec. 393.501. CRIMINAL PENALTY. (20770)(1-click HTML)

(a) A person commits an offense if the person violates this chapter. (20771)

(b) An offense under this chapter is a Class B misdemeanor. (20772)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20773)

Sec. 393.502. INJUNCTIVE RELIEF. (20774)(1-click HTML)

A district court on the application of the attorney general or a consumer may enjoin a violation of this chapter. (20775)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20776)

Sec. 393.503. DAMAGES. (20777)(1-click HTML)

(a) A consumer injured by a violation of this chapter is entitled to recover: (20778)

(1) actual damages in an amount not less than the amount the consumer paid the credit services organization; (20779)

(2) reasonable attorney's fees; and (20780)

(3) court costs. (20781)

(b) A consumer who prevails in an action under this section may also be awarded punitive damages. (20782)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20783)

Sec. 393.504. DECEPTIVE TRADE PRACTICE. (20784)(1-click HTML)

A violation of this chapter is a deceptive trade practice actionable under Subchapter E, Chapter 17, Business & Commerce Code. (20785)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20786)

Sec. 393.505. STATUTE OF LIMITATIONS. (20787)(1-click HTML)

An action under Section 393.503 or 393.504 must be brought not later than the fourth anniversary of the date on which the contract to which the action relates is executed. (20788)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20789)

SUBCHAPTER G. LICENSING AND REGULATION OF CERTAIN CREDIT SERVICES ORGANIZATIONS (20790)(1-click HTML)
Sec. 393.601. DEFINITIONS. (20791)(1-click HTML)

In this subchapter: (20792)

(1) "Commissioner" means the consumer credit commissioner. (20793)

(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. (20794)

(3) "Deferred presentment transaction" has the meaning assigned by Section 341.001. For purposes of this chapter, this definition does not preclude repayment in more than one installment. (20795)

(4) "Finance commission" means the Finance Commission of Texas. (20796)

(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. (20797)

(6) "Office" means the Office of Consumer Credit Commissioner. (20798)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20799)

Sec. 393.602. APPLICABILITY. (20800)(1-click HTML)

(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: (20801)

(1) a deferred presentment transaction; or (20802)

(2) a motor vehicle title loan. (20803)

(b) A credit access business may assess fees for its services 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. (20804)

(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. (20805)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20806)

Sec. 393.603. LICENSE REQUIRED. (20807)(1-click HTML)

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). (20808)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20809)

Sec. 393.604. APPLICATION FOR LICENSE. (20810)(1-click HTML)

(a) An application for a license under this subchapter must: (20811)

(1) be under oath; (20812)

(2) give the approximate location from which the business is to be conducted; (20813)

(3) identify the business's principal parties in interest; (20814)

(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 (20815)

(5) contain other relevant information that the commissioner requires for the findings required under Section 393.607. (20816)

(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. (20817)

(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. (20818)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20819)

Sec. 393.605. BOND. (20820)(1-click HTML)

(a) If the commissioner requires, an applicant for a license under this subchapter shall file with the application a bond that is: (20821)

(1) in an amount satisfactory to the commissioner that does not exceed the lesser of: (20822)

(A) $10,000 for the first license and $10,000 for each additional license; or (20823)

(B) $2,500,000; and (20824)

(2) issued by a surety company qualified to do business as a surety in this state. (20825)

(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. (20826)

(c) The bond must be conditioned on: (20827)

(1) the license holder's faithful performance under this subchapter and rules adopted under this subchapter; and (20828)

(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. (20829)

(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. (20830)

(e) A credit access business that files a bond under this section is not required to file a bond under Subchapter E. (20831)

(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. (20832)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20833)

Sec. 393.606. INVESTIGATION OF APPLICATION. (20834)(1-click HTML)

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. (20835)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20836)

Sec. 393.607. APPROVAL OR DENIAL OF APPLICATION. (20837)(1-click HTML)

(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: (20838)

(1) the financial responsibility, experience, character, and general fitness of the applicant are sufficient to: (20839)

(A) command the confidence of the public; and (20840)

(B) warrant the belief that the business will be operated lawfully and fairly, within the purposes of this subchapter; and (20841)

(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. (20842)

(b) If the commissioner does not find the eligibility requirements of Subsection (a) have been met, the commissioner shall notify the applicant. (20843)

(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. (20844)

(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. (20845)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20846)

Sec. 393.608. DISPOSITION OF FEES ON DENIAL OF APPLICATION. (20847)(1-click HTML)

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. (20848)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20849)

Sec. 393.609. NAME AND PLACE OF LICENSE. (20850)(1-click HTML)

(a) A license issued under this subchapter must state: (20851)

(1) the name of the license holder; and (20852)

(2) the address of the office from which the business is to be conducted, except as provided by Subsection (c). (20853)

(b) A license holder may not conduct business under this subchapter under a name other than the name stated on the license. (20854)

(c) A license holder may not conduct business at a location other than the address stated on the license, except that a license holder: (20855)

(1) is not required to have an office in this state; and (20856)

(2) may operate using e-commerce methods, including the Internet. (20857)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20858)

Sec. 393.610. LICENSE DISPLAY. (20859)(1-click HTML)

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. (20860)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20861)

Sec. 393.611. MINIMUM ASSETS FOR LICENSE. (20862)(1-click HTML)

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: (20863)

(1) $25,000 for each office; or (20864)

(2) $2,500,000 in the aggregate. (20865)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20866)

Sec. 393.612. ANNUAL LICENSE FEE. (20867)(1-click HTML)

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. (20868)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20869)

Sec. 393.613. EXPIRATION OF LICENSE ON FAILURE TO PAY ANNUAL FEE. (20870)(1-click HTML)

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: (20871)

(1) that day; or (20872)

(2) December 31 of the last year for which an annual fee was paid. (20873)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20874)

Sec. 393.614. LICENSE SUSPENSION OR REVOCATION. (20875)(1-click HTML)

(a) After notice and a hearing the commissioner may suspend or revoke a license if the commissioner finds that: (20876)

(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; (20877)

(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 (20878)

(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. (20879)

(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. (20880)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20881)

Sec. 393.615. LICENSE SUSPENSION OR REVOCATION FILED WITH PUBLIC RECORDS. (20882)(1-click HTML)

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. (20883)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20884)

Sec. 393.616. REINSTATEMENT OF SUSPENDED LICENSE; ISSUANCE OF NEW LICENSE AFTER REVOCATION. (20885)(1-click HTML)

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. (20886)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20887)

Sec. 393.617. SURRENDER OF LICENSE. (20888)(1-click HTML)

A license holder may surrender a license issued under this subchapter by delivering to the commissioner: (20889)

(1) the license; and (20890)

(2) a written notice of the license's surrender. (20891)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20892)

Sec. 393.618. EFFECT OF LICENSE SUSPENSION, REVOCATION, OR SURRENDER. (20893)(1-click HTML)

(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. (20894)

(b) Surrender of a license does not affect the license holder's civil or criminal liability for an act committed before surrender. (20895)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20896)

Sec. 393.619. MOVING AN OFFICE. (20897)(1-click HTML)

(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. (20898)

(b) The commissioner shall amend a license holder's license accordingly. (20899)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20900)

Sec. 393.620. TRANSFER OR ASSIGNMENT OF LICENSE. (20901)(1-click HTML)

A license may be transferred or assigned only with the approval of the commissioner. (20902)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20903)

Sec. 393.621. ADMINISTRATION. (20904)(1-click HTML)

The office shall administer this subchapter. (20905)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20906)

Sec. 393.622. RULES. (20907)(1-click HTML)

(a) The finance commission may: (20908)

(1) adopt rules necessary to enforce and administer this subchapter; (20909)

(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 (20910)

(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. (20911)

(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. (20912)

(c) Nothing in Section 393.201(c) or Sections 393.601-393.628 grants authority to the finance commission or the Office of Consumer Credit Commissioner to establish a limit on the fees charged by a credit access business. (20913)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20914)

Sec. 393.623. PROVIDING OR ADVERTISING SERVICES WITHOUT LICENSE PROHIBITED. (20915)(1-click HTML)

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. (20916)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20917)

Sec. 393.624. RESTRICTIONS ON OFF-SITE ADVERTISING. (20918)(1-click HTML)

(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. (20919)

(b) The finance commission may adopt rules to implement this section. (20920)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20921)

Sec. 393.625. MILITARY BORROWERS. (20922)(1-click HTML)

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. (20923)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20924)

Sec. 393.626. DEBT COLLECTION PRACTICES. (20925)(1-click HTML)

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. (20926)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20927)

Sec. 393.627. QUARTERLY REPORT TO COMMISSIONER. (20928)(1-click HTML)

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: (20929)

(1) the number of consumers for whom the business obtained or assisted in obtaining those extensions of consumer credit; (20930)

(2) the number of those extensions of consumer credit obtained by the business or that the business assisted consumers in obtaining; (20931)

(3) the number of refinancing transactions of the extensions of consumer credit described by Subdivision (2); (20932)

(4) the number of consumers refinancing the extensions of consumer credit described by Subdivision (2); (20933)

(5) the number of consumers refinancing more than once the extensions of consumer credit described by Subdivision (2); (20934)

(6) the average amount of the extensions of consumer credit described by Subdivision (2); (20935)

(7) the total amount of fees charged by the business for the activities described by Subdivision (1); (20936)

(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; (20937)

(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 (20938)

(10) any related information the commissioner determines necessary. (20939)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20940)

Sec. 393.628. TEXAS FINANCIAL EDUCATION ENDOWMENT. (20941)(1-click HTML)

(a) As part of the licensing fee and procedures described under this subchapter, each credit access business or 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. (20942)

(b) The commissioner shall remit to the comptroller amounts received under Subsection (a) for deposit in an interest-bearing deposit account in the Texas Treasury Safekeeping Trust Company. Money in the account may be spent by the finance commission only for the purposes provided by this section. Amounts in the account may be invested and reinvested in the same manner as funds of the Employees Retirement System of Texas, and the interest from those investments shall be deposited to the credit of the account. (20943)

(c) 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: (20944)

(1) production and dissemination of approved financial education materials at licensed locations; (20945)

(2) advertising, marketing, and public awareness campaigns to improve the credit profiles and credit scores of consumers in this state; (20946)

(3) school and youth-based financial literacy and capability; (20947)

(4) credit building and credit repair; (20948)

(5) financial coaching and consumer counseling; (20949)

(6) bank account enrollment and incentives for personal savings; and (20950)

(7) other consumer financial education and asset-building initiatives as considered appropriate by the finance commission. (20951)

(d) In implementing this section, the finance commission may solicit gifts, grants, and donations for this purpose. (20952)

(e) The finance commission may partner with other state agencies and entities to implement this section. (20953)

(f) The finance commission shall adopt rules to administer this section. (20954)

Added by Acts 2011, 82nd Leg., R.S., Ch. 1302 (H.B. 2594), Sec. 2, eff. January 1, 2012. (20955)

CHAPTER 394. DEBTOR ASSISTANCE (20956)(1-click HTML)

SUBCHAPTER A. DEBT COUNSELING AND EDUCATION (20957)(1-click HTML)
Sec. 394.001. DUTIES OF COMMISSIONER. (20958)(1-click HTML)

The consumer credit commissioner shall provide advice and assistance to: (20959)

(1) encourage the establishment and operation of voluntary nonprofit debt-counseling services for residents of this state; and (20960)

(2) coordinate, encourage, and aid public and private agencies, organizations and groups, and consumer credit institutions in the development and operation of voluntary education programs to promote the prudent and beneficial use of consumer credit by residents of this state. (20961)

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997. (20962)

SUBCHAPTER C. CONSUMER DEBT MANAGEMENT SERVICES (20963)(1-click HTML)
Sec. 394.201. PURPOSE; CONSTRUCTION. (20964)(1-click HTML)

(a) The purpose of this subchapter is to protect consumers who contract for services with debt management services providers. (20965)

(b) This subchapter shall be liberally construed to accomplish its purpose. (20966)

Added by Acts 2005, 79th Leg., Ch. 336 (S.B. 1112), Sec. 1, eff. September 1, 2005. (20967)

Sec. 394.202. DEFINITIONS. (20968)(1-click HTML)

In this subchapter: (20969)

(1) "Advertising" means information about a provider or about the provider's debt management services, communicated in writing or orally to an individual consumer or the public by telephone, television, Internet, radio, or other electronic medium, or by written material sent by mail, posted publicly, or posted at the provider's business location. (20970)

(2) "Certified counselor" means an individual who: (20971)

(A) is certified as a debt management counselor by an independent accreditation organization; or (20972)

(B) if the individual has been employed for less than 12 months, is in the process of being certified as a debt management counselor by an independent accreditation organization. (20973)

(3) "Commissioner" means the consumer credit commissioner. (20974)

(3-a) "Concession" means assent to repayment of a debt on terms more favorable to a consumer than the terms of the agreement under which the consumer became indebted to the creditor. (20975)

(4) "Consumer" means an individual who resides in this state and seeks a debt management service or enters a debt management service agreement. (20976)

(5) "Creditor" means a person to whom a person owes money. (20977)

(6) "Debt management service" means a service in which a provider obtains or seeks to obtain a concession from one or more creditors on behalf of a consumer. (20978)

(7) "Debt management service agreement" means a written agreement between a provider and a consumer for the performance of a debt management service. (20979)

(8) "Finance commission" means the Finance Commission of Texas. (20980)

(9) "Person" means an individual, partnership, corporation, limited liability company, association, or organization. (20981)

(9-a) "Principal amount of the debt" means the amount of a debt owed by a consumer at the time the consumer enters into a debt management service agreement. (20982)

(10) "Provider" means a person that acts as an intermediary between a consumer and one or more creditors and that provides or offers to provide a debt management service to a consumer in this state. (20983)

(11) "Secured debt" means a debt for which a creditor has a mortgage, lien, or security interest in collateral. (20984)

(11-a) "Settlement fee" means a charge that is imposed on or paid by a consumer in connection with a debt management service agreement after a creditor agrees to accept in full satisfaction of a debt an amount that is less than the principal amount of the debt. (20985)

(12) "Trust account" means an account that is: (20986)

(A) established in a federally insured financial institution; (20987)

(B) separate from any account of the debt management service provider; (20988)

(C) designated as a "trust account" or other appropriate designation indicating that the money in the account is not money of the provider or its officers, employees, or agents; (20989)

(D) unavailable to creditors of the provider; and (20990)

(E) used exclusively to hold money paid by consumers to the provider for disbursement to creditors of the consumers and to the provider for the disbursement of fees and contributions earned and agreed to in advance. (20991)

(13) "Unsecured debt" means a debt for which a creditor does not have collateral. (20992)

Added by Acts 2005, 79th Leg., Ch. 336 (S.B. 1112), Sec. 1, eff. September 1, 2005. (20993)

Amended by: (20994)

Acts 2011, 82nd Leg., R.S., Ch. 368 (S.B. 141), Sec. 1, eff. September 1, 2011. (20995)

Sec. 394.203. APPLICABILITY. (20996)(1-click HTML)

(a) Except as otherwise provided by this subchapter, this subchapter applies to a provider regardless of whether the provider charges a fee or receives consideration for a service. (20997)

(b) The business of providing debt management services is conducted in this state if the debt management services provider solicits or contracts with consumers located in this state. (20998)

(c) This subchapter does not apply to: (20999)

(1) an attorney licensed to practice in this state, unless the attorney holds the attorney's self out to the public as a provider or is employed, affiliated with, or otherwise working on behalf of a provider; (21000)

(2) a title insurance or abstract company employee or agent, or other person legally authorized to engage in escrow business in the state, only while engaged in the escrow business; (21001)

(3) a judicial officer or person acting under a court order; (21002)

(4) a person who has legal authority under federal or state law to act as a representative payee for a consumer, only to the extent the person is paying bills or other debts on behalf of that consumer; (21003)

(5) a person who pays bills or other debts owed by a consumer and on behalf of a consumer, if the money used to make the payments belongs exclusively to the consumer and the person does not initiate any contact with individual creditors of the consumer to compromise a debt, arrange a new payment schedule, or otherwise change the terms of the debt; or (21004)

(6) a financial institution, as defined by Section 201.101. (21005)

(d) The following are not debt management services for purposes of this subchapter: (21006)

(1) an extension of credit, including consolidation or refinance of a loan; and (21007)

(2) bankruptcy services provided by an attorney licensed to practice in this state. (21008)

(e) This subchapter applies to a person who seeks to evade its applicability by any device, subterfuge, or pretense. (21009)

Added by Acts 2005, 79th Leg., Ch. 336 (S.B. 1112), Sec. 1, eff. September 1, 2005. (21010)

Sec. 394.204. REGISTRATION. (21011)(1-click HTML)

(a) A person, regardless of whether located in this state, may not provide a debt management service to a consumer in this state unless the person is registered with the commissioner. (21012)

(b) Registration expires on December 31 of the year in which the registration occurs and must be renewed annually. (21013)

(c) An application for an initial registration must be in a form prescribed by the commissioner and accompanied by: (21014)

(1) the appropriate fees set by the finance commission in an amount necessary to recover the costs of administering this subchapter; (21015)

(2) the surety bond or insurance required by Section 394.206; (21016)

(3) the applicant's name, the applicant's principal business address and telephone number, all other business addresses of the applicant in this state, and the applicant's electronic mail address and Internet website address; (21017)

(4) all names under which the applicant conducts business; (21018)

(5) the address of each location in this state at which the applicant will provide debt management services, or if the applicant will have no such location, a statement to that effect; (21019)

(6) the name and home address of each officer and director of the applicant and each person that holds at least a 10 percent ownership interest in the applicant; (21020)

(7) if the applicant is a nonprofit or tax exempt organization, a detailed description of the ownership interest of each officer, director, agent, or employee of the applicant, and any member of the immediate family of an officer, director, agent, or employee of the applicant, in a for-profit affiliate or subsidiary of the applicant or in any other for-profit business entity that provides services to the applicant or to a consumer in relation to the applicant's debt management business; and (21021)

(8) any other information that the commissioner requires. (21022)

(d) An officer or employee of a person registered under this subchapter is not required to be separately registered. (21023)

(e) Unless the commissioner notifies an applicant that a longer period is necessary, the commissioner shall approve or deny an initial registration not later than the 60th day after the date on which the completed application, including all required documents and payments, is filed. The commissioner shall inform the applicant in writing of the reason for denial. (21024)

(f) A person may renew a registration by paying the appropriate fee and completing all required documents. (21025)

(g) The finance commission by rule may establish procedures to facilitate the registration and collection of fees under this section, including rules staggering throughout the year the dates on which fees are due. (21026)

(h) The commissioner may refuse an initial application if the application contains errors or incomplete information. An application is incomplete if it does not include all of the information required by this section and Section 394.205. (21027)

(i) The commissioner may deny an initial application if: (21028)

(1) the applicant or any principal of the applicant has been convicted of a crime or found civilly liable for an offense involving moral turpitude, including forgery, embezzlement, obtaining money under false pretenses, larceny, extortion, conspiracy to defraud, or any other similar offense or violation; (21029)

(2) the registration of the applicant or any principal of the applicant has been revoked or suspended in this state or another state, unless the applicant provides information that the commissioner finds sufficient to show that the grounds for the previous revocation or suspension no longer exist and any problem cited in the previous revocation has been corrected; or (21030)

(3) the commissioner, based on specific evidence, finds that the applicant does not warrant the belief that the business will be operated lawfully and fairly and within the provisions and purposes of this subchapter. (21031)

(j) On written request, the applicant is entitled to a hearing, pursuant to Chapter 2001, Government Code, on the question of the applicant's qualifications for initial registration if the commissioner has notified the applicant in writing that the initial application has been denied. A request for a hearing may not be made after the 30th day after the date the commissioner mails a notice to the applicant stating that the application has been denied and stating the reasons for the denial. (21032)

(k) In addition to the power to refuse an initial application as specified in this section, the commissioner may suspend or revoke a provider's registration after notice and hearing if the commissioner finds that any of the following conditions are met: (21033)

(1) a fact or condition exists that if it had existed when the provider applied for registration would have been grounds for denying registration; (21034)

(2) a fact or condition exists that the commissioner was not aware of when the provider applied for registration and would have been grounds for denying registration; (21035)

(3) the provider violates this subchapter or rule or order of the commissioner under this subchapter; (21036)

(4) the provider is insolvent; (21037)

(5) the provider refuses to permit the commissioner to make an examination authorized by this subchapter; (21038)

(6) the provider fails to respond within a reasonable time and in an appropriate manner to communications from the commissioner; (21039)

(7) the provider has received money from or on behalf of a consumer for disbursement to a creditor under a debt management plan that provides for regular periodic payments to creditors in full repayment of the principal amount of the debts and the provider has failed to disburse money to the creditor on behalf of the consumer within a reasonable time, normally 30 days; (21040)

(8) the commissioner determines that the provider's trust account is not materially in balance with and reconciled to the consumer's account; or (21041)

(9) the provider fails to warrant the belief that the business will be operated lawfully and fairly and within the provisions and purposes of this subchapter. (21042)

(l) The commissioner's order revoking a registration must include appropriate provisions to transfer existing clients of the provider to one or more registered providers to ensure the continued servicing of the clients' accounts. (21043)

(m) The commissioner shall maintain a list of registered providers and make the list available to interested persons and to the public. (21044)

Added by Acts 2005, 79th Leg., Ch. 336 (S.B. 1112), Sec. 1, eff. September 1, 2005. (21045)

Amended by: (21046)

Acts 2007, 80th Leg., R.S., Ch. 48 (S.B. 884), Sec. 1, eff. September 1, 2007. (21047)

Acts 2011, 82nd Leg., R.S., Ch. 368 (S.B. 141), Sec. 2, eff. September 1, 2011. (21048)

Sec. 394.205. RECORDS. (21049)(1-click HTML)

(a) A provider shall keep and use books, accounts, and other records that will enable the commissioner to determine if the provider is complying with this subchapter and maintain any other records as required by the commissioner. The commissioner may examine the records at any reasonable time. The records must be kept for at least three years after the date of the last service on a consumer's debt management plan. (21050)

(b) Each provider shall file a report with the commissioner at each renewal of the provider's registration. The report must at a minimum disclose in detail and under appropriate headings: (21051)

(1) the assets and liabilities of the provider at the beginning and end of the period, if the provider is a nonprofit or tax exempt organization; (21052)

(2) the total number of debt management plans the provider has initiated on behalf of consumers in this state during that year; and (21053)

(3) records of total and average fees charged to consumers, including all voluntary contributions received from consumers. (21054)

(c) The reports must be verified by the oath or affirmation of the owner, manager, president, chief executive officer, or chairman of the board of directors of the provider. (21055)

(d) A provider shall file a blank copy of the agreement described in Section 394.209 and blank copies of the written information required in Section 394.208(a) with the commissioner accompanying the initial registration and each renewal of registration. (21056)

(e) The commissioner shall make the information provided under this section available to interested parties and to the public. (21057)

Added by Acts 2005, 79th Leg., Ch. 336 (S.B. 1112), Sec. 1, eff. September 1, 2005. (21058)

Amended by: (21059)

Acts 2007, 80th Leg., R.S., Ch. 48 (S.B. 884), Sec. 2, eff. September 1, 2007. (21060)

Sec. 394.206. BOND; INSURANCE. (21061)(1-click HTML)

(a) A provider shall, at the time the provider files an initial or renewal registration application with the commissioner, file: (21062)

(1) a surety bond; or (21063)

(2) evidence that the provider maintains an insurance policy in a form approved by the commissioner. (21064)

(b) The bond or insurance must: (21065)

(1) run concurrently with the period of registration; (21066)

(2) be available to pay damages and penalties to consumers directly harmed by a violation of this subchapter; (21067)

(3) 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 provider; (21068)

(4) if a bond: (21069)

(A) be in an amount equal to the average daily balance of the provider's trust account serving Texas consumers over the six-month period preceding the issuance of the bond, or in the case of an initial application, in an amount determined by the commissioner, but not less than $25,000 or more than $100,000, if the provider receives and holds money paid by or on behalf of a consumer for disbursement to the consumer's creditors; or (21070)

(B) be in the amount of $50,000, if the provider does not receive and hold money paid by or on behalf of a consumer for disbursement to the consumer's creditors; (21071)

(5) if an insurance policy: (21072)

(A) provide coverage for professional liability, employee dishonesty, depositor's forgery, and computer fraud in an amount not less than $100,000; (21073)

(B) be issued by a company rated at least "A-" or its equivalent by a nationally recognized rating organization; and (21074)

(C) provide for 30 days advance written notice of termination of the policy to be provided to the commissioner; (21075)

(6) be issued by a bonding, surety, or insurance company that is authorized to do business in the state; and (21076)

(7) be conditioned on the provider and its agents complying with all state and federal laws, including regulations, governing the business of debt management services. (21077)

(c) In lieu of a bond or insurance, the finance commission by rule may establish alternative financial requirements to provide substantially equivalent protection to pay damages and penalties to consumers directly harmed by a violation under this subchapter. (21078)

(d) The commissioner may adjust the amount of the provider's bond or insurance only when the provider applies for renewal of registration and requests a review of the bond or insurance amount. (21079)

Added by Acts 2005, 79th Leg., Ch. 336 (S.B. 1112), Sec. 1, eff. September 1, 2005. (21080)

Amended by: (21081)

Acts 2011, 82nd Leg., R.S., Ch. 368 (S.B. 141), Sec. 3, eff. September 1, 2011. (21082)

Sec. 394.207. ADVERTISING. (21083)(1-click HTML)

A provider may not engage in false or deceptive advertising. (21084)

Added by Acts 2005, 79th Leg., Ch. 336 (S.B. 1112), Sec. 1, eff. September 1, 2005. (21085)

Sec. 394.208. REQUIRED ACTIONS BY PROVIDER. (21086)(1-click HTML)

(21087)

(a) A provider may not enroll a consumer in a debt management plan unless, through the services of a counselor certified by an independent accreditation organization, the provider: (21088)

(1) has provided the consumer individualized counseling and educational information that at a minimum addresses the topics of managing household finances, managing credit and debt, and budgeting; (21089)

(2) has prepared an individualized financial analysis and an initial debt management plan for the consumer's debts with specific recommendations regarding actions the consumer should take; (21090)

(3) has determined that the consumer has a reasonable ability to make payments under the proposed debt management plan based on the information provided by the consumer; (21091)

(4) if the proposed debt management plan does not provide for a reduction of principal as a concession: (21092)

(A) has a reasonable expectation, provided that the consumer has provided accurate information to the provider, that each creditor of the consumer listed as a participating creditor in the plan will accept payment of the consumer's debts as provided in the initial plan; and (21093)

(B) has prepared, for all creditors identified by the consumer or identified through additional investigation by the provider, a list, which must be provided to the consumer in a form the consumer may keep, of the creditors that the provider reasonably expects to participate in the plan; and (21094)

(5) has provided a written document to the consumer in a form the consumer may keep that clearly and conspicuously contains the following statements: (21095)

(A) that debt management services are not suitable for all consumers and that consumers may request information about other ways, including bankruptcy, to deal with indebtedness; (21096)

(B) that if the provider is a nonprofit or tax-exempt organization the provider cannot require donations or contributions; and (21097)

(C) if applicable, that some of the provider's funding comes from contributions from creditors who participate in debt management plans, except that a provider may substitute for "some" the actual percentage of creditor contributions it received during the most recent reporting period. (21098)

(b) If the provider discusses its services with a consumer primarily in a language other than English, the provider must provide the debt management agreement in that language. (21099)

(c) A consumer must give at least 10 days' notice to the provider to cancel a debt management services agreement. The provider must cancel a debt management services agreement within 10 days after the date the provider receives the notice from the consumer. The provider must continue making disbursements to the consumer's creditors if money has been paid to the provider under the agreement until the expiration of the 10-day period, unless otherwise agreed in writing by the consumer and the provider. (21100)

(d) A provider may provide the information required by Subsections (a)(2), (4)(B), and (5) through its Internet website if the provider: (21101)

(1) has complied with the federal Electronic Signatures in Global and National Commerce Act (15 U.S.C. Section 7001 et seq.); (21102)

(2) informs the consumer that, on electronic, telephonic, or written request the provider will make available to the consumer a paper copy or copies; and (21103)

(3) discloses on its Internet website: (21104)

(A) the provider's name and each name under which it does business; (21105)

(B) the provider's principal business address and telephone number; and (21106)

(C) the names of the provider's principal officers. (21107)

(e) A provider, including a provider that does business only or principally through the Internet, shall maintain a telephone system staffed at a level that reasonably permits a consumer to access a counselor during ordinary business hours. (21108)

(f) A provider who receives and disburses money to creditors on behalf of consumers for debt management services shall provide each consumer to whom those services were provided a written report accounting for: (21109)

(1) the amount of money received from the consumer since the last report; (21110)

(2) the amount and date of each disbursement made on the consumer's behalf to each creditor listed in the agreement since the last report; (21111)

(3) any amount deducted from amounts received from the consumer; and (21112)

(4) any amount held in reserve. (21113)

(g) The provider shall provide the report under Subsection (f): (21114)

(1) at least once each calendar quarter; and (21115)

(2) not later than the 10th business day after the date of a request by a consumer. (21116)

Added by Acts 2005, 79th Leg., Ch. 336 (S.B. 1112), Sec. 1, eff. September 1, 2005. (21117)

Amended by: (21118)

Acts 2007, 80th Leg., R.S., Ch. 48 (S.B. 884), Sec. 3, eff. September 1, 2007. (21119)

Acts 2011, 82nd Leg., R.S., Ch. 368 (S.B. 141), Sec. 4, eff. September 1, 2011. (21120)

Sec. 394.209. WRITTEN DEBT MANAGEMENT SERVICES AGREEMENT. (21121)(1-click HTML)

(a) A debt management services provider may not prepare a debt management services agreement before the provider has fully complied with Sections 394.208(a) and (b). (21122)

(b) Each debt management services agreement must: (21123)

(1) be dated and signed by the consumer; (21124)

(2) include the name and address of the consumer and the name, address, and telephone number of the provider; (21125)

(3) describe the services to be provided; (21126)

(4) state all fees, individually itemized, to be paid by the consumer; (21127)

(5) if the proposed debt management plan does not provide for a reduction of principal as a concession, list in the agreement or accompanying document, to the extent the information is available to the provider at the time the agreement is executed, each participating creditor of the consumer to which payments will be made and, based on information provided by the consumer, the amount owed to each creditor and the schedule of payments the consumer will be required to make to the creditor, including the amount and date on which each payment will be due; (21128)

(6) state the existence of a surety bond or insurance for consumer claims; (21129)

(7) state that establishment of a debt management plan may impact the consumer's credit rating and credit score either favorably or unfavorably, depending on creditor policies and the consumer's payment history before and during participation in the debt management plan; and (21130)

(8) state that either party may cancel the agreement without penalty at any time on 10 days' notice and that a consumer who cancels an agreement is entitled to a refund of all money that the consumer has paid to the provider that has not been disbursed. (21131)

(c) A debt management services agreement may contain a voluntary consumer arbitration provision or a voluntary mediation provision. (21132)

(d) A provider may deliver the debt management services agreement through the Internet if the provider: (21133)

(1) has complied with the federal Electronic Signatures in Global and National Commerce Act (15 U.S.C. Section 7001 et seq.); (21134)

(2) sends the consumer a paper copy of the agreement not later than the seventh day after the date of a request by a consumer to do so; and (21135)

(3) discloses on a prominent page of its Internet website: (21136)

(A) the provider's name and each name under which it does business; (21137)

(B) the provider's principal business address and telephone number; and (21138)

(C) the names of the provider's principal officers. (21139)

(e) If the provider discusses its services or negotiates with a consumer primarily in a language other than English, the provider may not begin performance of a debt management plan until the provider and consumer sign a copy of the written agreement, provided by the debt management services provider, in that language and a copy is made available to the consumer. (21140)

Added by Acts 2005, 79th Leg., Ch. 336 (S.B. 1112), Sec. 1, eff. September 1, 2005. (21141)

Amended by: (21142)

Acts 2011, 82nd Leg., R.S., Ch. 368 (S.B. 141), Sec. 5, eff. September 1, 2011. (21143)

Sec. 394.2095. CANCELLATION OF AGREEMENT BY EITHER PROVIDER OR CONSUMER. (21144)(1-click HTML)

If a provider or a consumer cancels a debt management service agreement, the provider shall immediately return to the consumer: (21145)

(1) any money of the consumer held in trust by the provider for the consumer's benefit; and (21146)

(2) 65 percent of any portion of the account set-up fee received under Section 394.210(g)(1) that has not been credited against settlement fees. (21147)

Added by Acts 2011, 82nd Leg., R.S., Ch. 368 (S.B. 141), Sec. 6, eff. September 1, 2011. (21148)

Sec. 394.210. PERMITTED FEES. (21149)(1-click HTML)

(a) With respect to the provision of a debt management plan service, a provider may not impose a fee or other charge on a consumer, or receive payment from a consumer or other person on behalf of a consumer, except as allowed under this section. (21150)

(b) For the purposes of this section, fees or charges include both voluntary contributions and any other fees charged to or collected from a consumer or on behalf of the consumer. (21151)

(c) A provider may not impose fees or other charges on a consumer or receive payment for debt management services until the consumer has entered into a debt management service agreement with the provider that complies with Section 394.209. (21152)

(d) If a consumer enters into a debt management service agreement with a provider, the provider may not impose a fee or other charge for debt counseling, education services, or similar services except as otherwise authorized by this section. The commissioner may authorize a provider to charge a fee based on the nature and extent of the counseling, education services, or other similar services furnished by the provider. (21153)

(e) Subsections (f)-(j) apply subject to an adjustment made under Section 394.2101. (21154)

(f) If a consumer is enrolled in a debt management plan that provides for a reduction of finance charges or fees for late payment, default, or delinquency as a concession from creditors, the provider may charge: (21155)

(1) a fee not to exceed $100 for debt consultation or education services, including obtaining a credit report, setting up an account, and other similar services; and (21156)

(2) a monthly service fee, not to exceed the lesser of: (21157)

(A) $10 multiplied by the number of accounts remaining in the plan on the day of the month the fee is assessed; or (21158)

(B) $50. (21159)

(g) If a consumer is enrolled in a debt management plan that provides for settlement of debts for amounts that are less than the principal amounts of the debts as a concession from creditors, the provider may charge: (21160)

(1) a fee for debt consultation or education services, including obtaining a credit report, setting up an account, and other similar services, in an amount not to exceed the lesser of $400 or four percent of the total amount of the outstanding debt included in the plan at the time the plan is established; and (21161)

(2) a monthly service fee, not to exceed the lesser of: (21162)

(A) $10 multiplied by the number of accounts remaining in the plan on the day of the month the fee is assessed; or (21163)

(B) $50; and (21164)

(3) one of the following: (21165)

(A) with respect to a debt management service agreement in which a flat fee is charged based on the total amount of debt that is included in a debt management plan, the total aggregate amount of fees charged to a consumer under this subchapter, including fees charged under Subdivisions (1) and (2), may not exceed 17 percent of the total principal amount of debt included in the debt management plan; or (21166)

(B) with respect to a debt management service agreement in which fees are computed as a percentage of the amount saved by a consumer as a result of a concession, in addition to fees charged under Subdivisions (1) and (2), a settlement fee may not exceed 30 percent of the excess of the outstanding amount of each debt over the amount actually paid to the creditor, as computed at the time of settlement. (21167)

(h) Settlement fees authorized under Subsection (g)(3)(B) may be charged only as debts are settled, and the total aggregate amount of fees charged to a consumer under this subchapter, including fees charged under Subsections (g)(1) and (2), may not exceed 20 percent of the principal amount of debt included in the debt management plan. (21168)

(i) The flat fee authorized under this subchapter shall be assessed in equal monthly payments for a period that is at least as long as the term of the debt management plan, as estimated when the debt management plan is established, unless: (21169)

(1) the fee payment period is voluntarily accelerated by the consumer in an addendum to the agreement or other separate agreement; and (21170)

(2) offers of settlement by creditors have been obtained on at least half of the outstanding debt included in the debt management plan. (21171)

(j) If a consumer is enrolled in a debt management plan that provides for the settlement of debts for amounts that are less than the principal amount of the debts as a concession from creditors, if fees for debt management services will not be charged or collected until the time a settlement agreement is reached with a creditor, and if at least one payment has been made toward the settlement agreement by or on behalf of the consumer, the fee limitations in Subsection (g) do not apply and the provider may charge reasonable settlement fees. The fee with respect to each debt included in the plan must: (21172)

(1) bear the same proportional relationship to the total fee for settling all debts included in the debt management plan as the principal amount of the particular debt bears to the total principal amount of the debt included in the plan; or (21173)

(2) be a percentage of the amount saved as a result of the settlement, determined as the difference between the principal amount of a debt and the amount actually paid to satisfy the debt. The percentage charged cannot change from one debt to another. (21174)

(k) A provider may impose fees or other charges or receive fees or payment under only one of Subsection (f), (g), or (j). (21175)

(l) If a consumer does not enter into a debt management service agreement with a provider, the provider may receive payment for debt counseling or education services provided to the consumer in an amount not to exceed $100 or a greater amount, on approval of the commissioner. The commissioner may approve a fee in an amount greater than $100 if the nature and extent of the educational and counseling services warrant the greater amount. (21176)

(m) If, before the expiration of the 90th day after the date debt counseling or education services are completed or canceled, a consumer enters into a debt management service agreement with a provider, the provider shall refund to the consumer any payments received under Subsection (l). (21177)

(n) Subject to an adjustment made under Section 394.2101, if any payment made by a consumer to a provider under this subchapter is dishonored, the provider may impose a reasonable charge on the consumer not to exceed the lesser of $25 or an amount permitted by a law other than this chapter. (21178)

Added by Acts 2005, 79th Leg., Ch. 336 (S.B. 1112), Sec. 1, eff. September 1, 2005. (21179)

Amended by: (21180)

Acts 2007, 80th Leg., R.S., Ch. 48 (S.B. 884), Sec. 4, eff. September 1, 2007. (21181)

Acts 2011, 82nd Leg., R.S., Ch. 368 (S.B. 141), Sec. 7, eff. September 1, 2011. (21182)

Sec. 394.2101. ADJUSTMENT OF AMOUNTS OF FEES OR OTHER CHARGES. (21183)(1-click HTML)

(a) The commissioner shall compute and publish the dollar amounts of fees or other charges in amounts different from the amounts of fees or other charges specified in Section 394.210 to reflect inflation, as measured by the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the United States Department of Labor or, if that index is not available, another index adopted by finance commission rule. The commissioner shall adopt a base year and adjust the dollar amounts, effective on July 1 of each year, if the change in the index from the base year, as of December 31 of the preceding year, is at least 10 percent. The dollar amounts must be rounded to the nearest $100, except that the amounts of the fees and other charges specified in Section 394.210 must be rounded to the nearest dollar. (21184)

(b) The commissioner shall notify registered providers of any change in dollar amounts made under Subsection (a) and make that information available to the public. (21185)

Added by Acts 2011, 82nd Leg., R.S., Ch. 368 (S.B. 141), Sec. 8, eff. September 1, 2011. (21186)

Sec. 394.211. TRUST ACCOUNT. (21187)(1-click HTML)

(a) A provider must use a trust account for the management of all money paid by or on behalf of a consumer and received by the provider for disbursement to the consumer's creditor. A provider may not commingle the money in a trust account established for the benefit of consumers with any operating funds of the provider. A provider shall exercise due care to appropriately manage the funds in the trust account. (21188)

(b) The trust account must at all times be materially in balance with and reconciled to the consumers' accounts. Failure to maintain that balance is cause for a summary suspension of registration under Section 394.204. (21189)

(c) If a trust account does not contain sufficient money to cover the aggregate consumer balances, and the provider has not corrected the deficiency within 48 hours of discovery, the provider shall notify the commissioner by telephone, facsimile, electronic mail, or other method approved by the commissioner, and provide written notice including a description of the remedial action taken. (21190)

Added by Acts 2005, 79th Leg., Ch. 336 (S.B. 1112), Sec. 1, eff. September 1, 2005. (21191)

Amended by: (21192)

Acts 2011, 82nd Leg., R.S., Ch. 368 (S.B. 141), Sec. 9, eff. September 1, 2011. (21193)

Sec. 394.212. PROHIBITED ACTS AND PRACTICES. (21194)(1-click HTML)

(a) A provider may not: (21195)

(1) purchase a debt or obligation of a consumer; (21196)

(2) receive or charge a fee in the form of a promissory note or other negotiable instrument other than a check or a draft; (21197)

(3) lend money or provide credit to the consumer; (21198)

(4) obtain a mortgage or other security interest in property owned by a consumer; (21199)

(5) engage in business with an entity described by Section 394.204(c)(3) without prior consent of the commissioner, except that unless denied, consent is considered granted 30 days after the date the provider notifies the commissioner of the intent to engage in business with an organization described by Section 394.204(c)(3); (21200)

(6) offer, pay, or give a gift, bonus, premium, reward, or other compensation to a person for entering into a debt management services agreement; (21201)

(7) represent that the provider is authorized or competent to furnish legal advice or perform legal services unless supervised by an attorney as required by State Bar of Texas rules; (21202)

(8) use an unconscionable means to obtain a contract with a consumer; (21203)

(9) engage in an unfair, deceptive, or unconscionable act or practice in connection with a service provided to a consumer; or (21204)

(10) require or attempt to require payment of an amount that the provider states, discloses, or advertises to be a voluntary contribution from the consumer. (21205)

(b) A provider does not have a claim: (21206)

(1) for breach of contract against a consumer who cancels an agreement pursuant to this subchapter; or (21207)

(2) in restitution with respect to an agreement that is void under this subchapter. (21208)

(c) A provider may not include any of the following provisions in a disclosure related to debt management services or in a debt management services agreement: (21209)

(1) a confession of judgment clause; (21210)

(2) a waiver of the right to a jury trial, if applicable, in an action brought by or against a consumer; (21211)

  

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