Bill Text: TX SB92 | 2015-2016 | 84th Legislature | Introduced

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Bill Title: Relating to regulation of certain credit services organizations and to certain extensions of consumer credit the organizations obtain for a consumer or assist a consumer in obtaining.

Sponsorship: Partisan Bill (Democrat 1)

Status: (Introduced - Dead) 2015-04-28 - Left pending in committee [SB92 Detail]

Download: Texas-2015-SB92-Introduced.html

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84R664 ATP-F
By: Ellis S.B. No. 92

A BILL TO BE ENTITLED
AN ACT
relating to regulation of certain credit services organizations and
to certain extensions of consumer credit the organizations obtain
for a consumer or assist a consumer in obtaining.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter A, Chapter 393, Finance Code, is
amended by adding Section 393.004 to read as follows:
Sec. 393.004. EFFECT ON MUNICIPAL ORDINANCES. (a) In this
section, "credit access business" has the meaning assigned by
Section 393.601.
(b) This chapter does not preempt a municipal ordinance
regulating a credit access business or an extension of consumer
credit that a credit access business obtains for a consumer or
assists a consumer in obtaining.
(c) If a municipal ordinance described by Subsection (b)
conflicts with a provision of this chapter regulating a credit
access business or an extension of consumer credit described by
Subsection (b), the more stringent regulation controls to the
extent of the conflict.
SECTION 2. Section 393.203, Finance Code, is amended to
read as follows:
Sec. 393.203. ISSUANCE OF CONTRACT AND OTHER DOCUMENTS.
(a) A credit services organization shall give to the consumer, when
the document is signed, a copy of the completed contract and any
other document the organization requires the consumer to sign.
(b) The contract and other documents provided by a credit
access business, as defined by Section 393.221, to a consumer under
this section in relation to an extension of consumer credit must be:
(1) provided before signing wholly written in the
language in which the contract is negotiated; and
(2) read before signing in their entirety in the
language in which the contract is negotiated to any consumer who
cannot read.
SECTION 3. Section 393.223, Finance Code, is amended by
amending Subsection (a) and adding Subsection (b-1) to read as
follows:
(a) Before performing services described by Section
393.602(a) [393.221(1)], a credit access business must provide to a
consumer a written disclosure adopted by rule of the Finance
Commission of Texas [that discloses the following] in a form
prescribed by the commission that:
(1) discloses the interest, fees, and annual
percentage rates, as applicable, to be charged on a deferred
presentment transaction or on a motor vehicle title loan, as
applicable, in comparison to interest, fees, and annual percentage
rates to be charged on other alternative forms of consumer debt;
(2) discloses the amount of accumulated fees a
consumer would incur by renewing or refinancing a deferred
presentment transaction or motor vehicle title loan that remains
outstanding for a period of two weeks, one month, two months, and
three months; [and]
(3) provides information regarding the typical
pattern of repayment of deferred presentment transactions and motor
vehicle title loans; and
(4) references nonprofit agencies that provide
financial education and training or cash assistance to borrowers.
(b-1) The disclosure and notice required by this section
must be:
(1) available in English and Spanish at each location
at which the credit access business performs services described by
Section 393.602(a); and
(2) provided to a consumer wholly written, and read in
their entirety at the time provided to any consumer who cannot read,
in the language in which the contract is negotiated.
SECTION 4. Subchapter D, Chapter 393, Finance Code, is
amended by adding Sections 393.308 and 393.309 to read as follows:
Sec. 393.308. RESTRICTIONS ON AMOUNT ADVANCED UNDER CERTAIN
EXTENSIONS OF CONSUMER CREDIT. (a) In this section, "deferred
presentment transaction" and "motor vehicle title loan" have the
meanings assigned by Section 393.601.
(b) A credit services organization may not obtain for a
consumer or assist a consumer in obtaining an extension of consumer
credit in the form of a deferred presentment transaction if the
amount of cash advanced exceeds 20 percent of the borrower's gross
monthly income.
(c) A credit services organization may not obtain for a
consumer or assist a consumer in obtaining an extension of consumer
credit in the form of a motor vehicle title loan if the amount of
cash advanced exceeds the lesser of:
(1) three percent of the borrower's gross annual
income; or
(2) 70 percent of the retail value of the motor
vehicle.
(d) A credit services organization shall use a consumer's
paycheck or other documentation establishing income to determine a
consumer's income for purposes of this section.
Sec. 393.309. REPAYMENT OF CERTAIN EXTENSIONS OF CONSUMER
CREDIT. (a) In this section, "deferred presentment transaction"
and "motor vehicle title loan" have the meanings assigned by
Section 393.221.
(b) An extension of consumer credit in the form of a
deferred presentment transaction or motor vehicle title loan that a
credit services organization obtains for a consumer or assists a
consumer in obtaining may not be payable in more than four
installments. Proceeds from each installment must be used to repay
at least 25 percent of the principal amount of the debt. An
extension of consumer credit described by this subsection that
provides for repayment in installments may not be refinanced or
renewed.
(c) An extension of consumer credit in the form of a
deferred presentment transaction or motor vehicle title loan that a
credit services organization obtains for a consumer or assists a
consumer in obtaining and that provides for a single lump-sum
payment may not be refinanced or renewed more than three times.
Proceeds from each refinancing or renewal must be used to repay at
least 25 percent of the principal amount of the original debt.
(d) For purposes of this section, an extension of consumer
credit in the form of a deferred presentment transaction or motor
vehicle title loan that is made to a consumer on or before the
seventh day after the date the consumer has paid a previous
extension of consumer credit made by the same person is considered a
refinance or renewal of the previous debt.
SECTION 5. Section 393.501, Finance Code, is amended by
adding Subsection (c) to read as follows:
(c) Each day of a continuing violation of a provision of
Subchapter C-1 or G constitutes a separate offense.
SECTION 6. Section 393.604(a), Finance Code, is amended to
read as follows:
(a) An application for a license under this subchapter must:
(1) be under oath;
(2) contain the applicant's name and the street
address, mailing address, facsimile number, and telephone number of
the applicant at the location for which the license is sought;
(3) give the approximate location from which the
business is to be conducted;
(4) [(3)] identify the business's principal parties in
interest;
(5) [(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
(6) [(5)] contain other relevant information that the
commissioner requires for the findings required under Section
393.607.
SECTION 7. Section 393.620, Finance Code, is amended to
read as follows:
Sec. 393.620. TRANSFER OR ASSIGNMENT OF LICENSE PROHIBITED.
A license may not be transferred or assigned [only with the approval
of the commissioner].
SECTION 8. Subchapter G, Chapter 393, Finance Code, is
amended by adding Section 393.629 to read as follows:
Sec. 393.629. MAINTENANCE OF RECORDS. (a) A credit access
business shall maintain a complete set of records of all extensions
of consumer credit obtained for consumers by the business or that
the business assisted consumers in obtaining. The record
pertaining to each extension of consumer credit must be retained
until the third anniversary of the date the extension of consumer
credit was obtained and must include:
(1) the name and address of the consumer;
(2) the principal amount of the cash advance or loan;
(3) the length of the original term of the extension of
consumer credit, the number of installments or renewals, and the
length of the term of any renewal or refinance;
(4) the fees charged by the credit access business for
obtaining for a consumer or assisting the consumer in obtaining the
extension of consumer credit; and
(5) the documentation used to establish a consumer's
income under Section 393.308.
(b) A credit access business shall retain a copy of each
written agreement between the business and a consumer pertaining to
an extension of consumer credit, including any agreement regarding
refinancing or renewing an extension of consumer credit, until the
third anniversary of the date on which the agreement was entered
into.
(c) A credit access business shall retain a copy of each
report filed under Section 393.627 until the third anniversary of
the date on which the report was filed.
(d) A record described by this section must be available for
inspection on request by the office during the normal business
hours of the credit access business.
SECTION 9. The changes in law made by this Act apply only to
an extension of consumer credit made on or after the effective date
of this Act. An extension of consumer credit made before the
effective date of this Act is governed by the law in effect on the
date the extension of consumer credit was made, and the former law
is continued in effect for that purpose.
SECTION 10. (a) The change in law made by this Act to
Section 393.223, Finance Code, applies only to a disclosure or
notice provided by a credit access business on or after January 1,
2016. A disclosure or notice provided by a credit access business
before January 1, 2016, is governed by Section 393.223, Finance
Code, as that section existed immediately before the effective date
of this Act, and that law is continued in effect for that purpose.
(b) The Finance Commission of Texas shall adopt rules
prescribing forms under Section 393.223(a), Finance Code, as
amended by this Act, not later than November 1, 2015.
SECTION 11. Section 393.629, Finance Code, as added by this
Act, applies only to a record created on or after the effective date
of this Act. A record created before the effective date of this Act
is governed by the law in effect when the record was created, and
the former law is continued in effect for that purpose.
SECTION 12. This Act takes effect September 1, 2015.