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


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.

Spectrum: Partisan Bill (Democrat 1-0)

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

Download: Texas-2015-SB92-Introduced.html
  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.
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