Texas 2009 - 81st Regular

Texas House Bill HB1706 Compare Versions

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1	1	81R14629 NC-F
2	2	By: Geren, et al. H.B. No. 1706
3	3	Substitute the following for H.B. No. 1706:
4	4	By: Jones C.S.H.B. No. 1706
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to the licensing and regulation of identity recovery
10	10	service contract providers and the inclusion of identity recovery
11	11	service agreements in certain service contracts and vehicle
12	12	protection products; providing penalties.
13	13	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
14	14	SECTION 1. Section 348.001, Finance Code, is amended by
15	15	adding Subdivision (8-a) to read as follows:
16	16	(8-a) "Service contract" includes an identity
17	17	recovery service contract as defined by Section 1306.003,
18	18	Occupations Code.
19	19	SECTION 2. Section 1304.003(b), Occupations Code, is
20	20	amended to read as follows:
21	21	(b) A service contract may also provide for:
22	22	(1) incidental payment or indemnity under limited
23	23	circumstances, including towing, rental, and emergency road
24	24	service; [or]
25	25	(2) the repair or replacement of a product for damage
26	26	resulting from a power surge or for accidental damage incurred in
27	27	handling the product; or
28	28	(3) identity recovery, as defined by Section 1306.002,
29	29	if the service contract is financed under Chapter 348, Finance
30	30	Code.
31	31	SECTION 3. Title 8, Occupations Code, is amended by adding
32	32	Chapter 1306 to read as follows:
33	33	CHAPTER 1306. IDENTITY RECOVERY SERVICE CONTRACT PROVIDERS AND
34	34	ADMINISTRATORS
35	35	SUBCHAPTER A. GENERAL PROVISIONS
36	36	Sec. 1306.001. SHORT TITLE. This chapter may be cited as
37	37	the Identity Recovery Service Contract Regulatory Act.
38	38	Sec. 1306.002. DEFINITIONS. In this chapter:
39	39	(1) "Administrator" means a person, other than the
40	40	provider of the identity recovery service contract or an employee
41	41	of the provider, who is responsible for the third-party
42	42	administration of an identity recovery service contract.
43	43	(2) "Commission" means the Texas Commission of
44	44	Licensing and Regulation.
45	45	(3) "Consumer" means an individual who purchases an
46	46	identity recovery service contract.
47	47	(4) "Department" means the Texas Department of
48	48	Licensing and Regulation.
49	49	(5) "Executive director" means the executive director
50	50	of the department.
51	51	(6) "Identity recovery" means a process, through a
52	52	limited power of attorney and the assistance of an identity
53	53	recovery expert, that returns the identity of an identity theft
54	54	victim to pre-identity theft event status.
55	55	(7) "Identity recovery service contract holder" means
56	56	a person who purchases or otherwise holds an identity recovery
57	57	service contract.
58	58	(8) "Person" means an individual or an association,
59	59	company, corporation, partnership, or other group.
60	60	(9) "Provider" means a person who is contractually
61	61	obligated to an identity recovery service contract holder under the
62	62	terms of an identity recovery service contract.
63	63	(10) "Reimbursement insurance policy" means a policy
64	64	of insurance issued to a provider to:
65	65	(A) reimburse the provider under an identity
66	66	recovery service contract the provider issued or sold; or
67	67	(B) pay on behalf of the provider all covered
68	68	contractual obligations that are incurred by the provider under an
69	69	identity recovery service contract the provider issued or sold and
70	70	that the provider does not perform.
71	71	Sec. 1306.003. IDENTITY RECOVERY SERVICE CONTRACT. In this
72	72	chapter, "identity recovery service contract" means an agreement:
73	73	(1) to provide identity recovery;
74	74	(2) that is entered into for a separately stated
75	75	consideration and for a specified term; and
76	76	(3) that is financed through a retail installment
77	77	contract under Chapter 348, Finance Code.
78	78	Sec. 1306.004. CONTROLLING PERSON. (a) In this chapter,
79	79	"controlling person" means an individual who:
80	80	(1) possesses direct or indirect control of at least
81	81	25 percent of the voting securities of a corporation;
82	82	(2) possesses the authority to set policy and direct
83	83	the management of a business entity;
84	84	(3) is the president, the secretary, or a director of a
85	85	corporation; or
86	86	(4) is a general partner of a partnership.
87	87	(b) An individual who is a controlling person of a
88	88	corporation or other business entity that is the general partner of
89	89	a limited partnership is a controlling person of the limited
90	90	partnership.
91	91	Sec. 1306.005. EXEMPTIONS. This chapter does not apply to:
92	92	(1) an identity recovery service contract sold or
93	93	offered for sale to a person who is not a consumer; or
94	94	(2) an identity recovery service contract sold by a
95	95	motor vehicle dealer on a motor vehicle sold by that dealer, if the
96	96	dealer:
97	97	(A) is the provider;
98	98	(B) is licensed as a motor vehicle dealer under
99	99	Chapter 2301; and
100	100	(C) covers its obligations under the identity
101	101	recovery service contract with a reimbursement insurance policy.
102	102	Sec. 1306.006. EXEMPTIONS FROM CERTAIN OTHER LAWS.
103	103	Marketing, selling, offering for sale, issuing, making, proposing
104	104	to make, and administering an identity recovery service contract
105	105	are exempt from the Insurance Code and other laws of this state
106	106	regulating the business of insurance.
107	107	Sec. 1306.007. PURCHASE REQUIREMENT PROHIBITED. A person
108	108	regulated by Chapter 2301 may not require the purchase of an
109	109	identity recovery service contract as a condition of a loan or the
110	110	sale of a vehicle.
111	111	Sec. 1306.008. GENERAL INVESTIGATIVE POWER OF EXECUTIVE
112	112	DIRECTOR. (a) The executive director may investigate a provider,
113	113	administrator, or other person as necessary to enforce this chapter
114	114	and protect identity recovery service contract holders in this
115	115	state.
116	116	(b) On request of the executive director, a provider shall
117	117	make the records required by Section 1306.105 available to the
118	118	executive director as necessary to enable the executive director to
119	119	reasonably determine compliance with this chapter.
120	120	[Sections 1306.009-1306.050 reserved for expansion]
121	121	SUBCHAPTER B. REGISTRATION REQUIREMENTS
122	122	Sec. 1306.051. REGISTRATION REQUIRED; EXEMPTION FROM OTHER
123	123	LICENSING REQUIREMENTS. (a) A person may not operate as a provider
124	124	or administrator of identity recovery service contracts sold in
125	125	this state unless the person is registered with the department.
126	126	(b) Except for the registration requirement of this
127	127	subchapter, a provider, identity recovery service contract seller,
128	128	administrator, or other person who markets, sells, or offers to
129	129	sell identity recovery service contracts is exempt from any
130	130	licensing requirement of this state that relates to an activity
131	131	regulated under this chapter.
132	132	(c) If a person registered under Chapter 1304 registers
133	133	under Chapter 1306, the financial security used to comply with
134	134	Section 1304.151 fulfills the requirements of Section 1306.101.
135	135	Sec. 1306.052. APPLICATION FOR REGISTRATION OR RENEWAL;
136	136	GENERAL REQUIREMENTS. (a) An applicant for registration or
137	137	registration renewal must submit an application to the executive
138	138	director.
139	139	(b) The application must:
140	140	(1) be in the form prescribed by the executive
141	141	director; and
142	142	(2) include evidence satisfactory to the executive
143	143	director of compliance with the applicable financial security
144	144	requirements prescribed by Section 1306.101, if the application is
145	145	for a provider registration or renewal.
146	146	(c) The department may refuse to issue or renew a
147	147	registration if the applicant or a controlling person of the
148	148	applicant has violated this chapter or a rule adopted or order
149	149	issued by the commission or executive director.
150	150	(d) A person who makes a false statement in an application
151	151	or in any document provided with an application is subject to
152	152	disciplinary action under Subchapter D, including denial of the
153	153	application or suspension or revocation of a registration.
154	154	Sec. 1306.053. ADDITIONAL REGISTRATION AND RENEWAL
155	155	REQUIREMENTS FOR PROVIDERS. (a) In addition to the requirements of
156	156	Section 1306.052, an applicant for issuance or renewal of a
157	157	provider registration must file with the application:
158	158	(1) the reimbursement insurance policy required by
159	159	Section 1306.102, if the provider is using a reimbursement
160	160	insurance policy; and
161	161	(2) a biographical affidavit, in a form prescribed by
162	162	the executive director, for each controlling person of the
163	163	provider.
164	164	(b) The executive director may not issue or renew a
165	165	registration to a provider unless the provider provides evidence to
166	166	the executive director that:
167	167	(1) each controlling person of the provider is
168	168	trustworthy and can competently manage the affairs of the provider
169	169	in compliance with this chapter; and
170	170	(2) the provider can meet the provider's obligations
171	171	under identity recovery service contracts and this chapter.
172	172	Sec. 1306.054. FEES. (a) As prescribed by this section, a
173	173	provider must pay annual registration and renewal fees and
174	174	quarterly fees based on the number of identity recovery service
175	175	contracts sold or issued and in force in this state. As prescribed
176	176	by this section, an administrator must pay annual registration and
177	177	renewal fees.
178	178	(b) To register or renew a registration, a provider or
179	179	administrator must pay the appropriate fee. The commission shall
180	180	set by rule the amounts of the registration and renewal fees
181	181	required to cover the costs of administering this chapter.
182	182	(c) Not later than the 30th day after the date each calendar
183	183	quarter ends, a provider must report to the department the number of
184	184	identity recovery service contracts sold or issued to consumers in
185	185	this state during the calendar quarter and submit to the department
186	186	a fee equal to $1 for each of those contracts.
187	187	(d) The information concerning the number of identity
188	188	recovery service contracts sold or issued by a provider that is
189	189	submitted under Subsection (c):
190	190	(1) is a trade secret to which Section 552.110,
191	191	Government Code, applies; and
192	192	(2) may be used only by the executive director and the
193	193	department for the purposes of this section.
194	194	(e) The commission shall adopt rules to implement this
195	195	section.
196	196	Sec. 1306.055. RENEWAL. The commission shall adopt rules
197	197	regarding the renewal of a registration issued under this chapter.
198	198	[Sections 1306.056-1306.100 reserved for expansion]
199	199	SUBCHAPTER C. PRACTICE BY IDENTITY RECOVERY SERVICE CONTRACT
200	200	PROVIDERS AND ADMINISTRATORS
201	201	Sec. 1306.101. FINANCIAL SECURITY REQUIREMENTS. (a) To
202	202	ensure the faithful performance of a provider's obligations to its
203	203	identity recovery service contract holders, each provider must:
204	204	(1) insure the provider's identity recovery service
205	205	contracts under a reimbursement insurance policy issued by an
206	206	insurer authorized to transact insurance in this state or by a
207	207	surplus lines insurer eligible to place coverage in this state
208	208	under Chapter 981, Insurance Code;
209	209	(2) maintain a funded reserve account covering the
210	210	provider's obligations under its identity recovery service
211	211	contracts that are issued and outstanding in this state and place in
212	212	trust with the executive director a financial security deposit
213	213	consisting of:
214	214	(A) a surety bond issued by an authorized surety;
215	215	(B) securities of the type eligible for deposit
216	216	by an authorized insurer in this state;
217	217	(C) a statutory deposit of cash or cash
218	218	equivalents;
219	219	(D) a letter of credit issued by a qualified
220	220	financial institution; or
221	221	(E) another form of security prescribed by rules
222	222	adopted by the commission; or
223	223	(3) maintain, or have a parent company that maintains,
224	224	a net worth or stockholders' equity of at least $100 million.
225	225	(b) If the provider ensures its obligations under
226	226	Subsection (a)(2), the amount maintained in the reserve account may
227	227	not be less than an amount equal to 40 percent of the gross
228	228	consideration the provider received from consumers from the sale of
229	229	all identity recovery service contracts issued and outstanding in
230	230	this state, minus any claims paid. The executive director may
231	231	review and examine the reserve account. The amount of the security
232	232	deposit may not be less than the greater of:
233	233	(1) $25,000; or
234	234	(2) an amount equal to five percent of the gross
235	235	consideration the provider received from consumers from the sale of
236	236	all identity recovery service contracts issued and outstanding in
237	237	this state, minus any claims paid.
238	238	(c) If the provider ensures its obligations under
239	239	Subsection (a)(3), the provider must give to the executive director
240	240	on request:
241	241	(1) a copy of the provider's or the provider's parent
242	242	company's most recent Form 10-K or Form 20-F filed with the
243	243	Securities and Exchange Commission within the preceding calendar
244	244	year; or
245	245	(2) if the provider or the provider's parent company
246	246	does not file with the Securities and Exchange Commission, a copy of
247	247	the provider's or the provider's parent company's audited financial
248	248	statements showing a net worth of the provider or its parent company
249	249	of at least $100 million.
250	250	(d) If the provider's parent company's Form 10-K, Form 20-F,
251	251	or audited financial statements are filed to show that the provider
252	252	meets the financial security requirement, the parent company shall
253	253	agree to guarantee the obligations of the provider relating to
254	254	identity recovery service contracts sold by the provider in this
255	255	state.
256	256	(e) The executive director may not require a provider to
257	257	meet any additional financial security requirement.
258	258	Sec. 1306.102. REIMBURSEMENT INSURANCE POLICY. (a) A
259	259	reimbursement insurance policy that a provider uses to comply with
260	260	Sections 1306.053 and 1306.101(a)(1) must state that:
261	261	(1) the insurer that issued the policy shall:
262	262	(A) reimburse or pay on behalf of the provider
263	263	any covered amount the provider is legally obligated to pay; or
264	264	(B) provide the service that the provider is
265	265	legally obligated to perform according to the provider's
266	266	contractual obligations under the insured identity recovery
267	267	service contract;
268	268	(2) if the covered service is not provided to an
269	269	identity recovery service contract holder before the 61st day after
270	270	the date of proof of loss, the insurer shall pay the covered amount
271	271	directly to the identity recovery service contract holder or
272	272	provide the required service; and
273	273	(3) if a refund is not paid to the identity recovery
274	274	service contract holder or credited to the identity recovery
275	275	service contract holder's account as required by Section 1306.108,
276	276	the insurer, after receiving written notice, shall pay the refund
277	277	amount directly to the identity recovery service contract holder.
278	278	(b) For a reimbursement insurance policy to comply with
279	279	Section 1306.101(a)(1), the insurer issuing the policy must:
280	280	(1) maintain surplus as to policyholders and paid-in
281	281	capital of at least $15 million and annually file with the executive
282	282	director copies of the insurer's audited financial statements,
283	283	National Association of Insurance Commissioners annual statement,
284	284	and actuarial certification if the certification is required and
285	285	filed in the insurer's state of domicile; or
286	286	(2) maintain surplus as to policyholders and paid-in
287	287	capital of at least $10 million but not more than $15 million,
288	288	demonstrate to the satisfaction of the executive director that the
289	289	insurer maintains a ratio of net written premiums, wherever
290	290	written, to surplus as to policyholders and paid-in capital of not
291	291	more than three to one, and annually file with the executive
292	292	director copies of the insurer's audited financial statements,
293	293	National Association of Insurance Commissioners annual statement,
294	294	and actuarial certification if the certification is required and
295	295	filed in the insurer's state of domicile.
296	296	(c) The insurer may not cancel the reimbursement insurance
297	297	policy until the insurer delivers to the provider and the executive
298	298	director a written notice of cancellation that complies with the
299	299	notice requirements prescribed by Subchapters B and C, Chapter 551,
300	300	Insurance Code, for cancellation of an insurance policy under those
301	301	subchapters. Cancellation of the policy does not affect the
302	302	insurer's liability for an identity recovery service contract
303	303	issued by the provider and insured under the policy before the
304	304	effective date of the cancellation.
305	305	(d) If the insurer or provider cancels the reimbursement
306	306	insurance policy, the provider named on the policy may not issue a
307	307	new identity recovery service contract after the effective date of
308	308	the cancellation unless:
309	309	(1) the provider files with the executive director a
310	310	copy of a new policy that meets the requirements of this section and
311	311	that provides coverage after that date; or
312	312	(2) the provider complies with other financial
313	313	security requirements provided by Section 1306.101(a).
314	314	(e) A provider is considered the agent of an insurer that
315	315	issues a reimbursement insurance policy for purposes of obligating
316	316	the insurer to the identity recovery service contract holder in
317	317	accordance with the identity recovery service contract and this
318	318	chapter. The insurer issuing the reimbursement insurance policy is
319	319	considered to have received the premium for the policy on the date
320	320	the identity recovery service contract holder pays the purchase
321	321	price of the identity recovery service contract.
322	322	(f) This chapter does not prevent or limit the right of the
323	323	insurer to seek indemnification or subrogation against a provider
324	324	for any amount the insurer pays or is obligated to pay to an
325	325	identity recovery service contract holder on behalf of the
326	326	provider.
327	327	(g) In this section, "net written premiums" means the sum of
328	328	direct written premiums and assumed reinsurance premiums, minus
329	329	ceded reinsurance premiums.
330	330	Sec. 1306.103. APPOINTMENT AND RESPONSIBILITIES OF
331	331	ADMINISTRATOR. (a) A provider may appoint an administrator
332	332	registered under this chapter to be responsible for:
333	333	(1) all or any part of the administration or sale of
334	334	identity recovery service contracts; and
335	335	(2) compliance with this chapter, except for Section
336	336	1306.101.
337	337	(b) The appointment of an administrator under this section
338	338	does not affect a provider's responsibility to comply with this
339	339	chapter.
340	340	Sec. 1306.104. PROVIDER REQUIREMENTS. A provider may not
341	341	sell, offer for sale, or issue an identity recovery service
342	342	contract in this state unless the provider gives the identity
343	343	recovery service contract holder:
344	344	(1) a receipt for, or other written evidence of, the
345	345	purchase of the contract; and
346	346	(2) a copy of the contract within a reasonable period
347	347	after the date of purchase.
348	348	Sec. 1306.105. PROVIDER RECORDS. (a) A provider shall
349	349	maintain accurate accounts, books, and other records regarding
350	350	transactions regulated under this chapter. The provider's records
351	351	must include:
352	352	(1) a copy of each unique form of identity recovery
353	353	service contract sold;
354	354	(2) the name and address of each identity recovery
355	355	service contract holder who provided the holder's name and address;
356	356	(3) a list of each location at which the provider's
357	357	identity recovery service contracts are marketed, sold, or offered
358	358	for sale; and
359	359	(4) written claims files that contain at least the
360	360	date and a description of each claim related to the identity
361	361	recovery service contracts.
362	362	(b) The records required by this section may be maintained
363	363	in an electronic medium or through other recordkeeping technology.
364	364	If a record is not in a hard copy, the provider must be able to
365	365	reformat the record into a legible hard copy at the request of the
366	366	executive director.
367	367	(c) Except as provided by Subsection (d), a provider shall
368	368	retain the records required by this section until at least the first
369	369	anniversary of the expiration date of the specified period of
370	370	coverage under the identity recovery service contract.
371	371	(d) A provider that discontinues business in this state
372	372	shall retain its records until the provider furnishes the executive
373	373	director with proof satisfactory to the executive director that the
374	374	provider has discharged all obligations to identity recovery
375	375	service contract holders in this state.
376	376	(e) An administrator appointed to maintain the provider's
377	377	records is responsible for compliance with this section to the same
378	378	extent as the provider.
379	379	Sec. 1306.106. FORM OF IDENTITY RECOVERY SERVICE CONTRACT
380	380	AND REQUIRED DISCLOSURES. (a) An identity recovery service
381	381	contract marketed, sold, offered for sale, issued, made, proposed
382	382	to be made, or administered in this state must:
383	383	(1) be written, printed, or typed in clear,
384	384	understandable language that is easy to read;
385	385	(2) state the name and address of the provider;
386	386	(3) state the purchase price of the contract and the
387	387	terms under which the contract is sold;
388	388	(4) state the terms and restrictions governing
389	389	cancellation of the contract by the provider or the identity
390	390	recovery service contract holder before the expiration date of the
391	391	contract;
392	392	(5) identify:
393	393	(A) any administrator;
394	394	(B) the contract seller; and
395	395	(C) the identity recovery service contract
396	396	holder, if the identity recovery service contract holder provides
397	397	the holder's name;
398	398	(6) state the amount of any deductible;
399	399	(7) specify the services to be provided under the
400	400	contract and any limitation, exception, or exclusion;
401	401	(8) specify any restriction governing the
402	402	transferability of the contract; and
403	403	(9) state the duties of the identity recovery service
404	404	contract holder, including any duty to protect against any further
405	405	damage and any requirement to follow the instructions in the
406	406	identity recovery service contract.
407	407	(b) The identity of a person described by Subsection (a)(5)
408	408	is not required to be preprinted on the identity recovery service
409	409	contract and may be added to the contract at the time of sale.
410	410	(c) The purchase price is not required to be preprinted on
411	411	the identity recovery service contract and may be negotiated with
412	412	the identity recovery service contract holder at the time of sale.
413	413	(d) An identity recovery service contract insured under a
414	414	reimbursement insurance policy under Section 1306.102 must:
415	415	(1) state the name and address of the insurer;
416	416	(2) state that the identity recovery service contract
417	417	holder may apply for reimbursement directly to the insurer if:
418	418	(A) a covered service is not provided to the
419	419	identity recovery service contract holder by the provider before
420	420	the 61st day after the date of proof of loss; or
421	421	(B) a refund or credit is not paid before the 46th
422	422	day after the date on which the contract is returned to the provider
423	423	under Section 1306.107; and
424	424	(3) contain a statement substantially similar to the
425	425	following: "Obligations of the provider under this identity
426	426	recovery service contract are insured under an identity recovery
427	427	service contract reimbursement insurance policy."
428	428	(e) An identity recovery service contract that is not
429	429	insured under a reimbursement insurance policy must contain a
430	430	statement substantially similar to the following: "Obligations of
431	431	the provider under this identity recovery service contract are
432	432	backed by the full faith and credit of the provider."
433	433	Sec. 1306.107. RETURNING AN IDENTITY RECOVERY SERVICE
434	434	CONTRACT. An identity recovery service contract must require the
435	435	provider to allow the identity recovery service contract holder to
436	436	return the contract to the provider not later than:
437	437	(1) the 20th day after the date the contract is mailed
438	438	to the identity recovery service contract holder; or
439	439	(2) the 10th day after the date of delivery, if the
440	440	contract is delivered to the identity recovery service contract
441	441	holder at the time of sale.
442	442	Sec. 1306.108. VOIDING AN IDENTITY RECOVERY SERVICE
443	443	CONTRACT. (a) If an identity recovery service contract holder
444	444	returns an identity recovery service contract in accordance with
445	445	Section 1306.107 and a claim has not been made under the contract
446	446	before the contract is returned, the contract is void.
447	447	(b) An identity recovery service contract holder may void
448	448	the identity recovery service contract at a later time as provided
449	449	by the contract.
450	450	(c) If an identity recovery service contract is voided under
451	451	Subsection (a), the provider shall refund to the identity recovery
452	452	service contract holder or credit to the account of the identity
453	453	recovery service contract holder the full purchase price of the
454	454	contract. If the provider does not pay the refund or credit the
455	455	identity recovery service contract holder's account before the 46th
456	456	day after the date the contract is returned to the provider, the
457	457	provider is liable to the identity recovery service contract holder
458	458	for a penalty each month an amount remains outstanding. The monthly
459	459	penalty may not exceed 10 percent of the amount outstanding.
460	460	(d) The right to void an identity recovery service contract
461	461	is not transferable.
462	462	Sec. 1306.109. CANCELING AN IDENTITY RECOVERY SERVICE
463	463	CONTRACT. (a) A provider may cancel an identity recovery service
464	464	contract by mailing a written notice of cancellation to the
465	465	identity recovery service contract holder at the identity recovery
466	466	service contract holder's last known address according to the
467	467	records of the provider. The provider must mail the notice before
468	468	the fifth day preceding the effective date of the cancellation. The
469	469	notice must state the effective date of the cancellation and the
470	470	reason for the cancellation.
471	471	(b) The provider is not required to provide prior notice of
472	472	cancellation if the identity recovery service contract is canceled
473	473	because of:
474	474	(1) nonpayment of the consideration for the contract;
475	475	(2) a material misrepresentation by the identity
476	476	recovery service contract holder to the provider; or
477	477	(3) a substantial breach of a duty by the identity
478	478	recovery service contract holder.
479	479	Sec. 1306.110. LIMITATIONS ON PROVIDER NAME. (a) A
480	480	provider may not use a name that:
481	481	(1) includes "insurance," "casualty," "surety," or
482	482	"mutual" or any other word descriptive of the insurance, casualty,
483	483	or surety business; or
484	484	(2) is deceptively similar to the name or description
485	485	of an insurance or surety corporation or to the name of any other
486	486	provider.
487	487	(b) A provider may include in its name "guaranty" or a
488	488	similar word.
489	489	(c) This section does not apply to a provider that, before
490	490	September 1, 2009, included a word prohibited under this section in
491	491	its name. A provider described by this subsection must include in
492	492	each identity recovery service contract a statement substantially
493	493	similar to the following: "This agreement is not an insurance
494	494	contract."
495	495	Sec. 1306.111. MISLEADING STATEMENTS PROHIBITED. A
496	496	provider or the provider's representative may not, in the
497	497	provider's identity recovery service contracts or literature:
498	498	(1) make, permit, or cause to be made any false or
499	499	misleading statement; or
500	500	(2) deliberately omit a material statement if the
501	501	omission would be considered misleading.
502	502	[Sections 1306.112-1306.150 reserved for expansion]
503	503	SUBCHAPTER D. DISCIPLINARY ACTION
504	504	Sec. 1306.151. DISCIPLINARY ACTION. On a finding that a
505	505	ground for disciplinary action exists under this chapter, the
506	506	commission may impose an administrative sanction, including an
507	507	administrative penalty as provided by Subchapter F, Chapter 51.
508	508	Sec. 1306.152. INJUNCTIVE RELIEF; CIVIL PENALTY. (a) The
509	509	executive director may institute an action under Section 51.352 for
510	510	injunctive relief to restrain a violation or a threatened violation
511	511	of this chapter or an order issued or rule adopted under this
512	512	chapter.
513	513	(b) In addition to the injunctive relief provided by
514	514	Subsection (a), the executive director may institute an action for
515	515	a civil penalty as provided by Section 51.352. The amount of a
516	516	civil penalty assessed under this section may not exceed:
517	517	(1) $2,500 for each violation; or
518	518	(2) $50,000 in the aggregate for all violations of a
519	519	similar nature.
520	520	Sec. 1306.153. MULTIPLE VIOLATIONS. For purposes of this
521	521	subchapter, violations are of a similar nature if the violations
522	522	consist of the same or a similar course of conduct, action, or
523	523	practice, regardless of the number of times the conduct, act, or
524	524	practice occurred.
525	525	Sec. 1306.154. ADMINISTRATIVE PROCEDURE. Sections 51.305,
526	526	51.310, and 51.354 apply to disciplinary action taken under this
527	527	chapter.
528	528	SECTION 4. Section 2306.003, Occupations Code, is amended
529	529	by adding Subsection (c) to read as follows:
530	530	(c) A vehicle protection product may also include identity
531	531	recovery, as defined by Section 1306.002, if the vehicle protection
532	532	product is financed under Chapter 348, Finance Code.
533	533	SECTION 5. (a) The change in law made by this Act applies to
534	534	an identity recovery service contract entered into on or after
535	535	January 1, 2010. An identity recovery service contract entered
536	536	into before January 1, 2010, is covered by the law in effect on the
537	537	date the contract was entered into, and the former law is continued
538	538	in effect for that purpose.
539	539	(b) Not later than November 1, 2009, the Texas Commission of
540	540	Licensing and Regulation shall adopt rules to implement Chapter
541	541	1306, Occupations Code, as added by this Act.
542	542	SECTION 6. (a) Except as provided by Subsection (b) of this
543	543	section, this Act takes effect September 1, 2009.
544	544	(b) Section 1306.051 and Subchapter D, Chapter 1306,
545	545	Occupations Code, as added by this Act, take effect January 1, 2010.