Texas 2009 - 81st Regular

Texas Senate Bill SB1519 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	81R2407 KFF-D
2	2	By: Shapleigh S.B. No. 1519
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the regulation of debt collection agencies; imposing
8	8	criminal penalties.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Sections 392.101(a) and (c), Finance Code, are
11	11	amended to read as follows:
12	12	(a) A third-party debt collector or credit bureau may not
13	13	engage in debt collection unless the third-party debt collector or
14	14	credit bureau has obtained a surety bond issued by a surety company
15	15	authorized to do business in this state as prescribed by this
16	16	section. A copy of the bond for a credit bureau must be filed with
17	17	the secretary of state. A copy of the bond for a third-party debt
18	18	collector must be filed with the Texas Department of Licensing and
19	19	Regulation.
20	20	(c) The bond must be in the amount of $15,000 [$10,000].
21	21	SECTION 2. The heading to Subchapter D, Chapter 392,
22	22	Finance Code, is amended to read as follows:
23	23	SUBCHAPTER D. [PROHIBITED] DEBT COLLECTION PRACTICES [METHODS]
24	24	SECTION 3. Subchapter D, Chapter 392, Finance Code, is
25	25	amended by adding Sections 392.307 and 392.308 to read as follows:
26	26	Sec. 392.307. TOLL-FREE TELEPHONE NUMBER REQUIRED. A debt
27	27	collector shall maintain at all times a toll-free telephone number
28	28	that a consumer may call to discuss an alleged consumer debt.
29	29	Sec. 392.308. CEASING COMMUNICATIONS. (a) In debt
30	30	collection, a debt collector may not continue to communicate with a
31	31	consumer regarding a debt if the consumer notifies the debt
32	32	collector in writing that the consumer:
33	33	(1) refuses to pay the debt; or
34	34	(2) wishes the debt collector to cease further
35	35	communications with the consumer concerning the debt.
36	36	(b) Subsection (a) does not prevent a debt collector from:
37	37	(1) advising the consumer that the debt collector's
38	38	efforts are being terminated;
39	39	(2) notifying the consumer that the debt collector or
40	40	creditor may pursue a legal or equitable remedy ordinarily invoked
41	41	by the collector or creditor in the collection of consumer debts; or
42	42	(3) notifying the consumer that the debt collector or
43	43	creditor intends to invoke a specified legal or equitable remedy.
44	44	(c) Subsection (a) does not apply to a secured creditor who
45	45	is sending a notice required under state or federal law.
46	46	(d) In its initial written communication to a consumer, a
47	47	debt collector shall include:
48	48	(1) a notice to the consumer regarding the protections
49	49	afforded by this chapter, including a brief description of
50	50	prohibited debt collection practices; and
51	51	(2) on the front page of the communication, in at least
52	52	10-point type, the following statement: "A consumer has the right
53	53	to request in writing that a debt collector cease further
54	54	communication with the consumer. A written request to cease
55	55	communication will not prohibit the debt collector from taking any
56	56	other action authorized by law to collect the debt."
57	57	SECTION 4. Chapter 392, Finance Code, is amended by adding
58	58	Subchapter F to read as follows:
59	59	SUBCHAPTER F. LICENSING OF THIRD-PARTY DEBT COLLECTORS
60	60	Sec. 392.501. DEFINITIONS. In this subchapter:
61	61	(1) "Commission" means the Texas Commission of
62	62	Licensing and Regulation.
63	63	(2) "Department" means the Texas Department of
64	64	Licensing and Regulation.
65	65	Sec. 392.502. LICENSE REQUIRED. A person may not act as a
66	66	third-party debt collector under this chapter unless the person
67	67	holds a license issued under this subchapter.
68	68	Sec. 392.503. EXEMPTIONS. This subchapter does not apply
69	69	to:
70	70	(1) a real estate broker or salesperson licensed under
71	71	Chapter 1101, Occupations Code, who is acting within the course and
72	72	scope of that license;
73	73	(2) a financial institution, as defined by Section
74	74	201.101;
75	75	(3) an attorney; and
76	76	(4) an insurance company authorized to do business in
77	77	this state.
78	78	Sec. 392.504. APPLICATION REQUIREMENTS. (a) The
79	79	application for a license under this subchapter must:
80	80	(1) be under oath;
81	81	(2) contain the name of the applicant and if the
82	82	applicant is:
83	83	(A) a corporation, a list of the names and
84	84	addresses of its officers and directors;
85	85	(B) a partnership, a list of the names and
86	86	addresses of its partners; or
87	87	(C) a limited liability company, a list of the
88	88	names and addresses of its members and managers;
89	89	(3) contain the street address of the applicant's
90	90	principal place of business;
91	91	(4) contain all names under which the applicant
92	92	engages in debt collection activities;
93	93	(5) contain the names of all persons with which the
94	94	applicant is affiliated, and the principal place of business of
95	95	each affiliate;
96	96	(6) contain the name, address, and qualifications of
97	97	an individual designated as the applicant's supervisor under
98	98	Section 392.505;
99	99	(7) include a list of the names, business addresses,
100	100	and business telephone numbers of all individuals who will contact
101	101	debtors in this state on behalf of the applicant for the purpose of
102	102	collection or adjustment of debts; and
103	103	(8) contain any other relevant information that the
104	104	department determines appropriate.
105	105	(b) On the filing of a license application, the applicant
106	106	shall pay to the commission:
107	107	(1) an investigation fee not to exceed $200; and
108	108	(2) an application fee in an amount determined as
109	109	provided by Section 392.506.
110	110	Sec. 392.505. DESIGNATION OF SUPERVISOR. A license holder
111	111	must designate an individual who possesses a minimum of three years
112	112	of debt collection experience to supervise the license holder's
113	113	debt collection activities in this state.
114	114	Sec. 392.506. GENERAL POWERS AND DUTIES OF COMMISSION;
115	115	FEES. The commission shall:
116	116	(1) adopt necessary rules to administer and enforce
117	117	this subchapter; and
118	118	(2) set application, licensing, and renewal fees in an
119	119	amount reasonable and necessary to cover the cost of administering
120	120	and enforcing this subchapter.
121	121	Sec. 392.507. ADMINISTRATION BY DEPARTMENT. (a) The
122	122	department shall administer and enforce this subchapter.
123	123	(b) The department may recommend proposed rules to the
124	124	commission.
125	125	Sec. 392.508. FINANCIAL STATEMENT. (a) An applicant for a
126	126	license under this subchapter must file with the application a
127	127	financial statement that shows the assets and liabilities of the
128	128	applicant.
129	129	(b) The financial statement must be sworn to by the
130	130	applicant if the applicant is an individual or by a partner,
131	131	officer, or manager if the applicant is a partnership, corporation,
132	132	trust, joint-stock company, foundation, or association of
133	133	individuals.
134	134	(c) Information contained in a financial statement filed
135	135	under this section is confidential and not public information but
136	136	is admissible in evidence at a hearing held or an action instituted
137	137	under this chapter.
138	138	Sec. 392.509. INVESTIGATION OF APPLICATION. On the filing
139	139	of an application and payment of the required fees, the department
140	140	shall conduct an investigation to determine whether to issue the
141	141	license.
142	142	Sec. 392.510. APPROVAL OR DENIAL OF APPLICATION. (a) The
143	143	department shall approve the application and issue to the applicant
144	144	a license under this subchapter if the department finds that:
145	145	(1) the applicant meets the application requirements
146	146	of Section 392.504;
147	147	(2) the financial responsibility, experience,
148	148	character, and general fitness of the applicant are sufficient to:
149	149	(A) command the confidence of the public; and
150	150	(B) warrant the belief that the business will be
151	151	operated lawfully and fairly, within the purposes of this chapter;
152	152	and
153	153	(3) the applicant has obtained a surety bond as
154	154	required by Section 392.101.
155	155	(b) If the department does not find the eligibility
156	156	requirements of Subsection (a), the department shall notify the
157	157	applicant.
158	158	(c) If an applicant requests a hearing on the application
159	159	not later than the 30th day after the date of notification under
160	160	Subsection (b), the applicant is entitled to a hearing not later
161	161	than the 60th day after the date of the request.
162	162	(d) The department shall approve or deny the application not
163	163	later than the 60th day after the date of the filing of a completed
164	164	application with payment of the required fees, or if a hearing is
165	165	held, after the date of the completion of the hearing on the
166	166	application. The department and the applicant may agree to a later
167	167	date in writing.
168	168	Sec. 392.511. DISPOSITION OF FEES ON DENIAL OF APPLICATION.
169	169	If the department denies the application, the department shall
170	170	retain the investigation fee.
171	171	Sec. 392.512. ANNUAL LICENSE FEE. Not later than December
172	172	1, a license holder shall pay to the department an annual fee for
173	173	the year beginning the next January 1, in an amount determined as
174	174	provided by Section 392.506.
175	175	Sec. 392.513. EXPIRATION OF LICENSE ON FAILURE TO PAY
176	176	ANNUAL FEE. If the annual fee for a license is not paid before the
177	177	16th day after the date on which the written notice of delinquency
178	178	of payment has been given to the license holder, the license expires
179	179	on the later of:
180	180	(1) that day; or
181	181	(2) December 31 of the last year for which an annual
182	182	fee was paid.
183	183	Sec. 392.514. LICENSE SUSPENSION OR REVOCATION. After
184	184	notice and a hearing the department may suspend or revoke a license
185	185	if the department finds that:
186	186	(1) the license holder failed to pay the annual
187	187	license fee, an examination fee, or another fee imposed by the
188	188	department;
189	189	(2) the license holder, knowingly or without the
190	190	exercise of due care, violated this chapter or a rule adopted or
191	191	order issued under this chapter; or
192	192	(3) a fact or condition exists that, if it had existed
193	193	or had been known to exist at the time of the original application
194	194	for the license, clearly would have justified the department's
195	195	denial of the application.
196	196	Sec. 392.515. REINSTATEMENT OF SUSPENDED LICENSE; ISSUANCE
197	197	OF NEW LICENSE AFTER REVOCATION. The department may reinstate a
198	198	suspended license or issue a new license on application to a person
199	199	whose license has been revoked if at the time of the reinstatement
200	200	or issuance no fact or condition exists that clearly would have
201	201	justified the department's denial of an original application for
202	202	the license.
203	203	Sec. 392.516. SURRENDER OF LICENSE. A license holder may
204	204	surrender a license issued under this subchapter by delivering to
205	205	the department:
206	206	(1) the license; and
207	207	(2) a written notice of the license's surrender.
208	208	Sec. 392.517. TRANSFER OR ASSIGNMENT OF LICENSE PROHIBITED.
209	209	A license may not be transferred or assigned.
210	210	Sec. 392.518. TRUST ACCOUNTS. A license holder that
211	211	receives or holds funds belonging to another in connection with the
212	212	provision of debt collection activities under this chapter shall
213	213	establish and maintain a separate trust account for the deposit and
214	214	remittance of the funds in a financial institution, the deposits of
215	215	which are insured by the Federal Deposit Insurance Corporation or
216	216	its successor or the National Credit Union Share Insurance Fund or
217	217	its successor.
218	218	Sec. 392.519. CRIMINAL PENALTY. (a) A person commits an
219	219	offense if the person acts as a third-party debt collector without
220	220	holding a license under this subchapter and the person is not
221	221	otherwise exempt under Section 392.503.
222	222	(b) A person commits an offense if the person:
223	223	(1) fails to establish and maintain separate trust
224	224	accounts as required by Section 392.518; and
225	225	(2) misappropriates, transfers, or converts to the
226	226	collector's own benefit the funds held in a trust account for
227	227	another.
228	228	(c) An offense under Subsection (a) is a Class A
229	229	misdemeanor.
230	230	(d) An offense under Subsection (b) is a third degree
231	231	felony.
232	232	SECTION 5. Not later than October 1, 2009, the Texas
233	233	Commission of Licensing and Regulation shall adopt rules required
234	234	by Section 392.506, Finance Code, as added by this Act.
235	235	SECTION 6. A person is not required to obtain a license
236	236	under Subchapter F, Chapter 392, Finance Code, as added by this Act,
237	237	until January 1, 2010.
238	238	SECTION 7. (a) Except as provided by Subsection (b) of this
239	239	section, this Act takes effect September 1, 2009.
240	240	(b) Section 392.519, Finance Code, as added by this Act,
241	241	takes effect January 1, 2010.