82R4904 KFF-D
By: Davis of Dallas H.B. No. 3529
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of debt collection agencies and credit
bureaus.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 20, Business & Commerce Code, is amended
by adding Section 20.055 to read as follows:
Sec. 20.055. NOTIFICATION RELATING TO REPORTING OF ADVERSE
INFORMATION. Not later than the 10th day after the date adverse
information is added to a consumer's file, the consumer reporting
agency shall notify the consumer in writing that the information
has been added to the consumer's file. The notice must include:
(1) a brief description of the adverse information;
(2) the name, address, and telephone number of the
person who provided the information;
(3) an explanation regarding the actions a consumer
may take to dispute the adverse information if the information is
inaccurate; and
(4) the information described by Section 20.03(a)(3).
SECTION 2. Sections 20.06(a), (b), (c), (d), and (e),
Business & Commerce Code, are amended to read as follows:
(a) If the completeness or accuracy of information
contained in a consumer's file is disputed by the consumer and the
consumer notifies the consumer reporting agency of the dispute, the
agency shall reinvestigate the disputed information free of charge
[and record the current status of the disputed information] not
later than the 30th business day after the date on which the agency
receives the notice and, pending the results of the
reinvestigation, promptly delete the disputed information from the
consumer's file. The consumer reporting agency shall provide the
consumer with the option of notifying the agency of a dispute
concerning the consumer's file by speaking directly to a
representative of the agency during normal business hours.
(b) Not later than the fifth business day after the date on
which a consumer reporting agency receives notice of a dispute from
a consumer in accordance with Subsection (a), the agency shall
provide notice of the dispute to:
(1) each person who provided any information related
to the dispute; and
(2) each person who requested a copy of the consumer's
report during the six-month period preceding the date of the
dispute.
(c) A consumer reporting agency may terminate a
reinvestigation of information disputed by a consumer under
Subsection (a) if the agency reasonably determines that the dispute
is frivolous or irrelevant. An agency that terminates a
reinvestigation of disputed information under this subsection
shall promptly notify the consumer of the termination and the
reasons for the termination by mail, or if authorized by the
consumer, by telephone and shall promptly reinsert the information
into the consumer's file. The presence of contradictory
information in a consumer's file does not by itself constitute
reasonable grounds for determining that the dispute is frivolous or
irrelevant.
(d) If disputed information is found to be accurate
[inaccurate or cannot be verified] after a reinvestigation under
Subsection (a), the consumer reporting agency[, unless otherwise
directed by the consumer,] shall promptly reinsert [delete] the
information into [from] the consumer's file[, revise the consumer
file, and provide the revised consumer report to the consumer and to
each person who requested the consumer report within the preceding
six months]. The consumer reporting agency may not report in
subsequent reports disputed information found, after a
reinvestigation under Subsection (a), to be [the] inaccurate or
unverifiable [unverified information in subsequent reports].
(e) Information deleted under Subsection (a) that is found
to be inaccurate or unverifiable by the agency's reinvestigation
under that subsection [(d)] may not be reinserted in the consumer's
file unless the person who furnishes the information to the
consumer reporting agency reinvestigates and states in writing or
by electronic record to the agency that the information is complete
and accurate.
SECTION 3. Sections 392.101(a) and (c), Finance Code, are
amended to read as follows:
(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 for a credit bureau must be filed with
the secretary of state. A copy of the bond for a third-party debt
collector must be filed with the Texas Department of Licensing and
Regulation.
(c) The bond must be in the amount of $50,000 [$10,000].
SECTION 4. Section 392.202, Finance Code, is amended by
amending Subsections (a), (c), and (d) and adding Subsection (a-1)
to read as follows:
(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:
(1) make a written record of the dispute;
(2) notify each credit bureau, if any, to which the
collector has reported the item that the individual disputes the
accuracy of the item;
(3) initiate an investigation of the dispute described
by Subsections (b)-(e), if the collector reports information
related to the dispute to a credit bureau; and
(4) [. 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.
(a-1) [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.
(c) If the third-party debt collector admits that the item
is inaccurate under Subsection (b), the third-party debt collector
shall:
(1) not later than the fifth business day after the
date of the admission:
(A)[,] correct the item in the relevant file; and
(B) notify any credit bureau informed of the
dispute under Subsection (a) that the item is inaccurate; and
(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.
(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:
(1) change the item in the relevant file as requested
by the individual;
(2) notify any credit bureau informed of the dispute
under Subsection (a) that the third-party debt collector has not
completed an investigation;
(3) [(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
(4) [(3)] cease collection efforts.
SECTION 5. Sections 392.403(a), (b), and (e), Finance Code,
are amended to read as follows:
(a) A person may sue for:
(1) injunctive relief to prevent or restrain a
violation of this chapter; [and]
(2) subject to Subsection (e), damages in an amount
equal to the greater of:
(A) actual damages sustained as a result of a
violation of this chapter; or
(B) $1,000 or, if the person is 65 years of age or
older, $5,000 for each violation of the same nature; or
(3) both injunctive relief and damages.
(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, including court costs.
(e) The court may increase an amount of actual damages in an
action brought under Subsection (a) to an amount not to exceed three
times the amount of actual damages sustained if the court finds
that:
(1) the violation has occurred with sufficient
frequency to constitute a pattern or practice; or
(2) the debt collector or third-party debt collector
wilfully and knowingly committed the violation. [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.]
SECTION 6. Chapter 392, Finance Code, is amended by adding
Subchapter F to read as follows:
SUBCHAPTER F. LICENSING OF THIRD-PARTY DEBT COLLECTORS
Sec. 392.501. DEFINITIONS. In this subchapter:
(1) "Commission" means the Texas Commission of
Licensing and Regulation.
(2) "Department" means the Texas Department of
Licensing and Regulation.
Sec. 392.502. LICENSE REQUIRED. A person may not act as a
third-party debt collector under this chapter unless the person
holds a license issued under this subchapter.
Sec. 392.503. EXEMPTIONS. This subchapter does not apply
to:
(1) a real estate broker or salesperson licensed under
Chapter 1101, Occupations Code, who is acting within the course and
scope of that license;
(2) a financial institution, as defined by Section
201.101; and
(3) an insurance company authorized to do business in
this state.
Sec. 392.504. APPLICATION REQUIREMENTS. (a) The
application for a license under this subchapter must:
(1) be under oath;
(2) contain the name of the applicant and if the
applicant is:
(A) a corporation, a list of the names and
addresses of its officers and directors;
(B) a partnership, a list of the names and
addresses of its partners; or
(C) a limited liability company, a list of the
names and addresses of its members and managers;
(3) contain the street address of the applicant's
principal place of business;
(4) contain all names under which the applicant
engages in debt collection activities;
(5) contain the names of all persons with which the
applicant is affiliated, and the principal place of business of
each affiliate; and
(6) contain any other relevant information that the
department determines appropriate.
(b) On the filing of a license application, the applicant
shall pay to the commission:
(1) an investigation fee not to exceed $200; and
(2) an application fee in an amount determined as
provided by Section 392.505.
Sec. 392.505. GENERAL POWERS AND DUTIES OF COMMISSION;
FEES. The commission shall:
(1) adopt necessary rules to administer and enforce
this subchapter; and
(2) set application, licensing, and renewal fees in an
amount reasonable and necessary to cover the cost of administering
and enforcing this subchapter.
Sec. 392.506. ADMINISTRATION BY DEPARTMENT. (a) The
department shall administer and enforce this subchapter.
(b) The department may recommend proposed rules to the
commission.
Sec. 392.507. FINANCIAL STATEMENT. (a) An applicant for a
license under this subchapter must file with the application a
financial statement that shows the assets and liabilities of the
applicant.
(b) The financial statement must be sworn to by the
applicant if the applicant is an individual or by a partner,
officer, or manager if the applicant is a partnership, corporation,
trust, joint-stock company, foundation, or association of
individuals.
(c) Information contained in a financial statement filed
under this section is confidential and not public information but
is admissible in evidence at a hearing held or an action instituted
under this chapter.
Sec. 392.508. INVESTIGATION OF APPLICATION. On the filing
of an application and payment of the required fees, the department
shall conduct an investigation to determine whether to issue the
license.
Sec. 392.509. APPROVAL OR DENIAL OF APPLICATION. (a) The
department shall approve the application and issue to the applicant
a license under this subchapter if the department finds that:
(1) the applicant meets the application requirements
of Section 392.504;
(2) the financial responsibility, experience,
character, and general fitness of the applicant are sufficient to:
(A) command the confidence of the public; and
(B) warrant the belief that the business will be
operated lawfully and fairly, within the purposes of this chapter;
and
(3) the applicant has obtained a surety bond as
required by Section 392.101.
(b) If the department does not find the eligibility
requirements of Subsection (a), the department shall notify the
applicant.
(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 60th day after the date of the request.
(d) The department shall approve or deny the application not
later than the 60th 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 department and the applicant may agree to a later
date in writing.
Sec. 392.510. DISPOSITION OF FEES ON DENIAL OF APPLICATION.
If the department denies the application, the department shall
retain the investigation fee.
Sec. 392.511. ANNUAL LICENSE FEE. Not later than December
1, a license holder shall pay to the department an annual fee for
the year beginning the next January 1, in an amount determined as
provided by Section 392.505.
Sec. 392.512. EXPIRATION OF LICENSE ON FAILURE TO PAY
ANNUAL FEE. 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:
(1) that day; or
(2) December 31 of the last year for which an annual
fee was paid.
Sec. 392.513. LICENSE SUSPENSION OR REVOCATION. After
notice and a hearing the department may suspend or revoke a license
if the department finds that:
(1) the license holder failed to pay the annual
license fee, an examination fee, or another fee imposed by the
department;
(2) the license holder, knowingly or without the
exercise of due care, has committed multiple violations of this
chapter or a rule adopted or order issued under this chapter; or
(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 department's
denial of the application.
Sec. 392.514. REINSTATEMENT OF SUSPENDED LICENSE; ISSUANCE
OF NEW LICENSE AFTER REVOCATION. The department 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 department's denial of an original application for
the license.
Sec. 392.515. SURRENDER OF LICENSE. A license holder may
surrender a license issued under this subchapter by delivering to
the department:
(1) the license; and
(2) a written notice of the license's surrender.
Sec. 392.516. TRANSFER OR ASSIGNMENT OF LICENSE PROHIBITED.
A license may not be transferred or assigned.
SECTION 7. Section 392.403, Finance Code, as amended by
this Act, applies only to a cause of action that accrues on or after
the effective date of this Act. A cause of action that accrues
before the effective date of this Act is governed by the law as it
existed immediately before the effective date of this Act, and the
former law is continued in effect for that purpose.
SECTION 8. Not later than October 1, 2011, the Texas
Commission of Licensing and Regulation shall adopt rules required
by Section 392.505, Finance Code, as added by this Act.
SECTION 9. A person is not required to obtain a license
under Subchapter F, Chapter 392, Finance Code, as added by this Act,
until January 1, 2012.
SECTION 10. This Act takes effect September 1, 2011.