Relating to credit services organizations and extensions of consumer credit facilitated by credit services organizations; providing civil and administrative penalties.
One significant aspect of SB1247 is the restrictions it places on the amounts that can be lent to consumers based on their income levels. Specifically, under the provisions of the bill, limits are placed on single-payment and multiple-payment deferred presentment transactions, as well as motor vehicle title loans. This could have profound implications for lending practices, particularly for low-income borrowers who might be more vulnerable to predatory lending practices. By linking loan amounts to consumers' incomes, the bill could potentially reduce the cycle of debt that often accompanies high-interest loans.
SB1247 is a bill aimed at regulating credit services organizations in Texas, particularly focusing on the extension of consumer credit through various means such as deferred presentment transactions and motor vehicle title loans. The bill outlines new standards for how these organizations can operate, including the disclosure of terms and conditions to consumers, and the obligations placed upon credit access businesses when facilitating these types of loans. Additionally, it introduces civil and administrative penalties for violations of these regulations, aiming to create a more transparent lending environment for consumers.
The bill has been met with some contention, particularly regarding the preemption of local ordinances by state law. Section 393.633 explicitly states that local rules regulating credit access businesses are overridden by this chapter, which opponents argue could hinder local efforts to impose stricter regulations tailored to specific community needs. Furthermore, concerns have been raised about the extensive powers given to the finance commission in rule-making, which allows for potential future expansions of credit access under less stringent conditions, potentially undermining the protections designed for consumers.