Texas Senate Bill SB1323

Texas 2015 - 84th Regular

Caption

Relating to fees paid to certain credit services organizations in connection with certain extensions of consumer credit.

Impact

The introduction of SB1323 has implications for existing laws regarding consumer credit and the operations of credit services organizations in Texas. By designating certain fees as interest, the bill is expected to limit the amount these organizations can charge, thereby potentially reducing the cost of credit for consumers. However, the bill will only apply to credit extensions made after its effective date of September 1, 2015, meaning that past loans and their associated fees will remain governed by the previous legal framework. This could lead to a transitional period where organizations must adjust their practices and fee structures to comply with the new guidelines.

Summary

SB1323 addresses the regulation of fees charged by credit services organizations for assisting consumers in obtaining extensions of consumer credit. The bill amends Chapter 302 of the Finance Code, specifically introducing a new section that categorizes certain fees as 'interest' for the purpose of usury laws. This means that if a credit extension is secured by personal property or unsecured and intended for personal, family, or household purposes, the fees charged will fall under the interest rate limitations established by state law. This legislative effort aims to protect consumers from potentially excessive fees imposed by credit services organizations.

Contention

Discussions surrounding SB1323 revolve around the balance between protecting consumers and ensuring the viability of credit services organizations. Supporters of the bill argue that it prevents exploitation of consumers by limiting excessive fees, therefore promoting fair lending practices. Conversely, opponents express concerns regarding the potential reduction of access to credit for consumers who may rely on these services, particularly those with poor credit histories. This highlights a broader debate about the trade-offs between consumer protection laws and the financial industry's capacity to serve varying consumer needs.