Texas House Bill HB1384

Texas 2023 - 88th Regular

• Filed: 1/18/23

Caption

Relating to a restriction on total charges charged for certain extensions of consumer credit that are facilitated by credit access businesses and entered into by consumers residing in disaster areas.

Impact

If enacted, HB1384 would significantly impact the financial landscape for consumers in areas affected by disasters. By capping the costs associated with deferred presentment transactions, the bill seeks to prevent predatory lending practices that often arise in the aftermath of natural disasters. This legislation would alter how credit access businesses operate within disaster areas, potentially reshaping the way consumers approach borrowing in these critical times. The expected outcome is to enhance consumer protection and promote equitable access to credit during periods of financial hardship that follow disasters.

Summary

House Bill 1384 aims to establish a restriction on the total charges that credit access businesses can impose for certain extensions of consumer credit, particularly in disaster areas. The bill modifies the Finance Code by introducing a cap on the annual percentage rate (APR) for deferred presentment transactions for consumers residing in designated disaster areas, limiting it to 30 percent during a specified disaster period. Proponents argue that this law will provide much-needed financial relief to vulnerable consumers in disaster-stricken regions by curbing exorbitant interest rates and fees typically associated with such loans.

Sentiment

The sentiment surrounding HB1384 appears to be largely positive among consumer advocacy groups and lawmakers concerned with protecting vulnerable populations. Supporters emphasize the necessity of regulating credit access businesses, which have a history of exploiting disaster situations for profit. However, there may be some contention from industry stakeholders who argue that such restrictions could limit the availability of credit and ultimately harm consumers seeking quick financial assistance during emergencies.

Contention

Notable points of contention regarding this bill may revolve around the balance between consumer protection and market freedom. Some legislators may express concerns about potential negative effects on credit access businesses, which could argue that capping interest rates might discourage them from lending in high-risk areas. Additionally, discussions may surface regarding the definition of 'disaster area' and how effectively the law can be enforced to truly provide relief without compromising the market dynamics for credit access.

Texas Constitutional Statutes Affected

Finance Code

• Chapter 393. Credit Services Organizations
  • Section: 602
  • Section: New Section