Texas House Bill HB709

Texas 2023 - 88th Regular

• Filed: 11/15/22

Caption

Relating to prohibiting the use of certain credit scores, including environmental, social, or governance scores and social credit scores, by certain financial institutions and other lenders in this state; providing a civil penalty.

Impact

If enacted, HB 709 would significantly change how financial institutions evaluate creditworthiness in Texas. By banning the use of ESG and social credit scores, this bill aims to safeguard consumer rights and prevent discrimination based on non-financial factors. This legislative move highlights an increasing concern over how subjective measures in financial services could unfairly disadvantage individuals and small businesses. The bill's provisions include civil penalties for non-compliance, underscoring the seriousness of its enforcement.

Summary

House Bill 709 aims to prohibit the use of certain credit scores, specifically environmental, social, or governance (ESG) scores and social credit scores, by financial institutions and other lenders in Texas. The bill defines credit scores and emphasizes that financial institutions should not discriminate against customers based on these scores. By restricting the use of subjective criteria for credit assessments, the bill seeks to ensure fair lending practices and protect consumers from potential biases inherent in scoring systems that take into account an individual's social behavior or affiliations.

Sentiment

The sentiment surrounding HB 709 appears to lean towards consumer protection, positioning the bill as a response to growing scrutiny over the adoption of scoring systems that do not solely reflect an individual's financial history. Supporters argue that the bill champions the rights of consumers, while opponents may express concerns over the regulatory constraints it places on financial institutions and their ability to assess risk.

Contention

Notable points of contention regarding HB 709 revolve around the balancing act between ensuring consumer protection and permitting financial institutions the flexibility to assess credit risk efficiently. Proponents of the bill may argue that ESG and social credit scores could lead to ethical dilemmas or violations of privacy, while critics could claim that the bill limits the ability of lenders to utilize comprehensive data for making informed lending decisions.

Texas Constitutional Statutes Affected

Finance Code

• Chapter 32. Powers, Organization, And Financial Requirements
  • Section: New Section

• Chapter 62. Organizational And Financial Requirements
  • Section: New Section

• Chapter 92. Organizational And Financial Requirements
  • Section: New Section

• Chapter 122. Organizational And Financial Requirements
  • Section: New Section