Texas 2023 - 88th Regular

Texas Senate Bill SB1918 Compare Versions

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Version 2 (New)

Old	New	Differences
1	1	88R16851 TYPED
2	2	By: Parker S.B. No. 1918
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the regulation of accounts receivable purchase
8	8	transaction actions
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Title 4, Business and Commerce Code, is amended
11	11	by adding a new Chapter 60 as follows:
12	12	CHAPTER 60. ACCOUNTS RECEIVABLE PURCHASE TRANSACTIONS
13	13	Sec. 60.001. DEFINITIONS. For the purposes of this
14	14	chapter, these terms are defined as follows:
15	15	(1) "Account receivable purchase transaction" means a
16	16	transaction in which a business forwards or otherwise sells to a
17	17	person all or a portion of the business's accounts or payment
18	18	intangibles, as defined in Texas Business and Commerce Code,
19	19	Chapter 9, Section 9.102, at a discount to the accounts' or payment
20	20	intangibles' expected value.
21	21	(2) "Broker" means any person who, for compensation or
22	22	the expectation of compensation, obtains an account receivable
23	23	purchase transaction or an offer for an account receivable purchase
24	24	transaction from a third party that would, if executed, be binding
25	25	upon that third party and communicates that offer to a business
26	26	located in Texas. The term "broker" excludes a "provider," and any
27	27	person whose compensation is not based on or dependent upon the
28	28	terms of the specific account receivable purchase transaction
29	29	obtained or offered.
30	30	(3) "Provider" means a person who consummates more
31	31	than five account receivable purchase transactions in Texas during
32	32	any calendar year, including a person who, under a written
33	33	agreement with a depository institution, offers one or more account
34	34	receivable purchase transactions provided by the depository
35	35	institution via an online platform that the person administers.
36	36	Sec. 60.02. EXEMPTIONS. The provisions of this subsection
37	37	do not apply to
38	38	(a) an account receivable purchase transaction offered or
39	39	made by a provider:
40	40	(1) that is a depository institution, a subsidiary of
41	41	a depository institution, or a service corporation for a depository
42	42	institution that is regulated by a federal banking agency;
43	43	(2) that is regulated under the federal Farm Credit
44	44	Act 12 U.S.C. Sec. 2001 et seq.; and
45	45	(3) that is licensed as a money transmitter in any
46	46	state;
47	47	(b) a person who consummates five or fewer account
48	48	receivable purchase transactions in Texas during any 12-month
49	49	period;
50	50	(c) a person who offers or makes an account receivable
51	51	purchase transaction in connection with the sale or lease of a
52	52	product or service that:
53	53	(1) the person manufactures, licenses, or
54	54	distributes;
55	55	(2) the person's parent company or the person's
56	56	directly or indirectly owned and controlled subsidiary
57	57	manufactures, licenses, or distributes.
58	58	(d) an account receivable purchase transaction of more than
59	59	$500,000.
60	60	Sec. 60.03. DISCLOSURES. (a) At or before consummating an
61	61	account receivable purchase transaction, a provider shall disclose
62	62	the terms of the account receivable purchase transaction in
63	63	accordance with subsection (c).
64	64	(b) Only one disclosure must be provided for each account
65	65	receivable purchase transaction, and a disclosure is not required
66	66	as a result of a modification or forbearance.
67	67	(c) A provider shall disclose the following terms of the
68	68	account receivable purchase transaction:
69	69	(1) the total amount of funds provided to the
70	70	business;
71	71	(2) the total amount of funds disbursed to the
72	72	business, if less than the amount described in Subsection (c)(1);
73	73	(3) the total amount to be paid to the provider;
74	74	(4) the total dollar cost, calculated by finding the
75	75	difference between:
76	76	(A) the amount described in Subsection (c)(1);
77	77	and
78	78	(B) the amount described in Subsection (c)(3);
79	79	(5) the manner, frequency, and amount of each payment;
80	80	or if the amount of each payment may vary, the manner, frequency,
81	81	and estimated amount of the initial payment; and
82	82	(6) a statement of whether there are any costs or
83	83	discounts associated with prepayment, including a reference to the
84	84	paragraph in the account receivable purchase transaction agreement
85	85	that creates each cost or discount.
86	86	(d) The account receivable purchase transaction agreement
87	87	shall include a description of the methodology for calculating any
88	88	variable payment amount and the circumstances that may cause a
89	89	payment amount to vary.
90	90	Sec. 60.04. ACCOUNT RECEIVABLE PURCHASE TRANSACTION. (a)
91	91	An account receivable purchase transaction cannot be made for
92	92	personal, family, or household purposes.
93	93	(b) An account receivable purchase transaction is a form of
94	94	an account purchase transaction as established by Section 306.103,
95	95	Finance Code. An amount of a discount in, or charged under, an
96	96	account receivable purchase transaction is not interest.
97	97	(c) For the purposes of this chapter, the parties'
98	98	characterization of an account receivable purchase transaction as a
99	99	purchase is conclusive that the account receivable purchase
100	100	transaction is not a transaction for the use, forbearance, or
101	101	detention of money.
102	102	Sec. 60.05. ACCOUNT RECEIVABLE PURCHASE TRANSACTION BROKER
103	103	REGISTRATION REQUIREMENTS. (a) Beginning January 1, 2024, it is
104	104	unlawful for a broker to engage in business as a broker of account
105	105	receivable purchase transactions in Texas or with a Texas business,
106	106	unless the person annually registers with the Secretary of State in
107	107	accordance with this chapter.
108	108	(b) the officers or employees of a broker are not required
109	109	to register under this chapter if the broker for whom the individual
110	110	is an officer or employee is registered.
111	111	(c) To register or renew a registration under this section,
112	112	a broker shall:
113	113	(1) pay a fee established by the Secretary; and
114	114	(2) submit a registration statement containing the
115	115	information described in Subsection (d).
116	116	(d) Each registration or renewal statement shall state:
117	117	(1) the name of the broker and name of the business
118	118	under which the service will be transacted;
119	119	(2) the address of the broker's principal place of
120	120	business;
121	121	(3) if the broker, or an officer, director, employee,
122	122	manager, operator, or principal of that broker has a conviction of a
123	123	felony involving an act of fraud, dishonesty, breach of trust, or
124	124	money laundering.
125	125	(e) the Secretary may implement rules to implement and
126	126	enforce this section.
127	127	Sec. 60.06. ENFORCEMENT. (a) The Attorney General is
128	128	authorized to seek to enjoin violations of this chapter. The court
129	129	having jurisdiction may enjoin such violations notwithstanding the
130	130	existence of an adequate remedy at law.
131	131	(b) The Attorney General may also seek, and the court may
132	132	order or decree, damages and such other relief allowed by law,
133	133	including restitution to the extent available under applicable law.
134	134	Persons entitled to any relief as authorized by this section shall
135	135	be identified by order of the court within 180 days from the date of
136	136	the order permanently enjoining the unlawful act or practice.
137	137	(c) In any action brought by the Attorney General by virtue
138	138	of the authority granted in this provision, the Attorney General
139	139	shall be entitled to seek reasonable attorney fees and costs.
140	140	(d) This chapter does not create a private right of action.
141	141	SECTION 2. This act takes effect September 1, 2023.