BILL ANALYSIS H.B. 4238 By: Meyer Pensions, Investments & Financial Services Committee Report (Unamended) BACKGROUND AND PURPOSE The bill author has informed the committee that coerced debt, a type of identity theft in which an abuser incurs credit-related transactions using the identity of a victim without their consent, is an increasingly common form of economic abuse in family violence and human trafficking situations that can substantially limit a victim's economic self-sufficiency or prevent them from leaving an abusive relationship. Even if a victim manages to escape from an abusive situation, the coerced debt follows, negatively impacting their finances. In 2021, the Texas Legislature passed H.B. 3529, which allowed victims to take legal action against the effects of debt incurred involuntarily by abusers. This process, however, can be complex and cost prohibitive, especially for victims of domestic violence or human trafficking and other vulnerable adults without the means to hire an attorney. H.B. 4238 seeks to address this issue by providing streamlined access to debt collection protections for certain victims of identity theft and coerced debt. CRIMINAL JUSTICE IMPACT It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS H.B. 4238 amends the Finance Code to prohibit a creditor, debt collector, or third-party debt collector from attempting to collect a consumer debt or a portion of a consumer debt from a consumer who provides the following information: a criminal complaint alleging the consumer was a victim of the offense of the fraudulent use or possession of identifying information under Penal Code provisions, or a substantially similar federal law or law in another state, accompanied by a statement identifying the consumer debt or the portion of consumer debt that resulted from the offense; a court order issued under Business & Commerce Code provisions, or a substantially similar federal law or law in another state, declaring the consumer a victim of identity theft; or a copy of a Federal Trade Commission identity theft victim's report, completed, signed, and filed by the consumer affirming that the consumer is a victim of identity theft and identifying the consumer debt or affected portion of the consumer debt incurred as a result of identity theft. H.B. 4238 requires a creditor, debt collector, or third-party debt collector who receives such notice from a victim of identity theft that a consumer debt is a result of the identity theft to immediately cease efforts to collect the disputed debt or disputed portion of the debt from the victim of identity theft and send to each person who has previously received a report relating to that debt from the creditor, debt collector, or third-party debt collector notice that the debt is disputed under the bill's provisions and not collectible from the victim of identity theft. The bill prohibits a creditor, debt collector, or third-party debt collector from selling the debt or transferring it for consideration, except to collect the debt from the alleged perpetrator of identity theft or from a responsible person other than the victim of identity theft. The bill authorizes a creditor, debt collector, or third-party debt collector, if the disputed debt or disputed portion of the debt is secured by tangible personal property, to enforce the security interest but prohibits the creditor, debt collector, or third-party debt collector from collecting or seeking to collect any deficiency from the victim of identity theft. H.B. 4238 authorizes a creditor, debt collector, or third-party debt collector who has a good faith reason to believe that a consumer has disputed a consumer debt or portion of a consumer debt based on a material misrepresentation that the consumer is a victim of identity theft to file suit in a court of competent jurisdiction to collect the debt from the consumer. With respect to such a suit, the bill requires the creditor, debt collector, or third-party debt collector to show by a preponderance of the evidence that the consumer is not a victim of identity theft. The bill establishes that a creditor, debt collector, or third-party debt collector has standing to bring and may bring an action to exercise any right, seek any remedy, or use any lawful means to collect a consumer debt or a portion of consumer debt that is disputed under the bill's provisions from an alleged perpetrator of identity theft who by means of identity theft obtained, used, or possessed the money, goods, services, or property of the consumer who is a victim of the alleged perpetrator's identity theft. H.B. 4238 defines "identity theft" as a violation of Business & Commerce Code provisions relating to the unauthorized use or possession of personal identifying information, or a substantially similar federal law or law in another state, or a criminal offense under Penal Code provisions relating to fraudulent use or possession of identifying information, or a substantially similar federal law or law in another state. The bill does not apply to the collection of a judgment already obtained or to a consumer debt that is a home loan, as defined by reference to statutory provisions relating to such loans. EFFECTIVE DATE September 1, 2025.
BILL ANALYSIS
# BILL ANALYSIS
H.B. 4238
By: Meyer
Pensions, Investments & Financial Services
Committee Report (Unamended)
H.B. 4238
By: Meyer
Pensions, Investments & Financial Services
Committee Report (Unamended)
BACKGROUND AND PURPOSE The bill author has informed the committee that coerced debt, a type of identity theft in which an abuser incurs credit-related transactions using the identity of a victim without their consent, is an increasingly common form of economic abuse in family violence and human trafficking situations that can substantially limit a victim's economic self-sufficiency or prevent them from leaving an abusive relationship. Even if a victim manages to escape from an abusive situation, the coerced debt follows, negatively impacting their finances. In 2021, the Texas Legislature passed H.B. 3529, which allowed victims to take legal action against the effects of debt incurred involuntarily by abusers. This process, however, can be complex and cost prohibitive, especially for victims of domestic violence or human trafficking and other vulnerable adults without the means to hire an attorney. H.B. 4238 seeks to address this issue by providing streamlined access to debt collection protections for certain victims of identity theft and coerced debt.
CRIMINAL JUSTICE IMPACT It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.
RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
ANALYSIS H.B. 4238 amends the Finance Code to prohibit a creditor, debt collector, or third-party debt collector from attempting to collect a consumer debt or a portion of a consumer debt from a consumer who provides the following information: a criminal complaint alleging the consumer was a victim of the offense of the fraudulent use or possession of identifying information under Penal Code provisions, or a substantially similar federal law or law in another state, accompanied by a statement identifying the consumer debt or the portion of consumer debt that resulted from the offense; a court order issued under Business & Commerce Code provisions, or a substantially similar federal law or law in another state, declaring the consumer a victim of identity theft; or a copy of a Federal Trade Commission identity theft victim's report, completed, signed, and filed by the consumer affirming that the consumer is a victim of identity theft and identifying the consumer debt or affected portion of the consumer debt incurred as a result of identity theft. H.B. 4238 requires a creditor, debt collector, or third-party debt collector who receives such notice from a victim of identity theft that a consumer debt is a result of the identity theft to immediately cease efforts to collect the disputed debt or disputed portion of the debt from the victim of identity theft and send to each person who has previously received a report relating to that debt from the creditor, debt collector, or third-party debt collector notice that the debt is disputed under the bill's provisions and not collectible from the victim of identity theft. The bill prohibits a creditor, debt collector, or third-party debt collector from selling the debt or transferring it for consideration, except to collect the debt from the alleged perpetrator of identity theft or from a responsible person other than the victim of identity theft. The bill authorizes a creditor, debt collector, or third-party debt collector, if the disputed debt or disputed portion of the debt is secured by tangible personal property, to enforce the security interest but prohibits the creditor, debt collector, or third-party debt collector from collecting or seeking to collect any deficiency from the victim of identity theft. H.B. 4238 authorizes a creditor, debt collector, or third-party debt collector who has a good faith reason to believe that a consumer has disputed a consumer debt or portion of a consumer debt based on a material misrepresentation that the consumer is a victim of identity theft to file suit in a court of competent jurisdiction to collect the debt from the consumer. With respect to such a suit, the bill requires the creditor, debt collector, or third-party debt collector to show by a preponderance of the evidence that the consumer is not a victim of identity theft. The bill establishes that a creditor, debt collector, or third-party debt collector has standing to bring and may bring an action to exercise any right, seek any remedy, or use any lawful means to collect a consumer debt or a portion of consumer debt that is disputed under the bill's provisions from an alleged perpetrator of identity theft who by means of identity theft obtained, used, or possessed the money, goods, services, or property of the consumer who is a victim of the alleged perpetrator's identity theft. H.B. 4238 defines "identity theft" as a violation of Business & Commerce Code provisions relating to the unauthorized use or possession of personal identifying information, or a substantially similar federal law or law in another state, or a criminal offense under Penal Code provisions relating to fraudulent use or possession of identifying information, or a substantially similar federal law or law in another state. The bill does not apply to the collection of a judgment already obtained or to a consumer debt that is a home loan, as defined by reference to statutory provisions relating to such loans.
EFFECTIVE DATE September 1, 2025.
BACKGROUND AND PURPOSE
The bill author has informed the committee that coerced debt, a type of identity theft in which an abuser incurs credit-related transactions using the identity of a victim without their consent, is an increasingly common form of economic abuse in family violence and human trafficking situations that can substantially limit a victim's economic self-sufficiency or prevent them from leaving an abusive relationship. Even if a victim manages to escape from an abusive situation, the coerced debt follows, negatively impacting their finances. In 2021, the Texas Legislature passed H.B. 3529, which allowed victims to take legal action against the effects of debt incurred involuntarily by abusers. This process, however, can be complex and cost prohibitive, especially for victims of domestic violence or human trafficking and other vulnerable adults without the means to hire an attorney. H.B. 4238 seeks to address this issue by providing streamlined access to debt collection protections for certain victims of identity theft and coerced debt.
CRIMINAL JUSTICE IMPACT
It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
ANALYSIS
H.B. 4238 amends the Finance Code to prohibit a creditor, debt collector, or third-party debt collector from attempting to collect a consumer debt or a portion of a consumer debt from a consumer who provides the following information:
a criminal complaint alleging the consumer was a victim of the offense of the fraudulent use or possession of identifying information under Penal Code provisions, or a substantially similar federal law or law in another state, accompanied by a statement identifying the consumer debt or the portion of consumer debt that resulted from the offense;
a court order issued under Business & Commerce Code provisions, or a substantially similar federal law or law in another state, declaring the consumer a victim of identity theft; or
a copy of a Federal Trade Commission identity theft victim's report, completed, signed, and filed by the consumer affirming that the consumer is a victim of identity theft and identifying the consumer debt or affected portion of the consumer debt incurred as a result of identity theft.
H.B. 4238 requires a creditor, debt collector, or third-party debt collector who receives such notice from a victim of identity theft that a consumer debt is a result of the identity theft to immediately cease efforts to collect the disputed debt or disputed portion of the debt from the victim of identity theft and send to each person who has previously received a report relating to that debt from the creditor, debt collector, or third-party debt collector notice that the debt is disputed under the bill's provisions and not collectible from the victim of identity theft. The bill prohibits a creditor, debt collector, or third-party debt collector from selling the debt or transferring it for consideration, except to collect the debt from the alleged perpetrator of identity theft or from a responsible person other than the victim of identity theft. The bill authorizes a creditor, debt collector, or third-party debt collector, if the disputed debt or disputed portion of the debt is secured by tangible personal property, to enforce the security interest but prohibits the creditor, debt collector, or third-party debt collector from collecting or seeking to collect any deficiency from the victim of identity theft.
H.B. 4238 authorizes a creditor, debt collector, or third-party debt collector who has a good faith reason to believe that a consumer has disputed a consumer debt or portion of a consumer debt based on a material misrepresentation that the consumer is a victim of identity theft to file suit in a court of competent jurisdiction to collect the debt from the consumer. With respect to such a suit, the bill requires the creditor, debt collector, or third-party debt collector to show by a preponderance of the evidence that the consumer is not a victim of identity theft. The bill establishes that a creditor, debt collector, or third-party debt collector has standing to bring and may bring an action to exercise any right, seek any remedy, or use any lawful means to collect a consumer debt or a portion of consumer debt that is disputed under the bill's provisions from an alleged perpetrator of identity theft who by means of identity theft obtained, used, or possessed the money, goods, services, or property of the consumer who is a victim of the alleged perpetrator's identity theft.
H.B. 4238 defines "identity theft" as a violation of Business & Commerce Code provisions relating to the unauthorized use or possession of personal identifying information, or a substantially similar federal law or law in another state, or a criminal offense under Penal Code provisions relating to fraudulent use or possession of identifying information, or a substantially similar federal law or law in another state. The bill does not apply to the collection of a judgment already obtained or to a consumer debt that is a home loan, as defined by reference to statutory provisions relating to such loans.
EFFECTIVE DATE
September 1, 2025.