Texas 2025 - 89th Regular

Texas House Bill HB768 Compare Versions

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1	1	By: Bernal H.B. No. 768
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6	6	A BILL TO BE ENTITLED
7	7	AN ACT
8	8	relating to credit services organizations and extensions of
9	9	consumer credit facilitated by credit services organizations;
10	10	increasing a criminal penalty.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	SECTION 1. Section 393.001, Finance Code, is amended by
13	13	amending Subdivision (3) and adding Subdivisions (2-a), (3-a), (5),
14	14	(6), (7), (8), (9), and (10) to read as follows:
15	15	(2-a) "Credit access business" means a credit services
16	16	organization that obtains for a consumer or assists a consumer in
17	17	obtaining an extension of consumer credit.
18	18	(3) "Credit services organization" means a person who
19	19	provides, or represents that the person can or will provide, for the
20	20	payment of valuable consideration any of the following services
21	21	with respect to the extension of consumer credit by others:
22	22	(A) improving a consumer's credit history or
23	23	rating;
24	24	(B) obtaining an extension of consumer credit for
25	25	a consumer in the form of:
26	26	(i) a single-payment deferred presentment
27	27	transaction;
28	28	(ii) a multiple-payment deferred
29	29	presentment transaction;
30	30	(iii) a single-payment motor vehicle title
31	31	loan; or
32	32	(iv) a multiple-payment motor vehicle title
33	33	loan; or
34	34	(C) providing advice or assistance to a consumer
35	35	with regard to Paragraph (A) or (B).
36	36	(3-a) "Deferred presentment transaction" means a
37	37	single-payment or multiple-payment transaction defined as a
38	38	deferred presentment transaction by Section 341.001 in connection
39	39	with which the consumer is not required to provide real or personal
40	40	property as security.
41	41	(5) "Motor vehicle title loan" means a single-payment
42	42	or multiple-payment loan in which an unencumbered motor vehicle is
43	43	given as the only security for the loan. The term does not include a
44	44	retail installment transaction under Chapter 348 or another loan
45	45	made to finance the purchase of a motor vehicle.
46	46	(6) "Multiple-payment deferred presentment
47	47	transaction" means a deferred presentment transaction that is not a
48	48	single-payment deferred presentment transaction.
49	49	(7) "Multiple-payment motor vehicle title loan" means
50	50	a motor vehicle title loan that is not a single-payment motor
51	51	vehicle title loan.
52	52	(8) "Refinance" means a rollover, renewal, or other
53	53	type of transaction in which all or a portion of the principal,
54	54	fees, or interest due under an outstanding extension of consumer
55	55	credit becomes due on a later date. The term includes a new
56	56	extension of consumer credit that:
57	57	(A) consists of debt arising from principal,
58	58	fees, or interest that was not paid in full under an outstanding or
59	59	previous extension of consumer credit; or
60	60	(B) is made on or before the seventh day after the
61	61	date a previous extension of consumer credit that a credit access
62	62	business obtained for a consumer or assisted a consumer in
63	63	obtaining was paid in full.
64	64	(9) "Single-payment deferred presentment transaction"
65	65	means a deferred presentment transaction for which the entire cash
66	66	advance, interest, and fees are required under the terms of the
67	67	transaction to be payable in a single payment.
68	68	(10) "Single-payment motor vehicle title loan" means a
69	69	motor vehicle title loan for which the entire principal, interest,
70	70	and fees are required under the terms of the loan to be payable in a
71	71	single payment.
72	72	SECTION 2. Subchapter A, Chapter 393, Finance Code, is
73	73	amended by adding Section 393.004 to read as follows:
74	74	Sec. 393.004. EFFECT ON MUNICIPAL ORDINANCES. (a) This
75	75	chapter does not preempt a municipal ordinance regulating:
76	76	(1) a credit access business; or
77	77	(2) any form of an extension of consumer credit that a
78	78	credit access business is authorized to obtain for a consumer or
79	79	assist a consumer in obtaining as provided by Section 393.308.
80	80	(b) If a municipal ordinance described by Subsection (a)
81	81	conflicts with a provision of this chapter, the more stringent
82	82	regulation controls to the extent of the conflict.
83	83	SECTION 3. Section 393.201(c), Finance Code, is amended to
84	84	read as follows:
85	85	(c) A contract with a credit access business[, as defined by
86	86	Section 393.601,] for the performance of services described by
87	87	Section 393.602(a) must, in addition to the requirements of
88	88	Subsection (b) and Section 393.302:
89	89	(1) contain a statement that there is no prepayment
90	90	penalty;
91	91	(2) contain a statement that a credit access business
92	92	must comply with Chapter 392 and the federal Fair Debt Collection
93	93	Practices Act (15 U.S.C. Section 1692 et seq.) with respect to an
94	94	extension of consumer credit [described by Section 393.602(a)];
95	95	(3) contain a statement that a person may not threaten
96	96	or pursue criminal charges against a consumer related to a check or
97	97	other debit authorization provided by the consumer as security for
98	98	a transaction in the absence of forgery, fraud, theft, or other
99	99	criminal conduct;
100	100	(4) contain a statement that a credit access business
101	101	must comply, to the extent applicable, with 10 U.S.C. Section 987
102	102	and any regulations adopted under that law with respect to an
103	103	extension of consumer credit [described by Section 393.602(a)];
104	104	(5) disclose to the consumer:
105	105	(A) the lender from whom the extension of
106	106	consumer credit is obtained;
107	107	(B) the interest paid or to be paid to the lender;
108	108	and
109	109	(C) the specific fees that will be paid to the
110	110	credit access business for the business's services; and
111	111	(6) contain the name and address of the Office of
112	112	Consumer Credit Commissioner and the telephone number of the
113	113	office's consumer helpline.
114	114	SECTION 4. Section 393.203, Finance Code, is amended to
115	115	read as follows:
116	116	Sec. 393.203. ISSUANCE OF CONTRACT AND OTHER DOCUMENTS.
117	117	(a) A credit services organization shall give to the consumer, when
118	118	the document is signed, a copy of the completed contract and any
119	119	other document the organization requires the consumer to sign.
120	120	(b) The contract and other documents provided by a credit
121	121	access business to a consumer under this section in relation to an
122	122	extension of consumer credit must be:
123	123	(1) provided before signing wholly written:
124	124	(A) in English; and
125	125	(B) if the contract negotiations are not
126	126	conducted in English, in the language in which the contract is
127	127	negotiated; and
128	128	(2) before signing, read in their entirety in the
129	129	language in which the contract is negotiated to any consumer who
130	130	cannot read.
131	131	SECTION 5. Section 393.223, Finance Code, is amended by
132	132	amending Subsection (a) and adding Subsection (b-1) to read as
133	133	follows:
134	134	(a) Before performing services described by Section
135	135	393.602(a) [393.221(1)], a credit access business must provide to a
136	136	consumer a written disclosure adopted by rule of the Finance
137	137	Commission of Texas [that discloses the following] in a form
138	138	prescribed by the commission that:
139	139	(1) discloses the interest, fees, and annual
140	140	percentage rates, as applicable, to be charged on a deferred
141	141	presentment transaction or on a motor vehicle title loan, as
142	142	applicable, in comparison to interest, fees, and annual percentage
143	143	rates to be charged on other alternative forms of consumer debt;
144	144	(2) discloses the amount of accumulated fees a
145	145	consumer would incur by renewing or refinancing a deferred
146	146	presentment transaction or motor vehicle title loan that remains
147	147	outstanding for a period of two weeks, one month, two months, and
148	148	three months; [and]
149	149	(3) provides information regarding the typical
150	150	pattern of repayment of deferred presentment transactions and motor
151	151	vehicle title loans; and
152	152	(4) references nonprofit agencies that provide
153	153	financial education and training or cash assistance to borrowers.
154	154	(b-1) The disclosure and notice required by this section
155	155	must be:
156	156	(1) available in English and Spanish at each location
157	157	at which the credit access business performs services described by
158	158	Section 393.602(a); and
159	159	(2) provided to a consumer wholly written, and read in
160	160	their entirety at the time provided to any consumer who cannot read,
161	161	in the language in which the contract is negotiated.
162	162	SECTION 6. Subchapter D, Chapter 393, Finance Code, is
163	163	amended by adding Section 393.308 to read as follows:
164	164	Sec. 393.308. PROHIBITION ON OBTAINING CERTAIN EXTENSIONS
165	165	OF CONSUMER CREDIT. A credit services organization may not obtain
166	166	for a consumer or assist a consumer in obtaining an extension of
167	167	consumer credit in any form other than in the form of:
168	168	(1) a single-payment deferred presentment
169	169	transaction;
170	170	(2) a multiple-payment deferred presentment
171	171	transaction;
172	172	(3) a single-payment motor vehicle title loan; or
173	173	(4) a multiple-payment motor vehicle title loan.
174	174	SECTION 7. Section 393.501, Finance Code, is amended by
175	175	adding Subsection (c) to read as follows:
176	176	(c) Each day of a continuing violation of a provision of
177	177	Subchapter C-1 or G constitutes a separate offense.
178	178	SECTION 8. Section 393.602(a), Finance Code, is amended to
179	179	read as follows:
180	180	(a) This subchapter applies only to a credit services
181	181	organization that [, with respect to a consumer who is located in
182	182	this state at the time of the transaction,] obtains for a consumer
183	183	or assists a consumer in obtaining an extension of consumer credit
184	184	[in the form of:
185	185	[(1) a deferred presentment transaction; or
186	186	[(2) a motor vehicle title loan].
187	187	SECTION 9. Section 393.604(a), Finance Code, is amended to
188	188	read as follows:
189	189	(a) An application for a license under this subchapter must
190	190	be under oath and contain:
191	191	(1) the applicant's name and the street address,
192	192	mailing address, facsimile number, and telephone number of the
193	193	applicant at the location for which the license is sought [be under
194	194	oath];
195	195	(2) [give] the approximate location from which the
196	196	business is to be conducted;
197	197	(3) the identities of [identify] the business's
198	198	principal parties in interest;
199	199	(4) [contain] the name, physical address, and
200	200	telephone number of all third-party lender organizations:
201	201	(A) with which the business contracts to provide
202	202	services described by Section 393.602(a); or
203	203	(B) from which the business arranges extensions
204	204	of consumer credit [described by Section 393.602(a)]; and
205	205	(5) [contain] other relevant information that the
206	206	commissioner requires for the findings required under Section
207	207	393.607.
208	208	SECTION 10. Section 393.620, Finance Code, is amended to
209	209	read as follows:
210	210	Sec. 393.620. TRANSFER OR ASSIGNMENT OF LICENSE PROHIBITED.
211	211	A license may not be transferred or assigned [only with the approval
212	212	of the commissioner].
213	213	SECTION 11. Sections 393.622(a) and (b), Finance Code, are
214	214	amended to read as follows:
215	215	(a) The finance commission may:
216	216	(1) adopt rules necessary to enforce and administer
217	217	this subchapter;
218	218	(2) adopt rules with respect to the quarterly
219	219	reporting by a credit access business licensed under this
220	220	subchapter of summary business information relating to extensions
221	221	of consumer credit the business obtained for a consumer or assisted
222	222	a consumer in obtaining [described by Section 393.602(a)]; and
223	223	(3) adopt rules with respect to periodic examination
224	224	by the office relating to extensions of consumer credit the
225	225	business obtained for a consumer or assisted a consumer in
226	226	obtaining [described by Section 393.602(a)], including rules
227	227	related to charges for defraying the reasonable cost of conducting
228	228	the examinations.
229	229	(b) The finance commission may adopt rules under this
230	230	section to allow the commissioner to review, as part of a periodic
231	231	examination, any relevant contracts between the credit access
232	232	business and the third-party lender organizations with which the
233	233	credit access business contracts to provide services described by
234	234	Section 393.602(a) or from which the business arranges extensions
235	235	of consumer credit [described by Section 393.602(a)]. A contract
236	236	or information obtained by the commissioner under this section is
237	237	considered proprietary and confidential to the respective parties
238	238	to the contract, and is not subject to disclosure under Chapter 552,
239	239	Government Code.
240	240	SECTION 12. Sections 393.625, 393.626, and 393.627, Finance
241	241	Code, are amended to read as follows:
242	242	Sec. 393.625. MILITARY BORROWERS. An extension of consumer
243	243	credit [described by Section 393.602(a)] that is obtained by a
244	244	credit access business for a member of the United States military or
245	245	a dependent of a member of the United States military or that the
246	246	business assisted that person in obtaining must comply with 10
247	247	U.S.C. Section 987 and any regulations adopted under that law, to
248	248	the extent applicable.
249	249	Sec. 393.626. DEBT COLLECTION PRACTICES. A violation of
250	250	Chapter 392 by a credit access business with respect to an extension
251	251	of consumer credit [described by Section 393.602(a)] constitutes a
252	252	violation of this subchapter.
253	253	Sec. 393.627. QUARTERLY REPORT TO COMMISSIONER. A credit
254	254	access business shall file a quarterly report with the commissioner
255	255	on a form prescribed by the commissioner that provides the
256	256	following information relating to extensions of consumer credit
257	257	[described by Section 393.602(a)] during the preceding quarter:
258	258	(1) the number of consumers for whom the business
259	259	obtained or assisted in obtaining those extensions of consumer
260	260	credit;
261	261	(2) the number of those extensions of consumer credit
262	262	obtained by the business or that the business assisted consumers in
263	263	obtaining;
264	264	(3) the number of refinancing transactions of the
265	265	extensions of consumer credit described by Subdivision (2);
266	266	(4) the number of consumers refinancing the extensions
267	267	of consumer credit described by Subdivision (2);
268	268	(5) the number of consumers refinancing more than once
269	269	the extensions of consumer credit described by Subdivision (2);
270	270	(6) the average amount of the extensions of consumer
271	271	credit described by Subdivision (2);
272	272	(7) the total amount of fees charged by the business
273	273	for the activities described by Subdivision (1);
274	274	(8) the number of vehicles surrendered or repossessed
275	275	under the terms of an extension of consumer credit in the form of a
276	276	motor vehicle title loan obtained by the business or that the
277	277	business assisted a consumer in obtaining;
278	278	(9) the mean, median, and mode of the number of
279	279	extensions of consumer credit obtained by consumers as a result of
280	280	entering into the extensions of consumer credit described by
281	281	Subdivision (2); and
282	282	(10) any related information the commissioner
283	283	determines necessary.
284	284	SECTION 13. Subchapter G, Chapter 393, Finance Code, is
285	285	amended by adding Sections 393.629 through 393.637 to read as
286	286	follows:
287	287	Sec. 393.629. GENERAL LIMITATIONS ON EXTENSIONS OF CONSUMER
288	288	CREDIT; PAYMENT METHOD. (a) The provisions of this chapter
289	289	applicable to a credit access business apply to any consumer
290	290	physically located in this state at the time the extension of
291	291	consumer credit is made, regardless of whether the extension of
292	292	consumer credit was made in person in this state.
293	293	(b) A credit access business shall accept a payment made in
294	294	cash or by electronic transfer, cashier's check, teller's check, or
295	295	money order offered by the consumer or another party, to retire or
296	296	otherwise pay down debt incurred under an extension of consumer
297	297	credit that a credit access business obtained for a consumer or
298	298	assisted a consumer in obtaining under this chapter.
299	299	Sec. 393.630. ESTABLISHMENT OF INCOME. A credit access
300	300	business must require documentation to establish a consumer's
301	301	income for purposes of this subchapter. The only acceptable forms
302	302	of documentation are paper, facsimile, or electronic copies of:
303	303	(1) a payroll document;
304	304	(2) a paycheck;
305	305	(3) a bank, credit union, debit card, or other account
306	306	statement;
307	307	(4) a report from a nationally or regionally
308	308	recognized credit and data reporting company;
309	309	(5) Internal Revenue Service Form W-2 from the
310	310	preceding year;
311	311	(6) the federal income tax return from the preceding
312	312	tax year; or
313	313	(7) a signed letter from the consumer's employer at the
314	314	time the extension of consumer credit is sought.
315	315	Sec. 393.631. SINGLE-PAYMENT DEFERRED PRESENTMENT
316	316	TRANSACTION. (a) The sum of all fees, principal, interest, and
317	317	other amounts due under an extension of consumer credit in the form
318	318	of a single-payment deferred presentment transaction that a credit
319	319	access business obtains for a consumer or assists a consumer in
320	320	obtaining may not exceed 20 percent of the consumer's gross monthly
321	321	income.
322	322	(b) An extension of consumer credit in the form of a
323	323	single-payment deferred presentment transaction that a credit
324	324	access business obtains for a consumer or assists a consumer in
325	325	obtaining may not be refinanced more than three times. An amount
326	326	from each payment of a refinanced deferred presentment transaction
327	327	described by this subsection must be used to repay at least 25
328	328	percent of the principal amount of the original debt.
329	329	Sec. 393.632. MULTIPLE-PAYMENT DEFERRED PRESENTMENT
330	330	TRANSACTION. (a) The sum of all fees, principal, interest, and
331	331	other amounts due under all scheduled payments of an extension of
332	332	consumer credit in the form of a multiple-payment deferred
333	333	presentment transaction that a credit access business obtains for a
334	334	consumer or assists a consumer in obtaining may not exceed 20
335	335	percent of the consumer's gross monthly income.
336	336	(b) An extension of consumer credit in the form of a
337	337	multiple-payment deferred presentment transaction that a credit
338	338	access business obtains for a consumer or assists a consumer in
339	339	obtaining and all fees associated with the debt may not be payable
340	340	by the consumer in more than four installments. An amount from each
341	341	payment must be used to repay at least 25 percent of the principal
342	342	amount of the debt.
343	343	(c) An extension of consumer credit in the form of a
344	344	multiple-payment deferred presentment transaction that a credit
345	345	access business obtains for a consumer or assists a consumer in
346	346	obtaining may not be refinanced.
347	347	Sec. 393.633. SINGLE-PAYMENT MOTOR VEHICLE TITLE LOAN. (a)
348	348	The sum of all fees, principal, interest, and other amounts due
349	349	under an extension of consumer credit in the form of a
350	350	single-payment motor vehicle title loan that a credit access
351	351	business obtains for a consumer or assists a consumer in obtaining
352	352	may not exceed the lesser of:
353	353	(1) three percent of the consumer's gross annual
354	354	income; or
355	355	(2) 70 percent of the retail value of the motor vehicle
356	356	securing the debt.
357	357	(b) An extension of consumer credit in the form of a
358	358	single-payment motor vehicle title loan that a credit access
359	359	business obtains for a consumer or assists a consumer in obtaining
360	360	may not be refinanced more than three times. An amount from each
361	361	payment of a refinanced motor vehicle title loan described by this
362	362	subsection must be used to repay at least 25 percent of the
363	363	principal amount of the original debt.
364	364	Sec. 393.634. MULTIPLE-PAYMENT MOTOR VEHICLE TITLE LOAN.
365	365	(a) The sum of all fees, principal, interest, and other amounts due
366	366	under all scheduled payments of an extension of consumer credit in
367	367	the form of a multiple-payment motor vehicle title loan that a
368	368	credit access business obtains for a consumer or assists a consumer
369	369	in obtaining may not exceed the lesser of:
370	370	(1) three percent of the consumer's gross annual
371	371	income; or
372	372	(2) 70 percent of the retail value of the motor vehicle
373	373	securing the debt.
374	374	(b) An extension of consumer credit in the form of a
375	375	multiple-payment motor vehicle title loan that a credit access
376	376	business obtains for a consumer or assists a consumer in obtaining
377	377	and all fees associated with the debt may not be payable by the
378	378	consumer in more than four installments. An amount from each
379	379	payment must be used to repay at least 25 percent of the principal
380	380	amount of the debt.
381	381	(c) An extension of consumer credit in the form of a
382	382	multiple-payment motor vehicle title loan that a credit access
383	383	business obtains for a consumer or assists a consumer in obtaining
384	384	may not be refinanced.
385	385	Sec. 393.635. REFINANCES. (a) Any refinance of an
386	386	extension of consumer credit that a credit access business obtains
387	387	for a consumer or assists a consumer in obtaining:
388	388	(1) must be authorized under this subchapter;
389	389	(2) must be in the same form as the original extension
390	390	of consumer credit; and
391	391	(3) must meet all the requirements applicable to the
392	392	original extension of consumer credit, including the duration,
393	393	transaction, and applicable income-based or vehicle value-based
394	394	limitations under Section 393.631(a) or 393.633(a).
395	395	(b) For purposes of this section, a single-payment deferred
396	396	presentment transaction, a multiple-payment deferred presentment
397	397	transaction, a single-payment motor vehicle title loan, and a
398	398	multiple-payment motor vehicle title loan are the different forms
399	399	of extensions of consumer credit that a credit access business may
400	400	obtain for a consumer or assist a consumer in obtaining.
401	401	(c) A person may not use a device, subterfuge, or pretense
402	402	to evade the refinance requirements and limitations imposed on a
403	403	credit access business under this subchapter.
404	404	Sec. 393.636. MAINTENANCE OF RECORDS. (a) A credit access
405	405	business shall maintain a complete set of records of all extensions
406	406	of consumer credit obtained for consumers by the business or that
407	407	the business assisted consumers in obtaining. The record
408	408	pertaining to each extension of consumer credit must be retained
409	409	until the third anniversary of the date the extension of consumer
410	410	credit was obtained and must include:
411	411	(1) the name and address of the consumer;
412	412	(2) the principal amount of the cash advance or loan;
413	413	(3) the length of the original term of the extension of
414	414	consumer credit, the number of installments or refinances, if
415	415	applicable, and the length of the term of any refinance;
416	416	(4) the fees charged by the credit access business for
417	417	obtaining for a consumer or assisting the consumer in obtaining the
418	418	extension of consumer credit; and
419	419	(5) the documentation used to establish a consumer's
420	420	income under Section 393.630.
421	421	(b) A credit access business shall retain a copy of each
422	422	written agreement between the business and a consumer pertaining to
423	423	an extension of consumer credit, including any agreement regarding
424	424	refinancing an extension of consumer credit, until the third
425	425	anniversary of the date on which the agreement was entered into.
426	426	(c) A credit access business shall retain a copy of each
427	427	report filed under Section 393.627 until the third anniversary of
428	428	the date on which the report was filed.
429	429	(d) A record described by this section must be available for
430	430	inspection on request by the office during the normal business
431	431	hours of the credit access business.
432	432	Sec. 393.637. RULES. The finance commission shall adopt
433	433	any rules necessary to implement Sections 393.629-393.636.
434	434	SECTION 14. The following laws are repealed:
435	435	(1) Section 393.221, Finance Code; and
436	436	(2) Sections 393.601(2), (3), and (5), Finance Code.
437	437	SECTION 15. The changes in law made by this Act apply only
438	438	to an extension of consumer credit made on or after the effective
439	439	date of this Act. An extension of consumer credit made before the
440	440	effective date of this Act is governed by the law in effect on the
441	441	date the extension of consumer credit was made, and the former law
442	442	is continued in effect for that purpose. For purposes of this
443	443	section, a refinance of an extension of consumer credit is
444	444	considered made on the date the extension of consumer credit being
445	445	refinanced was made.
446	446	SECTION 16. (a) The change in law made by this Act to
447	447	Section 393.223, Finance Code, applies only to a disclosure or
448	448	notice provided by a credit access business on or after January 1,
449	449	2024. A disclosure or notice provided by a credit access business
450	450	before January 1, 2026, is governed by Section 393.223, Finance
451	451	Code, as that section existed immediately before the effective date
452	452	of this Act, and that law is continued in effect for that purpose.
453	453	(b) The Finance Commission of Texas shall adopt rules
454	454	prescribing forms under Section 393.223(a), Finance Code, as
455	455	amended by this Act, not later than November 1, 2025.
456	456	SECTION 17. Section 393.636, Finance Code, as added by this
457	457	Act, applies only to a record created on or after the effective date
458	458	of this Act. A record created before the effective date of this Act
459	459	is governed by the law in effect when the record was created, and
460	460	the former law is continued in effect for that purpose.
461	461	SECTION 18. This Act takes effect September 1, 2025.