HB768 - Relating to credit services organizations and extensions of consumer credit facilitated by credit services organizations; increasing a criminal penalty.

      By: Bernal H.B. No. 768       A BILL TO BE ENTITLED   AN ACT   relating to credit services organizations and extensions of   consumer credit facilitated by credit services organizations;   increasing a criminal penalty.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 393.001, Finance Code, is amended by   amending Subdivision (3) and adding Subdivisions (2-a), (3-a), (5),   (6), (7), (8), (9), and (10) to read as follows:                 (2-a)     "Credit access business" means a credit services   organization that obtains for a consumer or assists a consumer in   obtaining an extension of consumer credit.                (3)  "Credit services organization" means a person who   provides, or represents that the person can or will provide, for the   payment of valuable consideration any of the following services   with respect to the extension of consumer credit by others:                      (A)  improving a consumer's credit history or   rating;                      (B)  obtaining an extension of consumer credit for   a consumer in the form of:                             (i)     a single-payment deferred presentment   transaction;                             (ii)     a multiple-payment deferred   presentment transaction;                             (iii)     a single-payment motor vehicle title   loan; or                             (iv)     a multiple-payment motor vehicle title   loan ; or                      (C)  providing advice or assistance to a consumer   with regard to Paragraph (A) or (B).                 (3-a)     "Deferred presentment transaction" means a   single-payment or multiple-payment transaction defined as a   deferred presentment transaction by Section 341.001 in connection   with which the consumer is not required to provide real or personal   property as security.                 (5)     "Motor vehicle title loan" means a single-payment   or multiple-payment loan in which an unencumbered motor vehicle is   given as the only security for the loan. The term does not include a   retail installment transaction under Chapter 348 or another loan   made to finance the purchase of a motor vehicle.                 (6)     "Multiple-payment deferred presentment   transaction" means a deferred presentment transaction that is not a   single-payment deferred presentment transaction.                 (7)     "Multiple-payment motor vehicle title loan" means   a motor vehicle title loan that is not a single-payment motor   vehicle title loan.                 (8)     "Refinance" means a rollover, renewal, or other   type of transaction in which all or a portion of the principal,   fees, or interest due under an outstanding extension of consumer   credit becomes due on a later date. The term includes a new   extension of consumer credit that:                       (A)     consists of debt arising from principal,   fees, or interest that was not paid in full under an outstanding or   previous extension of consumer credit; or                       (B)     is made on or before the seventh day after the   date a previous extension of consumer credit that a credit access   business obtained for a consumer or assisted a consumer in   obtaining was paid in full.                 (9)     "Single-payment deferred presentment transaction"   means a deferred presentment transaction for which the entire cash   advance, interest, and fees are required under the terms of the   transaction to be payable in a single payment.                 (10)     "Single-payment motor vehicle title loan" means a   motor vehicle title loan for which the entire principal, interest,   and fees are required under the terms of the loan to be payable in a   single payment.          SECTION 2.  Subchapter A, Chapter 393, Finance Code, is   amended by adding Section 393.004 to read as follows:           Sec.   393.004.     EFFECT ON MUNICIPAL ORDINANCES. (a) This   chapter does not preempt a municipal ordinance regulating:                 (1)  a credit access business; or                 (2)     any form of an extension of consumer credit that a   credit access business is authorized to obtain for a consumer or   assist a consumer in obtaining as provided by Section 393.308.           (b)     If a municipal ordinance described by Subsection (a)   conflicts with a provision of this chapter, the more stringent   regulation controls to the extent of the conflict.          SECTION 3.  Section 393.201(c), Finance Code, is amended to   read as follows:          (c)  A contract with a credit access business[ , as defined by   Section 393.601, ] for the performance of services described by   Section 393.602(a) must, in addition to the requirements of   Subsection (b) and Section 393.302:                (1)  contain a statement that there is no prepayment   penalty;                (2)  contain a statement that a credit access business   must comply with Chapter 392 and the federal Fair Debt Collection   Practices Act (15 U.S.C. Section 1692 et seq.) with respect to an   extension of consumer credit [ described by Section 393.602(a) ];                (3)  contain a statement that a person may not threaten   or pursue criminal charges against a consumer related to a check or   other debit authorization provided by the consumer as security for   a transaction in the absence of forgery, fraud, theft, or other   criminal conduct;                (4)  contain a statement that a credit access business   must comply, to the extent applicable, with 10 U.S.C. Section 987   and any regulations adopted under that law with respect to an   extension of consumer credit [ described by Section 393.602(a) ];                (5)  disclose to the consumer:                      (A)  the lender from whom the extension of   consumer credit is obtained;                      (B)  the interest paid or to be paid to the lender;   and                      (C)  the specific fees that will be paid to the   credit access business for the business's services; and                (6)   contain the name and address of the Office of   Consumer Credit Commissioner and the telephone number of the   office's consumer helpline.          SECTION 4.  Section 393.203, Finance Code, is amended to   read as follows:          Sec. 393.203.  ISSUANCE OF CONTRACT AND OTHER DOCUMENTS.   (a) A credit services organization shall give to the consumer, when   the document is signed, a copy of the completed contract and any   other document the organization requires the consumer to sign.           (b)     The contract and other documents provided by a credit   access business to a consumer under this section in relation to an   extension of consumer credit must be:                 (1)  provided before signing wholly written:                       (A)  in English; and                       (B)     if the contract negotiations are not   conducted in English, in the language in which the contract is   negotiated; and                 (2)     before signing, read in their entirety in the   language in which the contract is negotiated to any consumer who   cannot read.          SECTION 5.  Section 393.223, Finance Code, is amended by   amending Subsection (a) and adding Subsection (b-1) to read as   follows:          (a)  Before performing services described by Section   393.602(a) [ 393.221(1) ], a credit access business must provide to a   consumer a written disclosure adopted by rule of the Finance   Commission of Texas [ that discloses the following ] in a form   prescribed by the commission that :                (1)   discloses the interest, fees, and annual   percentage rates, as applicable, to be charged on a deferred   presentment transaction or on a motor vehicle title loan, as   applicable, in comparison to interest, fees, and annual percentage   rates to be charged on other alternative forms of consumer debt;                (2)   discloses the amount of accumulated fees a   consumer would incur by renewing or refinancing a deferred   presentment transaction or motor vehicle title loan that remains   outstanding for a period of two weeks, one month, two months, and   three months; [ and ]                (3)   provides information regarding the typical   pattern of repayment of deferred presentment transactions and motor   vehicle title loans ; and                 (4)     references nonprofit agencies that provide   financial education and training or cash assistance to borrowers .           (b-1)     The disclosure and notice required by this section   must be:                 (1)     available in English and Spanish at each location   at which the credit access business performs services described by   Section 393.602(a); and                 (2)     provided to a consumer wholly written, and read in   their entirety at the time provided to any consumer who cannot read,   in the language in which the contract is negotiated.          SECTION 6.  Subchapter D, Chapter 393, Finance Code, is   amended by adding Section 393.308 to read as follows:           Sec.   393.308.     PROHIBITION ON OBTAINING CERTAIN EXTENSIONS   OF CONSUMER CREDIT. A credit services organization may not obtain   for a consumer or assist a consumer in obtaining an extension of   consumer credit in any form other than in the form of:                 (1)     a single-payment deferred presentment   transaction;                 (2)     a multiple-payment deferred presentment   transaction;                 (3)  a single-payment motor vehicle title loan; or                 (4)  a multiple-payment motor vehicle title loan.    &# [Text truncated for display. Full text available on Congress.gov.]