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.          SECTION 7.  Section 393.501, Finance Code, is amended by   adding Subsection (c) to read as follows:          (c)  Each day of a continuing violation of a provision of   Subchapter C-1 or G constitutes a separate offense.          SECTION 8.  Section 393.602(a), Finance Code, is amended to   read as follows:          (a)  This subchapter applies only to a credit services   organization that [, with respect to a consumer who is located in   this state at the time of the transaction,] obtains for a consumer   or assists a consumer in obtaining an extension of consumer credit   [in the form of:                [(1)  a deferred presentment transaction; or                [(2)  a motor vehicle title loan].          SECTION 9.  Section 393.604(a), Finance Code, is amended to   read as follows:          (a)  An application for a license under this subchapter must   be under oath and contain:                (1)  the applicant's name and the street address,   mailing address, facsimile number, and telephone number of the   applicant at the location for which the license is sought [be under   oath];                (2)  [give] the approximate location from which the   business is to be conducted;                (3)  the identities of [identify] the business's   principal parties in interest;                (4)  [contain] the name, physical address, and   telephone number of all third-party lender organizations:                      (A)  with which the business contracts to provide   services described by Section 393.602(a); or                      (B)  from which the business arranges extensions   of consumer credit [described by Section 393.602(a)]; and                (5)  [contain] other relevant information that the   commissioner requires for the findings required under Section   393.607.          SECTION 10.  Section 393.620, Finance Code, is amended to   read as follows:          Sec. 393.620.  TRANSFER OR ASSIGNMENT OF LICENSE PROHIBITED.   A license may not be transferred or assigned [only with the approval   of the commissioner].          SECTION 11.  Sections 393.622(a) and (b), Finance Code, are   amended to read as follows:          (a)  The finance commission may:                (1)  adopt rules necessary to enforce and administer   this subchapter;                (2)  adopt rules with respect to the quarterly   reporting by a credit access business licensed under this   subchapter of summary business information relating to extensions   of consumer credit the business obtained for a consumer or assisted   a consumer in obtaining [described by Section 393.602(a)]; and                (3)  adopt rules with respect to periodic examination   by the office relating to extensions of consumer credit the   business obtained for a consumer or assisted a consumer in   obtaining [described by Section 393.602(a)], including rules   related to charges for defraying the reasonable cost of conducting   the examinations.          (b)  The finance commission may adopt rules under this   section to allow the commissioner to review, as part of a periodic   examination, any relevant contracts between the credit access   business and the third-party lender organizations with which the   credit access business contracts to provide services described by   Section 393.602(a) or from which the business arranges extensions   of consumer credit [described by Section 393.602(a)]. A contract   or information obtained by the commissioner under this section is   considered proprietary and confidential to the respective parties   to the contract, and is not subject to disclosure under Chapter 552,   Government Code.          SECTION 12.  Sections 393.625, 393.626, and 393.627, Finance   Code, are amended to read as follows:          Sec. 393.625.  MILITARY BORROWERS. An extension of consumer   credit [described by Section 393.602(a)] that is obtained by a   credit access business for a member of the United States military or   a dependent of a member of the United States military or that the   business assisted that person in obtaining must comply with 10   U.S.C. Section 987 and any regulations adopted under that law, to   the extent applicable.          Sec. 393.626.  DEBT COLLECTION PRACTICES. A violation of   Chapter 392 by a credit access business with respect to an extension   of consumer credit [described by Section 393.602(a)] constitutes a   violation of this subchapter.          Sec. 393.627.  QUARTERLY REPORT TO COMMISSIONER. A credit   access business shall file a quarterly report with the commissioner   on a form prescribed by the commissioner that provides the   following information relating to extensions of consumer credit   [described by Section 393.602(a)] during the preceding quarter:                (1)  the number of consumers for whom the business   obtained or assisted in obtaining those extensions of consumer   credit;                (2)  the number of those extensions of consumer credit   obtained by the business or that the business assisted consumers in   obtaining;                (3)  the number of refinancing transactions of the   extensions of consumer credit described by Subdivision (2);                (4)  the number of consumers refinancing the extensions   of consumer credit described by Subdivision (2);                (5)  the number of consumers refinancing more than once   the extensions of consumer credit described by Subdivision (2);                (6)  the average amount of the extensions of consumer   credit described by Subdivision (2);                (7)  the total amount of fees charged by the business   for the activities described by Subdivision (1);                (8)  the number of vehicles surrendered or repossessed   under the terms of an extension of consumer credit in the form of a   motor vehicle title loan obtained by the business or that the   business assisted a consumer in obtaining;                (9)  the mean, median, and mode of the number of   extensions of consumer credit obtained by consumers as a result of   entering into the extensions of consumer credit described by   Subdivision (2); and                (10)  any related information the commissioner   determines necessary.          SECTION 13.  Subchapter G, Chapter 393, Finance Code, is   amended by adding Sections 393.629 through 393.637 to read as   follows:          Sec. 393.629.  GENERAL LIMITATIONS ON EXTENSIONS OF CONSUMER   CREDIT; PAYMENT METHOD. (a) The provisions of this chapter   applicable to a credit access business apply to any consumer   physically located in this state at the time the extension of   consumer credit is made, regardless of whether the extension of   consumer credit was made in person in this state.          (b)  A credit access business shall accept a payment made in   cash or by electronic transfer, cashier's check, teller's check, or   money order offered by the consumer or another party, to retire or   otherwise pay down debt incurred under an extension of consumer   credit that a credit access business obtained for a consumer or   assisted a consumer in obtaining under this chapter.          Sec. 393.630.  ESTABLISHMENT OF INCOME. A credit access   business must require documentation to establish a consumer's   income for purposes of this subchapter. The only acceptable forms   of documentation are paper, facsimile, or electronic copies of:                (1)  a payroll document;                (2)  a paycheck;                (3)  a bank, credit union, debit card, or other account   statement;                (4)  a report from a nationally or regionally   recognized credit and data reporting company;                (5)  Internal Revenue Service Form W-2 from the   preceding year;                (6)  the federal income tax return from the preceding   tax year; or                (7)  a signed letter from the consumer's employer at the   time the extension of consumer credit is sought.          Sec. 393.631.  SINGLE-PAYMENT DEFERRED PRESENTMENT   TRANSACTION. (a) The sum of all fees, principal, interest, and   other amounts due under an extension of consumer credit in the form   of a single-payment deferred presentment transaction that a credit   access business obtains for a consumer or assists a consumer in   obtaining may not exceed 20 percent of the consumer's gross monthly   income.          (b)  An extension of consumer credit in the form of a   single-payment deferred presentment transaction that a credit   access business obtains for a consumer or assists a consumer in   obtaining may not be refinanced more than three times. An amount   from each payment of a refinanced deferred presentment transaction   described by this subsection must be used to repay at least 25   percent of the principal amount of the original debt.          Sec. 393.632.  MULTIPLE-PAYMENT DEFERRED PRESENTMENT   TRANSACTION. (a) The sum of all fees, principal, interest, and   other amounts due under all scheduled payments of an extension of   consumer credit in the form of a multiple-payment deferred   presentment transaction that a credit access business obtains for a   consumer or assists a consumer in obtaining may not exceed 20   percent of the consumer's gross monthly income.          (b)  An extension of consumer credit in the form of a   multiple-payment deferred presentment transaction that a credit   access business obtains for a consumer or assists a consumer in   obtaining and all fees associated with the debt may not be payable   by the consumer in more than four installments. An amount from each   payment must be used to repay at least 25 percent of the principal   amount of the debt.          (c)  An extension of consumer credit in the form of a   multiple-payment deferred presentment transaction that a credit   access business obtains for a consumer or assists a consumer in   obtaining may not be refinanced.          Sec. 393.633.  SINGLE-PAYMENT MOTOR VEHICLE TITLE LOAN. (a)   The sum of all fees, principal, interest, and other amounts due   under an extension of consumer credit in the form of a   single-payment motor vehicle title loan that a credit access   business obtains for a consumer or assists a consumer in obtaining   may not exceed the lesser of:                (1)  three percent of the consumer's gross annual   income; or                (2)  70 percent of the retail value of the motor vehicle   securing the debt.          (b)  An extension of consumer credit in the form of a   single-payment motor vehicle title loan that a credit access   business obtains for a consumer or assists a consumer in obtaining   may not be refinanced more than three times. An amount from each   payment of a refinanced motor vehicle title loan described by this   subsection must be used to repay at least 25 percent of the   principal amount of the original debt.          Sec. 393.634.  MULTIPLE-PAYMENT MOTOR VEHICLE TITLE LOAN.   (a) The sum of all fees, principal, interest, and other amounts due   under all scheduled payments of an extension of consumer credit in   the form of a multiple-payment motor vehicle title loan that a   credit access business obtains for a consumer or assists a consumer   in obtaining may not exceed the lesser of:                (1)  three percent of the consumer's gross annual   income; or                (2)  70 percent of the retail value of the motor vehicle   securing the debt.          (b)  An extension of consumer credit in the form of a   multiple-payment motor vehicle title loan that a credit access   business obtains for a consumer or assists a consumer in obtaining   and all fees associated with the debt may not be payable by the   consumer in more than four installments. An amount from each   payment must be used to repay at least 25 percent of the principal   amount of the debt.          (c)  An extension of consumer credit in the form of a   multiple-payment motor vehicle title loan that a credit access   business obtains for a consumer or assists a consumer in obtaining   may not be refinanced.          Sec. 393.635.  REFINANCES. (a) Any refinance of an   extension of consumer credit that a credit access business obtains   for a consumer or assists a consumer in obtaining:                (1)  must be authorized under this subchapter;                (2)  must be in the same form as the original extension   of consumer credit; and                (3)  must meet all the requirements applicable to the   original extension of consumer credit, including the duration,   transaction, and applicable income-based or vehicle value-based   limitations under Section 393.631(a) or 393.633(a).          (b)  For purposes of this section, a single-payment deferred   presentment transaction, a multiple-payment deferred presentment   transaction, a single-payment motor vehicle title loan, and a   multiple-payment motor vehicle title loan are the different forms   of extensions of consumer credit that a credit access business may   obtain for a consumer or assist a consumer in obtaining.          (c)  A person may not use a device, subterfuge, or pretense   to evade the refinance requirements and limitations imposed on a   credit access business under this subchapter.          Sec. 393.636.  MAINTENANCE OF RECORDS. (a) A credit access   business shall maintain a complete set of records of all extensions   of consumer credit obtained for consumers by the business or that   the business assisted consumers in obtaining. The record   pertaining to each extension of consumer credit must be retained   until the third anniversary of the date the extension of consumer   credit was obtained and must include:                (1)  the name and address of the consumer;                (2)  the principal amount of the cash advance or loan;                (3)  the length of the original term of the extension of   consumer credit, the number of installments or refinances, if   applicable, and the length of the term of any refinance;                (4)  the fees charged by the credit access business for   obtaining for a consumer or assisting the consumer in obtaining the   extension of consumer credit; and                (5)  the documentation used to establish a consumer's   income under Section 393.630.          (b)  A credit access business shall retain a copy of each   written agreement between the business and a consumer pertaining to   an extension of consumer credit, including any agreement regarding   refinancing an extension of consumer credit, until the third   anniversary of the date on which the agreement was entered into.          (c)  A credit access business shall retain a copy of each   report filed under Section 393.627 until the third anniversary of   the date on which the report was filed.           (d)  A record described by this section must be available for   inspection on request by the office during the normal business   hours of the credit access business.          Sec. 393.637.  RULES. The finance commission shall adopt   any rules necessary to implement Sections 393.629-393.636.          SECTION 14.  The following laws are repealed:                (1)  Section 393.221, Finance Code; and                (2)  Sections 393.601(2), (3), and (5), Finance Code.          SECTION 15.  The changes in law made by this Act apply only   to an extension of consumer credit made on or after the effective   date of this Act. An extension of consumer credit made before the   effective date of this Act is governed by the law in effect on the   date the extension of consumer credit was made, and the former law   is continued in effect for that purpose. For purposes of this   section, a refinance of an extension of consumer credit is   considered made on the date the extension of consumer credit being   refinanced was made.          SECTION 16.  (a) The change in law made by this Act to   Section 393.223, Finance Code, applies only to a disclosure or   notice provided by a credit access business on or after January 1,   2024. A disclosure or notice provided by a credit access business   before January 1, 2026, is governed by Section 393.223, Finance   Code, as that section existed immediately before the effective date   of this Act, and that law is continued in effect for that purpose.          (b)  The Finance Commission of Texas shall adopt rules   prescribing forms under Section 393.223(a), Finance Code, as   amended by this Act, not later than November 1, 2025.          SECTION 17.  Section 393.636, Finance Code, as added by this   Act, applies only to a record created on or after the effective date   of this Act. A record created before the effective date of this Act   is governed by the law in effect when the record was created, and   the former law is continued in effect for that purpose.          SECTION 18.  This Act takes effect September 1, 2025.