This bill was written by Rodriguez. It is the opinion of CAB Consulting that this bill addresses Credit Access Businesses operators who were allegedly providing services without holding a post check, or without a vehicle title. The operators in question may have intentionally forfeited their CAB licenses and just operated as a CSO’s, which was a method employed to adapt to local ordinances. Local ordinances were put into place to regulate and restrict “Credit Access Businesses,” not “CSO’s” who weren’t holding post-dated checks or filing liens on auto title loans they brokered. The bill makes revisions to existing rules and statutes, and edits-down the definitions of key terms like deferred presentment and motor vehicle title loans. By doing so the bill would theoretically prohibit operators (CSO’s and/or CAB’s) from this continuing this practice. Simply put, simplifying the definitions and rules gives the law broader applicability.

The OCCC issued an advisory bulletin on this subject recently and noted that the legislature would likely look into this matter. HB 786 also gets into some requirements about CAB contracts, they would need to say “no prepayment penalty”, must “comply with FDCPA,” “may not threaten or pursue criminal action,” must comply with Military Lending Act, 10 USC 987,” etc. Also, the third party lender must be disclosed, along with their interest charged, the CAB fees charged, etc.

There are some revisions to the Texas Finance Code Chapter 393.221 definitions, lines are drawn through certain phrases within the definitions on deferred presentment and auto title loans. Appears to address the work arounds mentioned above. The bill goes on to require CSO’s to get a CAB license if they are going to perform services detailed & defined in this bill under the modified definitions. Additional attention is given to other issues on disclosures and reporting, no new topics there.

Click here for House Bill 786! HB.786

If you already are one, or if you are laying the groundwork for becoming a Credit Access Business in Texas, consider cementing your Third Party Lender component with more than a handshake.  It goes without saying that we need to invest in proper consumer loan documentation and operating software.  We should also do the same with our approach to the Third Party Lender relationship.

Now that the OCCC is closely examining many facets of the CAB as it operates, it is critical that you have a clear arrangement between your business and the Third Party Lender who issues loans through your CAB location.

Do you know that many CAB’s have written contracts which serve as the operating policy between them and the Third Party Lender?  It is important that the CAB invests in this written company policy, and that it can be produced upon request.  Do what you can to have a well rounded agreement in place as means to demonstrate your commitment to operating lawfully and fairly.  Gain confidence in your readiness for an OCCC examination.  Operating reports that echo your Third Party Lender Agreement are an intelligent addition to a well designed arrangement.  CAB Consulting and Brokerage is working with licensed Credit Access Businesses and Third Party Lenders in Texas in these matters.

We can assist you in a review and improvement of your Third Party Lender arrangement.  Feel free to contact Michael Brown at CAB Consulting and Brokerage at 214-293-8676 or cabconbrokerage@gmail.com to learn more.

Some very positive news came out of Lubbock with the City Council voting down the “Payday Loan Ordinance” by a vote 5 to 2.  Credit Access Business owners all across Texas were impressed by Lubbock’s push back of the liberal backed City Ordinance.  Ordinances across Texas have shut down over 40% of Credit Access Businesses in the last several years.  

Rates have increased as CABs have fought to survive the ordinances, access to credit for consumers who need it most has decreased.  The ordinance issue just another reminder that liberals meddling with small businesses and the passage of more regulation ends up hurting the consumer they say they are trying to protect.  

We have quite a lengthy set of rules and regulations that govern Credit Access Businesses in Texas.  And, the Office of Consumer Credit Commissioner does an effective job at overseeing Credit Access Businesses.  Let the conversation about “payday” stay at the Capitol and trust in the statewide legislative process.