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