Draft Bill: Creditor Notice After Established Debt-Collection Violations

Draft statute · Sections (a) to (i)

A bill to be entitled An Act relating to notification of creditors and affected consumers following a qualifying final finding of unlawful debt-collection practices; providing civil enforcement remedies.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

### SECTION 1.  Finance Code, Chapter 392, is amended by adding Section 392.3061 to read as follows:

Sec. 392.3061.  NOTICE FOLLOWING QUALIFYING DEBT-COLLECTION FINDING.

(a) Definitions. In this section:

1. "Covered collector" means an independent debt collector that has engaged in debt collection involving a consumer debt of an individual residing in this state, whether the collector is physically located inside or outside this state.
2. "Creditor client" means a creditor, or an identified property or servicing agent acting for a creditor, that retained a covered collector to collect a consumer debt involving an individual residing in this state.
3. "Qualifying finding" means (A) a final court judgment or final administrative order, no longer subject to an ordinary appeal as of right, expressly finding that the collector repeatedly or continuously engaged in an act or practice prohibited by this chapter; (B) such a final judgment or order expressly finding a common unlawful debt-collection practice under this chapter affecting two or more Texas consumer accounts; or (C) an enforceable consent order that expressly requires creditor-client notification under this section. A complaint, pending proceeding, settlement without an express notification obligation, and a finding solely under another jurisdiction's law do not qualify by themselves.
4. "Covered period" means the 36 months before the date of the qualifying finding, except that the attorney general may prescribe a shorter period on a finding that the conduct and exposure were demonstrably limited.

(b) Notice to attorney general and confidential roster. Not later than the 30th day after a qualifying finding becomes final, a covered collector shall provide the attorney general:

1. a complete copy of the operative order and an accurate, non-misleading summary of the specific findings;
2. a roster of every current creditor client and each creditor client for which the collector performed Texas-related debt collection during the covered period;
3. for each client, its known legal name, current business contact address, designated notice recipient if known, and relevant service dates;
4. an explanation identifying which creditor clients, if any, are known to have accounts within the practice addressed by the finding; and
5. a sworn certification by an officer responsible for compliance attesting to the reasonable completeness of the roster and report.

The client roster submitted under this subsection may not include consumer names, personal addresses, government identification numbers or account numbers except where separately and specifically authorized for an individual remediation audit.

(c) Form and service of notice. The attorney general shall provide or approve a standard notice identifying the court or agency, date, operative order, specific unlawful practice, the scope and finality of the finding, and the existing creditor duties under Section 392.306. Not later than the 30th day after approval of the notice, the covered collector shall deliver the notice to each creditor client on the roster by a verifiable method designated by rule, and provide evidence of delivery to the attorney general. The attorney general may deliver notice directly if necessary and recover reasonable documented costs under an applicable enforcement order.

(d) Creditor review and acknowledgment. Not later than the 30th day after receiving the notice, each creditor client shall acknowledge receipt, identify the compliance official responsible for evaluating the finding, and document whether the collector continues to perform covered collection services for that client and whether additional review or corrective action is warranted. The client shall retain the notice and its response for not less than five years, subject to applicable privacy and record-retention laws.

(e) Relationship to Section 392.306. Proof of delivery and acknowledgment under this section establishes notice of the particular contents delivered as of the demonstrated date of receipt. It does not, without other proof as required by Section 392.306, conclusively establish that the creditor had actual knowledge of repeated or continuous practices prohibited by this chapter. Nothing in this section retroactively establishes knowledge for conduct occurring before receipt, shifts the burden of proving a separate Section 392.306 violation, or makes a creditor strictly liable for a collector's adjudicated misconduct.

(f) Review of potentially affected consumer accounts. If a qualifying finding identifies a practice capable of affecting multiple identifiable Texas consumer accounts, the attorney general may require the covered collector to submit a reasonable remediation plan within 60 days identifying the affected population, records to be reviewed, corrections required under applicable law, methods of providing individual notice where warranted, deadlines and an audit trail. A required plan must respect the Fair Credit Reporting Act and other applicable federal law. The attorney general may require independent verification for materially widespread deficiencies and may approve extensions for documented good cause.

(g) Privacy and public reporting. A roster or personal data received under this section is confidential and not subject to public disclosure except to the extent necessary for a judicial proceeding, authorized governmental enforcement, notice to the affected client or consumer, or other disclosure expressly authorized by law. The attorney general may publish the qualifying order, the type of finding, the number of clients notified, and aggregate remediation results without disclosing individual consumers or confidential account information. This subsection is subject to legislative review for compatibility with Government Code Chapter 552 and federal privacy requirements.

(h) Enforcement. The attorney general may investigate and bring a civil action to enforce this section. On proof of a knowing or reckless failure to furnish an accurate roster or to deliver required notice, a court may impose a civil penalty not exceeding $1,000 for each creditor client omitted or not notified, with a total maximum of $250,000 for the same qualifying finding. For a first non-willful administrative defect, the attorney general shall ordinarily provide written notice and a 30-day opportunity to cure before seeking penalties, unless delay would materially prejudice consumers or concealment is indicated. A court may order specific performance, records preservation and appropriate equitable relief. This subsection does not independently create a consumer damages action; existing statutory remedies remain available where their elements are proved.

(i) Procedures and review. Before imposing an obligation based on a disputed designation as a covered collector or qualifying finding, the attorney general shall provide written notice, an opportunity to submit contrary documents, and review through an applicable administrative or judicial procedure. The attorney general may adopt rules governing electronic reporting, proof of service, secure records handling, and proportionate procedures for small collectors.

### SECTION 2.  Prospective application

This Act applies only to a qualifying finding that becomes final on or after its effective date. Earlier cases may be relevant background but do not trigger retroactive roster or notice duties merely because they were previously public.

### SECTION 3.  Effective date

This Act takes effect September 1 following enactment, subject to legislative scheduling and final bill drafting.

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