Bill Text: TX HB4359 | 2023-2024 | 88th Legislature | Introduced

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Bill Title: Relating to the regulation of accounts receivable purchase transaction actions.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2023-04-05 - Left pending in committee [HB4359 Detail]

Download: Texas-2023-HB4359-Introduced.html

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88R16851 TYPED
By: Frazier H.B. No. 4359

A BILL TO BE ENTITLED
AN ACT
relating to the regulation of accounts receivable purchase
transaction actions
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 4, Business and Commerce Code, is amended
by adding a new Chapter 60 as follows:
CHAPTER 60. ACCOUNTS RECEIVABLE PURCHASE TRANSACTIONS
Sec. 60.001. DEFINITIONS. For the purposes of this
chapter, these terms are defined as follows:
(1) "Account receivable purchase transaction" means a
transaction in which a business forwards or otherwise sells to a
person all or a portion of the business's accounts or payment
intangibles, as defined in Texas Business and Commerce Code,
Chapter 9, Section 9.102, at a discount to the accounts' or payment
intangibles' expected value.
(2) "Broker" means any person who, for compensation or
the expectation of compensation, obtains an account receivable
purchase transaction or an offer for an account receivable purchase
transaction from a third party that would, if executed, be binding
upon that third party and communicates that offer to a business
located in Texas. The term "broker" excludes a "provider," and any
person whose compensation is not based on or dependent upon the
terms of the specific account receivable purchase transaction
obtained or offered.
(3) "Provider" means a person who consummates more
than five account receivable purchase transactions in Texas during
any calendar year, including a person who, under a written
agreement with a depository institution, offers one or more account
receivable purchase transactions provided by the depository
institution via an online platform that the person administers.
Sec. 60.02. EXEMPTIONS. The provisions of this subsection
do not apply to
(a) an account receivable purchase transaction offered or
made by a provider:
(1) that is a depository institution, a subsidiary of
a depository institution, or a service corporation for a depository
institution that is regulated by a federal banking agency;
(2) that is regulated under the federal Farm Credit
Act 12 U.S.C. Sec. 2001 et seq.; and
(3) that is licensed as a money transmitter in any
state;
(b) a person who consummates five or fewer account
receivable purchase transactions in Texas during any 12-month
period;
(c) a person who offers or makes an account receivable
purchase transaction in connection with the sale or lease of a
product or service that:
(1) the person manufactures, licenses, or
distributes;
(2) the person's parent company or the person's
directly or indirectly owned and controlled subsidiary
manufactures, licenses, or distributes.
(d) an account receivable purchase transaction of more than
$500,000.
Sec. 60.03. DISCLOSURES. (a) At or before consummating an
account receivable purchase transaction, a provider shall disclose
the terms of the account receivable purchase transaction in
accordance with subsection (c).
(b) Only one disclosure must be provided for each account
receivable purchase transaction, and a disclosure is not required
as a result of a modification or forbearance.
(c) A provider shall disclose the following terms of the
account receivable purchase transaction:
(1) the total amount of funds provided to the
business;
(2) the total amount of funds disbursed to the
business, if less than the amount described in Subsection (c)(1);
(3) the total amount to be paid to the provider;
(4) the total dollar cost, calculated by finding the
difference between:
(A) the amount described in Subsection (c)(1);
and
(B) the amount described in Subsection (c)(3);
(5) the manner, frequency, and amount of each payment;
or if the amount of each payment may vary, the manner, frequency,
and estimated amount of the initial payment; and
(6) a statement of whether there are any costs or
discounts associated with prepayment, including a reference to the
paragraph in the account receivable purchase transaction agreement
that creates each cost or discount.
(d) The account receivable purchase transaction agreement
shall include a description of the methodology for calculating any
variable payment amount and the circumstances that may cause a
payment amount to vary.
Sec. 60.04. ACCOUNT RECEIVABLE PURCHASE TRANSACTION. (a)
An account receivable purchase transaction cannot be made for
personal, family, or household purposes.
(b) An account receivable purchase transaction is a form of
an account purchase transaction as established by Section 306.103,
Finance Code. An amount of a discount in, or charged under, an
account receivable purchase transaction is not interest.
(c) For the purposes of this chapter, the parties'
characterization of an account receivable purchase transaction as a
purchase is conclusive that the account receivable purchase
transaction is not a transaction for the use, forbearance, or
detention of money.
Sec. 60.05. ACCOUNT RECEIVABLE PURCHASE TRANSACTION BROKER
REGISTRATION REQUIREMENTS. (a) Beginning January 1, 2024, it is
unlawful for a broker to engage in business as a broker of account
receivable purchase transactions in Texas or with a Texas business,
unless the person annually registers with the Secretary of State in
accordance with this chapter.
(b) the officers or employees of a broker are not required
to register under this chapter if the broker for whom the individual
is an officer or employee is registered.
(c) To register or renew a registration under this section,
a broker shall:
(1) pay a fee established by the Secretary; and
(2) submit a registration statement containing the
information described in Subsection (d).
(d) Each registration or renewal statement shall state:
(1) the name of the broker and name of the business
under which the service will be transacted;
(2) the address of the broker's principal place of
business;
(3) if the broker, or an officer, director, employee,
manager, operator, or principal of that broker has a conviction of a
felony involving an act of fraud, dishonesty, breach of trust, or
money laundering.
(e) the Secretary may implement rules to implement and
enforce this section.
Sec. 60.06. ENFORCEMENT. (a) The Attorney General is
authorized to seek to enjoin violations of this chapter. The court
having jurisdiction may enjoin such violations notwithstanding the
existence of an adequate remedy at law.
(b) The Attorney General may also seek, and the court may
order or decree, damages and such other relief allowed by law,
including restitution to the extent available under applicable law.
Persons entitled to any relief as authorized by this section shall
be identified by order of the court within 180 days from the date of
the order permanently enjoining the unlawful act or practice.
(c) In any action brought by the Attorney General by virtue
of the authority granted in this provision, the Attorney General
shall be entitled to seek reasonable attorney fees and costs.
(d) This chapter does not create a private right of action.
SECTION 2. This act takes effect September 1, 2023.