Sec. 394.206. BOND; INSURANCE. (a) A provider shall, at the time the provider files an initial or renewal registration application with the commissioner, file:
(1) a surety bond; or
(2) evidence that the provider maintains an insurance policy in a form approved by the commissioner.
(b) The bond or insurance must:
(1) run concurrently with the period of registration;
(2) be available to pay damages and penalties to consumers directly harmed by a violation of this subchapter;
(3) be in favor of this state for the use of this state and the use of a person who has a cause of action under this subchapter against the provider;
(4) if a bond:
(A) be in an amount equal to the average daily balance of the provider's trust account serving Texas consumers over the six-month period preceding the issuance of the bond, or in the case of an initial application, in an amount determined by the commissioner, but not less than $25,000 or more than $100,000, if the provider receives and holds money paid by or on behalf of a consumer for disbursement to the consumer's creditors; or
(B) be in the amount of $50,000, if the provider does not receive and hold money paid by or on behalf of a consumer for disbursement to the consumer's creditors;
(5) if an insurance policy:
(A) provide coverage for professional liability, employee dishonesty, depositor's forgery, and computer fraud in an amount not less than $100,000;
(B) be issued by a company rated at least "A-" or its equivalent by a nationally recognized rating organization; and
(C) provide for 30 days advance written notice of termination of the policy to be provided to the commissioner;
(6) be issued by a bonding, surety, or insurance company that is authorized to do business in the state; and
(7) be conditioned on the provider and its agents complying with all state and federal laws, including regulations, governing the business of debt management services.
(c) In lieu of a bond or insurance, the finance commission by rule may establish alternative financial requirements to provide substantially equivalent protection to pay damages and penalties to consumers directly harmed by a violation under this subchapter.
(d) The commissioner may adjust the amount of the provider's bond or insurance only when the provider applies for renewal of registration and requests a review of the bond or insurance amount.
Added by Acts 2005, 79th Leg., Ch. 336 (S.B. 1112), Sec. 1, eff. September 1, 2005.
Amended by:
Acts 2011, 82nd Leg., R.S., Ch. 368 (S.B. 141), Sec. 3, eff. September 1, 2011.
Structure Texas Statutes
Title 5 - Protection of Consumers of Financial Services
Chapter 394 - Debtor Assistance
Subchapter C. Consumer Debt Management Services
Section 394.201. Purpose; Construction
Section 394.203. Applicability
Section 394.206. Bond; Insurance
Section 394.208. Required Actions by Provider
Section 394.209. Written Debt Management Services Agreement
Section 394.2095. Cancellation of Agreement by Either Provider or Consumer
Section 394.210. Permitted Fees
Section 394.2101. Adjustment of Amounts of Fees or Other Charges
Section 394.211. Trust Account
Section 394.212. Prohibited Acts and Practices
Section 394.213. Duties of Proper Management