LIT Exclusive
The Texas Office of Consumer Credit Commissioner Is a Lemon Which Harms, Rather than Protect Texans
MAY 23, 2022
Debt management services: Under Section 394.202, a “debt management service” generally includes any service where a provider, on a consumer’s behalf, seeks repayment to creditors on terms more favorable than the original terms of a debt.
This term encompasses services that may have other labels in the industry (such as “debt settlement” or “debt negotiation”).
Labels used by the parties do not govern whether a service is a debt management service.
LIT published the following article in May. It’s now Oct. and NOTHIN’ has been done by @texasgov @GovAbbott @TXAG @TXsecofstate et al to address the CRISIS that in the MAJORITY, Law Firms are Runnin’ about Offering Debt Mgt Svcs in VIOLATION of TX laws.https://t.co/3Q3QnkL98L
— lawsinusa (@lawsinusa) October 9, 2022
COMMISSIONER LESLIE PETTIJOHN (BA, CPA) IS A COSTLY FAILURE IN BOTH LOST REVENUES AND PROTECTIONS FOR CONSUMERS, SHE SHOULD BE SACKED IMMEDIATELY.
The failure to pursue businesses in the debt management and settlement services industry is extremely costly in terms of both revenue and consumer protection.
LIT asserts, this is what happens when you have the same person in power as the Commissioner for over 22 long years without independent oversight e.g. external auditors performing value for money audits.
As a result of this poor executive management, Texas is missing millions of dollars in revenue – for example the fee for debt management registrations (effective since 2020) is $250 per applicant.
To put that in perspective, if 4,000 businesses registered in Texas, that would be an additional $1 Million dollars revenue.
Instead, there are 57 registered businesses, $14,250 in revenue. In 2016, OCCC provided the Testimony of Pettijohn before the House Investments and Financial Services Committee which stated 108 registered businesses in both 2015 and 2016. That matching number for both years should have immediately raised a red flag, and when comparing to the other registered and licensed data figures (see image below from testimony/report).
Secondly, when LIT sampled historical reports from the FTC and CFPB, consumers are confused about these types of services offered, often leading back to rogue companies and law firms who have charged excessive fees for little or no work.
In short, is this long serving employee, Leslie Pettijohn, Commissioner of the OCCC in Texas worth the annual salary? Heck no.
WHO IS COMMISSIONER LESLIE PETTIJOHN?
From the OCCC website:
Leslie Pettijohn was appointed Texas Consumer Credit Commissioner by the Finance Commission of Texas in 1995. Her experience spans over 30 years in financial regulation along with several years of accounting experience in the private sector.
Pettijohn, as Consumer Credit Commissioner, is responsible for the supervision of the regulated activities of 12 different types of nonbank financial service providers who collectively hold more than 36,000 licenses or registrations, and provide services such as consumer loans, motor vehicle sales financing, property tax loans, and pawn loans. She is committed to promoting and ensuring a healthy financial services market that is balanced and fair for both providers and consumers — supporting economic prosperity for all Texans. She is an ardent supporter of programs that provide for the financial education of Texans.
She has been actively involved in the National Association of Consumer Credit Administrators for more than 25 years, having served in all leadership positions. Pettijohn also served as a member of the Nationwide Multistate Licensing System Policy Committee from 2012-2018. This 11-member committee, appointed by State Regulatory Registry (a subsidiary of the Conference of State Bank Supervisors), deliberates on policy issues that affect the operation of the NMLS and provides guidance and advice on system development prioritization.
Pettijohn, a native Texan, received her Bachelor of Business Administration in Accounting from the University of Texas at Austin and is a Certified Public Accountant. She also completed the Governor’s Executive Development Program at the University of Texas LBJ School of Public Affairs. Pettijohn resides in Austin and has two daughters.
| Texas Administrative Code |
| TITLE 7 | BANKING AND SECURITIES |
| PART 5 | OFFICE OF CONSUMER CREDIT COMMISSIONER |
| CHAPTER 88 | CONSUMER DEBT MANAGEMENT SERVICES |
| SUBCHAPTER A | REGISTRATION PROCEDURES |
(a) An application for issuance of a new debt management services provider registration must be submitted as prescribed by the OCCC at the date of filing and in accordance with the OCCC’s instructions. Applications may be submitted electronically.
(b) The application must include the following required forms and filings. All questions must be answered.
(1) Application for registration.
(A) Required names and addresses. An applicant for a debt management services provider registration must provide the following:
(i) the applicant’s name;
(ii) all other names under which the applicant conducts business;
(iii) a physical street address for the applicant’s principal business address and that location’s telephone number;
(iv) the address of each location in this state at which the applicant will provide debt management services, or if the applicant will have no such location, a statement to that effect;
(v) all other business addresses of the applicant in this state;
(vi) the e-mail address of the applicant’s responsible person listed in subparagraph (B) of this paragraph; and
(vii) the applicant’s primary Internet website address.
(B) Responsible person. The person responsible for the day-to-day operation of the applicant’s proposed business location must be named.
(C) Authentication. An officer must authenticate the application.
(2) Application questionnaire. All applicable questions must be answered.
(3) Owners and principal parties.
(A) Detailed ownership and for-profit affiliate disclosure of nonprofit or tax exempt organizations. If the applicant is a nonprofit or tax exempt organization, a detailed description of the ownership interest of each officer, director, agent, or employee of the applicant must be provided. Any member of the immediate family of an officer, director, agent, or employee of the applicant, in a for-profit affiliate or subsidiary of the applicant, or in any other for-profit business entity that provides services to the applicant or to a consumer in relation to the applicant’s debt management services business must also be provided.
(B) Ownership disclosure. The section inquiring about owners requires an answer based upon the applicant’s entity type.
(i) All entity types. All applicants must disclose the name and home address of each officer and director of the applicant and each person that holds at least a 10% ownership interest in the applicant.
(ii) Corporations. All shareholders holding 10% or more voting stock must be named. If a parent corporation is the sole or part owner of the proposed business, a narrative or diagram must be provided that describes each level of ownership and management. This narrative or diagram must include the names of all officers, directors, and stockholders owning 10% or more stock at each level.
(iii) Limited liability companies. Each “manager,” “officer,” and “member” owning 10% or more of the company, as those terms are defined in Texas Business Organizations Code, §1.002, and each agent owning 10% or more of the company must be listed. If a member is a legal entity and not a natural person, a narrative or diagram must be included that describes each level of ownership of 10% or greater.
(iv) Proprietorships. The applicant must disclose the name of any individual holding an ownership interest in the business and the name of any individual responsible for operating the business. If requested, the applicant must also disclose the names of the spouses of these individuals.
(v) General partnerships. Each partner must be listed and the percentage of ownership stated. If a general partner is wholly or partially owned by a legal entity and not a natural person, a narrative or diagram must be included that lists the names and titles of all meeting the definition of “managerial official,” as contained in Texas Business Organizations Code, §1.002, and a description of the ownership of each legal entity must be provided. General partnerships that register as limited liability partnerships should provide the same information as that required for general partnerships.
(vi) Limited partnerships. Each partner, general and limited, fulfilling the requirements of subclauses (I) – (III) of this clause must be listed and the percentage of ownership stated.
(I) General partners. The applicant should provide the complete ownership, regardless of percentage owned, for all general partners. If a general partner is wholly or partially owned by a legal entity and not a natural person, a narrative or diagram must be included that lists the names and titles of all meeting the definition of “managerial official,” as contained in Texas Business Organizations Code, §1.002, and a description of the ownership of each legal entity must be provided.
(II) Limited partners. The applicant should provide a complete list of all limited partners owning 10% or more of the partnership.
(III) Limited partnerships that register as limited liability partnerships. The applicant should provide the same information as that required for limited partnerships.
(vii) Trusts or estates. Each trustee or executor, as appropriate, must be listed.
(4) Registered agent. The registered agent must be provided by each applicant. The registered agent is the person or entity to whom any legal notice may be delivered. The agent must be a Texas resident and list an address for legal service. If the registered agent is a natural person, the address must be a different address than the business location address. If the applicant is a corporation or a limited liability company, the registered agent should be the one on file with the Office of the Texas Secretary of State. If the registered agent is not the same as the agent filed with the Office of the Texas Secretary of State, then the applicant must submit a certification from the secretary of the company identifying the registered agent.
(5) Surety bond or insurance. An applicant must file with the OCCC either:
(A) a Surety Bond in the prescribed form:
(i) At initial application:
(I) A provider that receives and holds money paid by or on behalf of a consumer for disbursement to the consumer’s creditors must provide a bond in the amount of:
(-a-) $50,000, if the average daily balance of the provider’s trust account serving Texas consumers over the six-month period preceding the issuance of the bond is less than $50,000 or if the provider does not have any trust account history for Texas consumers;
(-b-) $100,000, if the average daily balance of the provider’s trust account serving Texas consumers over the six-month period preceding the issuance of the bond is $50,000 or more; or
(II) A provider that does not receive and hold money paid by or on behalf of a consumer for disbursement to the consumer’s creditors must provide a bond in the amount of $50,000.
(ii) At annual renewal:
(I) A provider that receives and holds money paid by or on behalf of a consumer for disbursement to the consumer’s creditors must provide a bond:
(-a-) in an amount that is equivalent to or exceeds the average daily balance, but is not less than $25,000, if the average daily balance of the provider’s trust account serving Texas consumers over the six-month period preceding the issuance of the bond is less than $100,000;
(-b-) in the amount of $100,000, if the average daily balance of the provider’s trust account serving Texas consumers over the six-month period preceding the issuance of the bond is $100,000 or more; or
(II) A provider that does not receive and hold money paid by or on behalf of a consumer for disbursement to the consumer’s creditors must provide a bond in the amount of $50,000; or
(B) evidence of insurance meeting the requirements of Texas Finance Code, §394.206 and clauses (i) – (iii) of this subparagraph, as follows:
(i) a fidelity insurance policy, in the aggregate amount of $100,000, that provides coverage for:
(I) employee dishonesty;
(II) depositor’s forgery;
(III) computer fraud; and
(ii) a professional liability insurance policy in the aggregate amount of $100,000.
(iii) The fidelity insurance policy and the professional liability insurance policy must cover losses sustained by a Texas resident that are attributable to a debt management service or a debt management services agreement. Both the fidelity insurance policy and the professional liability insurance policy must contain a loss payee clause or rider stating that any loss or claim arising out of an action which occurred within the scope of Texas Finance Code, Chapter 394 may be payable in favor of the State of Texas.
(6) Assumed name certificates. For any applicant that does business under an assumed name as that term is defined in Texas Business and Commerce Code, §71.002, the applicant must provide all assumed names used.
(7) Debt management services agreement. The applicant must provide a blank copy of the written debt management services agreement as described in Texas Finance Code, §394.209.
(8) Accreditation organizations. The applicant must provide the names and contact information for:
(A) the independent, third-party accreditation organization of the provider; and
(B) the accreditation organization or program that certifies the provider’s credit counselors.
(9) Fingerprints.
(A) The applicant must provide a complete set of legible fingerprints for each person meeting the definition of “principal party” in §88.101 of this title (relating to Definitions). All fingerprints must be submitted in a format prescribed by the OCCC and approved by the Texas Department of Public Safety and the Federal Bureau of Investigation.
(B) For limited partnerships, if the owners and principal parties under paragraph (3) of this subsection does not produce a natural person, the applicant must provide a complete set of legible fingerprints for individuals who are associated with the general partner as principal parties.
(C) For entities with complex ownership structures that result in the identification of individuals to be fingerprinted who do not have a substantial relationship to the proposed applicant, the applicant may submit a request to fingerprint three officers or similar employees with significant involvement in the proposed business. The request should describe the relationship and significant involvement of the individuals in the proposed business. The OCCC may approve the request, seek alternative appropriate individuals, or deny the request.
(D) For individuals who have previously been registered by the OCCC and principal parties of entities currently registered, fingerprints are not required to be provided with the initial application if the fingerprints are on record with the OCCC, are less than 10 years old, and have been processed by both the Texas Department of Public Safety and the Federal Bureau of Investigation. Upon request, the OCCC may require individuals and principal parties previously registered with the OCCC to submit a new set of fingerprints.
(E) For individuals who have previously submitted fingerprints to another state agency, fingerprints are still required to be submitted for use by the OCCC under Texas Finance Code, §14.152. Fingerprints cannot be disclosed to others, except as authorized by Texas Government Code, §560.002.
Source Note: The provisions of this §88.102 adopted to be effective November 10, 2005, 30 TexReg 7213; amended to be effective September 6, 2007, 32 TexReg 5659; amended to be effective May 6, 2010, 35 TexReg 3481; amended to be effective September 8, 2011, 36 TexReg 5673; amended to be effective January 2, 2014, 38 TexReg 9488; amended to be effective September 10, 2015, 40 TexReg 5774; amended to be effective March 8, 2018, 43 TexReg 1258
(a) Initial review. The agency will generally respond to incomplete applications within 14 calendar days of receipt stating that the application is incomplete and specifying the information required for acceptance.
(b) Complete application. An application is complete when:
(1) it conforms to the rules and the OCCC’s published instructions;
(2) all fees have been paid; and
(3) all requests for additional information have been satisfied.
(c) Failure to complete application. If a complete application has not been filed with the OCCC within 30 days after notice of deficiency has been sent to the applicant, the application may be denied.
(d) Hearing. Whenever an application is denied, the applicant has 30 days from the date the application was denied to request in writing a hearing to contest the denial. This hearing will be conducted pursuant to the Administrative Procedure Act, Texas Government Code, Chapter 2001, and the rules of procedure applicable under §9.1(a) of this title (relating to Application, Construction, and Definitions), before an administrative law judge who will recommend a decision to the commissioner. The commissioner will then issue a final decision after review of the recommended decision.
(e) Denial. The commissioner will inform the applicant in writing of the reasons for denial. Upon the final denial of an application, the annual fee will be refunded to the applicant. The investigation fee will be forfeited.
(f) Processing time.
(1) A registered provider application will ordinarily be approved or denied within a maximum of 60 days after the date of filing of a completed application.
(2) More time may be taken where good cause exists, as defined by Texas Government Code, §2005.004, for exceeding the established time period in paragraph (1) of this subsection.
Source Note: The provisions of this §88.103 adopted to be effective November 10, 2005, 30 TexReg 7213; amended to be effective May 6, 2010, 35 TexReg 3481; amended to be effective January 2, 2014, 38 TexReg 9488; amended to be effective January 7, 2016, 41 TexReg 123; amended to be effective March 8, 2018, 43 TexReg 1258
(a) Applicant’s updates to registered provider application information. Before an application for registration is approved, an applicant must report to the OCCC any information that would require a materially different answer than that given in the original registered provider application and which relates to the qualifications for registration within 14 calendar days after the person has knowledge of the information.
(b) Registrant’s updates to registration application information. A registrant must report to the OCCC any information that would require a different answer than that given in the original registration application within 30 calendar days after the registrant has knowledge of the information, if the information relates to any of the following:
(1) the name or any operating name of the registrant;
(2) the location of any additional offices;
(3) the registrant’s website address;
(4) the names of principal parties;
(5) criminal history;
(6) actions by regulatory agencies; or
(7) court judgments.
(c) Contact information. Each applicant or registered provider is responsible for ensuring that all contact information on file with the OCCC is current and correct, including all mailing addresses, all phone numbers, and all e-mail addresses. It is a best practice for registered providers to regularly review contact information on file with the OCCC to ensure that it is current and correct.
Source Note: The provisions of this §88.104 adopted to be effective November 10, 2005, 30 TexReg 7213; amended to be effective May 6, 2010, 35 TexReg 3481; amended to be effective March 8, 2018, 43 TexReg 1258; amended to be effective March 10, 2022, 47 TexReg 1085
A registered provider may move the business office from the registered provider location to any other location by giving notice of intended relocation to the OCCC. The notice must include the present address of the registered provider location, the contemplated new address of the registered provider location, and the approximate date of relocation.
Source Note: The provisions of this §88.105 adopted to be effective November 10, 2005, 30 TexReg 7213; amended to be effective March 8, 2018, 43 TexReg 1258
(a) New registrations. A $250 nonrefundable investigation fee is assessed each time an application for a new registration under this chapter is filed.
(b) Fingerprint processing. An applicant must pay a fee to a party designated by the Texas Department of Public Safety for processing fingerprints. The Texas Department of Public Safety and the designated party determine the amount of the fee and whether it is refundable.
(c) Registration amendments. A fee of $25 must be paid each time a registered provider amends a registration by changing the assumed name of the registered provider or relocating the registered provider location.
(d) Registration duplicates sent by mail. The fee for a registration duplicate to be sent by mail is $10.
(e) Costs of hearings. The commissioner may assess the costs of an administrative appeal pursuant to Texas Finance Code, §14.207 for a hearing afforded under §88.103 of this title (relating to Processing of Application), including the cost of the administrative law judge, the court reporter, attorney’s fees, or investigative costs, if applicable.
(f) Annual assessments. An annual fixed fee not to exceed $430 is required for each registered debt management services provider.
Source Note: The provisions of this §88.107 adopted to be effective November 10, 2005, 30 TexReg 7213; amended to be effective May 6, 2010, 35 TexReg 3481; amended to be effective January 2, 2014, 38 TexReg 9488; amended to be effective September 10, 2015, 40 TexReg 5774; amended to be effective March 8, 2018, 43 TexReg 1258
Once a registration application or notice is filed with the OCCC, it becomes a “state record” under Texas Government Code, §441.180(11), and “public information” under Government Code, §552.002. Under Government Code, §§441.190, 441.191 and 552.004, the original applications and notices must be preserved as “state records” and “public information” unless destroyed with the approval of the director and librarian of the Texas State Library and Archives Commission under Government Code, §441.187. Under Government Code, §441.191, the OCCC may not return any original documents associated with a debt management services provider application or notice to the applicant or registered provider. An individual may request copies of a state record under the authority of the Texas Public Information Act, Government Code, Chapter 552.
Source Note: The provisions of this §88.108 adopted to be effective November 10, 2005, 30 TexReg 7213; amended to be effective May 6, 2010, 35 TexReg 3481; amended to be effective March 8, 2018, 43 TexReg 1258
(a) The rules contained in this chapter of this title are applicable to a provider as defined by Texas Finance Code, §394.202(10).
(b) The rules contained in this chapter of this title do not apply to:
(1) the exceptions as provided by Texas Finance Code, §394.203; or
(2) transactions subject to the Money Services Act, Texas Finance Code, Chapter 151.
Source Note: The provisions of this §88.109 adopted to be effective January 5, 2006, 30 TexReg 8860; amended to be effective May 6, 2010, 35 TexReg 3481; amended to be effective September 8, 2011, 36 TexReg 5673
(a) Criminal history record information. After an applicant submits a complete registration application, including all required fingerprints, and pays the fees required by §88.107 of this title (relating to Fees), the OCCC will investigate the applicant. The OCCC will obtain criminal history record information from the Texas Department of Public Safety and the Federal Bureau of Investigation based on the applicant’s fingerprint submission. The OCCC will continue to receive information on new criminal activity reported after the fingerprints have been initially processed.
(b) Disclosure of criminal history. The applicant must disclose all criminal history information required to file a complete application with the OCCC. Failure to provide any information required as part of the application or requested by the OCCC reflects negatively on the belief that the business will be operated lawfully and fairly. The OCCC may request additional criminal history information from the applicant, including the following:
(1) information about arrests, charges, indictments, and convictions;
(2) reliable documents or testimony necessary to make a determination under subsection (c) of this section, including letters of recommendation from prosecution, law enforcement, and correctional authorities;
(3) proof that the applicant has maintained a record of steady employment, has supported the applicant’s dependents, and has otherwise maintained a record of good conduct; and
(4) proof that all outstanding court costs, supervision fees, fines, and restitution as may have been ordered have been paid or are current.
(c) Crimes directly related to registered occupation. The OCCC may deny a registration application, or suspend or revoke a registration, if the applicant or registrant has been convicted of an offense that directly relates to the duties and responsibilities of a debt management services provider, as provided by Texas Occupations Code, §53.021(a)(1).
(1) Providing debt management services involves making representations to consumers regarding the terms of the services, holding money entrusted to the provider, remitting money to third parties, collecting charges in a legal manner, and compliance with reporting requirements to government agencies. Consequently, the following crimes are directly related to the duties and responsibilities of a registered provider and may be grounds for denial, suspension, or revocation:
(A) theft;
(B) assault;
(C) any offense that involves misrepresentation, deceptive practices, or making a false or misleading statement (including fraud or forgery);
(D) any offense that involves breach of trust or other fiduciary duty;
(E) any criminal violation of a statute governing credit transaction or debt collection;
(F) failure to file a government report, filing a false government report, or tampering with a government record;
(G) any greater offense that includes an offense described in subparagraphs (A) – (F) of this paragraph as a lesser included offense;
(H) any offense that involves intent, attempt, aiding, solicitation, or conspiracy to commit an offense described in subparagraphs (A) – (G) of this paragraph.
(2) In determining whether a criminal offense directly relates to the duties and responsibilities of holding a registration, the OCCC will consider the following factors, as specified in Texas Occupations Code, §53.022:
(A) the nature and seriousness of the crime;
(B) the relationship of the crime to the purposes for requiring a registration to engage in the occupation;
(C) the extent to which a registration might offer an opportunity to engage in further criminal activity of the same type as that in which the person previously had been involved;
(D) the relationship of the crime to the ability or capacity required to perform the duties and discharge the responsibilities of a registrant; and
(E) any correlation between the elements of the crime and the duties and responsibilities of the licensed occupation.
(3) In determining whether a conviction for a crime renders an applicant or a registrant unfit to be a registrant, the OCCC will consider the following factors, as specified in Texas Occupations Code, §53.023:
(A) the extent and nature of the person’s past criminal activity;
(B) the age of the person when the crime was committed;
(C) the amount of time that has elapsed since the person’s last criminal activity;
(D) the conduct and work activity of the person before and after the criminal activity;
(E) evidence of the person’s rehabilitation or rehabilitative effort while incarcerated or after release, or following the criminal activity if no time was served;
(F) evidence of the person’s compliance with any conditions of community supervision, parole, or mandatory supervision; and
(G) evidence of the person’s current circumstances relating to fitness to hold a registration, which may include letters of recommendation.
(d) Offenses involving moral turpitude. The OCCC may deny a registration application, or suspend or revoke a registration, if the applicant, registrant, or a principal party has been convicted of or found civilly liable for an offense involving moral turpitude, as provided by Texas Finance Code, §394.204(i)(1), (k)(1)-(2). Offenses involving moral turpitude include the following:
(1) forgery;
(2) embezzlement;
(3) obtaining money under false pretenses;
(4) larceny;
(5) extortion;
(6) conspiracy to defraud; and
(7) any other similar offense or violation.
(e) Revocation on imprisonment. A registration will be revoked on the registrant’s imprisonment following a felony conviction, felony community supervision revocation, revocation of parole, or revocation of mandatory supervision, as provided by Texas Occupations Code, §53.021(b).
(f) Other grounds for denial, suspension, or revocation. The OCCC may deny a registration application, or suspend or revoke a registration, based on any other ground authorized by statute, including the following:
(1) a conviction for an offense listed in Texas Code of Criminal Procedure, art. 42A.054, or art. 62.001(6), as provided by Texas Occupations Code, §53.021(a)(2)-(3);
(2) errors or incomplete information in the registration application, as provided by Texas Finance Code, §394.204(h);
(3) a fact or condition that would have been grounds for denying the registration application, and that either did not exist at the time of the application or the OCCC was unaware of at the time of application, as provided by Texas Finance Code, §394.204(k)(1)-(2); and
(4) any other information warranting the belief that the business will not be operated lawfully and fairly, as provided by Texas Finance Code, §394.204(i)(3), (k)(9).
Source Note: The provisions of this §88.110 adopted to be effective September 10, 2015, 40 TexReg 5774; amended to be effective March 8, 2018, 43 TexReg 1258; amended to be effective March 10, 2022, 47 TexReg 1085
§ 394.001. DUTIES OF COMMISSIONER. The consumer credit commissioner shall provide advice and assistance to: (1) encourage the establishment and operation of voluntary nonprofit debt-counseling services for residents of this state; and (2) coordinate, encourage, and aid public and private agencies, organizations and groups, and consumer credit institutions in the development and operation of voluntary education programs to promote the prudent and beneficial use of consumer credit by residents of this state. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
§ 394.201. PURPOSE; CONSTRUCTION. (a) The purpose of this subchapter is to protect consumers who contract for services with debt management services providers. (b) This subchapter shall be liberally construed to accomplish its purpose. Added by Acts 2005, 79th Leg., ch. 336, § 1, eff. Sept. 1, 2005. § 394.202. DEFINITIONS. In this subchapter: (1) "Advertising" means information about a provider or about the provider's debt management services, communicated in writing or orally to an individual consumer or the public by telephone, television, Internet, radio, or other electronic medium, or by written material sent by mail, posted publicly, or posted at the provider's business location. (2) "Certified counselor" means an individual who: (A) is certified as a debt management counselor by an independent accreditation organization; or (B) if the individual has been employed for less than 12 months, is in the process of being certified as a debt management counselor by an independent accreditation organization. (3) "Commissioner" means the consumer credit commissioner. (4) "Consumer" means an individual who resides in this state and seeks a debt management service or enters a debt management service agreement. (5) "Creditor" means a person to whom a person owes money. (6) "Debt management service" means: (A) the receiving of money from a consumer for the purpose of distributing that money to or among one or more of the creditors of the consumer in full or partial payment of the consumer's obligations; (B) arranging or assisting a consumer to arrange for the distribution of one or more payments to or among one or more creditors of the consumer in full or partial payment of the consumer's obligations; or (C) exercising control, directly or indirectly, or arranging for the exercise of control over funds of a consumer for the purpose of distributing payments to or among one or more creditors of the consumer in full or partial payment of the consumer's obligations. (7) "Debt management service agreement" means a written agreement between a provider and a consumer for the performance of a debt management service. (8) "Finance commission" means the Finance Commission of Texas. (9) "Person" means an individual, partnership, corporation, limited liability company, association, or organization. (10) "Provider" means a person that provides or offers to provide to a consumer in this state a debt management service. (11) "Secured debt" means a debt for which a creditor has a mortgage, lien, or security interest in collateral. (12) "Trust account" means an account that is: (A) established in a federally insured financial institution; (B) separate from any account of the debt management service provider; (C) designated as a "trust account" or other appropriate designation indicating that the money in the account is not money of the provider or its officers, employees, or agents; (D) unavailable to creditors of the provider; and (E) used exclusively to hold money paid by consumers to the provider for disbursement to creditors of the consumers and to the provider for the disbursement of fees and contributions earned and agreed to in advance. (13) "Unsecured debt" means a debt for which a creditor does not have collateral. Added by Acts 2005, 79th Leg., ch. 336, § 1, eff. Sept. 1, 2005. § 394.203. APPLICABILITY. (a) Except as otherwise provided by this subchapter, this subchapter applies to a provider regardless of whether the provider charges a fee or receives consideration for a service. (b) The business of providing debt management services is conducted in this state if the debt management services provider solicits or contracts with consumers located in this state. (c) This subchapter does not apply to: (1) an attorney licensed to practice in this state, unless the attorney holds the attorney's self out to the public as a provider or is employed, affiliated with, or otherwise working on behalf of a provider; (2) a title insurance or abstract company employee or agent, or other person legally authorized to engage in escrow business in the state, only while engaged in the escrow business; (3) a judicial officer or person acting under a court order; (4) a person who has legal authority under federal or state law to act as a representative payee for a consumer, only to the extent the person is paying bills or other debts on behalf of that consumer; (5) a person who pays bills or other debts owed by a consumer and on behalf of a consumer, if the money used to make the payments belongs exclusively to the consumer and the person does not initiate any contact with individual creditors of the consumer to compromise a debt, arrange a new payment schedule, or otherwise change the terms of the debt; or (6) a financial institution, as defined by Section 201.101. (d) The following are not debt management services for purposes of this subchapter: (1) an extension of credit, including consolidation or refinance of a loan; and (2) bankruptcy services provided by an attorney licensed to practice in this state. (e) This subchapter applies to a person who seeks to evade its applicability by any device, subterfuge, or pretense. Added by Acts 2005, 79th Leg., ch. 336, § 1, eff. Sept. 1, 2005. § 394.204. REGISTRATION. (a) A person, regardless of whether located in this state, may not provide a debt management service to a consumer in this state unless the person is registered with the commissioner. (b) Registration expires on December 31 of the year in which the registration occurs and must be renewed annually. (c) An application for an initial registration must be in a form prescribed by the commissioner and accompanied by: (1) the appropriate fees set by the finance commission in an amount necessary to recover the costs of administering this subchapter; (2) the surety bond or insurance required by Section 394.206; (3) a detailed description of the ownership interest of each officer, director, agent, or employee of the applicant, and any member of the immediate family of an officer, director, agent, or employee of the applicant, in a for-profit affiliate or subsidiary of the applicant or in any other for-profit business entity that provides services to the applicant or to a consumer in relation to the applicant's debt management business; and (4) any other information that the commissioner requires. (d) An officer or employee of a person registered under this subchapter is not required to be separately registered. (e) Unless the commissioner notifies an applicant that a longer period is necessary, the commissioner shall approve or deny an initial registration not later than the 60th day after the date on which the completed application, including all required documents and payments, is filed. The commissioner shall inform the applicant in writing of the reason for denial. (f) A person may renew a registration by paying the appropriate fee and completing all required documents. (g) The finance commission by rule may establish procedures to facilitate the registration and collection of fees under this section, including rules staggering throughout the year the dates on which fees are due. (h) The commissioner may refuse an initial application if the application contains errors or incomplete information. An application is incomplete if it does not include all of the information required by this section and Section 394.205. (i) The commissioner may deny an initial application if: (1) the applicant or any principal of the applicant has been convicted of a crime or found civilly liable for an offense involving moral turpitude, including forgery, embezzlement, obtaining money under false pretenses, larceny, extortion, conspiracy to defraud, or any other similar offense or violation; (2) the registration of the applicant or any principal of the applicant has been revoked or suspended in this state or another state, unless the applicant provides information that the commissioner finds sufficient to show that the grounds for the previous revocation or suspension no longer exist and any problem cited in the previous revocation has been corrected; or (3) the commissioner, based on specific evidence, finds that the applicant does not warrant the belief that the business will be operated lawfully and fairly and within the provisions and purposes of this subchapter. (j) On written request, the applicant is entitled to a hearing, pursuant to Chapter 2001, Government Code, on the question of the applicant's qualifications for initial registration if the commissioner has notified the applicant in writing that the initial application has been denied. A request for a hearing may not be made after the 30th day after the date the commissioner mails a notice to the applicant stating that the application has been denied and stating the reasons for the denial. (k) In addition to the power to refuse an initial application as specified in this section, the commissioner may suspend or revoke a provider's registration after notice and hearing if the commissioner finds that any of the following conditions are met: (1) a fact or condition exists that if it had existed when the provider applied for registration would have been grounds for denying registration; (2) a fact or condition exists that the commissioner was not aware of when the provider applied for registration and would have been grounds for denying registration; (3) the provider violates this subchapter or rule or order of the commissioner under this subchapter; (4) the provider is insolvent; (5) the provider refuses to permit the commissioner to make an examination authorized by this subchapter; (6) the provider fails to respond within a reasonable time and in an appropriate manner to communications from the commissioner; (7) the provider has failed to disburse money to creditors on behalf of consumers within a reasonable time, normally 30 days; (8) the commissioner determines that the provider's trust account is not materially in balance with and reconciled to the consumer's account; or (9) the provider fails to warrant the belief that the business will be operated lawfully and fairly and within the provisions and purposes of this subchapter. (l) The commissioner's order revoking a registration must include appropriate provisions to transfer existing clients of the provider to one or more registered providers to ensure the continued servicing of the clients' accounts. (m) The commissioner shall maintain a list of registered providers and make the list available to interested persons and to the public. Added by Acts 2005, 79th Leg., ch. 336, § 1, eff. Sept. 1, 2005. § 394.205. RECORDS. (a) A provider shall keep and use books, accounts, and other records that will enable the commissioner to determine if the provider is complying with this subchapter and maintain any other records as required by the commissioner. The commissioner may examine the records at any reasonable time. The records must be kept for at least three years after the date of the last service on a consumer's debt management plan. (b) Each provider shall file a report with the commissioner at each renewal of the provider's registration. The report must at a minimum disclose in detail and under appropriate headings: (1) the assets and liabilities of the provider at the beginning and end of the period; (2) the total number of debt management plans the provider has initiated during that year; and (3) records of total and average fees charged to consumers, including all voluntary contributions received from consumers. (c) The reports must be verified by the oath or affirmation of the owner, manager, president, chief executive officer, or chairman of the board of directors of the provider. (d) A provider shall file a blank copy of the agreement described in Section 394.209 and blank copies of the written information required in Section 394.208(a) with the commissioner accompanying the initial registration and each renewal of registration. (e) The commissioner shall make the information provided under this section available to interested parties and to the public. Added by Acts 2005, 79th Leg., ch. 336, § 1, eff. Sept. 1, 2005. § 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) 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; (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, § 1, eff. Sept. 1, 2005. § 394.207. ADVERTISING. A provider may not engage in false or deceptive advertising. Added by Acts 2005, 79th Leg., ch. 336, § 1, eff. Sept. 1, 2005. § 394.208. REQUIRED ACTIONS BY PROVIDER. (a) A provider may not enroll a consumer in a debt management plan unless: (1) the provider is a nonprofit organization exempt from taxation under Section 501(c)(3), Internal Revenue Code of 1986; and (2) through the services of a counselor certified by an independent accreditation organization, the provider has: (A) provided the consumer individualized counseling and educational information that at a minimum addresses the topics of managing household finances, managing credit and debt, and budgeting; (B) prepared an individualized financial analysis and an initial debt management plan for the consumer's debts with specific recommendations regarding actions the consumer should take; (C) determined that the consumer has a reasonable ability to make payments under the proposed debt management plan based on the information provided by the consumer; (D) a reasonable expectation, provided that the consumer has provided accurate information to the provider, that each creditor of the consumer listed as a participating creditor in the plan will accept payment of the consumer's debts as provided in the initial plan; (E) prepared, for all creditors identified by the consumer or identified through additional investigation by the provider, a list, which must be provided to the consumer in a form the consumer may keep, of the creditors that the provider reasonably expects to participate in the plan; and (F) provided a written document to the consumer in a form the consumer may keep that clearly and conspicuously contains the following statements: (i) that debt management services are not suitable for all consumers and that consumers may request information about other ways, including bankruptcy, to deal with indebtedness; (ii) that the nonprofit or tax-exempt organization cannot require donations or contributions; and (iii) that some of the provider's funding comes from contributions from creditors who participate in debt management plans, except that a provider may substitute for "some" the actual percentage of creditor contributions it received during the most recent reporting period. (b) If the provider discusses its services with a consumer primarily in a language other than English, the provider must provide the debt management agreement in that language. (c) A consumer must give at least 10 days' notice to the provider to cancel a debt management services agreement. The provider must cancel a debt management services agreement within 10 days after the date the provider receives the notice from the consumer. The provider must continue making disbursements to the consumer's creditors if money has been paid to the provider under the agreement until the expiration of the 10-day period, unless otherwise agreed in writing by the consumer and the provider. (d) A provider may provide the information required by Subsections (a)(2)(B), (E), and (F) through its Internet website if the provider: (1) has complied with the federal Electronic Signatures in Global and National Commerce Act (15 U.S.C. Section 7001 et seq.); (2) informs the consumer that, on electronic, telephonic, or written request the provider will make available to the consumer a paper copy or copies; and (3) discloses on its Internet website: (A) the provider's name and each name under which it does business; (B) the provider's principal business address and telephone number; and (C) the names of the provider's principal officers. (e) A provider, including a provider that does business only or principally through the Internet, shall maintain a telephone system staffed at a level that reasonably permits a consumer to access a counselor during ordinary business hours. (f) A provider shall provide each consumer for whom it provides debt management services a written report accounting for: (1) the amount of money received from the consumer since the last report; (2) the amount and date of each disbursement made on the consumer's behalf to each creditor listed in the agreement since the last report; (3) any amount deducted from amounts received from the consumer; and (4) any amount held in reserve. (g) The provider shall provide the report under Subsection (f): (1) at least once each calendar quarter; and (2) not later than the 10th business day after the date of a request by a consumer. Added by Acts 2005, 79th Leg., ch. 336, § 1, eff. Sept. 1, 2005. § 394.209. WRITTEN DEBT MANAGEMENT SERVICES AGREEMENT. (a) A debt management services provider may not prepare a debt management services agreement before the provider has fully complied with Sections 394.208(a) and (b). (b) Each debt management services agreement must: (1) be dated and signed by the consumer; (2) include the name and address of the consumer and the name, address, and telephone number of the provider; (3) describe the services to be provided; (4) state all fees, individually itemized, to be paid by the consumer; (5) list in the agreement or accompanying document, to the extent the information is available to the provider at the time the agreement is executed, each participating creditor of the consumer to which payments will be made and, based on information provided by the consumer, the amount owed to each creditor and the schedule of payments the consumer will be required to make to the creditor, including the amount and date on which each payment will be due; (6) state the existence of a surety bond or insurance for consumer claims; (7) state that establishment of a debt management plan may impact the consumer's credit rating and credit score either favorably or unfavorably, depending on creditor policies and the consumer's payment history before and during participation in the debt management plan; and (8) state that either party may cancel the agreement without penalty at any time on 10 days' notice and that a consumer who cancels an agreement is entitled to a refund of all money that the consumer has paid to the provider that has not been disbursed. (c) A debt management services agreement may contain a voluntary consumer arbitration provision or a voluntary mediation provision. (d) A provider may deliver the debt management services agreement through the Internet if the provider: (1) has complied with the federal Electronic Signatures in Global and National Commerce Act (15 U.S.C. Section 7001 et seq.); (2) sends the consumer a paper copy of the agreement not later than the seventh day after the date of a request by a consumer to do so; and (3) discloses on a prominent page of its Internet website: (A) the provider's name and each name under which it does business; (B) the provider's principal business address and telephone number; and (C) the names of the provider's principal officers. (e) If the provider discusses its services or negotiates with a consumer primarily in a language other than English, the provider may not begin performance of a debt management plan until the provider and consumer sign a copy of the written agreement, provided by the debt management services provider, in that language and a copy is made available to the consumer. Added by Acts 2005, 79th Leg., ch. 336, § 1, eff. Sept. 1, 2005. § 394.210. PERMITTED FEES. (a) With respect to the provision of a debt management plan service, a provider may not impose a fee or other charge on a consumer, or receive payment from a consumer or other person on behalf of a consumer, except as allowed under this section. (b) For the purposes of this section, fees or charges include both voluntary contributions and any other fees charged to or collected from a consumer or on behalf of the consumer. (c) Any fee charged by a provider must be fair and reasonable given the value of the products and services provided to the consumer, including consideration of the amount subject to debt management and the number of anticipated payments. A fee or a portion of a fee that is specifically related to a debt management plan may not be charged until the provider has complied with Sections 394.208(a) and (b) and 394.209. (d) A provider may charge a monthly maintenance fee if the fee is fair and reasonable. (e) A fee charged for a service other than a debt management service must be fair and reasonable. Added by Acts 2005, 79th Leg., ch. 336, § 1, eff. Sept. 1, 2005. § 394.211. TRUST ACCOUNT. (a) A provider must use a trust account for the management of all money paid by or on behalf of a consumer for disbursement to the consumer's creditor. A provider may not commingle the money in a trust account established for the benefit of consumers with any operating funds of the provider. A provider shall exercise due care to appropriately manage the funds in the trust account. (b) The trust account must at all times be materially in balance with and reconciled to the consumers' accounts. Failure to maintain that balance is cause for a summary suspension of registration under Section 394.204. (c) If a trust account does not contain sufficient money to cover the aggregate consumer balances, and the provider has not corrected the deficiency within 48 hours of discovery, the provider shall notify the commissioner by telephone, facsimile, electronic mail, or other method approved by the commissioner, and provide written notice including a description of the remedial action taken. Added by Acts 2005, 79th Leg., ch. 336, § 1, eff. Sept. 1, 2005. § 394.212. PROHIBITED ACTS AND PRACTICES. (a) A provider may not: (1) purchase a debt or obligation of a consumer; (2) receive or charge a fee in the form of a promissory note or other negotiable instrument other than a check or a draft; (3) lend money or provide credit to the consumer; (4) obtain a mortgage or other security interest in property owned by a consumer; (5) engage in business with an entity described by Section 394.204(c)(3) without prior consent of the commissioner, except that unless denied, consent is considered granted 30 days after the date the provider notifies the commissioner of the intent to engage in business with an organization described by Section 394.204(c)(3); (6) offer, pay, or give a gift, bonus, premium, reward, or other compensation to a person for entering into a debt management services agreement; (7) represent that the provider is authorized or competent to furnish legal advice or perform legal services unless supervised by an attorney as required by State Bar of Texas rules; (8) use an unconscionable means to obtain a contract with a consumer; (9) engage in an unfair, deceptive, or unconscionable act or practice in connection with a service provided to a consumer; or (10) require or attempt to require payment of an amount that the provider states, discloses, or advertises to be a voluntary contribution from the consumer. (b) A provider does not have a claim: (1) for breach of contract against a consumer who cancels an agreement pursuant to this subchapter; or (2) in restitution with respect to an agreement that is void under this subchapter. (c) A provider may not include any of the following provisions in a disclosure related to debt management services or in a debt management services agreement: (1) a confession of judgment clause; (2) a waiver of the right to a jury trial, if applicable, in an action brought by or against a consumer; (3) an assignment of or order for payment of wages or other compensation for services; or (4) a waiver of a provision of this subchapter. Added by Acts 2005, 79th Leg., ch. 336, § 1, eff. Sept. 1, 2005. § 394.213. DUTIES OF PROPER MANAGEMENT. A provider has a duty to a consumer who receives debt management services from the provider to ensure that client money is managed properly at all times. Added by Acts 2005, 79th Leg., ch. 336, § 1, eff. Sept. 1, 2005. § 394.214. ADDITIONAL ENFORCEMENT POWERS. (a) The finance commission may adopt rules to carry out this subchapter. (b) The commissioner may: (1) investigate the activities of a person subject to this subchapter to determine compliance with this subchapter, including examination of the books, accounts, and records of a provider; and (2) require or permit a person to file a statement under oath and otherwise subject to the penalties of perjury, as to all the facts and circumstances of the matter to be investigated. (c) Failure to comply with an investigation under Subsection (b) is grounds for issuance of a cease and desist order. (d) The commissioner may receive and act on complaints, take action to obtain voluntary compliance with this subchapter, and refer cases to the attorney general for prosecution. (e) The commissioner may enforce this subchapter and rules adopted under this subchapter by: (1) ordering the violator to cease and desist from the violation and any similar violations; (2) ordering the violator to take affirmative action to correct the violation, including the restitution of money or property to a person aggrieved by the violation; (3) imposing an administrative penalty not to exceed $1,000 for each violation as provided by Subchapter F, Chapter 14; or (4) rejecting an initial application or revoking or suspending a registration as provided by Section 394.204. (f) In determining the amount of an administrative penalty to be imposed under this section, the commissioner shall consider the seriousness of the violation, the good faith of the violator, the violator's history of previous violations, the deleterious effect of the violation on the public, the assets of the violator, and any other factors the commissioner considers relevant. (g) The commissioner, on relation of the attorney general at the request of the commissioner, may bring an action in district court to enjoin a person from engaging in an act or continuing a course of action that violates this chapter. The court may order a preliminary or final injunction. Added by Acts 2005, 79th Leg., ch. 336, § 1, eff. Sept. 1, 2005. § 394.215. PRIVATE REMEDIES. (a) An agreement for debt management services between a consumer and a person that is not registered under this subchapter is void. (b) A consumer is entitled to recover all fees paid by the consumer under a void agreement, costs, and reasonable attorney's fees. (c) In addition to any other remedies provided by this subchapter, a consumer who is aggrieved by a violation of this subchapter, a rule adopted by the finance commission under this subchapter, or by any unfair, unconscionable, or deceptive act or practice may recover: (1) actual damages; (2) punitive damages for acts or practices under a void agreement; and (3) the costs of the action, including reasonable attorney's fees based on the amount of time involved. (d) An aggrieved consumer may sue for injunctive and other appropriate equitable relief to stop a person from violating this subchapter. (e) The remedies provided in this section are not intended to be the exclusive remedies available to a consumer nor must the consumer exhaust any administrative remedies provided under this subchapter or any other applicable law. Added by Acts 2005, 79th Leg., ch. 336, § 1, eff. Sept. 1, 2005.
TEXAS CREDIT CARD DEBT LAWSUIT DEFENSE ATTORNEYS
Shawn Jaffer & Associates Is Not Registered with the OCCC as Required per Texas Law.
GOOGLE AD, JULY 10, 2022
Jaffer’s even payin’ for leads, running google ads. That should also mean that the State Bar of Texas has approved the advert. His firm is not registered as a debt management / debt settlement law firm on Texas OCCC.
SHAWN JAFFER AND ASSOCIATES WEBSITE AND GOOGLE PAID ADVERTISING LANDING PAGE (PPC)
Original Video by Jaffer, Backed Up on LIT Servers
LIT published Jaffer law firm’s class action in 2020, wherein he was complainin’ about the fact that law firm Kelly M. Davis and Associates were not bonded to collect debts, per TFC 392.101.
What’s ridiculous is the fact that Jaffer is not registered with the OCCC to file class actions or any law suits where he’s acting as a debt management or settlement law firm.
Kelly Davis was represented by Jacob Sparks of Spencer Fane. We note the case settled, but whether or not Sparks told Jaffer he’s violating Texas laws himself is unknown, but highly unlikely, based on LIT’s investigations.
Look what happened in Judge Hinojosa’s SDTX Court today in Archer v Carrington, which happened right after our tweet re Judge Ada Brown. Then look at Carrington’s diversity jurisdiction arguments, which @SpencerFane lawyer Sparks was zealously advocatin’ https://t.co/sdyLIBHto5 pic.twitter.com/OzbowcXL6i
— lawsinusa (@lawsinusa) July 8, 2022
YOUR HOUSTON CONSUMER ATTORNEY [DOT COM]
The Law Office of David A. Fernandez Is Not Registered with the OCCC as Required per Texas Law.
LAW OFFICE OF DAVID A. FERNANDEZ
As an aside, the sitemap fails to disclosure any legal terms or debt management services disclosures. The disclosure on the footer is an advertising disclaimer and a privacy policy statement c/o the website builder.
OUT OF STATE GERSHFELD LAW (CALIFORNIA) IS FOLLOWING TEXAS LAW, THEY ARE REGISTERED.
SEARCH RESULT FOR GERSHFELD ON OCCC LICENSE SEARCH PORTAL
Gersfheld Law Group does not offer services in the following states: CT, DC, KS, MT, NJ, ND, SC, WV, WY, AK, HI, IL, ME, NE, NC, OR, RI, VT, WA.
US Gov. Cleanup of CCTX Continues: Exposing Legal Bandit Dave Medearis and the Foreclosure Scam Fallout
Bandit lawyer Dave Medearis came knockin’ and presented his petition claimin’ Susan Casias was a felon and he’d pursue justice for victims.
Judicially Protected Foreclosure Scammers Switch Trustee After Being Sued Before Judge Manor
Sandy Forsythe and Justina De Pasquale of New Millennia Properties Switch out Trustees including con man Brian Brewer on Oct. 25, 2024.
OCC Real Estate Investments LLC Sued PT-Patriot Title For Breach of Lease then Changed its Mind
OCC’s lawsuit was filed by debt collector Bob Kruckemeyer of 244 Malone St, and OCC returns results that he is a member of OCC.
