CHAPTER 349. PENALTIES AND LIABILITIES - Texas Statutes

FINANCE CODE

TITLE 4. REGULATION OF INTEREST, LOANS, AND FINANCED TRANSACTIONS

SUBTITLE B. LOANS AND FINANCED TRANSACTIONS

CHAPTER 349. PENALTIES AND LIABILITIES

SUBCHAPTER A. CIVIL PENALTIES

Sec. 349.001. LIABILITY FOR CONTRACTING FOR, CHARGING, OR

RECEIVING EXCESSIVE AMOUNT. (a) A person who violates this

subtitle by contracting for, charging, or receiving interest or

time price differential greater than the amount authorized by

this subtitle is liable to the obligor for an amount equal to:

(1) twice the amount of the interest or time price differential

contracted for, charged, or received; and

(2) reasonable attorney's fees set by the court.

(b) A person who violates this subtitle by contracting for,

charging, or receiving a charge, other than interest or time

price differential, greater than the amount authorized by this

subtitle is liable to the obligor for an amount equal to:

(1) the greater of:

(A) three times the amount computed by subtracting the amount of

the charge authorized by this subtitle from the amount of the

charge contracted for, charged, or received; or

(B) $2,000 or 20 percent of the amount of the principal balance,

whichever is less; and

(2) reasonable attorney's fees set by the court.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 62, Sec. 7.24(a), eff. Sept.

1, 1999.

Sec. 349.002. LIABILITY FOR CHARGES EXCEEDING TWICE AMOUNT

AUTHORIZED. (a) A person who violates this subtitle by

contracting for, charging, or receiving interest or time price

differential that in an aggregate amount exceeds twice the total

amount of interest or time price differential authorized by this

subtitle is liable to the obligor as an additional penalty for

all principal or principal balance, as well as all interest or

time price differential.

(b) A person who is liable under Subsection (a) is also liable

for reasonable attorney's fees incurred by the obligor in

enforcing this section.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 62, Sec. 7.25(a), eff. Sept.

1, 1999.

Sec. 349.003. LIABILITY FOR FAILURE TO PERFORM OR FOR

PERFORMANCE OF PROHIBITED ACT. (a) Except as provided by this

subtitle, a person who fails to perform a requirement

specifically imposed on the person by this subtitle or who

commits an act prohibited by this subtitle is liable to the

obligor for an amount that does not exceed an amount computed

under one, but not both, of the following:

(1) three times the actual economic loss to the obligor that

results from the violation; or

(2) if the violation was material and the violation induced the

obligor to enter into a transaction that the obligor would not

have entered if the violation had not occurred, twice the

interest or time price differential contracted for, charged, or

received, not to exceed:

(A) $2,000 in a transaction in which the amount financed does

not exceed $5,000; or

(B) $4,000 in a transaction in which the amount financed exceeds

$5,000.

(b) A person who is liable under Subsection (a) is also liable

for reasonable attorney's fees set by the court.

(c) In a judicial proceeding under Subsection (a)(2), the court

determines whether the violation is material and the finder of

fact determines whether the violation induced the obligor to

enter into the transaction.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 349.004. LIABILITY RELATED TO CRIMINAL OFFENSE. In

addition to other applicable penalties, a person who commits an

offense under Section 349.502 is liable to the obligor for an

amount equal to:

(1) the principal of and all charges contracted for or collected

on each loan made without the authority required by Chapter 342

or 346; and

(2) reasonable attorney's fees incurred by the obligor.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 62, Sec. 7.56, eff. Sept. 1,

1999.

Sec. 349.005. LIABILITY FOR VIOLATING INJUNCTION. (a) A person

who violates an injunction issued under this subtitle is liable

to this state for a civil penalty that does not exceed $1,000 for

each violation.

(b) For purposes of this section, a district court that issues

an injunction under this subtitle shall retain jurisdiction, and

the cause shall be continued.

(c) The attorney general may petition the court for recovery of

the civil penalty prescribed by this section.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER B. GENERAL LIMITATIONS ON LIABILITY

Sec. 349.101. NO LIABILITY IF VIOLATION UNINTENTIONAL AND FROM

BONA FIDE ERROR OR IF IN CONFORMITY WITH OTHER LAW. (a) A

person is not liable under Section 349.001, 349.002, or 349.003

if the person shows by a preponderance of evidence that:

(1) the violation:

(A) was not intentional; and

(B) resulted from a bona fide error notwithstanding the

maintenance of procedures reasonably adopted to avoid such a

violation; or

(2) the violation was an act done or omitted in good faith in

conformity with:

(A) a rule adopted under, or interpretation of, this title by a

state agency, board, or commission;

(B) the Consumer Credit Protection Act (15 U.S.C. Section 1601

et seq.); or

(C) a rule or regulation adopted under, or interpretation of,

the Consumer Credit Protection Act (15 U.S.C. Section 1601 et

seq.) by an agency, board, or commission of the United States.

(b) The exception from liability provided by Subsection (a)(2)

is not affected by the fact that after the act or omission

occurs, the rule, regulation, or interpretation in conformity

with which the act was done or omitted is amended, rescinded, or

determined by judicial or other authority to be invalid for any

reason.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 349.102. LIABILITY FOR MULTIPLE VIOLATIONS IN ONE

TRANSACTION. (a) A person who would be liable under Sections

349.001 and 349.003 as a result of the same transaction is liable

only for the penalties provided by Section 349.001.

(b) An obligor is entitled to only one recovery for multiple

violations of this subtitle that occur in the same transaction.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 349.103. LIMITATION ON MULTIPLE RECOVERY OF PENALTIES. (a)

An administrative penalty, fine, settlement, or assurance of

voluntary compliance under this title or federal law that is

assessed by or agreed to with an administrative agency or the

attorney general shall be considered and applied as a bar or

credit to recovery of further fines, penalties, or enhanced

damages for substantially the same act, practice, or violation in

a suit or other proceeding brought by a private litigant under

this title, the Business & Commerce Code, or other applicable

law of this state. This section does not apply to a claim for

restitution for unreimbursed actual damages.

(b) A suit or other proceeding by a private litigant does not

affect or restrict any state or federal agency from pursuing a

person for any administrative remedy, including an administrative

penalty. An administrative agency of this state, however, shall

consider as a mitigating factor any relief recovered in a private

suit or proceeding when the agency determines an administrative

remedy.

Added by Acts 2005, 79th Leg., Ch.

1018, Sec. 4.07, eff. September 1, 2005.

SUBCHAPTER C. LIMITING LIABILITY BY CORRECTING VIOLATION

Sec. 349.201. CORRECTION RESULTING IN NO LIABILITY. (a) A

person is not liable to an obligor for a violation of this

subtitle if:

(1) not later than the 60th day after the date on which the

person actually discovered the violation, the person corrects the

violation as to that obligor by:

(A) performing the required act; or

(B) refunding the amount in excess of the amount authorized by

law; and

(2) the person gives to the obligor written notice of the

violation as provided by Section 349.204 before the obligor:

(A) gives written notice of that violation; or

(B) files an action alleging that violation.

(b) For purposes of Subsection (a), "actually discovered" refers

to the time of the discovery of the violation in fact and not to

the time when an ordinarily prudent person, through reasonable

diligence, could or should have discovered or known as a matter

of law or fact of the violation. Actual discovery of a violation

in one transaction may constitute actual discovery of the same

violation in other transactions if the violation actually

discovered is of such a nature that it would necessarily be

repeated and would be clearly apparent in the other transactions

without the necessity of examining all of the other transactions.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 349.202. CORRECTION OF VIOLATION OF FAILURE TO ACT OR

PERFORMING PROHIBITED ACT RESULTING IN LIMITED LIABILITY. (a)

Liability to an obligor for a violation of this subtitle to which

Section 349.003 applies is limited as provided by this section

if, after the 60-day period described by Section 349.201(a)(1)

but before the time the obligor gives written notice of that

violation or files an action alleging that violation, the

violation is corrected as to that obligor by:

(1) the performance of the required act; and

(2) giving to the obligor written notice of the violation as

provided by Section 349.204.

(b) The liability of any person for the violation to the obligor

as described by Subsection (a) is limited for each transaction to

an amount that does not exceed one, but not both, of the

following:

(1) the actual economic loss suffered by the obligor as a result

of the violation; or

(2) the time price differential or interest contracted for,

charged, or received, not to exceed $2,000, if:

(A) the violation was material; and

(B) the violation induced the obligor to enter into a

transaction that the obligor would not have entered if the

violation had not occurred.

(c) A person who is liable under Subsection (b) is also liable

for reasonable attorney's fees set by the court.

(d) In a judicial proceeding under Subsection (b)(2), the court

determines whether the violation is material and the finder of

fact determines whether the violation induced the obligor to

enter into the transaction.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 349.203. CORRECTION OF VIOLATION OF CHARGING EXCESSIVE

AMOUNTS RESULTING IN LIMITED LIABILITY. (a) This section

applies only to a violation of this subtitle to which Section

349.001 applies and that results from:

(1) contracting for, charging, or receiving interest or time

price differential that exceeds the amount authorized by law if

the excess is directly and solely attributable to and computed on

the amount of a charge other than the interest or time price

differential; or

(2) contracting for, charging, or receiving a charge, other than

interest or time price differential, that exceeds the amount

authorized by law.

(b) If, after the 60-day period described by Section

349.201(a)(1) but before the time an obligor gives written notice

of the violation or files an action alleging the violation, the

violation is corrected as to the obligor by refunding the amount

of the excess and giving to the obligor written notice of the

violation as provided by Section 349.204, the liability of any

person to that obligor is limited for each transaction to an

amount that does not exceed:

(1) the time price differential or interest contracted for,

charged, or received, not to exceed $2,000; and

(2) reasonable attorney's fees set by the court.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 349.204. GIVING WRITTEN NOTICE. (a) For purposes of this

subchapter, written notice is given to a person by delivering the

notice to the person or the person's agent or attorney of record:

(1) in person; or

(2) by United States mail to the address shown on the most

recent documents in the transaction.

(b) Deposit of a notice as registered or certified mail in a

postage-paid, properly addressed wrapper in a post office or

official depository under the care and custody of the United

States Postal Service is prima facie evidence of the delivery of

the notice to the person to whom it is addressed.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 349.205. CORRECTION EXCEPTION AVAILABLE TO ALL SIMILARLY

SITUATED. If in a single transaction more than one person may be

liable for a violation of this subtitle, compliance with Section

349.201, 349.202, or 349.203 by any of those persons entitles

each to the protection provided by that section.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER D. LIMITING LIABILITY BY LATE REGISTRATION OR

LICENSURE

Sec. 349.301. PAYMENT OF FEES. A person who registers or

obtains or renews a license under this title after the date on

which the person was required to register or to obtain or renew

the license may limit the person's liability as provided by this

subchapter by paying to the commissioner:

(1) all registration or license fees that the person should have

paid under this title for prior years; and

(2) except as provided by Section 349.302(a), a late filing fee

as provided by this subchapter.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 349.302. LATE FILING FEE FOR REGISTERING OR RENEWAL OF

REGISTRATION. (a) A person who renews a registration not later

than the 30th day after the date on which the registration

expires is not required to pay a late filing fee.

(b) The late filing fee is $250 for:

(1) registering after the time registration is required under

this title; or

(2) renewal of a registration after the day prescribed by

Subsection (a).

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 349.303. LATE FILING FEE FOR OBTAINING OR RENEWING LICENSE.

(a) The late filing fee for renewing an expired license is

$1,000 if the license:

(1) was in good standing when it expired; and

(2) is renewed not later than the 180th day after its expiration

date.

(b) The late filing fee is $10,000 for:

(1) obtaining a license after the time it is required under this

title; or

(2) renewing an expired license to which Subsection (a) does not

apply.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 349.304. EFFECT OF COMPLIANCE WITH SUBCHAPTER FOR

REGISTRANT OR LICENSE HOLDER. (a) A person who pays the

applicable registration fees and late filing fee as provided by

Section 349.301 is considered for all purposes to have had the

required registration for the periods for which the registration

fees have been paid.

(b) A person who renews an expired license and pays the

applicable license fees and, if required, a late filing fee as

provided by Section 349.301 is considered for all purposes to

have held the required license as if it had not expired.

(c) A person who obtains a license and pays the applicable

license fees and the late filing fee under Section 349.301 is

considered for all purposes to have held the license for the

period during which it was required but only as to a loan on

which the person has contracted for, charged, or received

interest that does not exceed the amount that would have been

allowed for the loan under Chapter 303.

(d) A person who under this section is considered to have been

registered or to have held a license is not subject to any

liability, forfeiture, or penalty, other than as provided by this

subchapter, relating to the person's not having been registered

or not holding a license during the period for which the

registration or license fees and late filing fee are paid under

Section 349.301.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 349.305. EFFECT OF COMPLIANCE WITH SUBCHAPTER ON PERSON

OTHER THAN REGISTRANT OR LICENSE HOLDER. A benefit provided to a

person under Section 349.304 also applies to that person's

employees or other agents, employers, predecessors, successors,

and assigns but does not apply to any other person required to be

licensed under this title.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER E. PROCEDURES FOR CIVIL ACTIONS

Sec. 349.401. VENUE. An action under this chapter must be

brought in the county in which:

(1) the transaction was entered; or

(2) the defendant resides when the action is filed.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 349.402. LIMITATION PERIOD. (a) Except as provided by

Subsection (b), an action under this chapter must be brought

before the later of:

(1) the fourth anniversary of the date of the loan or retail

installment transaction with respect to which the violation

occurred; or

(2) the second anniversary of the date on which the violation

occurred.

(b) An action under this chapter with respect to an open-end

credit transaction must be brought before the second anniversary

of the date on which the violation occurred.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 349.403. CLASS ACTION. (a) In a class action that alleges

one or more violations of this subtitle and is determined by the

court to be maintainable as a class action, the class may recover

the amount of actual damages proximately caused to the members of

the class as a result of the violations.

(b) The court may assess as a penalty:

(1) for each obligor who is named as a class representative at

the time that the action is determined to be maintainable as a

class action, the amount that could be recovered by the person

under this chapter; and

(2) for other class members, an amount set by the court under

Subsection (c) and subject to Subsection (d).

(c) In determining the award amount, the court shall consider,

in addition to other relevant factors:

(1) the amount of any actual damages awarded;

(2) the frequency and persistence of violations by the creditor;

(3) the resources of the creditor;

(4) the number of persons adversely affected; and

(5) the extent to which the creditor's violation was intentional

or reckless.

(d) A minimum recovery is not applicable to a class member to

whom Subsection (b)(2) applies. The total recovery under

Subsection (b)(2) in a class action or series of class actions

arising out of the same violation of this subtitle by the same

person may not exceed the lesser of $100,000 or five percent of

the net worth of the person.

(e) In a successful action to enforce the liability under this

section, the court may award:

(1) costs of the action; and

(2) reasonable attorney's fees set by the court.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 349.404. LIABILITY UNDER SUBCHAPTER IN LIEU OF LIABILITY

UNDER CONSUMER CREDIT PROTECTION ACT. (a) A final judgment

granting or denying relief under the Consumer Credit Protection

Act (15 U.S.C. Section 1601 et seq.) bars a subsequent action

under Section 349.001, 349.002, or 349.003 by the same obligor

with respect to the same violation.

(b) If an obligor brings an action under the Consumer Credit

Protection Act (15 U.S.C. Section 1601 et seq.) against a person

after a final judgment has been rendered under Section 349.001,

349.002, or 349.003 in favor of the obligor against that person

with respect to the same violation, that person in the same or an

independent action may sue that obligor to recover:

(1) the amount of the judgment rendered under Section 349.001,

349.002, or 349.003; and

(2) reasonable attorney's fees set by the court.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

SUBCHAPTER F. CRIMINAL OFFENSES

Sec. 349.501. OFFENSE OF CHARGES EXCEEDING TWICE AMOUNT

AUTHORIZED. (a) A person commits an offense if the person

contracts for, charges, or receives interest, time price

differential, and other charges that in an aggregate amount

exceed twice the total amount of interest, time price

differential, and other charges authorized by this subtitle.

(b) An offense under this section is a misdemeanor punishable by

a fine of not more than $100.

(c) Each contract or transaction that violates Subsection (a) is

a separate offense.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Sec. 349.502. OFFENSE OF ENGAGING IN LENDING BUSINESS WITHOUT

PROPER AUTHORITY. (a) A person commits an offense if the person

engages in a business that is subject to Chapter 342, 346, or 351

without holding the license or other authorization required under

that chapter.

(b) An offense under this section is a misdemeanor punishable by

a fine of not more than $1,000.

(c) Each loan made without the authority required by Chapter

342, 346, or 351 is a separate offense.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by Acts 1999, 76th Leg., ch. 62, Sec. 7.57, eff. Sept. 1,

1999.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

1220, Sec. 2, eff. September 1, 2007.

Sec. 349.503. CERTAIN PROCEEDINGS IN CONNECTION WITH

SALE-LEASEBACK TRANSACTION. (a) If a buyer in a sale-leaseback

transaction requires the seller to provide a check as security

for the transaction, the buyer may not file or threaten to file a

charge, complaint, or criminal prosecution under Section 31.03,

31.04, or 32.41, Penal Code, based on nonpayment of the check.

(b) A buyer who violates Subsection (a) commits an offense. An

offense under this section is a misdemeanor punishable by a fine

of not more than $1,000.

Added by Acts 2001, 77th Leg., ch. 1235, Sec. 19, eff. Sept. 1,

2001.