CHAPTER 396. PRIVATE CHILD SUPPORT ENFORCEMENT AGENCIES - Texas Statutes

FINANCE CODE

TITLE 5. PROTECTION OF CONSUMERS OF FINANCIAL SERVICES

CHAPTER 396. PRIVATE CHILD SUPPORT ENFORCEMENT AGENCIES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 396.001. DEFINITIONS. In this chapter:

(1) "Child support enforcement" means an action, conduct, or

practice in enforcing, or in soliciting for enforcement, a child

support obligation, including the collection of an amount owed

under a child support obligation.

(2) "Child support obligation" means an obligation for the

payment of financial support for a child under an order or writ

issued by a court or other tribunal.

(3) "Department" means the Texas Department of Banking.

(4) "Foreign agency" means a private child support enforcement

agency that engages in business in this state solely by use of

telephone, mail, the Internet, facsimile transmission, or any

other means of interstate communication.

(5) "Obligee" means the person identified in an order for child

support issued by a court or other tribunal as the payee to whom

an obligor's amounts of ordered child support are due.

(6) "Obligor" means the person identified in an order for child

support issued by a court or other tribunal as the individual

required to make payment under the terms of a support order for a

child.

(7) "Private child support enforcement agency" means an

individual or nongovernmental entity who engages in the

enforcement of child support ordered by a court or other tribunal

for a fee or other consideration. The term does not include:

(A) an attorney enforcing a child support obligation on behalf

of, and in the name of, a client unless the attorney has an

employee who is not an attorney and who on behalf of the

attorney:

(i) regularly solicits for child support enforcement; or

(ii) regularly contacts child support obligees or obligors for

the purpose of child support enforcement;

(B) a state agency designated to serve as the state's Title IV-D

agency in accordance with Part D, Title IV, Social Security Act

(42 U.S.C. Section 651 et seq.), as amended; or

(C) a contractor awarded a contract to engage in child support

enforcement on behalf of a governmental agency, including a

contractor awarded a contract:

(i) under Chapter 236, Family Code; or

(ii) by a political subdivision of this or another state that is

authorized by law to enforce a child support obligation.

(8) "Registered agency" means a private child support

enforcement agency, including a foreign agency, that is

registered under this chapter.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

SUBCHAPTER B. POWERS AND DUTIES OF DEPARTMENT

Sec. 396.051. ADMINISTRATIVE AND RULEMAKING AUTHORITY. (a) The

department shall administer this chapter.

(b) The Finance Commission of Texas shall adopt rules as

necessary for the administration of this chapter.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

Sec. 396.052. FILING FEE. (a) The department shall charge each

applicant for a certificate of registration, or renewal of a

certificate, a nonrefundable fee of $500 for each certificate.

(b) The application fee is due on the date the applicant submits

an application for registration. The renewal fee is due on the

date a certificate holder submits an application to renew a

registration.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

Sec. 396.053. COST OF REGULATION. The department may charge

each registered private child support enforcement agency an

annual fee not to exceed $500 to cover the cost of enforcing this

chapter.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

SUBCHAPTER C. REGISTRATION

Sec. 396.101. REGISTRATION REQUIRED. Except as otherwise

provided by this chapter, a private child support enforcement

agency must register with the department to engage in child

support enforcement in this state.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

Sec. 396.102. RECOGNITION OF AUTHORIZATION ISSUED BY ANOTHER

STATE. (a) The department may waive any prerequisite to

obtaining a registration for a foreign agency:

(1) after reviewing the applicant's credentials and determining

that the applicant holds a valid registration or other

authorization from another state whose requirements are

substantially equivalent to those imposed under this chapter; or

(2) after determining the applicant has a valid registration or

other authorization from another state with which this state has

a reciprocity agreement.

(b) The department may enter into an agreement with another

state to permit registration by reciprocity.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

Sec. 396.103. APPLICATION REQUIREMENTS. (a) An applicant for

registration as a private child support enforcement agency must

file with the department an application on a form and in the

manner prescribed by the department.

(b) The application must state:

(1) the name of the applicant;

(2) the name under which the applicant is doing or intends to do

business in this state, if different from the applicant's name;

(3) the address of the applicant's principal business office,

including the state, municipality, and numeric street address;

and

(4) any Internet or other electronic mail address and business

telephone number of the applicant.

(c) The chief executive officer of the applicant agency shall

state in a notarized statement that the application is accurate

and truthful in all respects.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

Sec. 396.104. FINANCIAL AND OTHER DISCLOSURES. The department

shall require an applicant for registration or renewal of

registration as a private child support enforcement agency to

provide:

(1) a certified financial statement demonstrating the financial

solvency of the agency for which registration or renewal of

registration is sought; and

(2) any other information the department may reasonably require

the applicant to provide to establish that the requirements and

qualifications for registration or renewal of registration have

been fulfilled by the applicant.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

Sec. 396.105. SURETY BOND OR OTHER DEPOSIT REQUIRED. (a) An

application for registration must be accompanied by a surety bond

approved by the department.

(b) The surety bond must be:

(1) issued by a surety authorized to do business in this state;

(2) in the amount of $50,000;

(3) in favor of the state for the benefit of a person damaged by

a violation of this chapter; and

(4) conditioned on the private child support enforcement

agency's compliance with this chapter and the faithful

performance of the obligations under the agency's agreements with

its clients.

(c) The surety bond must be filed with and held by the

department.

(d) Instead of a surety bond, the department may accept a

deposit of money in an amount determined by the department not to

exceed $50,000. The department shall deposit any amounts received

under this subsection in an insured depository account designated

for that purpose.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

Sec. 396.106. ISSUANCE OF CERTIFICATE OF REGISTRATION. (a) The

department shall issue a certificate of registration and mail the

certificate to the applicant on receipt of:

(1) a completed application;

(2) evidence of financial solvency;

(3) the surety bond or deposit of money required by Section

396.105; and

(4) the required registration fee.

(b) If a single application is used to register more than one

registered location, the department shall:

(1) issue a certificate of registration for each registered

location; and

(2) mail all of the certificates to the principal business

location stated in the application.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

Sec. 396.107. DUTY TO UPDATE APPLICATION INFORMATION. A

certificate holder shall notify the department of any material

change in the information provided in an application for

registration not later than the 60th day after the date on which

the information changes.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

Sec. 396.108. TERM OF REGISTRATION; RENEWAL. (a) A private

child support enforcement agency's certificate of registration

expires on the third anniversary of the date of issuance.

(b) A certificate of registration may be renewed for another

three-year period as provided by department rule.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

SUBCHAPTER D. AUTHORITY OF FOREIGN AGENCY TO ENGAGE IN BUSINESS

IN THIS STATE

Sec. 396.151. APPLICATION TO OPERATE UNDER OTHER AUTHORIZATION

INSTEAD OF REGISTRATION. (a) To engage in business in this

state, a foreign agency that is exempt from registration as

prescribed by Section 396.102 may file an application with the

department to operate under that authorization by filing:

(1) the information required for an application for registration

under Section 396.103;

(2) a surety bond or deposit of money that meets the

requirements of Section 396.105 unless the agency provides proof

to the satisfaction of the department that the agency maintains

in the state in which that agency has its principal office an

adequate bond or similar instrument for purposes similar to the

purposes required for the filing of a surety bond under Section

396.105; and

(3) a copy of the license or other authorization issued by the

state in which that agency is authorized to operate.

(b) The department may charge a single administrative fee in a

reasonable amount that is sufficient to cover the costs of the

department in processing and acting on the application.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

Sec. 396.152. ACCEPTANCE OF OTHER AUTHORIZATION INSTEAD OF

REGISTRATION. The department shall issue a certificate to

operate under another state's authorization in this state to a

foreign agency that files an application with the department

under Section 396.151 if:

(1) the agency submits all of the information required by

Section 396.151(a)(1);

(2) the department determines that the agency has met the

requirements of Section 396.151(a)(2);

(3) the agency remits any required administrative fee under

Section 396.151(b); and

(4) the department verifies that the registration or other

authorization issued by another state is active and in good

standing.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

Sec. 396.153. NOTIFICATION OF UPDATED INFORMATION OR CHANGE IN

STATUS OF OTHER AUTHORIZATION. Not later than the 30th day after

the date on which the change occurs, a foreign private child

support enforcement agency that is issued a certificate to

operate in this state under this subchapter shall notify the

department of any change in:

(1) the information provided in an application submitted under

Section 396.152; or

(2) the status of the agency's authorization in the other state.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

Sec. 396.154. WITHDRAWAL OF APPROVAL TO OPERATE UNDER OTHER

AUTHORIZATION. A holder of a certificate issued under this

subchapter may not engage in business in this state as a private

child support enforcement agency if another state has revoked or

withdrawn the person's authority to operate as a private child

support enforcement agency in that state unless the department

grants the agency a registration under this chapter.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

SUBCHAPTER E. REQUIRED BUSINESS PRACTICES

Sec. 396.201. REGISTRATION PREREQUISITE TO SUIT. A private

child support enforcement agency may not bring an action to

enforce a child support obligation in this state unless the

agency is registered or otherwise authorized to engage in

business in this state as provided by this chapter.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

Sec. 396.202. RECORDS. (a) A registered agency shall maintain

records of all child support collections made on behalf of, and

disbursed to, a client who is an obligee, including:

(1) the name of any obligor who made child support payments

collected by the agency;

(2) the amount of support collected by the agency for each

client, including:

(A) the date on which the amount was collected; and

(B) the date on which each amount due the client by the obligor

was paid to the client;

(3) a copy of the order establishing the child support

obligation under which a collection was made by the agency; and

(4) any other pertinent information relating to the child

support obligation, including any case, cause, or docket number

of the court having jurisdiction over the matter.

(b) The records required under this section must be updated at

least monthly and must be maintained by the registered agency for

a period of four years from the date of the last support payment

collected by the agency on behalf of an obligee.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

Sec. 396.203. CONTRACT FOR SERVICES. (a) A registered agency

and foreign agency authorized to engage in business under this

chapter shall execute a written contract for the enforcement of

child support for each client of the agency that is residing in

this state.

(b) The contract required under this section must:

(1) be in writing, dated, and signed by both parties to the

contract; and

(2) specify its terms in clear language.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

SUBCHAPTER F. PROHIBITED PRACTICES

Sec. 396.251. THREATS OR COERCION. (a) In enforcing a child

support obligation, a registered agency may not use threats,

coercion, or attempts to coerce that employ any of the following

practices:

(1) using or threatening to use violence or other criminal means

to cause harm to an obligor or property of the obligor;

(2) accusing falsely or threatening to accuse falsely an obligor

of a violation of state or federal child support laws;

(3) taking or threatening to take an enforcement action against

an obligor that is not authorized by law; or

(4) intentionally representing to a person that the agency is a

governmental agency authorized to enforce a child support

obligation.

(b) Subsection (a) does not prevent a registered agency from:

(1) informing an obligor that the obligor may be subject to

penalties prescribed by law for failure to pay a child support

obligation; or

(2) taking, or threatening to take, an action authorized by law

for the enforcement of a child support obligation by the agency.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

Sec. 396.252. FRAUDULENT, DECEPTIVE, OR MISLEADING

REPRESENTATIONS. In enforcing a child support obligation, a

registered agency or employee of the agency may not:

(1) identify the registered agency by any name other than one by

which the agency is registered with the department;

(2) falsely represent the nature of the child support

enforcement activities in which the agency is authorized by law

to engage; or

(3) falsely represent that an oral or written communication is

the communication of an attorney.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

SUBCHAPTER G. ADMINISTRATIVE ENFORCEMENT

Sec. 396.301. REVOCATION OF REGISTRATION. (a) After notice and

hearing, the department may revoke the registration of a

registered agency that:

(1) fails to comply with this chapter or a rule adopted under

this chapter;

(2) does not pay a fee or other charge imposed by the department

under this chapter; and

(3) fails to maintain and produce at the request of the

department records attesting to the financial solvency of the

registered agency or other business records concerning client

accounts.

(b) The department may permit a registered agency to take an

appropriate action to correct a failure to comply with this

chapter and not revoke the registration of the agency.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

Sec. 396.302. ADMINISTRATIVE HEARING ON DENIAL, SUSPENSION, OR

REVOCATION OF REGISTRATION. (a) The department may not deny or

suspend the registration of a private child support enforcement

agency under this chapter without first conducting an

administrative hearing.

(b) A hearing under this section or Section 396.301 is subject

to Chapter 2001, Government Code.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

Sec. 396.303. BONA FIDE ERROR. A registered agency does not

violate this chapter if the action complained of resulted from a

bona fide error that occurred notwithstanding the use of

reasonable procedures to avoid the error.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

Sec. 396.304. ADMINISTRATIVE INVESTIGATION OF COMPLAINT. (a) A

person may file with the department a written complaint against a

registered agency for a violation of this chapter.

(b) Not later than the 30th day after the date on which the

department receives a complaint under this section, the

department shall initiate an investigation into the merits of the

complaint.

(c) The department may appoint a hearings officer to conduct the

investigation.

(d) A hearings officer appointed by the department to

investigate a complaint may arrange for the services of a

qualified mediator and attempt to:

(1) resolve the complaint and any differences between the

parties; and

(2) reach a settlement without the requirement of further

investigation.

(e) The department may delegate to a hearings officer appointed

to investigate a complaint under this section the authority to

dismiss the complaint, after an initial investigation and after

notice to each affected party and an opportunity for hearing, for

lack of sufficient evidentiary basis.

(f) An individual aggrieved by a decision of the department or

hearings officer under this section may appeal the decision to a

district court in Travis County.

(g) The department shall provide for an annual public inspection

of an investigation report of a complaint filed under this

section.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

SUBCHAPTER H. CIVIL REMEDIES

Sec. 396.351. CIVIL ACTION. (a) In addition to any other

remedy provided by this chapter, a person may bring an action

for:

(1) injunctive relief to enjoin or restrain a violation of this

chapter; and

(2) actual damages incurred as a result of a violation of this

chapter.

(b) A person who prevails in an action brought under this

section is entitled to recover court costs and reasonable

attorney's fees.

(c) On a finding by a court that an action under this section

was brought in bad faith or for purposes of harassment, the court

shall award the defendant attorney's fees reasonably related to

the work performed and costs.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

Sec. 396.352. SERVICE OF PROCESS OUTSIDE STATE. (a) A

registered agency that is located in another state or a private

child support enforcement agency that engages in the business of

child support enforcement in this state in violation of this

chapter is considered to have submitted to the jurisdiction of

the courts of this state with respect to an action brought under

this chapter.

(b) A foreign agency engaging in business in this state in

violation of this chapter is considered to have appointed the

department as the agency's agent for service of process in any

action, suit, or proceeding arising from a violation of this

chapter.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.

Sec. 396.353. REMEDIES UNDER OTHER LAW. (a) A violation of

this chapter is a deceptive trade practice under Subchapter E,

Chapter 17, Business & Commerce Code, and is actionable under

that subchapter.

(b) This chapter does not affect or alter a remedy at law or in

equity otherwise available to an obligor, obligee, governmental

entity, or other legal entity.

Added by Acts 2001, 77th Leg., ch. 1023, Sec. 73, eff. Sept. 1,

2001.