Texas Finance Code 394.206 – Bond; Insurance
(a) A provider shall, at the time the provider files an initial or renewal registration application with the commissioner, file:
(1) a surety bond; or
(2) evidence that the provider maintains an insurance policy in a form approved by the commissioner.
(b) The bond or insurance must:
(1) run concurrently with the period of registration;
(2) be available to pay damages and penalties to consumers directly harmed by a violation of this subchapter;
(3) be in favor of this state for the use of this state and the use of a person who has a cause of action under this subchapter against the provider;
(4) if a bond:
(A) be in an amount equal to the average daily balance of the provider’s trust account serving Texas consumers over the six-month period preceding the issuance of the bond, or in the case of an initial application, in an amount determined by the commissioner, but not less than $25,000 or more than $100,000, if the provider receives and holds money paid by or on behalf of a consumer for disbursement to the consumer’s creditors; or
(B) be in the amount of $50,000, if the provider does not receive and hold money paid by or on behalf of a consumer for disbursement to the consumer’s creditors;
(5) if an insurance policy:
(A) provide coverage for professional liability, employee dishonesty, depositor’s forgery, and computer fraud in an amount not less than $100,000;
(B) be issued by a company rated at least “A-” or its equivalent by a nationally recognized rating organization; and
(C) provide for 30 days advance written notice of termination of the policy to be provided to the commissioner;
(6) be issued by a bonding, surety, or insurance company that is authorized to do business in the state; and
(7) be conditioned on the provider and its agents complying with all state and federal laws, including regulations, governing the business of debt management services.
Terms Used In Texas Finance Code 394.206
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Forgery: The fraudulent signing or alteration of another's name to an instrument such as a deed, mortgage, or check. The intent of the forgery is to deceive or defraud. Source: OCC
- Fraud: Intentional deception resulting in injury to another.
- Person: includes corporation, organization, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, and any other legal entity. See Texas Government Code 311.005
- Rule: includes regulation. See Texas Government Code 311.005
- Trust account: A general term that covers all types of accounts in a trust department, such as estates, guardianships, and agencies. Source: OCC
- Written: includes any representation of words, letters, symbols, or figures. See Texas Government Code 311.005
(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.