CHAPTER 396. PRIVATE CHILD SUPPORT ENFORCEMENT AGENCIES
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.