A Look Back at the 88th Texas Legislative Session: Fair Financial Services

May 29, 2023, marked the end of the regular 88th Texas Legislative Session. Texas Appleseed’s Fair Financial Services Project, grounded in building and supporting financial wellbeing for Texans, had a robust legislative agenda. Among our priority items, we worked to promote data privacy protections, enhance debt collection rights for victims of financial abuse, and address predatory lending. We faced some setbacks but had many successes and made important progress across all of our policy priorities.

Strengthening Data Privacy Protections for Texans
Texas Appleseed worked with consumer advocacy groups and stakeholders to strengthen data privacy protections for Texans. Our advocacy focused on ensuring that invasive data collection is not used as a way to evade fair lending laws or facilitate financial exploitation of people in vulnerable circumstances. We worked to achieve this goal through supporting laws that give individuals control of personal data and protect Texans from unnecessary data collection, sharing, and selling practices. 

We had two major data privacy policy wins: 

• We played a pivotal role in the introduction and passage of a bill that requires data brokers to register with the state. This new law is an essential first step of accountability and transparency for third-party businesses that collect and sell our data. Texas is now one of just three states with a data broker registry. The Texas law improves on others by establishing broader definitions to encompass more of the market and also includes important data security standards for data brokers.
• We also supported Texas’ first comprehensive data privacy regulation. We successfully advocated for important improvements to the law, including allowing for automatic opt out of data collection through browser settings, enhancing penalties for violations, and mandating a simple user guide so that Texans can access these new protections when the law is fully implemented in 2024.

As a next step, we plan to support effective implementation of these new laws and identify areas for improvement.

Maintaining Fair Laws for Consumer Credit and Fighting Predatory Lending
Texas stands out as having one of the most predatory payday and auto title lending markets in the country because of weak state laws. In response to a groundswell of community-based concerns, 49 municipalities have adopted ordinances to establish a baseline for fair market practices. 

This session, there were multiple aggressive attempts to preempt those beneficial ordinances:

• Working with a broad base of partner organizations, we were able to hold back three overreaching preemption bills: one that would enable payday and auto title loan businesses to sue cities that have payday and auto title loan ordinances and two bills (here and here) that would have prohibited cities from adopting and enforcing these local ordinances. 
• An expansive preemption bill passed the legislature and was signed into law. This bill would have rolled back payday and auto title lending ordinances in 49 cities. Due to the efforts of faith and community voices, consumer advocates, and fair lending coalitions, existing local ordinances that rein in abusive payday and auto title lending practices were protected. The future for new ordinances and necessary updates is uncertain. This bill is currently being challenged in the courts.

In partnership with Texas Fair Lending Alliance members, we also worked hard this session to stop two bills that would have expanded predatory lending in Texas:

• A bill increasing the interest rate of certain consumer loans was filed this session. It was filed for the fourth session in a row and, if passed, would have more than doubled the cost of credit for Texans. We estimate that stopping this bill saved Texans over $85 million in excess interest and fee charges.
• A bill filed this session would have exempted fintech wage advance products from basic state consumer protections. The bill passed the Texas House, but did not make it through the Senate. If passed, this bill would have opened up a new predatory lending loophole in Texas by allowing these businesses to charge unlimited fees for cash advances secured by a paycheck — creating a new kind of uncapped payday loan. We are pleased to report that this dangerous new regulatory approach was not given a stamp of approval in Texas.

In addition to our core priorities, we also worked to stop efforts that would have made it easier for bad actors to drain home equity from financially struggling homeowners and engage in door-to-door sales scams.  Moving forward, we will continue to build new and innovative ways to help communities expand access to affordable loans and protect Texas consumers from predatory lending practices. 

Enhancing Debt Collection Protections
We had our work cut out for us this session, trying both to stop several harmful debt collection bills and pass crucial debt collection protections.

We successfully advocated against a series of debt collection bills that would have harmed the financial wellbeing of Texans facing a debt collection judgment: 

• One bill would have prolonged debt collection judgments.
• Another bill would have made certain trade tools and vehicles vulnerable to collection.
• A third would have weakened wage garnishment protections.

We also made progress on some important policy priorities:

• We advocated in support of modernizing wage protections and, though that bill did not pass, we made important progress educating policymakers about the issue.  
• For the past two legislative sessions, in partnership with organizations working in support of survivors of domestic violence, Texas Appleseed has worked to establish clear protections related to coerced debts, debt incurred by an abuser, in the name of their victim, through threat, force, or fraud. We advocated for a bill to ensure that victims of financial abuse have enhanced and accessible tools to address wrongful debt collection efforts. Although this bill progressed through the legislative process, it ultimately ran out of time.

We will continue our push for debt collection reform and enhanced protections for victims of financial abuse and identity theft. 

Looking Ahead
Now that the 88th Regular Texas Legislative Session has ended, the Fair Financial Services team will continue our work to advocate for payday and auto title lending reform, fair debt collection practices, enhanced protections for victims of financial abuse, and data privacy rights for all Texans. 

We are deeply appreciative of the members of the Texas Legislature who were important partners and allies in this difficult work. We are extremely thankful for the numerous coalitions and community members we worked with to advance consumer protections for Texans, including the Texas Fair Lending Alliance, Texas Faith Leaders 4 Fair Lending, and the Texas Coalition on Coerced Debt.