| (a) Generally. A licensee assists consumers in obtaining
extensions of credit by others, as provided by Texas Finance Code, §393.001(3).
(b) Independent operation. A licensee must operate
independently from any third-party lender that makes a loan in connection
with a transaction under Texas Finance Code, Chapter 393. Independent
operation includes the following requirements:
(1) A licensee must be a separate legal entity from
any third-party lender that makes a loan in connection with a transaction
under Texas Finance Code, Chapter 393.
(2) The individuals who make major operational decisions
for a licensee must be different from the individuals who make major
operational decisions for any third-party lender.
(3) A licensee may not perform the functions of a third-party
lender, except by written agreement in accordance with this section.
(4) A licensee may not delegate functions to a third-party
lender, except by written agreement in accordance with this section.
(5) A licensee may not select the underwriting criteria
used in determining whether the lender will make a loan to the consumer,
but a licensee may apply underwriting criteria selected by the third-party
lender.
(6) A licensee may not lend money to a consumer in
connection with a transaction under Texas Finance Code, Chapter 393.
In particular, a licensee may not borrow money from another person
and then lend that money to a consumer.
(7) A licensee may not act as a general agent of a
third-party lender, but may act as a special limited agent under a
written agreement with a third-party lender in accordance with this
section.
(8) A licensee may not directly or indirectly share
fees for credit access business services with a third-party lender.
If a third-party lender receives any portion of a fee for credit access
business services charged by a licensee, it must be promptly remitted
to the licensee.
(9) A licensee must document each transfer of money
between itself and a third-party lender, in a manner sufficient to
show each amount that was remitted in connection with each transfer.
A licensee must maintain sufficient and complete records to show the
exact amounts that were earned by the licensee and the third-party
lender in connection with a deferred presentment transaction or motor
vehicle title loan.
(c) The OCCC may consider the following factors in
determining whether a licensee operates independently from a third-party
lender in compliance with this section:
(1) the extent of common ownership or control between
the licensee and any third-party lender, including common ownership
or control resulting from familial relationships between owners and
directors of the licensee and any third-party lender;
(2) whether a licensee shares common officers, directors,
or employees with a third-party lender;
(3) the sufficiency of documentation of transfers of
money between the licensee and a third-party lender; and
(4) whether the licensee's course of performance is
consistent with its written agreements with third-party lenders and
its agreements with consumers, including agreements that specify a
time within which the licensee will act on a guarantee.
(d) Representations regarding relationship with third-party
lender. Under Texas Finance Code, §393.304, a licensee may not
make a false or misleading representation in the offer or sale of
services. In particular, a licensee may not make a false or misleading
representation regarding its relationship with a third-party lender
or any guarantee that the licensee provides to a third-party lender
on the consumer's behalf. For example, a licensee may not represent
that it will enter a letter of credit with the third-party lender
if, in its course of performance, it does not actually enter a letter
of credit as that term is defined in Texas Business & Commerce
Code, §5.102(a)(10). A licensee may not represent that it guarantees
repayment to a third-party lender on the consumer's behalf if it does
not act on that guarantee as described in its representations.
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