Texas CSO & CAB Lending

• Maintain a $10,000 surety bond (or surety account) per location.

• Must be filed with the Secretary of State.

• A bond is required before collecting any fees or compensation from consumers.

Helpful Links:

Surety Bond Info – TX Finance Code §393 Subchapter E

Provide a written disclosure with:

• Complete list of services and fees

• Consumer rights under FCRA

• Cancellation policy

• OCCC contact information

Contracts must:

• Be in writing, signed, and dated

• Include a clear 3-day cancellation notice

• Identify third-party lender and credit access business

• List repayment terms and fees

• State that there is no prepayment penalty

Helpful Links:

Disclosure & Contract Requirements – §393.105 & §393.201

OCCC CAB Disclosure Guidance

• Licenses must be displayed on your website and in each physical location.

• All operational functions tied to online or mailed loans must be licensed.

• Only authorized lenders may transact loans online or by mail.

Helpful Links:

Online/Remote Office Licensing – TAC §83.204

OCCC E-Commerce Lending Guidance

• Submit required reports to the OCCC detailing:

• Number of loans and refinances

• Fees charged

• Vehicle repossessions (for title loans)

• Maintain signed disclosures for at least two years.

• Keep financial statements, ownership records, and business forms updated and accessible.

Helpful Links:

Reporting Requirements & Due Dates (OCCC)

Instructions for Quarterly Reporting (PDF)

ALECS CAB Quarterly Screenshot Guide

Instructions for Flat File Bulk Upload

Recordkeeping Rules – TAC §83.5003

Federal oversight is expanding. The CFPB’s new rule affects many short-term lenders, especially those offering payday loans, auto title loans, or small installment loans.

Key highlights:

• Mandatory underwriting for certain repeat-use loans

• Restrictions on payment withdrawals from consumer accounts

• Recordkeeping and compliance documentation requirements

• Enhanced consumer disclosures at loan origination and repayment stages

Who must comply:

• Lenders making loans of $1,000 or less

• Loans with terms of 45 days or less, or longer-term loans with balloon payments

Texas CABs & CSOs take note: Even if you're brokering loans through a third party, you're still responsible for compliance with federal rules when facilitating loan origination.

Next Step: Review your underwriting, ACH/payment withdrawal processes, and loan disclosures now to ensure alignment with CFPB requirements.

Helpful Links:

CFPB Small-Dollar Rule Summary

CFPB Compliance Aid Materials

• Do not advertise without a license

• Do not collect fees before services are complete without a surety bond

• No charging for referrals

• Avoid false, misleading, or guaranteed loan claims

• Advertising at regulated care facilities (like nursing homes) is prohibited

• No attempts to circumvent licensing or regulatory requirements

Helpful Links:

Prohibited Acts – §393.302–307

TAC §83.204(b) – Online Licensing & Scope

Understand and use terms defined in Chapters 342 and 393 of the Texas Finance Code, including:

• Credit Access Business (CAB): A business that helps consumers obtain payday or title loans from third-party lenders, for a fee.

• Single vs. Multiple Payment Loans:

• Single Payment: Entire loan due in one lump sum.

• Multiple Payment: Repaid in installments over time.

• Precomputed vs. Interest-Bearing Loans:

• Precomputed: Interest is calculated upfront for the full loan term.

• Interest-Bearing: Interest accrues on the unpaid balance over time.

• Authorized Lender: A licensed lender or financial institution legally allowed to issue loans in Texas.

• Principal Party: An individual with significant control or ownership in a lending business (e.g., owner, officer, or director).

• Net Assets: Total assets minus liabilities; must meet minimum thresholds to qualify for a license.

• Add-on Interest and Rebate Methods:

• Add-on Interest: Interest calculated on full loan amount regardless of payments.

• Rebate Methods: Ways to refund unearned interest if a loan is paid off early.