What is the Consumer Service Alliance of Texas (CSAT)?

The Consumer Service Alliance of Texas (CSAT) is a trade association advocating for the protection of financial choice based on [or in] personal responsibility for Texas consumers. CSAT represents the interests of consumers and Credit Service Organizations (CSO) across Texas.

What are Credit Service Organizations (CSOs)?

Credit Service Organizations provide retail financial products and services to Texas consumers. From stores in neighborhoods across the state, hard-working Texans have access to small, short term loans; money orders; pre-paid telephone and debit cards and other services to help them manage their finances.

One of the services a CSO provides is locating and securing an independent third-party lender for customers who need small, short term loans for immediate financial needs. CSOs do not provide loans to consumers. The small, short term loans are underwritten using the criteria of the unaffiliated third-party lender.

Many CSOs also help consumers improve and rebuild their credit ratings by providing the opportunity for the successful repayment of their loans to be reported favorably to the Payment Reporting Builds Credit (PRBC)™ credit bureau.

Does the CSO Charge Interest for These Services?

No. The CSO provides its services based on a fee schedule, which is predetermined and described in a written agreement signed by both the consumer and CSO. Fees for all retail financial services are determined by competition in the marketplace.

Is the Third-Party Lender Limited in the Amount of Interest or Fees Charged?

Yes. The maximum rate of interest for a small, short term loan is 10% per annum. A borrower is entitled, free of charge, to a ten day grace period before a late fee can be assessed for failure to repay. Late fees, if any, are capped at 5% of the amount unpaid. All additional fees associated with these loans are regulated by Chapter 302 of the Texas Finance Code.

What Is the Application Process for a small, short-term loan?

A consumer begins the small, short term loan process by filling out a credit application at a CSO location. The information is then sent to the lender, who determines eligibility and approves or denies the loan based upon its underwriting criteria. Documents are signed and the loan funds are given to the consumer. Consumers have the option of repaying a small, short term loan in cash or by an ACH debit to a bank account.

Are There Consumer Protections in Place When Purchasing Retail Financial Products or Services from a CSO?

Yes, many. CSOs in Texas:

• Disclose the cost of the service they provide both as a dollar amount and as part of an annual percentage rate;
• Comply with all applicable laws and regulations including Chapter 393 of the Texas Finance Code;
• Allow consumers to change their mind about obtaining a small, short term loan for three days without charge;
• Only collect past due loans in a professional, fair and lawful manner; and
• Never threaten or pursue criminal action against a borrower because of a default.

What Consumer Safeguards Apply to Small, Short Term Loans from a Third-Party Lender?

An independent, third-party lender must comply with the all of the state and federal laws that govern unsecured consumer loans. These loans are subject to Article 16 of the Texas Constitution, Chapter 302 of the Texas Finance Code, the standards of the federal Truth in Lending Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Debt Collection Practices Act, the federal regulations promulgated pursuant to those Acts along with the other laws that apply to consumer loans.

Can These Loans Be Issued to Military Personnel?

No. Recent changes to federal law prevent almost all forms of outside credit for military personnel and their families. Small, short term loans fall in that category.

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