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Bill

SB 512

Relating to prohibiting the imposition of a monetary fine or penalty for a violation of a money services business's terms of service agreement; providing a civil penalty.

89th Legislature (2025) Introduced by Lois Kolkhorst and 1 co-sponsor

Texas law bars money services businesses from charging customer fines for contract violations, effective September 1, 2025, with civil penalties for non-compliance.

Effective on 9/1/25
#business&commerce--general(i0050) #civilremedies&liabilities(i0065) #financial--general(i0365)
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Bill Summary · SB 512

Legislative bill overview

SB 512 prohibits money services businesses (such as check cashers, money transmitters, and prepaid card companies) from charging monetary fines or penalties to customers for violating the terms of service agreements. The bill establishes a civil penalty framework for violations of this prohibition, creating enforcement mechanisms for affected consumers.

Why is this important

Money services businesses commonly charge fees for overdrafts, early withdrawals, or other contract violations—practices that disproportionately impact lower-income consumers who rely on these services. By restricting these fees, the bill aims to reduce unexpected charges on vulnerable populations, though it may affect business profitability and service availability in underserved markets.

Potential points of contention

  • Business impact: Money services businesses may reduce service offerings, raise other fees, or exit markets with lower-volume customers if unable to recover costs through traditional penalty structures
  • Definition ambiguity: The bill's scope depends on how "money services business" and "terms of service violations" are legally interpreted and enforced in practice
  • Alternative fee structures: Businesses may shift to other revenue models (higher base fees, subscription models) that could harm consumers differently than the prohibited penalties

Compiled from official sources — confirm details with the bill’s official record.

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