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Bill

HB 1516

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 Mike Schofield

Texas bill prohibits money services businesses from charging monetary penalties for terms-of-service violations, replacing them with state civil penalties.

Referred to Pensions, Investments & Financial Services
#business&commerce--general(i0050) #civilremedies&liabilities(i0065) #financial--general(i0365)
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Bill Summary · HB 1516

Legislative bill overview

HB 1516 would prohibit money services businesses (MSBs) from imposing monetary fines or penalties directly for violations of their terms of service agreements. Instead, the bill appears to establish a civil penalty framework, though the specific penalty structure isn't detailed in the bill number alone. This represents a shift in enforcement authority from private contractual remedies to potential state-level penalties.

Why is this important

Money services businesses include payday lenders, check cashers, prepaid card issuers, and money transmitters that serve millions of Texans, particularly lower-income populations. Restricting contractual penalties could significantly affect how these businesses enforce compliance and manage risk, potentially altering their business models, fee structures, or service availability. The change also raises questions about consumer protection versus business operations in a heavily used financial services sector.

Potential points of contention

  • Business viability concerns: MSBs may argue that contractual penalties are essential loss-prevention tools; restricting them could increase overall costs or reduce service availability in underserved markets
  • Consumer protection trade-offs: While limiting predatory fee practices may help consumers, unclear enforcement mechanisms or state penalties could create regulatory gaps or unpredictable compliance costs
  • Scope ambiguity: The distinction between "terms of service" violations and other contractual breaches needs clarification to prevent unintended consequences or loopholes

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

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