Texas OCCC Finalizes Rules Implementing Sales-Based Financing Law

The Texas Office of the Consumer Credit Commissioner (“OCCC”) has (the “Rules”) to implement HB 700, the state’s sweeping sales-based financing law. Although most provisions of HB 700 have been in effect since September 2025, the Rules became effective on July 9, 2026. The following is a summary of certain key provisions of the Rules and HB 700:

• Automatic Debits: The most controversial provision of HB 700 prohibits sales-based financing providers from automatically debiting a recipient’s deposit account unless the provider holds a valid, perfected, first-priority security interest in the account. Because most sales-based financing providers collect remittances via automatic debits and rarely, if ever, have the first-priority security interest required by HB 700, many providers have adopted alternative strategies for collecting remittances in the state. The Rules thankfully provide two important clarifications on the scope of this requirement that should ease compliance burdens and provide certainty for sales-based financing providers:
  • First, the Rules provide that “debits are automatic if they are authorized in advance to occur more than one time or on a recurring basis.” This indicates that debits individually and manually authorized by the recipient should not be deemed to violate HB 700.
  • Second, the Rules clarify that to automatically debit a recipient’s deposit account, the provider must have a first-priority security interest in “all accounts receivable of the recipient,” not in the underlying deposit account. This clarification is significant because, although providers may still have difficulty obtaining a first-priority security interest in the recipient’s accounts receivable, obtaining the required security interest in a deposit account is next to impossible for most providers.
• Disclosures: HB 700 requires providers of sales-based financing to disclose certain specified terms of the financing when extending a “specific offer” of sales-based financing in an amount of less than $1 million. The Rules do not significantly alter these requirements, but the OCCC’s commentary on the Rules makes it clear that the term “specific offer” does not include nonbinding estimated offers. The Rules also require a provider to promptly notify the recipient and furnish updated disclosures if the provider discovers that the initial disclosures were inaccurate. Separately, the Rules also provide that a contract for services regulated by HB 700 must include a specified notice that includes the OCCC’s contact information.
• UDAAP Prohibition: HB 700 and the Rules also prohibit providers from engaging in any unlawful, unfair, deceptive, or abusive act or practice related to a sales-based financing transaction, including failing to make accurate disclosures, filing a confession of judgment or debiting amounts from a person’s account without authorization. HB 700 and the Rules provide the OCCC with broad enforcement and investigation authority to enforce these and other provisions of the law.
• Registration: Under HB 700, sales-based financing providers and brokers will be required to register with the state by December 31, 2026. Registrants will be required to submit applications through the Nationwide Multistate Licensing System, and such applications must include (among other things) a detailed business plan and an individual filing for each “key individual,” defined to include persons having the power to direct the management or policies of the applicant and individual direct owners of 10% or more of the applicant. Registrants are required to renew their registration on an annual basis, pay annual renewal fees, and provide advance notice of certain changes, including changes to the registrant’s key individuals or main address.

Sales-based financing providers and brokers operating in Texas should closely review HB 700 and the Rules (which as noted above are already in effect) and ensure that they are registered by December 31, 2026. If you have any questions or would like assistance with compliance, please contact any of the authors or the Manatt professional with whom you work.