This section sets how refunds or credits for a debt cancellation agreement fee must be calculated and paid, including cancellation rules, deadlines, and recordkeeping.
Sec. 354.007. REFUND FOR DEBT CANCELLATION AGREEMENTS. (a) A refund or credit of the debt cancellation agreement fee must be based on the earliest date of: (1) the prepayment of the contract in full before the original maturity date; (2) a demand by the holder for payment in full of the unpaid balance or acceleration; (3) a request by the retail buyer for cancellation of the debt cancellation agreement; or (4) the total denial of a debt cancellation request based on one of the exclusions listed in Section 354.003, except in the case of a partial loss of the covered vehicle. (b) The refund or credit for the debt cancellation agreement can be rounded to the nearest whole dollar. A refund or credit is not required if the amount of the refund or credit calculated is less than $5. (c) If total loss or theft has not occurred, the retail buyer may cancel the debt cancellation agreement not later than the 30th day after the date of the contract or the issuance of the debt cancellation agreement, whichever is later, or a later date as provided under the debt cancellation agreement. On cancellation, the holder or any administrator of the agreement shall refund or credit the entire debt cancellation agreement fee. A retail buyer may not cancel the debt cancellation agreement and subsequently receive any benefits under the agreement. (d) A holder may in good faith rely on a computation by any administrator of the agreement of the balance waived, unless the holder has knowledge that the computation is not correct. If a computation by the administrator of the balance waived is not correct, the holder must within a reasonable time of learning that the computation is incorrect make the necessary corrections or cause the corrections to be made to the retail buyer's account. This subsection does not prevent the holder from obtaining reimbursement from the administrator or another responsible for the debt cancellation agreement or computation. (e) If the debt cancellation agreement terminates due to the early termination of the contract, a holder who is a retail seller who has not assigned or transferred the contract shall: (1) not later than the 60th day after the date the debt cancellation agreement terminates refund or credit an appropriate amount of the debt cancellation agreement fee; or (2) cause to be refunded or credited an appropriate amount of the debt cancellation agreement fee by providing written instruction not later than the 30th day after the date the debt cancellation agreement terminates, including by electronic means, to the administrator of the agreement. (e-1) If the debt cancellation agreement terminates due to the early termination of the contract, a holder, other than a holder described by Subsection (e), shall: (1) not later than the 60th day after the date the debt cancellation agreement terminates refund or credit an appropriate amount of the debt cancellation agreement fee; or (2) cause to be refunded or credited an appropriate amount of the debt cancellation agreement fee by providing written instruction not later than the 30th day after the date the debt cancellation agreement terminates, including by electronic means, to the administrator of the agreement and the retail seller. (f) The administrator of the agreement or the administrator of the agreement and the retail seller, as applicable, not later than the 30th day after receiving the written instructions specified under Subsection (e)(2) or (e-1)(2), shall provide a refund or credit of an amount of a debt cancellation agreement fee proportional to the amount received by the administrator and retail seller under the agreement. (g) The administrator of the agreement and the retail seller shall maintain records of any refund or credit of an amount of a debt cancellation agreement fee made under Subsection (e) or (e-1) and provide electronic access to those records until the later of the fourth anniversary of the date of the contract or the second anniversary of the date of the refund or credit. Redesignated and amended from Finance Code, Subchapter G, Chapter 348 by Acts 2017, 85th Leg., R.S., Ch. 183 (S.B. 1052), Sec. 6, eff. September 1, 2017. Amended by: Acts 2023, 88th Leg., R.S., Ch. 580 (H.B. 2746), Sec. 1, eff. September 1, 2023.