S.B. No. 512 is a legislative bill that aims to prohibit money transmission licensees from imposing monetary fines or penalties for violations of their terms of service agreements. The bill amends the heading of Subchapter G, Chapter 152 of the Finance Code to reflect this change, specifically inserting "GENERAL DUTIES AND RESTRICTIONS FOR MONEY TRANSMISSION LICENSEE" and removing the previous wording related to timely transmission, refunds, and disclosures. Additionally, the bill introduces a new section, 152.305, which explicitly states that a licensee cannot include provisions for monetary penalties in their terms of service agreements. However, it allows for the closure of a customer account due to violations, provided that the remaining balance is refunded to the customer.

Furthermore, the bill establishes a civil penalty for licensees who violate this prohibition, amounting to three times the fine or penalty that would have been imposed. The attorney general is granted the authority to bring actions to recover these civil penalties and may also recover attorney's fees and costs incurred in such actions. The provisions of this act will apply only to terms of service agreements entered into after its effective date of September 1, 2025, while agreements made prior will continue to be governed by the existing law.

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