The bill, H.B. No. 1516, seeks to prohibit money transmission licensees from imposing monetary fines or penalties for violations of their terms of service agreements. It amends the heading of Subchapter G, Chapter 152 of the Finance Code to reflect this change, specifically removing the reference to "timely transmission, refunds, and disclosures" and replacing it with "general duties and restrictions." The new Section 152.305 explicitly states that a licensee cannot include provisions for monetary penalties in their terms of service agreements. However, it clarifies that this does not prevent a licensee from closing a customer account due to violations of the terms.

Additionally, the bill establishes a civil penalty for licensees that violate this prohibition, amounting to three times the fine or penalty they would have 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 bill 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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