H.B. No. 4238 introduces new provisions to the Texas Finance Code aimed at protecting consumers who are victims of identity theft. The bill adds Section 392.308, which defines "identity theft" and outlines the responsibilities of creditors, debt collectors, and third-party debt collectors when they receive a court order declaring a consumer as a victim of identity theft. Specifically, these entities are prohibited from attempting to collect debts that are a result of the identity theft as described in the court order. Additionally, they must cease collection efforts within seven business days of receiving notice of the identity theft and must inform any parties previously notified about the debt that it is now disputed and not collectible from the victim.

The bill also clarifies that it does not apply to home loans or to the collection of judgments already obtained. Furthermore, it allows creditors and debt collectors to pursue collection from the actual perpetrator of the identity theft, while ensuring that victims are not held liable for debts incurred as a result of the crime. This legislation is set to take effect on September 1, 2025, and aims to provide stronger protections for consumers against the repercussions of identity theft.

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