Section 85.402 - Recordkeeping(a) Minimum records. Books and records must be sufficient to demonstrate compliance with Texas Finance Code, Chapter 371, and this subchapter such that the books and records: (1) allow for the documentation of all transactions to the extent that any single transaction may be re-created; and (2) allow for the documentation of any set of transactions governed by Texas Finance Code, Chapter 371, to the extent that the set of transactions may be re-created. (b) Record retention. Any required book, record, or instrument pertaining to a transaction, whether paper or electronic, must be available for a minimum of two years from the date of the last recorded event. Records must be available for inspection during normal business hours by the commissioner's authorized representative. For purposes of this section, the date of the last recorded event is the date a pledged item is taken into inventory, redeemed, renewed, seized, or voided. (c) Compliance file. A separate file must be maintained at each licensed location for all communications from the OCCC and for copies of correspondence and reports addressed to the OCCC. This file must include, at a minimum, electronic or paper copies of the current Texas Finance Code, Chapter 371, the last three examination reports, correspondence relating to compliance issued in the last two years, and current rules issued by the OCCC . A licensee will be considered to have maintained copies of the Texas Finance Code and current rules by having access to the websites containing the official versions of the current Texas Finance Code and the current Texas Administrative Code. A licensee will be considered to have maintained copies of some or all of the last three examination reports if those reports were issued electronically by the OCCC.(d) Recordkeeping systems. A licensee must use a reviewed software system unless the licensee utilizes either a manual system that complies with subsection (f) of this section or a proprietary software system that is not sold or distributed to other licensees, unless the other licensees are affiliates of the licensee operating the proprietary system. All reviewed software systems in place on the effective date of this rule are not required to submit for re-review. A list of reviewed non-proprietary software systems that may be used by licensees will be maintained on the OCCC's website. A licensee or the software vendor must provide documentation of the non-proprietary software system to the OCCC that explains how the required information provided by subsection (e) of this section is maintained within the system. (e) System documentation. (1) Required information. A licensee or vendor seeking review of a system must make available a complete and detailed written description of the system proposed to be utilized, including: (A) a statement specifying whether the system will be used in its entirety; (D) a copy of the software to be used; and (E) a full description of backup systems in place that will ensure business continuity and the protection of pledged goods. (2) Amendments. Any change to a software system is required to meet the minimum reporting requirements as established by this section. (3) Who must file. A non-proprietary software vendor may make a filing on behalf of a pawnbroker. It is the pawnbroker's responsibility, however, to ensure the system was reviewed before utilizing the system. (4) Removal of reviewed status for non-proprietary software systems. The commissioner may remove a software vendor's name from the list of Reviewed Non-Proprietary Software Systems upon finding the system does not provide information as anticipated at the time of the review or does not comply with this section. Prior to the removal of the reviewed status for a non-proprietary software system, a pawnbroker or software vendor will be granted a reasonable time to make corrective modifications if it can be shown that the granting of time will not be detrimental to pledgors. Upon withdrawal of the system from the reviewed list, the use of the system must cease. (f) Requirements of manual recordkeeping system. In a manual recordkeeping system, the pawn ticket must be a four-part form. Manual entries to the top copy must be legible and simultaneously reproduced on the remaining parts. The form must provide a perforated stub to be utilized in labeling and identifying pledged goods. Each part of the pawn ticket form must be numbered sequentially by the supplier of the pawn ticket form. The stub must be numbered simultaneously with the same sequential number. The portion of the pawn ticket made available to local law enforcement may, with the approval of the local law enforcement agency receiving it, omit the preprinted text of the pawn ticket. The portion of the pawn ticket maintained in the numerical pawn ticket file must provide an appropriately designated space for posting amounts paid on the pawn transaction. (g) Requirements of electronic recordkeeping system. In an electronic recordkeeping system, the pawn ticket must be a three-part form. Entries made to the top copy of the pawn ticket must be legible and simultaneously reproduced on the remaining parts. The form must provide a perforated stub to be utilized in labeling and identifying pledged goods. Each part of the pawn ticket must be numbered sequentially by the supplier of the pawn ticket form. As an alternative to sequential numbering by the supplier, the licensee may sequentially number each pawn ticket in accordance with written policies and procedures (maintained by the licensee) that ensure the integrity of the numbering system through appropriate management and accounting controls. The stub and the three parts of the pawn ticket must be numbered simultaneously with the same sequential number. The second part of the pawn ticket (law enforcement copy) may be omitted or properly destroyed (i.e., pawn ticket is completely shredded or incinerated) if the pawn and purchase ticket information is exchanged electronically, directly or indirectly, with the primary law enforcement agency in the jurisdiction that the pawnshop is located. (1) Required electronic information. A pawnbroker who chooses to maintain pawn and purchase ticket information electronically must comply with the requirements of Chapter 371 of the Texas Finance Code and the rules governing electronic records. The information relating to the dates and amounts of all payments made on the pawn transaction, the final disposition or status of the pawn transaction (i.e., renewed, redeemed, voided, forfeited, or seized), and the final disposition date, must be either manually recorded on the hard card pursuant to subsection (f) of this section, or electronically stored pursuant to this subsection. The final disposition or closing date is the date that the pawn transaction is renewed, redeemed, voided, or the pledged goods are forfeited by the pledgor or seized by a law enforcement agency. For the electronic system, the final disposition information must be stored and accessible for the entire record retention period required by Texas Finance Code, §371.152(b). If paragraph (2) of this subsection applies, the loan disposition report and supplemental loan disposition report must be timely printed or stored as an electronically imaged or archived record. (2) Loan disposition report and supplemental loan disposition report. For purposes of this paragraph, a calendar month means every day from the first day of the month to the last day of the month. (A) Loan disposition report. The loan disposition report is a listing of all pawn transactions that were made in a calendar month. The loan disposition report is printed or stored as an electronically imaged or archived record and is sorted by using the field of the date made as recorded on the pawn ticket. (B) Supplemental loan disposition report. If the pawnbroker has a practice of extending the maturity date using a memorandum of extension or if the pawnbroker does not exercise the option to forfeit pledged goods on the day after the last day of grace recorded on the pawn ticket, then the pawnbroker must produce a supplemental loan disposition report. The supplemental loan disposition report is a listing of all pawn transactions that were closed (i.e., renewed, redeemed, voided, forfeited, or seized) in a calendar month. The supplemental loan disposition report must be printed or stored as an electronically imaged or archived record and is sorted by using the field of the final disposition or closing date.(C) Content. (i) Required information. The loan disposition report and the supplemental loan disposition report must contain the following: (I) pawn or loan ticket number; (III) original date made; (IV) original maturity date; (V) loan amount or amount financed; (VI) original pawn service charge; (VII) final disposition or closing date; (VIII) action taken to close the pawn transaction (i.e., renewed, redeemed, voided, forfeited, or seized); (IX) if applicable, date and dollar amount of each memorandum of extension payment; and (X) if applicable, dollar amount paid to redeem or renew the pawn transaction (i.e., amount paid itemized to show the allocation between the amount financed, pawn service charge, additional daily charges, and the lost pawn ticket statement). (ii) Active or open transactions. The loan disposition report may contain active or open pawn transactions. If a pawn transaction is active or open when the loan disposition report is printed or electronically imaged, the closing date should be left blank and the action taken to close the pawn transaction should be shown as "active" or "open." (D) Timing. If the licensee is not manually recording the payment information on the hard cards pursuant to subsection (f) of this section, the loan disposition report and supplemental loan disposition report must be printed or stored as an electronically imaged or archived record every month. (i) Loan disposition report. The loan disposition report must capture all pawn transactions, including active or open, that were made for a particular calendar month. The report must be produced four or five months after the completion of the reporting period, depending upon the length of the grace period. If a 30-day grace period is offered, the report must contain information for pawn transactions made four months prior. If a 60-day grace period is offered, the report must contain information for pawn transactions made five months prior. As an example, in May 2015, the loan disposition report must be printed or electronically imaged to include all pawn transactions that were made during the calendar month of December 2014 (60-day grace period) or January 2015 (30-day grace period). (ii) Supplemental loan disposition report. The supplemental loan disposition report must be printed to capture all pawn transactions that were closed or have had a final disposition (i.e., renewed, redeemed, voided, forfeited, or seized) in the previous calendar month. As an example, in May 2015, the supplemental loan disposition report must include all pawn transactions that were closed in the previous month of April 2015 (i.e., April 1, 2015 to April 30, 2015). (3) Disaster recovery plan. A pawnbroker must maintain a sufficient disaster recovery plan to ensure that pawn and purchase ticket information is not destroyed, lost, or damaged. (4) Access by OCCC personnel. The pawnbroker must provide reasonable access to a computer workstation capable of accessing and retrieving pawn and purchase ticket information throughout the examination or investigation conducted by the commissioner's representatives. A pawnbroker may provide the commissioner or the commissioner's representatives the same information in physical form as an alternative to reasonable access to a computer workstation.(h) Military Lending Act records. (1) A licensee must maintain any record that the licensee obtains under the Department of Defense's Military Lending Act Rule, RSA 232.5, regarding whether a consumer is a covered borrower. The licensee must maintain the record for at least two years after the last recorded event, as provided by subsection (b). (2) A licensee must maintain any mandatory disclosure to a covered borrower under the Military Lending Act Rule, RSA 232.6. The licensee must maintain the disclosure for at least two years after the last recorded event, as provided by subsection (b).7 Tex. Admin. Code § 85.402
The provisions of this §85.402 adopted to be effective October 1, 2000, 25 TexReg 9435; amended to be effective February 1, 2006, 30 TexReg 8856; amended to be effective June 7, 2010, 35 TexReg 3471; amended to be effective June 6, 2011, 36 TexReg 2726; amended to be effective July 1, 2014, 39 TexReg 3398; Amended by Texas Register, Volume 41, Number 45, November 4, 2016, TexReg 8819, eff. 1/1/2017; Amended by Texas Register, Volume 43, Number 52, December 28, 2018, TexReg 8588, eff. 2/1/2019