According to the Legislative Budget Board (LBB), HB 4134 is expected to have no significant fiscal implications for the State of Texas. The agencies that oversee motor vehicle retail financing—namely, the Department of Banking, Department of Savings and Mortgage Lending, Office of Consumer Credit Commissioner, and Credit Union Department—are all self-directed and semi-independent. These agencies operate outside the state’s general appropriations process and are required to fund their own operations without placing a financial burden on the state’s General Revenue Fund.

Additionally, the bill is not expected to result in any fiscal impact on local governments. Since the legislation merely authorizes private parties (retail installment contract holders) to charge a capped fee for electronic payments under certain conditions, it does not impose any new costs or administrative responsibilities on city, county, or other local governmental entities.

Overall, HB 4134 is a fiscally neutral proposal from the perspective of both state and local government budgets. The financial activity it regulates pertains strictly to private-sector transactions and does not require public funding or operational changes to government agencies

HB 4134 proposes a reasonable goal: to permit holders of motor vehicle retail installment contracts, such as dealerships and finance companies, to charge a convenience fee when customers choose to make payments electronically. Under current law, unregulated third-party processors can charge consumers these fees, but regulated creditors—like auto dealers—are prohibited from doing so. HB 4134 seeks to resolve this inconsistency, giving regulated entities the same flexibility as unregulated ones. In that regard, the bill addresses a legitimate fairness issue in Texas financial law.

However, the bill introduces a new inconsistency of its own by capping the allowable fee at the lesser of $10 or five percent of the payment amount. This cap only applies to regulated creditors, even though third-party processors performing the exact same function face no such restriction. While HB 4134 is presented as a consumer protection measure, this statutory cap on a private, optional fee unfairly limits one category of businesses—auto finance companies—while continuing to allow others to operate without such constraints. This unbalanced approach amounts to regulatory favoritism for third-party actors and continues a double standard rather than resolving it.

A more equitable and liberty-aligned approach would be to remove the cap entirely while preserving the core consumer protections already embedded in the bill. These include the requirement that the fee be disclosed clearly and in advance, that the customer not be compelled to pay electronically, and that a no-fee payment method—such as check, money order, or cash—remains available. These protections ensure transparency and preserve consumer choice, which are the most effective and respectful forms of consumer protection in a free market.

From a limited government perspective, the role of the state should not be to set arbitrary price caps in voluntary, disclosed financial transactions between private parties. Instead, the state’s role is to ensure the integrity and fairness of those transactions through full transparency and the prevention of coercion. By maintaining disclosure and choice, but removing fee caps, the Legislature would empower consumers to make informed decisions without unfairly penalizing one class of business actors.

Therefore, while the intent of the bill is commendable, its current form undermines free enterprise and perpetuates unequal treatment of similarly situated parties in the private sector. For these reasons, the Texas Policy Research recommends that lawmakers vote NO unless the bill is amended to remove the cap on convenience fees while retaining strong disclosure requirements and mandatory no-fee payment alternatives. Only then would the bill fully align with the principles of individual liberty, personal responsibility, free enterprise, and limited government.

• Individual Liberty: The bill protects individual liberty in part by giving consumers the freedom to choose whether to pay electronically, even when a fee is involved. It requires that the fee be disclosed clearly and that a no-fee option is always available, ensuring that customers are never coerced into paying extra. This transparency supports voluntary exchange and informed consent. However, the government-imposed cap on the fee ($10 or 5%) limits the range of choices available in the market. In doing so, it arguably undermines the liberty of both businesses and consumers by preventing them from entering into agreements that might fall outside of that range, even when both parties are willing. If a consumer values the speed or convenience of paying $15 to avoid a late fee, why should that option be illegal? By restricting such choices, the cap weakens individual liberty under the guise of protection.
• Personal Responsibility: The bill promotes personal responsibility by giving consumers control over how they pay and by making the cost of convenience explicit. Customers who wish to avoid the fee can take personal initiative to use a free alternative payment method (like a check or money order). By allowing people to see the cost difference and choose accordingly, the bill reinforces the idea that decisions have consequences—a central tenet of personal responsibility. However, personal responsibility is most respected when individuals are trusted to weigh trade-offs on their own, without arbitrary restrictions. The cap could be seen as a sign that the state doesn’t fully trust individuals to make informed decisions, which dilutes the principle.
• Free Enterprise: This is where the bill falls short. The bill intervenes directly in a private market transaction by placing a hard cap on a fee that would otherwise be determined by market dynamics, competition, and consumer demand. That’s a clear restriction on free enterprise. Moreover, it singles out a specific industry—regulated auto creditors for this limitation, while unregulated third-party processors can charge fees without any statutory cap. That creates an uneven playing field, which undermines competitive neutrality and market fairness. In effect, the state is picking winners and losers, which is contrary to the principle of a free and open market.
• Private Property Rights: The bill does not alter or infringe on anyone’s right to own or use property. It respects contractual relationships between the creditor and the buyer, and merely defines how certain payment methods can be offered. By allowing creditors to charge a convenience fee where previously prohibited, it enhances their ability to monetize their services, which aligns modestly with private property rights. However, the cap once again represents a restriction on how a private business may use its own infrastructure to offer services, and that could be interpreted as a limitation on the full enjoyment of private property and contract rights.
• Limited Government: Limited government means the state should not involve itself in matters that can be resolved through private negotiation, market competition, or individual discretion. By statutorily capping a private, voluntary fee, the state crosses into unnecessary economic regulation. If the goal is to ensure fairness and transparency, the state could simply require disclosure and fee-free alternatives, leaving the price of the fee to the market. Instead, the bill’s cap imposes top-down economic control, albeit narrow, which expands the regulatory footprint of government without clear justification.

• SB 1736 (Same As)