What Happens When an Unlicensed Security Company Operates in Texas?

Private-security companies in Texas are responsible for more than placing officers at a property. They may be trusted with protecting people, monitoring businesses, controlling access, responding to incidents, and handling sensitive information.

Because of that responsibility, companies that provide regulated private-security services must meet applicable licensing and regulatory requirements.

When a company operates without the required license, the consequences can extend beyond the business itself. The company may face investigation or prosecution, its employees may be placed in difficult positions, clients may be exposed to additional risk, and licensed competitors may lose work to an operator that is avoiding the standards legitimate businesses are expected to follow.

Table of Contents

1. What Is an Unlicensed Security Company?
2. Which Security Services Are Regulated in Texas?
3. How Unlicensed Activity May Be Discovered
4. What Happens After a Complaint Is Filed?
5. Possible Criminal and Civil Consequences
6. How Employees Can Be Affected
7. How Clients Can Be Affected
8. Why Unlicensed Companies Hurt Licensed Businesses
9. How to Report an Unlicensed Security Company
10. Frequently Asked Questions

What Is an Unlicensed Security Company?

An unlicensed security company is generally a business that provides or offers regulated private-security services without holding the company license required for that work.

The Texas Department of Public Safety regulates the private-security profession under Chapter 1702 of the Texas Occupations Code and related administrative rules. DPS oversees both companies and individuals working in regulated areas of the industry.

Potential unlicensed activity may include a company that:

• Offers guard services without the appropriate company license
• Provides armed or unarmed security officers without proper authorization
• Advertises regulated security services it is not licensed to provide
• Uses another company’s license information
• Employs individuals who do not hold the required credentials
• Continues operating after a license expires or becomes inactive
• Uses subcontractors without confirming that they are properly licensed
• Presents itself as a licensed security provider when it is not

The details matter. A company may use terms such as “patrol,” “protection,” “loss prevention,” or “event staff” without clearly describing what its workers actually do. Whether the services require licensing depends on the nature of the work, not only the job title used in an advertisement or contract.

Which Security Services Are Regulated in Texas?

The private-security profession regulated by Texas DPS includes several types of work, such as:

• Armed and unarmed security services
• Personal-protection services
• Private investigations
• Alarm-system installation and monitoring
• Armored-car services
• Electronic-access-control services
• Locksmith services

DPS conducts background checks, investigates complaints, takes disciplinary action against license holders, and may seek criminal prosecution when private-security services are performed without a license.

Some businesses provide services that are related to safety or property management but do not fall under the same licensing requirements. There may also be specific exemptions or exceptions depending on the employer, assignment, and services performed.

That is why suspected unlicensed activity should be reported for review rather than treated as a confirmed violation without an investigation.

How Unlicensed Activity May Be Discovered

An unlicensed security company may come to the attention of regulators, clients, employees, or licensed competitors in several ways.

Someone may notice that:

• The company does not appear in the Texas Online Private Security license search
• An officer cannot provide valid license information
• A company’s license appears expired or inactive
• The company is advertising armed services without the proper authorization
• Contracts, uniforms, vehicles, or online listings use a different company name
• Employees are being told that licensing is unnecessary
• A client receives a complaint about an officer’s credentials
• The business is bidding on regulated work without appearing to be licensed

A missing search result can raise a valid question, but it does not automatically prove that a company is breaking the law. Business names may be entered differently, the company may operate under another registered name, or an exception may apply.

The best approach is to document the information available and submit it to an organization or agency that can evaluate it.

What Happens After a Complaint Is Filed?

A complaint involving a potentially unlicensed company may be submitted to the Texas Department of Public Safety Regulatory Services Division.

DPS accepts complaints involving possible violations of Chapter 1702 by licensed and unlicensed companies or individuals. After a complaint is submitted, a Regulatory Services Division staff member reviews and evaluates the information. The staff member may contact the person who submitted the complaint for clarification or additional documentation.

DPS may consider questions such as:

• What services was the company providing?
• Did those services require a company license?
• Was the company properly licensed at the time?
• Were the officers or other employees properly credentialed?
• Was the company advertising services it was not authorized to perform?
• Does an exemption apply?
• Is there enough information to support further investigation?
• Does DPS have authority over the reported activity?

Submitting a complaint does not mean the company will automatically be found in violation. The information must first be reviewed, and the facts surrounding the company’s operations must be established.

Possible Criminal and Civil Consequences

Operating without a required private-security license can lead to serious consequences.

Texas DPS states that it may seek criminal prosecution against individuals or companies performing private-security services without a license.

Under Chapter 1702, a violation for which another specific criminal penalty is not provided is generally a Class A misdemeanor. A repeated conviction for failing to hold a required license, certificate of insurance, or commission may rise to a third-degree felony.

Depending on the violation and circumstances, an unlicensed operator could potentially face:

• A criminal investigation
• Misdemeanor charges
• More serious charges for repeat violations
• Civil enforcement
• An order to stop providing regulated services
• Financial penalties
• Loss of contracts or business relationships
• Difficulty obtaining a license in the future
• Additional consequences for related violations

The exact result depends on what occurred, which provisions apply, whether the conduct continued, and whether there is a prior enforcement history.

Not every report results in prosecution. DPS must evaluate the evidence and determine the appropriate response.

How Employees Can Be Affected

The consequences of an unlicensed company’s actions may also reach the people working for it.

An employee may believe that the employer completed all required licensing steps. In other cases, workers may be incorrectly told that a company license, individual credential, or commission is unnecessary.

Employees working through an unlicensed company may face questions about:

• Whether they were properly licensed
• Whether they were authorized to perform their assigned duties
• Whether they were working in an armed or unarmed capacity
• Whether they knew the company was operating without a license
• Whether their application was complete
• Whether they were properly affiliated with a licensed employer

Texas allows limited circumstances in which an applicant may perform unarmed work before final licensure, but specific application, timing, eligibility, and employer background-check requirements apply. Those provisions do not allow commissioned security officers or personal-protection officers to work in an armed capacity before licensure.

A company should not assume that simply submitting an application gives every employee immediate permission to perform regulated work.

For workers, the situation can also result in lost wages, sudden reassignment, unemployment, or difficulty documenting legitimate experience if the company is required to stop operating.

How Clients Can Be Affected

Businesses, property owners, event organizers, and other clients may hire an unlicensed company without realizing it.

That can create concerns involving:

• Whether the assigned officers were properly screened
• Whether required training was completed
• Whether armed personnel were properly commissioned
• Whether the company has appropriate insurance
• Whether reports and records are being maintained correctly
• Whether the company is accountable to the state regulator
• Whether the contract can be completed if the company is forced to stop operating

A lower bid may appear attractive, but it can come with hidden risks when the provider has avoided the licensing, training, and compliance costs expected of legitimate companies.

Clients may need to find a replacement company quickly if the provider is investigated or required to stop performing services. That can leave a property, business, or event without adequate coverage.

Before entering a contract, clients should verify the company’s legal name, license status, services offered, and the credentials required for the officers assigned to the job.

Why Unlicensed Companies Hurt Licensed Businesses

Licensed private-security companies invest in applications, insurance, training, background checks, record keeping, compliance, and the ongoing management of employee credentials.

An unlicensed operator may avoid some or all of those responsibilities. That can allow it to submit lower bids, make promises it is not authorized to fulfill, or enter markets without carrying the same expenses as a compliant company.

ASSIST identifies unlicensed operators as a concern because they undercut legitimate businesses, put the public at risk, and make it harder for licensed professionals to perform their work with the credibility it deserves.

The harm is not limited to one lost contract. Repeated unlicensed activity can affect:

• Public confidence in the security industry
• The reputation of licensed officers
• Fair competition among companies
• Client expectations about pricing
• Professional standards across the industry
• The perceived value of licensing and compliance

Licensed companies should not attempt to confront or publicly accuse a suspected operator. They can document the concern and submit the information for appropriate review.

How to Report an Unlicensed Security Company

Suspected unlicensed activity can be reported through ASSIST or directly to Texas DPS.

Reporting Through ASSIST

ASSIST provides a dedicated online form for reporting possible unlicensed activity.

The form allows the reporter to include:

• The region
• The suspected company’s name
• The suspected operator’s name
• An address
• A website
• A phone number
• Details about how the activity was discovered
• Supporting photographs
• The reporter’s contact information

ASSIST asks for as much detail as possible so its team can properly review and act on the report.

When a report is submitted, ASSIST reviews the information and determines the appropriate next steps. ASSIST states that the reporter’s information will not be shared with DPS unless the reporter specifically authorizes it.

Reporting Directly to Texas DPS

A person may also submit a complaint directly to the Texas Department of Public Safety Regulatory Services Division.

DPS provides an online complaint form and also accepts its PSP-22 complaint form by mail. Complaints can address possible Chapter 1702 violations by either licensed or unlicensed companies and individuals.

Helpful information may include:

• The company’s name and address
• The names of individuals involved
• The date and location of the activity
• A description of the services provided
• Copies of advertisements or contracts
• Website and social-media information
• Photographs lawfully obtained
• License-search results
• Vehicle, uniform, or company markings
• Witness information

Reports should be factual. The person submitting the information does not need to prove the case or conduct an independent investigation.

Protecting the Integrity of Texas Private Security

Licensing establishes a system of accountability for companies trusted to provide security and investigative services.

When an unlicensed company enters the market, it can affect the public, employees, clients, and licensed competitors. Reporting suspected activity allows ASSIST or Texas DPS to review the facts and determine whether further action is necessary.

ASSIST has represented Texas private-security and private-investigation professionals since 1970. Its work includes legislative advocacy, collaboration with DPS, compliance support, professional development, and helping licensed professionals report unlicensed activity.

Have information about a company that may be operating without the required credentials? Submit a report through ASSIST and provide as much detail as possible for review.

Frequently Asked Questions

1. Is operating an unlicensed security company a criminal offense in Texas?

It can be. Texas DPS may seek criminal prosecution against those who perform regulated private-security services without a license. A violation of Chapter 1702 without another specified penalty is generally a Class A misdemeanor, while certain repeated licensing offenses may be prosecuted as a third-degree felony.

2. Can an unlicensed security company be ordered to stop operating?

Potentially. DPS may investigate alleged violations and pursue the enforcement action authorized by law. The outcome depends on the services being provided, the evidence available, and the provisions that apply to the situation.

3. Can a company advertise security services before receiving its license?

Advertising can create a problem when a company offers to provide regulated services without the required license. DPS has explained in other regulated-service contexts that expressly offering a regulated service may itself violate Chapter 1702, depending on how the service is advertised and who actually provides it.

4. What happens to employees working for an unlicensed company?

Employees may have their own credentials and work authorization reviewed. Their ability to continue working may depend on whether they are properly licensed, what duties they performed, and whether they can become affiliated with a licensed employer.

5. Can I report a company anonymously through ASSIST?

The ASSIST form includes fields for the reporter’s name and phone number. ASSIST states that a reporter’s information will not be shared with DPS unless the reporter specifically authorizes it.

This article is provided for general informational purposes and is not legal advice.