Guerra Subscription Bill Excuses Any Business Acting In Good Faith

The text as introduced · 1,907 words

89R8391 MLH-D

By: Guerra
H.B. No. 2859

A BILL TO BE ENTITLED

AN ACT

relating to requirements for subscription service contracts;

providing a civil penalty.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Title 12, Business & Commerce Code, is amended by

adding Chapter 611 to read as follows:

CHAPTER 611. SUBSCRIPTION SERVICE CONTRACTS

SUBCHAPTER A. SUBSCRIPTION SERVICE CONTRACTS GENERALLY

Sec. 611.001. DEFINITIONS. In this chapter:

(1) "Automatic renewal clause" means a provision of a

contract that extends the term of or renews a contract for a period

of at least one month if the consumer does not take a specified

action.

(2) "Consumer" means a person who acquires goods or

services for personal, family, or household purposes.

(3) "Seller" means a person who sells or contracts to

sell goods.

(4) "Service provider" means a business that provides

a service to a consumer.

(5) "Subscription service" means a service provided by

a service provider or a periodic sale of goods provided by a seller

to a consumer under a contract that:

(A) has an automatic renewal clause; or

(B) continues indefinitely until canceled by a

party.

Sec. 611.002. APPLICABILITY OF CHAPTER. This chapter does

not apply to:

(1) a person that provides:

(A) an offering or contract of insurance;

(B) evidence of coverage under Chapter 843,

Insurance Code; or

(C) a service contract under Section 1304.003,

Occupations Code; or

(2) an affiliate of a person described by Subdivision

(1).

Sec. 611.003. NOTICE REQUIREMENTS FOR SUBSCRIPTION SERVICE

CONTRACTS. (a) If a consumer enters into a contract with a service

provider or seller for a subscription service, the service provider

or seller shall:

(1) at the time the service provider or seller enters

into the contract with the consumer, clearly and conspicuously

disclose to the consumer the nature of the contract;

(2) in the disclosure required under Subdivision (1)

or in a retainable confirmation sent to the consumer not later than

the date the consumer's first payment is due, clearly and

conspicuously disclose to the consumer the procedure for canceling

the contract; and

(3) if the contract has a term of 12 months or more and

automatically renews for a term of more than one month, give the

consumer additional written notice of the automatic renewal and the

procedure for canceling the contract not earlier than the 90th day

and not later than the 15th day before the date the contract is set

to renew.

(b) A service provider or seller may provide the written

notice required under Subsection (a)(3):

(1) by regular mail or certified mail;

(2) on an invoice delivered to the consumer; or

(3) by written electronic communication, including

e-mail, if the consumer has provided contact information for a

means of electronic communication to the service provider or

seller.

(c) Notice provided under Subsection (b) must be clear and

conspicuous. For purposes of Subsection (b)(1), the service

provider or seller may assume that written notice sent by regular

mail is received by the consumer on the third business day after the

date the notice is deposited in the mail.

Sec. 611.004. METHOD OF CANCELLATION. (a) Subject to

Subsections (b) and (c), a service provider or seller shall provide

a consumer with one or more methods for canceling a contract for a

subscription service, which may include cancellation by:

(1) toll-free telephone number;

(2) e-mail;

(3) mailing address, if the service provider or seller

bills the consumer using mail; and

(4) any other cost-effective, timely, and easy-to-use

method.

(b) A service provider or seller shall allow a consumer to

cancel a contract for a subscription service by using the same

method as the consumer used to enter into the contract, including

allowing cancellation online, by mail, or by telephone. A consumer

who enters into a contract online must be able to cancel the

contract online.

(c) If a subscription service contract is not entered into

electronically, the service provider or seller shall allow the

consumer to cancel the contract by mail.

SUBCHAPTER B. ADDITIONAL REQUIREMENTS FOR SUBSCRIPTION SERVICE

CONTRACTS FOR GOODS

Sec. 611.021. APPLICABILITY OF SUBCHAPTER. This subchapter

applies to a person who provides a subscription service contract

for the periodic sale of goods.

Sec. 611.022. REQUIREMENTS FOR PROMOTIONAL MATERIAL. A

seller who enters into a subscription service contract with a

consumer for the periodic sale of goods shall include in the notice

required by Section 611.003(a)(1):

(1) a description of the manner in which the consumer

may opt to not purchase goods during a period identified by the

consumer;

(2) a description of the notices the consumer will

receive under Section 611.023;

(3) a statement of the frequency with which the seller

will send notices under Section 611.023;

(4) a statement of the maximum number of notices

required by Section 611.023 that a consumer will receive in a

12-month period;

(5) a description of any obligation the consumer has

under the contract to purchase a minimum quantity of goods;

(6) a declaration of whether the bill to the customer

includes costs for shipping and handling the goods; and

(7) a description of the seller's duties under Section

611.024.

Sec. 611.023. REQUIRED NOTICE BEFORE PERIODIC SALE. (a)

Not later than the 20th day before completing a periodic sale under

this subchapter, a seller shall send a notice by mail reminding the

customer of the upcoming periodic sale.

(b) The notice required by Subsection (a) must:

(1) identify the goods to be sold;

(2) describe the process by which the consumer may

cancel or modify the periodic sale;

(3) provide notice that the consumer has not less than

10 days to return a request to cancel or modify the periodic sale

before the sale is completed; and

(4) provide assurance that the seller will credit the

consumer and pay the cost of shipping when required by Section

611.024.

(c) A seller that sends a notice under this section shall

accompany the notice with a form that the consumer may use to cancel

or modify the periodic sale.

(d) The form required by Subsection (c) must:

(1) clearly and conspicuously state that the seller

will complete the periodic sale if the consumer does not send a

request to cancel or modify the sale;

(2) describe how the form may be used to cancel or

modify the sale;

(3) state that to cancel or modify the sale, the

consumer must mail the form before the third day before the sale is

completed; and

(4) if the consumer entered into the subscription

service contract online, state the Internet website at which the

consumer may cancel or modify the sale online.

Sec. 611.024. RETURN OF GOODS DUE TO LATE NOTICE OF UPCOMING

SALE. A seller shall credit a consumer and pay the cost of shipping

for any return that is necessary because:

(1) a periodic sale was completed despite timely

receipt by the seller of a request by the consumer to cancel or

modify the sale;

(2) the consumer wanted to cancel or modify a periodic

sale and:

(A) the notice required under this section was

not delivered to the consumer before the 15th day before the date

the sale was completed; or

(B) the customer mailed a request to cancel or

modify the sale that was postmarked on or before the third day

before the date the sale was completed, but the request did not

arrive before the seller fulfilled the sale; or

(3) a periodic sale was made to a consumer who had

canceled the subscription services contract.

Sec. 611.025. INITIAL GOODS ON CREATION OF CONTRACT. (a) A

seller that offers initial or bonus goods as an incentive for a

consumer to enter into a subscription services contract for the

periodic sale of goods shall ship those goods not later than the

28th day after the consumer enters into a subscription services

contract.

(b) If a seller is unable to fulfill the sale due to

unanticipated circumstances beyond the seller's control, the

seller may offer a reasonably equivalent alternative to the

consumer and allow the consumer the opportunity to:

(1) accept the alternative goods; or

(2) cancel the subscription services contract for the

periodic sale of goods.

(c) A seller may require the return of any goods already

sent to the consumer as a condition for the refund of the consumer's

purchase.

(d) A seller may not send alternative goods under this

section without the express consent of the consumer.

Sec. 611.026. METHOD OF CANCELLATION OR MODIFICATION. If

the consumer entered into the subscription service contract online,

the seller shall provide a manner by which the consumer may cancel

or modify a periodic sale online.

SUBCHAPTER C. ENFORCEMENT

Sec. 611.051. DECEPTIVE TRADE PRACTICE. Except as provided

by Section 611.052, a violation of this chapter is a false,

misleading, or deceptive act or practice under Subchapter E,

Chapter 17, and is actionable under that subchapter.

Sec. 611.052. NO PRIVATE CAUSE OF ACTION. A private cause

of action for a violation of this chapter may not be brought under

this chapter or under Subchapter E, Chapter 17.

Sec. 611.053. OPPORTUNITY TO CURE. (a) Before the attorney

general may bring an action against a service provider or seller

under Section 611.054 for an initial violation of this chapter, the

attorney general, on behalf of a consumer, must provide written

notice to the service provider or seller identifying the specific

provisions of this chapter that the service provider or seller

allegedly violated.

(b) Not later than the 30th day after the date the notice

required by Subsection (a) was received by the service provider or

seller, the service provider or seller shall:

(1) cure each violation alleged in the notice; and

(2) provide a written statement to the attorney

general certifying that:

(A) each violation alleged in the notice has been

cured; and

(B) the service provider or seller will not

further violate this chapter in that same manner.

Sec. 611.054. CIVIL PENALTY; REMEDIES. (a) A service

provider or seller who violates this chapter is liable to this state

for a civil penalty of not more than $2,000 for each violation if

the service provider or seller:

(1) fails to cure the violation as provided by Section

611.053; or

(2) commits the violation after curing an initial

violation and providing a written statement to the attorney general

under Section 611.053.

(b) The attorney general may bring an action to:

(1) recover the civil penalty imposed under this

section;

(2) obtain a temporary or permanent injunction to

restrain the violation; or

(3) seek restitution for consumers who are residents

of this state and who incurred damages as a direct result of the

violation.

(c) An action under this section may be brought in a

district court in:

(1) Travis County; or

(2) a county in which any part of the violation occurs.

Sec. 611.055. LIABILITY OF SERVICE PROVIDER OR SELLER. A

service provider or seller acting in good faith to comply with the

requirements of this chapter is not liable under this chapter.

Sec. 611.056. CONSUMER'S OBLIGATIONS UNDER CONTRACT NOT

AFFECTED. Nothing in this chapter relieves a consumer of the

consumer's duties under the terms of a contract for subscription

services if the consumer cancels the contract's automatic renewal

clause.

SECTION 2. Chapter 611, Business & Commerce Code, as added

by this Act, applies only to a contract entered into or renewed on

or after the effective date of this Act.

SECTION 3. This Act takes effect January 1, 2026.