bill setting rules for auto-renewing subscriptions

The text as introduced · 1,002 words

89R3897 MLH-D

By: Lalani
H.B. No. 860

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

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) "Service provider" means a business that provides

a service to a consumer.

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

a service provider 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) an offering or contract of insurance; or

(2) evidence of coverage under Chapter 843, Insurance

Code.

Sec. 611.003. NOTICE REQUIREMENTS FOR SUBSCRIPTION SERVICE

CONTRACTS. (a) If a service provider and a consumer enter into a

contract for a subscription service, the service provider shall:

(1) at the time the service provider 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 fifth day after the date the service provider enters into the

contract with the consumer, 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 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

electronic mail, if agreed to by the consumer.

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

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

provider 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 shall provide a

consumer with multiple methods for canceling a contract for a

subscription service, which may include cancellation by:

(1) toll-free telephone number;

(2) electronic mail;

(3) mailing address, if the service provider bills the

consumer using mail; and

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

method.

(b) A service provider shall allow a consumer to cancel a

contract for a subscription service by using the same method 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 shall allow the consumer to

cancel the contract by mail.

Sec. 611.005. DECEPTIVE TRADE PRACTICE. Except as provided

by Section 611.006, 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. 611.006. 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. 611.007. OPPORTUNITY TO CURE. (a) Before the attorney

general may bring an action against a service provider under

Section 611.008 for an initial violation of this chapter, the

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

notice to the service provider identifying the specific provisions

of this chapter that the service provider allegedly violated.

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

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

the service provider 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) no further violation of this chapter will

occur.

Sec. 611.008. CIVIL PENALTY; REMEDIES. (a) A service

provider who violates this chapter is liable to this state for a

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

month the violation continues if the service provider:

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

611.007; or

(2) commits the violation after curing an initial

violation and providing a written statement to the attorney general

under Section 611.007.

(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. 611.009. CONSUMER'S OBLIGATIONS UNDER CONTRACT NOT

AFFECTED. Nothing in this chapter relieves a consumer of the

consumer's duties under a contract before the date the contract is

canceled.

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 September 1, 2025.