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A BILL TO BE ENTITLED
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AN ACT
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relating to requirements for subscription service contracts; |
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providing a civil penalty. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Title 12, Business & Commerce Code, is amended by |
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adding Chapter 608 to read as follows: |
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CHAPTER 608. SUBSCRIPTION SERVICE CONTRACTS |
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Sec. 608.001. DEFINITIONS. In this chapter: |
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(1) "Automatic renewal clause" means a provision of a |
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contract that extends the term of or renews a contract for a period |
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of at least one month if the consumer does not take a specified |
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action. |
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(2) "Consumer" means a person who acquires goods or |
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services for personal, family, or household purposes. |
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(3) "Service provider" means a business that provides |
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a service to a consumer. |
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(4) "Subscription service" means a service provided by |
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a service provider to a consumer under a contract that: |
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(A) has an automatic renewal clause; or |
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(B) continues indefinitely until canceled by a |
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party. |
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Sec. 608.002. APPLICABILITY OF CHAPTER. This chapter does |
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not apply to: |
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(1) an offering or contract of insurance; or |
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(2) evidence of coverage under Chapter 843, Insurance |
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Code. |
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Sec. 608.003. NOTICE REQUIREMENTS FOR SUBSCRIPTION SERVICE |
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CONTRACTS. (a) If a service provider and a consumer enter into a |
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contract for a subscription service, the service provider shall: |
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(1) at the time the service provider enters into the |
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contract with the consumer, clearly and conspicuously disclose to |
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the consumer the nature of the contract; |
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(2) in the disclosure required under Subdivision (1) |
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or in a retainable confirmation sent to the consumer not later than |
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the fifth day after the date the service provider enters into the |
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contract with the consumer, clearly and conspicuously disclose to |
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the consumer the procedure for canceling the contract; and |
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(3) if the contract has a term of 12 months or more and |
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automatically renews for a term of more than one month, give the |
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consumer additional written notice of the automatic renewal and the |
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procedure for canceling the contract not earlier than the 90th day |
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and not later than the 15th day before the date the contract is set |
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to renew. |
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(b) A service provider may provide the written notice |
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required under Subsection (a)(3): |
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(1) by regular mail or certified mail; |
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(2) on an invoice delivered to the consumer; or |
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(3) by written electronic communication, including |
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electronic mail, if agreed to by the consumer. |
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(c) Notice provided under Subsection (b) must be clear and |
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conspicuous. For purposes of Subsection (b)(1), the service |
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provider may assume that written notice sent by regular mail is |
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received by the consumer on the third business day after the date |
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the notice is deposited in the mail. |
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Sec. 608.004. METHOD OF CANCELLATION. (a) Subject to |
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Subsections (b) and (c), a service provider shall provide a |
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consumer with multiple methods for canceling a contract for a |
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subscription service, which may include cancellation by: |
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(1) toll-free telephone number; |
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(2) electronic mail; |
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(3) mailing address, if the service provider bills the |
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consumer using mail; and |
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(4) any other cost-effective, timely, and easy-to-use |
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method. |
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(b) A service provider shall allow a consumer to cancel a |
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contract for a subscription service by using the same method as the |
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consumer used to enter into the contract, including allowing |
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cancellation online, by mail, or by telephone. |
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(c) If a subscription service contract is not entered into |
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electronically, the service provider shall allow the consumer to |
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cancel the contract by mail. |
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Sec. 608.005. DECEPTIVE TRADE PRACTICE. Except as provided |
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by Section 608.006, a violation of this chapter is a false, |
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misleading, or deceptive act or practice under Subchapter E, |
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Chapter 17, and is actionable under that subchapter. |
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Sec. 608.006. NO PRIVATE CAUSE OF ACTION. A private cause |
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of action for a violation of this chapter may not be brought under |
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this chapter or under Subchapter E, Chapter 17. |
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Sec. 608.007. OPPORTUNITY TO CURE. (a) Before the attorney |
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general may bring an action against a service provider under |
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Section 608.008 for an initial violation of this chapter, the |
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attorney general, on behalf of a consumer, must provide written |
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notice to the service provider identifying the specific provisions |
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of this chapter that the service provider allegedly violated. |
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(b) Not later than the 30th day after the date the notice |
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required by Subsection (a) was received by the service provider, |
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the service provider shall: |
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(1) cure each violation alleged in the notice; and |
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(2) provide a written statement to the attorney |
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general certifying that: |
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(A) each violation alleged in the notice has been |
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cured; and |
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(B) no further violation of this chapter will |
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occur. |
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Sec. 608.008. CIVIL PENALTY; REMEDIES. (a) A service |
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provider who violates this chapter is liable to this state for a |
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civil penalty of not more than $2,000 for each violation for each |
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month the violation continues if the service provider: |
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(1) fails to cure the violation as provided by Section |
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608.007; or |
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(2) commits the violation after curing an initial |
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violation and providing a written statement to the attorney general |
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under Section 608.007. |
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(b) The attorney general may bring an action to: |
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(1) recover the civil penalty imposed under this |
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section; |
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(2) obtain a temporary or permanent injunction to |
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restrain the violation; or |
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(3) seek restitution for consumers who are residents |
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of this state and who incurred damages as a direct result of the |
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violation. |
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(c) An action under this section may be brought in a |
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district court in: |
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(1) Travis County; or |
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(2) a county in which any part of the violation occurs. |
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Sec. 608.009. CONSUMER'S OBLIGATIONS UNDER CONTRACT NOT |
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AFFECTED. Nothing in this chapter relieves a consumer of the |
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consumer's duties under a contract before the date the contract is |
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canceled. |
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SECTION 2. Chapter 608, Business & Commerce Code, as added |
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by this Act, applies only to a contract entered into or renewed on |
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or after the effective date of this Act. |
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SECTION 3. This Act takes effect September 1, 2021. |