Enrolled Bill Summary

House Bill 511	House Author:  Hochberg et al.
Effective:  Vetoed	Senate Sponsor:  Van de Putte

            House Bill 511 amends the Business & Commerce Code to require a manufacturer or retailer who offers a rebate, or who uses an independent entity to process a rebate, to mail or electronically pay the amount of the rebate to the consumer within the promised period or, if no date was specified, not later than the 30th day after receiving a properly completed rebate request.  The bill specifies when the period begins if the offer is contingent on the consumer continuing to purchase a service for a minimum length of time.  If the manufacturer or retailer receives a request that is not properly completed, the bill requires that entity to process the request as if it were properly completed or to notify the consumer by mail or e-mail of the reasons the request is not properly completed and the consumer's right to correct the deficiency within 30 days after the date of the notification, and it requires the entity to process the rebate for payment if the consumer corrects the deficiency before the established deadline.  It also is required to notify the consumer if it is considering rejecting, or has rejected, the rebate request, and to instruct the consumer of any actions that the consumer may take to cure the deficiency.  If the entity erroneously rejects a properly completed rebate request, it is required to pay the consumer as soon as practicable, but not later than 30 days after the date it learns of the error.  A violation of this section is actionable under the Deceptive Trade Practices-Consumer Protection Act.

            Reason Given for Veto:  "Under House Bill No. 511, businesses offering consumer rebates which take more than 30 days to process would be subjected to potential class action lawsuits under the Deceptive Trade Practices Act.  This is an unreasonably short period of time, which could subject companies with reasonable procedures for paying rebates to endure expensive and lengthy litigation.  These lawsuits could include claims for mental anguish, treble damages and attorneys' fees, an overly broad and onerous remedy that does not differentiate between companies that withhold rebates unfairly from those that have reasonable payment processes that take more than 30 days.

            "Under the guise of consumer protection, this bill would vastly expand class action lawsuits without a direct relationship to demonstrable harm. In these instances, the end result of this bill would be to make the litigation so expensive and so risky that a company could be compelled to pay a large settlement even if it has not harmed anyone.

            "The company would also be susceptible to lawsuits if it employs a different procedure for helping consumers fix incorrectly completed rebate applications than the procedure set forth in the bill, or if its notice to a consumer that he has submitted false proof of purchase takes more than 30 days to arrive. The bill also allows retailers to be sued, even though they do not control the mailing of the rebate.

            "We want to encourage companies to offer the best prices to Texas consumers.  This bill would result in companies offering rebates to consumers in other states, but making them void in Texas.

            "Consumer protection laws should not be used as a pretext for the vast expansion of class action and other 'big ticket' lawsuits which lead to higher insurance and litigation costs for employers and higher prices to Texas consumers."