H.B. No. 364 1-1 AN ACT 1-2 relating to the regulation of telephone solicitation; providing 1-3 civil and criminal penalties. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Subtitle 3, Title 79, Revised Statutes (Article 1-6 5069-9.01 et seq., Vernon's Texas Civil Statutes), is amended by 1-7 adding Chapter 18 to read as follows: 1-8 CHAPTER EIGHTEEN 1-9 SUBCHAPTER A. GENERAL PROVISIONS 1-10 Art. 1. DEFINITIONS. In this chapter: 1-11 (1) "Item" means property or a good or service and 1-12 includes: 1-13 (A) a coupon book that is to be used with a 1-14 business or company; and 1-15 (B) an interest in real property. 1-16 (2) "Owner" means a person who owns, controls, or 1-17 otherwise has claim to 10 percent or more of the net income of a 1-18 seller. 1-19 (3) "Person" includes an individual, sole 1-20 proprietorship, firm, association, corporation, partnership, joint 1-21 venture, or any other business entity. 1-22 (4) "Principal" means an owner, an executive officer 1-23 of a corporation, a general partner of a partnership, a sole 1-24 proprietor, a trustee of a trust, or another individual with 2-1 similar supervisory functions with respect to any person. 2-2 (5) "Purchaser" means a person who is: 2-3 (A) solicited to become or becomes obligated for 2-4 the purchase or rental of an item; or 2-5 (B) offered the opportunity to claim or receive 2-6 an item. 2-7 (6) "Registration statement" means a registration 2-8 statement required under this chapter. 2-9 (7) "Salesperson" means a person employed or 2-10 authorized by a seller to cause, or to attempt to cause, a 2-11 telephone solicitation. 2-12 (8) "Seller" means a person who, on the person's own 2-13 behalf, causes or attempts to cause a telephone solicitation. 2-14 (9) "Supervised financial institution" means a bank, 2-15 trust company, savings and loan association, credit union, 2-16 industrial loan company, personal property broker, consumer finance 2-17 lender, commercial finance lender, insurer, or other financial 2-18 institution that is subject to supervision by an official or agency 2-19 of this state or the United States. 2-20 (10) "Telephone solicitation" means a telephone call 2-21 to or from a person, initiated by a seller, salesperson, automatic 2-22 dialing machine, or recorded message device for the purpose of 2-23 inducing the person to purchase, rent, claim, or receive an item 2-24 and includes a call made by a purchaser in response to a 2-25 solicitation sent by mail or made by any other means. 2-26 Art. 2. EXEMPTIONS. (a) This chapter does not apply to: 2-27 (1) a person offering or selling a security that has 3-1 been qualified for sale under Section 7, The Securities Act 3-2 (Article 581-7, Vernon's Texas Civil Statutes), and its subsequent 3-3 amendments, or that is subject to an exemption under Section 5 or 6 3-4 of that Act; 3-5 (2) a publicly traded corporation registered with the 3-6 Securities and Exchange Commission or the State Securities Board, 3-7 or a subsidiary or agent of the corporation; 3-8 (3) a person licensed under the Insurance Code, if the 3-9 solicited transaction is governed by the Insurance Code; 3-10 (4) a person soliciting the sale of a subscription to: 3-11 (A) a daily or weekly newspaper of general 3-12 circulation; 3-13 (B) a magazine or other periodical of general 3-14 circulation; or 3-15 (C) a cable television service; 3-16 (5) a supervised financial institution or parent, 3-17 subsidiary, or affiliate of a supervised financial institution; 3-18 (6) a person or affiliate of a person whose business 3-19 is regulated by the Public Utility Commission of Texas; 3-20 (7) an educational institution or organization or a 3-21 nonprofit organization exempt from taxation under Section 501(c)(3) 3-22 of the Internal Revenue Code of 1986; 3-23 (8) a sale in which the purchaser is a business that 3-24 intends to: 3-25 (A) resell the item purchased; or 3-26 (B) use the item purchased in a recycling, 3-27 reuse, remanufacturing, or manufacturing process; 4-1 (9) a person soliciting the sale of food; 4-2 (10) a person who periodically issues and delivers 4-3 catalogs to potential purchasers if the catalog: 4-4 (A) includes a written description or 4-5 illustration and the sales price of each item offered for sale; 4-6 (B) includes at least 24 full pages of written 4-7 material or illustrations; 4-8 (C) is distributed in more than one state; and 4-9 (D) has an annual circulation of not less than 4-10 250,000 customers; 4-11 (11) the solicitation of contracts for the maintenance 4-12 or repair of items previously purchased from the person making the 4-13 solicitation or on whose behalf the solicitation is made; 4-14 (12) a person soliciting: 4-15 (A) without intent to complete or obtain 4-16 provisional acceptance of a sale during the telephone solicitation; 4-17 (B) who does not make the major sales 4-18 presentation during the telephone solicitation but arranges for the 4-19 major sales presentation to be made at a later face-to-face meeting 4-20 between the salesperson and the purchaser; and 4-21 (C) who does not cause an individual to go to 4-22 the prospective purchaser to collect payment for the purchase or to 4-23 deliver any item purchased directly following the telephone 4-24 solicitation; 4-25 (13) a person subject to the control or licensing 4-26 regulations of the Federal Communications Commission; 4-27 (14) a person selling: 5-1 (A) a contractual plan regulated by the Federal 5-2 Trade Commission trade regulation on use of negative option plans 5-3 by sellers in commerce under Title 16, Code of Federal Regulations, 5-4 Part 425; or 5-5 (B) merchandise under an arrangement in which 5-6 the seller periodically ships the merchandise to a consumer who has 5-7 consented in advance to receive the merchandise on a periodic 5-8 basis; 5-9 (15) a person: 5-10 (A) who provides telephone solicitation services 5-11 under contract to sellers; 5-12 (B) who has been operating continuously for at 5-13 least three years under the same business name; and 5-14 (C) for whom at least 75 percent of the person's 5-15 contracts are performed on behalf of other persons exempt under 5-16 this section; 5-17 (16) a person soliciting business from a former or 5-18 current customer if the person has operated under the exact same 5-19 business name for at least two years; 5-20 (17) a person engaging in a commercial telephone 5-21 solicitation that is an isolated transaction and not done in the 5-22 course of a pattern of repeated transactions of a like nature; 5-23 (18) a person who for at least two years has been 5-24 operating under the same name as that used in connection with its 5-25 telemarketing operations a retail establishment where consumer 5-26 goods are displayed and offered for sale on a continuing basis if a 5-27 majority of the person's business involves the buyers obtaining 6-1 services or products at the person's retail establishment; 6-2 (19) a person subject to the filing requirements of 6-3 Chapter 1054, Acts of the 70th Legislature, Regular Session, 1987 6-4 (Article 9023a, Vernon's Texas Civil Statutes), or any successor to 6-5 this statute; or 6-6 (20) a person soliciting a transaction regulated by 6-7 the Commodity Futures Trading Commission if the person is 6-8 registered or temporarily licensed for that activity with the 6-9 Commodity Futures Trading Commission under the Commodity Exchange 6-10 Act (7 U.S.C. Section 1 et seq.) and the registration or license 6-11 has not expired or been suspended or revoked. 6-12 (b) In a civil proceeding alleging a violation of this 6-13 chapter, the burden of proving an exemption is on the person 6-14 claiming the exemption, and in a criminal proceeding alleging a 6-15 violation of this chapter, the burden of producing evidence to 6-16 support a defense based on an exemption is on the person claiming 6-17 the exemption. 6-18 (c) The exemptions provided in this section apply only to a 6-19 seller engaging in a telephone solicitation on its own behalf, 6-20 except that the exemption provided in Subsection (a)(15) applies to 6-21 a person providing telephone solicitation services to sellers. 6-22 Art. 3. CONSTRUCTION AND APPLICATION. This chapter shall be 6-23 liberally construed and applied to promote its underlying purpose 6-24 to protect persons against false, misleading, or deceptive 6-25 practices in the telephone solicitation business. 6-26 SUBCHAPTER B. REGISTRATION OF TELEPHONE SELLERS 6-27 Art. 4. REGISTRATION REQUIRED. (a) A seller may not engage 7-1 in telephone solicitation from a location in this state or to a 7-2 purchaser located in this state without a certificate of 7-3 registration for the business location from which the solicitation 7-4 is made. 7-5 (b) A separate certificate is required for each business 7-6 location from which a solicitation is made. 7-7 Art. 5. CONTENTS OF REGISTRATION STATEMENT; VERIFICATION; 7-8 PUBLIC INFORMATION. (a) To obtain a certificate of registration, 7-9 a seller must file a registration statement with the secretary of 7-10 state. 7-11 (b) A registration statement must be in the form prescribed 7-12 by the secretary of state and contain the information required by 7-13 Subchapter C of this chapter. 7-14 (c) A registration statement must be verified by each 7-15 principal of the seller and must specify the date and location of 7-16 verification. 7-17 (d) All information included in or attached to a 7-18 registration statement is public information. 7-19 Art. 6. FILING FEE. The filing fee for a registration 7-20 statement is $200. 7-21 Art. 7. ISSUANCE OF CERTIFICATE OF REGISTRATION. (a) On 7-22 receipt of a completed registration statement, the filing fee 7-23 required by Article 6 of this chapter, the security required by 7-24 Article 10 of this chapter, and the consent regarding service of 7-25 process required by Article 11 of this chapter, the secretary of 7-26 state shall issue a certificate of registration and mail the 7-27 certificate to the seller. 8-1 (b) If the seller uses one registration statement to 8-2 register more than one business location, the secretary of state 8-3 shall issue a certificate for each business location and mail all 8-4 the certificates to the principal business location shown on the 8-5 registration statement. 8-6 Art. 8. EFFECTIVE DATE; RENEWAL. The effective date of a 8-7 registration statement is the date on which the secretary of state 8-8 issues the certificate. A registration statement is effective for 8-9 one year after its effective date and may be renewed annually by 8-10 filing a renewal registration statement with the information 8-11 required by Subchapter C of this chapter and paying the filing fee. 8-12 Art. 9. UPDATE ADDENDUM REQUIRED. (a) A seller shall file 8-13 with the secretary of state an update addendum at quarterly 8-14 intervals, computed from the effective date of registration, 8-15 providing all required registration information for all 8-16 salespersons who are currently soliciting or have solicited on 8-17 behalf of the seller at any time during the period between the 8-18 filing of the registration statement or the last addendum and the 8-19 current addendum. For the purposes of compliance with this 8-20 section, the seller may provide a copy of the "Employer's Quarterly 8-21 Report" for employee wages it files with the Texas Employment 8-22 Commission. 8-23 (b) In addition to the quarterly updates, if a material 8-24 change in information submitted in a registration statement, other 8-25 than the information described by Subsection (a) of this article, 8-26 occurs before the date for renewal, a seller shall submit that 8-27 information to the secretary of state by filing an update addendum. 9-1 Art. 10. SECURITY. (a) A registration statement filed 9-2 under this chapter must be accompanied by: 9-3 (1) a bond executed by a corporate surety approved by 9-4 the secretary of state and licensed to do business in this state; 9-5 (2) an irrevocable letter of credit issued for the 9-6 benefit of the registrant by a supervised financial institution 9-7 whose deposits are insured by an agency of the federal government; 9-8 or 9-9 (3) a certificate of deposit in a supervised financial 9-10 institution whose deposits are insured by an agency of the federal 9-11 government, the principal of which may be withdrawn only on the 9-12 order of the secretary of state. 9-13 (b) The amount of the bond, letter of credit, or certificate 9-14 of deposit must be $10,000, and the bond, letter of credit, or 9-15 certificate of deposit must be conditioned on compliance by the 9-16 seller with this chapter. 9-17 Art. 11. SECRETARY OF STATE AS SELLER'S AGENT TO RECEIVE 9-18 SERVICE. (a) A seller shall file with the secretary of state, in 9-19 the form prescribed by the secretary of state, an irrevocable 9-20 consent appointing the secretary of state to act as the seller's 9-21 agent to receive service of any lawful process in any noncriminal 9-22 suit, action, or proceeding against the seller or the seller's 9-23 successor, executor, or administrator that may arise under this 9-24 chapter, when: 9-25 (1) an agent has not been designated under Subdivision 9-26 15, Article 12, of this chapter; 9-27 (2) the agent has resigned or died and a replacement 10-1 has not been designated under Article 9 of this chapter; or 10-2 (3) the agent cannot with reasonable diligence be 10-3 found at the designated address. 10-4 (b) Service on the secretary of state under this article has 10-5 the same force and validity as service on the seller. Service on 10-6 the secretary of state may be made by: 10-7 (1) leaving a copy of the process in the office of the 10-8 secretary of state; 10-9 (2) promptly sending by first-class mail a notice of 10-10 the service and a copy of the process to the seller's principal 10-11 business location at the last address on file with the secretary of 10-12 state; and 10-13 (3) filing the plaintiff's affidavit of compliance 10-14 with this article in the case on or before the return date of the 10-15 process, if any, or within an additional period that the court 10-16 allows. 10-17 SUBCHAPTER C. CONTENTS OF REGISTRATION STATEMENT 10-18 Art. 12. DISCLOSURE OF CERTAIN NAMES, ADDRESSES, AND 10-19 ORGANIZATIONAL INFORMATION. A registration statement must contain 10-20 the following information: 10-21 (1) the seller's name and the name under which the 10-22 seller is doing or intends to do business, if different from the 10-23 seller's name; 10-24 (2) the name of each parent and affiliated 10-25 organization of the seller that: 10-26 (A) will engage in business transactions with 10-27 purchasers relating to sales solicited by the seller; or 11-1 (B) accepts responsibility for statements made 11-2 by, or acts of, the seller relating to sales solicited by the 11-3 seller; 11-4 (3) the seller's business form and place of 11-5 organization; 11-6 (4) if the seller is a corporation, a copy of its 11-7 articles of incorporation and bylaws; 11-8 (5) if the seller is a partnership, a copy of the 11-9 partnership agreement; 11-10 (6) if the seller is operating under an assumed 11-11 business name, the location where the assumed name has been 11-12 registered; 11-13 (7) for any parent or affiliated organization 11-14 disclosed under Subdivision (2) of this article, the applicable 11-15 information that is required of a seller under Subdivisions (3)-(6) 11-16 of this article; 11-17 (8) the complete street address of each location of 11-18 the seller, designating the principal location from which the 11-19 seller will be conducting business; 11-20 (9) if the principal business location of the seller 11-21 is not in this state, a designation of its main location in the 11-22 state; 11-23 (10) a listing of each telephone number to be used by 11-24 the seller and the address where each telephone using the number is 11-25 located; 11-26 (11) the name and title of each of the seller's 11-27 officers, directors, trustees, general and limited partners, sole 12-1 proprietor, and owners, as applicable, and the name of each of 12-2 those persons who have management responsibilities in connection 12-3 with the seller's business activities; 12-4 (12) the complete address of the principal residence, 12-5 the date of birth, and the number and state of issuance of the 12-6 driver's license of each person whose name is disclosed under 12-7 Subdivision (11) of this article; 12-8 (13) the name and principal residence address of each 12-9 person the seller leaves in charge at each location from which the 12-10 seller does business in this state, and the business location at 12-11 which each of these persons is or will be in charge; 12-12 (14) the name and principal residence address of each 12-13 salesperson who solicits on behalf of the seller or a copy of the 12-14 "Employer's Quarterly Report" for employee wages the seller files 12-15 with the Texas Employment Commission and the name the salesperson 12-16 uses while soliciting; 12-17 (15) the name and address of the seller's agent in 12-18 this state, other than the secretary of state, authorized to 12-19 receive service of process; and 12-20 (16) the name and address of each financial 12-21 institution with which banking or similar monetary transactions are 12-22 made by the seller and the identification number of each of the 12-23 seller's accounts in each institution. 12-24 Art. 13. DISCLOSURE OF CERTAIN CONVICTIONS, JUDGMENTS, 12-25 ORDERS, AND BANKRUPTCIES. (a) With respect to the seller and each 12-26 person identified under Subdivision (11) or (13), Article 12, of 12-27 this chapter, a registration statement must state the identity of 13-1 each person: 13-2 (1) who has been convicted of or pleaded nolo 13-3 contendere to a felony or misdemeanor involving an alleged 13-4 violation of this chapter, or fraud, theft, embezzlement, 13-5 fraudulent conversion, or misappropriation of property; 13-6 (2) against whom has been entered a final judgment or 13-7 order in a civil or administrative action, including a stipulated 13-8 judgment or order, in which the complaint or petition alleged acts 13-9 constituting a violation of this chapter, fraud, theft, 13-10 embezzlement, fraudulent conversion, or misappropriation of 13-11 property, the use of untrue or misleading representations in an 13-12 attempt to sell or dispose of real or personal property, or the use 13-13 of unfair, unlawful, or deceptive business practices; 13-14 (3) who is subject to an injunction or restrictive 13-15 court order relating to business activity as the result of an 13-16 action brought by a federal, state, or local public agency, 13-17 including an action affecting any vocational license; or 13-18 (4) who has, during the previous seven tax years, 13-19 filed in bankruptcy, been adjudged a bankrupt, been reorganized due 13-20 to insolvency, or has been a principal, director, officer, trustee, 13-21 general or limited partner, or had management responsibilities of a 13-22 corporation, partnership, joint venture, or other business entity 13-23 that has filed in bankruptcy, been adjudged a bankrupt, or been 13-24 reorganized due to insolvency while the person held that position 13-25 or within one year after the date on which the person last held 13-26 that position. 13-27 (b) Under Subsections (a)(1), (2), and (3) of this article, 14-1 the statement must identify the court or administrative agency 14-2 rendering the conviction, judgment, or order, the docket number of 14-3 the matter, the date of conviction, judgment, or order, and the 14-4 name of the governmental agency, if any, that brought the action 14-5 resulting in the conviction, judgment, or order. Under Subsection 14-6 (a)(4) of this article, the statement must include the name and 14-7 location of the person filing in bankruptcy, adjudged a bankrupt, 14-8 or reorganized due to insolvency, and must include the date of the 14-9 filing, judgment, or reorganization order, the court having 14-10 jurisdiction, and the docket number of the matter. 14-11 Art. 14. DISCLOSURE OF CERTAIN SALES INFORMATION. The 14-12 registration statement must be accompanied by the following 14-13 information: 14-14 (1) a description of the items the seller is offering 14-15 for sale; 14-16 (2) a copy of all sales information and literature, 14-17 including scripts, outlines, instructions, and information 14-18 regarding the conduct of telephone solicitations, sample 14-19 introductions, sample closings, product information, and contest or 14-20 premium-award information, provided by the seller to salespersons 14-21 or about which the seller informs salespersons, and a copy of all 14-22 written material the seller sends to any purchaser; 14-23 (3) if the seller represents or implies, or directs 14-24 salespersons to represent or imply, to purchasers that the 14-25 purchaser will receive a specific item, including a certificate 14-26 that the purchaser must redeem to obtain the item described in the 14-27 certificate, or one or more items from among designated items, 15-1 whether the items are denominated as gifts, premiums, bonuses, 15-2 prizes, or otherwise: 15-3 (A) a list of the items described; 15-4 (B) the value of each item and the basis for the 15-5 valuation; 15-6 (C) the price paid by the seller to its supplier 15-7 for each item and the name, address, and telephone number of each 15-8 item's supplier; 15-9 (D) if the purchaser is to receive fewer than 15-10 all of the items described by the seller: 15-11 (i) the manner in which the seller 15-12 decides which item a particular purchaser is to receive; 15-13 (ii) for each item, the odds of a single 15-14 purchaser's receiving the item; and 15-15 (iii) the name and address of each 15-16 recipient who has received, during the preceding 12 months, or if 15-17 the seller has not been in business that long, during the period 15-18 the seller has been in business, the item having the greatest value 15-19 and the item with the smallest odds of being received; and 15-20 (E) all rules, regulations, terms, and 15-21 conditions a purchaser must meet in order to receive the item; 15-22 (4) if the seller is offering an item that the seller 15-23 neither manufactures nor supplies: 15-24 (A) the name, address, and telephone number of 15-25 each of the seller's suppliers and a description of each item 15-26 provided by the supplier; 15-27 (B) if the possession of the item is to be 16-1 retained by the seller or will not be transferred to the purchaser 16-2 until the purchaser has paid in full: 16-3 (i) the address of each location where the 16-4 item will be kept; 16-5 (ii) if not kept on premises owned by the 16-6 seller or at an address registered under Subdivision (8) or (9), 16-7 Article 12, of this chapter, the name of the owner of the business 16-8 at which the item will be kept; and 16-9 (iii) a copy of any contract or other 16-10 document that evidences the seller's right to store the item at the 16-11 address designated under Subparagraph (ii) of this paragraph; 16-12 (C) if the seller is not selling the item from 16-13 its own inventory but purchases the item to fill an order already 16-14 taken from a purchaser, copies of all contracts or other documents 16-15 evidencing the seller's ability to call on suppliers to fill the 16-16 seller's orders; 16-17 (D) if the seller represents to purchasers that 16-18 the seller has insurance or a surety bond of any type relating to a 16-19 purchaser's purchase of any item, a complete copy of each insurance 16-20 policy and bond; and 16-21 (E) if the seller makes any representation as to 16-22 the post-purchase earning or profit potential of an item, data to 16-23 substantiate the claims made, and if the representation relates to 16-24 previous sales made by the seller or a related entity, 16-25 substantiating data based on the experiences of at least 50 percent 16-26 of the persons who purchased that particular type of item from the 16-27 seller or related entity during the preceding six months, or if the 17-1 seller or related entity has not been in business that long, during 17-2 the period the seller or related entity has been in business, 17-3 including: 17-4 (i) the length of time the seller or 17-5 related entity has been selling the particular type of item being 17-6 offered; 17-7 (ii) the number of purchasers of the item 17-8 from the seller or related entity known to the seller or related 17-9 entity to have made at least the same earnings or profit as those 17-10 represented; and 17-11 (iii) the percentage that the number 17-12 disclosed under Subparagraph (ii) of this paragraph represents of 17-13 the total number of purchasers from the seller or related entity of 17-14 the particular type of item offered; and 17-15 (5) if the seller is offering to sell an interest in 17-16 oil, gas, or a mineral field, well, or exploration site: 17-17 (A) the seller's ownership interest, if any, in 17-18 each field, well, or site being offered for sale; 17-19 (B) the total number of interests to be sold in 17-20 each field, well, or site being offered for sale; and 17-21 (C) if, in selling an interest in any particular 17-22 field, well, or site, reference is made to an investigation of the 17-23 field, well, or site by the seller or anyone else: 17-24 (i) the name, business address, telephone 17-25 number, and professional credentials of the person who made the 17-26 investigation; and 17-27 (ii) a copy of the report and other 18-1 documents relating to the investigation prepared by the person. 18-2 SUBCHAPTER D. ADDITIONAL INFORMATION FROM SELLER 18-3 Art. 15. INFORMATION POSTED OR AVAILABLE AT SELLER'S 18-4 BUSINESS LOCATION. (a) A seller shall post the certificate of 18-5 registration in a conspicuous place at the location for which it is 18-6 issued. 18-7 (b) A seller shall make available at each of the seller's 18-8 business locations a copy of the entire registration statement and 18-9 update addenda, if any, for inspection by any purchaser or 18-10 representative of any governmental agency. 18-11 (c) A seller shall post in close proximity to the 18-12 certificate of registration the name of each individual in charge 18-13 of the location. 18-14 Art. 16. DISCLOSURES TO PROSPECTIVE PURCHASERS. A seller 18-15 shall, when the solicitation is made and before consummation of any 18-16 sales transaction, provide to each purchaser: 18-17 (1) the complete street address of the location from 18-18 which the salesperson is calling the purchaser and, if different, 18-19 the complete street address of the seller's principal location; 18-20 (2) if the seller represents or implies that a 18-21 purchaser will receive without charge a specified item or one item 18-22 from among designated items, whether the items are denominated as 18-23 gifts, premiums, bonuses, prizes, or otherwise: 18-24 (A) the information required to be filed by 18-25 Subdivisions (3)(D)(i) and (ii) and (3)(E), Article 14, of this 18-26 chapter, as appropriate; and 18-27 (B) the total number of individuals who have 19-1 actually received from the seller during the preceding 12 months, 19-2 or if the seller has not been in the business that long, during the 19-3 period the seller has been in business, the item having the 19-4 greatest value and the item with the smallest odds of being 19-5 received; 19-6 (3) if the seller is offering to sell an interest in 19-7 oil, gas, or mineral field, well, or exploration site, the 19-8 information required by Subdivision (5), Article 14, of this 19-9 chapter; and 19-10 (4) if the seller represents that an item is being 19-11 offered at a price below that usually charged for the item, the 19-12 name of the manufacturer of the item. 19-13 Art. 17. NO REFERENCE TO COMPLIANCE WITH STATUTE. A seller 19-14 may not make or authorize the making of a reference to its 19-15 compliance with this chapter to a purchaser. 19-16 SUBCHAPTER E. OFFENSES 19-17 Art. 18. VIOLATION OF CHAPTER. (a) A person commits an 19-18 offense if the person knowingly or intentionally violates Article 19-19 4, 9, 15, 16, or 17 of this chapter. Each violation constitutes a 19-20 separate offense. 19-21 (b) An offense under this article is a Class A misdemeanor. 19-22 Art. 19. SALESPERSON FOR UNREGISTERED SELLER. (a) A person 19-23 commits an offense if the person knowingly or intentionally acts as 19-24 a salesperson on behalf of a seller who violates the registration 19-25 requirements of this chapter. Each violation constitutes a 19-26 separate offense. 19-27 (b) An offense under this article is a Class A misdemeanor. 20-1 Art. 19A. CHARGE TO A CREDIT CARD ACCOUNT OR DEBIT OF A 20-2 CHECKING ACCOUNT AFTER OFFER OF FREE ITEM. (a) A seller commits 20-3 an offense if the seller knowingly: 20-4 (1) represents or implies that a purchaser will 20-5 receive without charge an item or service, regardless of whether 20-6 denominated as a gift, premium, bonus, prize, or otherwise; and 20-7 (2) requests a credit card account number or checking 20-8 account number from the purchaser for the purpose of charging to 20-9 the credit card account or debiting from the checking account an 20-10 amount as a condition precedent to the purchaser's receipt of an 20-11 item. 20-12 (b) An offense under this article is a Class A misdemeanor. 20-13 SUBCHAPTER F. ENFORCEMENT 20-14 Art. 20. INJUNCTION. The attorney general may sue in a 20-15 court of competent jurisdiction to enjoin a person from violating 20-16 this chapter. The attorney general shall notify the defendant of 20-17 the alleged prohibited conduct not later than the seventh day 20-18 before the date the suit is filed, unless the attorney general 20-19 intends to request that the court issue a temporary restraining 20-20 order, in which event notice is not required. The party bringing 20-21 the suit shall recover all reasonable costs of prosecuting these 20-22 cases including, but not limited to, costs of investigation, 20-23 depositions, witness fees, attorney's fees, and other costs of 20-24 court. 20-25 Art. 21. CIVIL PENALTIES. A person is subject to a civil 20-26 penalty of not more than $5,000 for a single violation. A person 20-27 who violates an injunction issued under Article 20 of this chapter 21-1 is liable to the state for a civil penalty of not more than $25,000 21-2 for a single violation and not more than $50,000 for all violations 21-3 of the injunction. The attorney general may bring suit to recover 21-4 the civil penalty in the court that issued the original injunction. 21-5 The party bringing the suit shall also recover all reasonable costs 21-6 of prosecuting these cases including, but not limited to, costs of 21-7 investigation, depositions, witness fees, attorney's fees, and 21-8 other costs of court. 21-9 Art. 22. DECEPTIVE TRADE PRACTICES. A violation of this 21-10 chapter is a false, misleading, or deceptive act or practice under 21-11 Subchapter E, Chapter 17, Business & Commerce Code, and its 21-12 subsequent amendments, and any public or private right or remedy 21-13 prescribed by that subchapter may be used to enforce this chapter. 21-14 Art. 23. ACTION TO RECOVER AGAINST SECURITY. (a) A person 21-15 who is injured by the bankruptcy of a seller or the seller's breach 21-16 of an agreement entered into during a telephone solicitation may 21-17 bring and maintain an action to recover against the bond, letter of 21-18 credit, or certificate of deposit required under Article 10 of this 21-19 chapter. 21-20 (b) The liability of the surety on a bond provided pursuant 21-21 to Article 10 of this chapter does not exceed the amount of the 21-22 bond, regardless of the number of claims filed or the aggregate 21-23 amount claimed. If the amount claimed exceeds the amount of the 21-24 bond, the surety shall deposit the amount of the bond with the 21-25 secretary of state for distribution to claimants entitled to 21-26 recovery, and the surety is then relieved of all liability under 21-27 the bond. 22-1 Art. 24. NO WAIVER. An attempted waiver of a provision of 22-2 this chapter is void. 22-3 Art. 25. CUMULATIVE REMEDIES. The remedies provided by this 22-4 chapter are in addition to any other procedures or remedies 22-5 provided for by other law. 22-6 SECTION 2. (a) This Act takes effect September 1, 1993. 22-7 (b) The change in law made by this Act applies only to an 22-8 offense committed on or after the effective date of this Act. For 22-9 purposes of this section, an offense is committed before the 22-10 effective date of this Act if any element of the offense occurs 22-11 before that date. 22-12 SECTION 3. The importance of this legislation and the 22-13 crowded condition of the calendars in both houses create an 22-14 emergency and an imperative public necessity that the 22-15 constitutional rule requiring bills to be read on three several 22-16 days in each house be suspended, and this rule is hereby suspended.