1-1 By: Clemons (Senate Sponsor - Lucio) H.B. No. 364 1-2 (In the Senate - Received from the House April 26, 1993; 1-3 April 27, 1993, read first time and referred to Committee on 1-4 Economic Development; May 24, 1993, reported favorably by the 1-5 following vote: Yeas 8, Nays 0; May 24, 1993, sent to printer.) 1-6 COMMITTEE VOTE 1-7 Yea Nay PNV Absent 1-8 Parker x 1-9 Lucio x 1-10 Ellis x 1-11 Haley x 1-12 Harris of Dallas x 1-13 Harris of Tarrant x 1-14 Leedom x 1-15 Madla x 1-16 Rosson x 1-17 Shapiro x 1-18 Wentworth x 1-19 A BILL TO BE ENTITLED 1-20 AN ACT 1-21 relating to the regulation of telephone solicitation; providing 1-22 civil and criminal penalties. 1-23 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-24 SECTION 1. Subtitle 3, Title 79, Revised Statutes (Article 1-25 5069-9.01 et seq., Vernon's Texas Civil Statutes), is amended by 1-26 adding Chapter 18 to read as follows: 1-27 CHAPTER EIGHTEEN 1-28 SUBCHAPTER A. GENERAL PROVISIONS 1-29 Art. 1. DEFINITIONS. In this chapter: 1-30 (1) "Item" means property or a good or service and 1-31 includes: 1-32 (A) a coupon book that is to be used with a 1-33 business or company; and 1-34 (B) an interest in real property. 1-35 (2) "Owner" means a person who owns, controls, or 1-36 otherwise has claim to 10 percent or more of the net income of a 1-37 seller. 1-38 (3) "Person" includes an individual, sole 1-39 proprietorship, firm, association, corporation, partnership, joint 1-40 venture, or any other business entity. 1-41 (4) "Principal" means an owner, an executive officer 1-42 of a corporation, a general partner of a partnership, a sole 1-43 proprietor, a trustee of a trust, or another individual with 1-44 similar supervisory functions with respect to any person. 1-45 (5) "Purchaser" means a person who is: 1-46 (A) solicited to become or becomes obligated for 1-47 the purchase or rental of an item; or 1-48 (B) offered the opportunity to claim or receive 1-49 an item. 1-50 (6) "Registration statement" means a registration 1-51 statement required under this chapter. 1-52 (7) "Salesperson" means a person employed or 1-53 authorized by a seller to cause, or to attempt to cause, a 1-54 telephone solicitation. 1-55 (8) "Seller" means a person who, on the person's own 1-56 behalf, causes or attempts to cause a telephone solicitation. 1-57 (9) "Supervised financial institution" means a bank, 1-58 trust company, savings and loan association, credit union, 1-59 industrial loan company, personal property broker, consumer finance 1-60 lender, commercial finance lender, insurer, or other financial 1-61 institution that is subject to supervision by an official or agency 1-62 of this state or the United States. 1-63 (10) "Telephone solicitation" means a telephone call 1-64 to or from a person, initiated by a seller, salesperson, automatic 1-65 dialing machine, or recorded message device for the purpose of 1-66 inducing the person to purchase, rent, claim, or receive an item 1-67 and includes a call made by a purchaser in response to a 1-68 solicitation sent by mail or made by any other means. 2-1 Art. 2. EXEMPTIONS. (a) This chapter does not apply to: 2-2 (1) a person offering or selling a security that has 2-3 been qualified for sale under Section 7, The Securities Act 2-4 (Article 581-7, Vernon's Texas Civil Statutes), and its subsequent 2-5 amendments, or that is subject to an exemption under Section 5 or 6 2-6 of that Act; 2-7 (2) a publicly traded corporation registered with the 2-8 Securities and Exchange Commission or the State Securities Board, 2-9 or a subsidiary or agent of the corporation; 2-10 (3) a person licensed under the Insurance Code, if the 2-11 solicited transaction is governed by the Insurance Code; 2-12 (4) a person soliciting the sale of a subscription to: 2-13 (A) a daily or weekly newspaper of general 2-14 circulation; 2-15 (B) a magazine or other periodical of general 2-16 circulation; or 2-17 (C) a cable television service; 2-18 (5) a supervised financial institution or parent, 2-19 subsidiary, or affiliate of a supervised financial institution; 2-20 (6) a person or affiliate of a person whose business 2-21 is regulated by the Public Utility Commission of Texas; 2-22 (7) an educational institution or organization or a 2-23 nonprofit organization exempt from taxation under Section 501(c)(3) 2-24 of the Internal Revenue Code of 1986; 2-25 (8) a sale in which the purchaser is a business that 2-26 intends to: 2-27 (A) resell the item purchased; or 2-28 (B) use the item purchased in a recycling, 2-29 reuse, remanufacturing, or manufacturing process; 2-30 (9) a person soliciting the sale of food; 2-31 (10) a person who periodically issues and delivers 2-32 catalogs to potential purchasers if the catalog: 2-33 (A) includes a written description or 2-34 illustration and the sales price of each item offered for sale; 2-35 (B) includes at least 24 full pages of written 2-36 material or illustrations; 2-37 (C) is distributed in more than one state; and 2-38 (D) has an annual circulation of not less than 2-39 250,000 customers; 2-40 (11) the solicitation of contracts for the maintenance 2-41 or repair of items previously purchased from the person making the 2-42 solicitation or on whose behalf the solicitation is made; 2-43 (12) a person soliciting: 2-44 (A) without intent to complete or obtain 2-45 provisional acceptance of a sale during the telephone solicitation; 2-46 (B) who does not make the major sales 2-47 presentation during the telephone solicitation but arranges for the 2-48 major sales presentation to be made at a later face-to-face meeting 2-49 between the salesperson and the purchaser; and 2-50 (C) who does not cause an individual to go to 2-51 the prospective purchaser to collect payment for the purchase or to 2-52 deliver any item purchased directly following the telephone 2-53 solicitation; 2-54 (13) a person subject to the control or licensing 2-55 regulations of the Federal Communications Commission; 2-56 (14) a person selling: 2-57 (A) a contractual plan regulated by the Federal 2-58 Trade Commission trade regulation on use of negative option plans 2-59 by sellers in commerce under Title 16, Code of Federal Regulations, 2-60 Part 425; or 2-61 (B) merchandise under an arrangement in which 2-62 the seller periodically ships the merchandise to a consumer who has 2-63 consented in advance to receive the merchandise on a periodic 2-64 basis; 2-65 (15) a person: 2-66 (A) who provides telephone solicitation services 2-67 under contract to sellers; 2-68 (B) who has been operating continuously for at 2-69 least three years under the same business name; and 2-70 (C) for whom at least 75 percent of the person's 3-1 contracts are performed on behalf of other persons exempt under 3-2 this section; 3-3 (16) a person soliciting business from a former or 3-4 current customer if the person has operated under the exact same 3-5 business name for at least two years; 3-6 (17) a person engaging in a commercial telephone 3-7 solicitation that is an isolated transaction and not done in the 3-8 course of a pattern of repeated transactions of a like nature; 3-9 (18) a person who for at least two years has been 3-10 operating under the same name as that used in connection with its 3-11 telemarketing operations a retail establishment where consumer 3-12 goods are displayed and offered for sale on a continuing basis if a 3-13 majority of the person's business involves the buyers obtaining 3-14 services or products at the person's retail establishment; 3-15 (19) a person subject to the filing requirements of 3-16 Chapter 1054, Acts of the 70th Legislature, Regular Session, 1987 3-17 (Article 9023a, Vernon's Texas Civil Statutes), or any successor to 3-18 this statute; or 3-19 (20) a person soliciting a transaction regulated by 3-20 the Commodity Futures Trading Commission if the person is 3-21 registered or temporarily licensed for that activity with the 3-22 Commodity Futures Trading Commission under the Commodity Exchange 3-23 Act (7 U.S.C. Section 1 et seq.) and the registration or license 3-24 has not expired or been suspended or revoked. 3-25 (b) In a civil proceeding alleging a violation of this 3-26 chapter, the burden of proving an exemption is on the person 3-27 claiming the exemption, and in a criminal proceeding alleging a 3-28 violation of this chapter, the burden of producing evidence to 3-29 support a defense based on an exemption is on the person claiming 3-30 the exemption. 3-31 (c) The exemptions provided in this section apply only to a 3-32 seller engaging in a telephone solicitation on its own behalf, 3-33 except that the exemption provided in Subsection (a)(15) applies to 3-34 a person providing telephone solicitation services to sellers. 3-35 Art. 3. CONSTRUCTION AND APPLICATION. This chapter shall be 3-36 liberally construed and applied to promote its underlying purpose 3-37 to protect persons against false, misleading, or deceptive 3-38 practices in the telephone solicitation business. 3-39 SUBCHAPTER B. REGISTRATION OF TELEPHONE SELLERS 3-40 Art. 4. REGISTRATION REQUIRED. (a) A seller may not engage 3-41 in telephone solicitation from a location in this state or to a 3-42 purchaser located in this state without a certificate of 3-43 registration for the business location from which the solicitation 3-44 is made. 3-45 (b) A separate certificate is required for each business 3-46 location from which a solicitation is made. 3-47 Art. 5. CONTENTS OF REGISTRATION STATEMENT; VERIFICATION; 3-48 PUBLIC INFORMATION. (a) To obtain a certificate of registration, 3-49 a seller must file a registration statement with the secretary of 3-50 state. 3-51 (b) A registration statement must be in the form prescribed 3-52 by the secretary of state and contain the information required by 3-53 Subchapter C of this chapter. 3-54 (c) A registration statement must be verified by each 3-55 principal of the seller and must specify the date and location of 3-56 verification. 3-57 (d) All information included in or attached to a 3-58 registration statement is public information. 3-59 Art. 6. FILING FEE. The filing fee for a registration 3-60 statement is $200. 3-61 Art. 7. ISSUANCE OF CERTIFICATE OF REGISTRATION. (a) On 3-62 receipt of a completed registration statement, the filing fee 3-63 required by Article 6 of this chapter, the security required by 3-64 Article 10 of this chapter, and the consent regarding service of 3-65 process required by Article 11 of this chapter, the secretary of 3-66 state shall issue a certificate of registration and mail the 3-67 certificate to the seller. 3-68 (b) If the seller uses one registration statement to 3-69 register more than one business location, the secretary of state 3-70 shall issue a certificate for each business location and mail all 4-1 the certificates to the principal business location shown on the 4-2 registration statement. 4-3 Art. 8. EFFECTIVE DATE; RENEWAL. The effective date of a 4-4 registration statement is the date on which the secretary of state 4-5 issues the certificate. A registration statement is effective for 4-6 one year after its effective date and may be renewed annually by 4-7 filing a renewal registration statement with the information 4-8 required by Subchapter C of this chapter and paying the filing fee. 4-9 Art. 9. UPDATE ADDENDUM REQUIRED. (a) A seller shall file 4-10 with the secretary of state an update addendum at quarterly 4-11 intervals, computed from the effective date of registration, 4-12 providing all required registration information for all 4-13 salespersons who are currently soliciting or have solicited on 4-14 behalf of the seller at any time during the period between the 4-15 filing of the registration statement or the last addendum and the 4-16 current addendum. For the purposes of compliance with this 4-17 section, the seller may provide a copy of the "Employer's Quarterly 4-18 Report" for employee wages it files with the Texas Employment 4-19 Commission. 4-20 (b) In addition to the quarterly updates, if a material 4-21 change in information submitted in a registration statement, other 4-22 than the information described by Subsection (a) of this article, 4-23 occurs before the date for renewal, a seller shall submit that 4-24 information to the secretary of state by filing an update addendum. 4-25 Art. 10. SECURITY. (a) A registration statement filed 4-26 under this chapter must be accompanied by: 4-27 (1) a bond executed by a corporate surety approved by 4-28 the secretary of state and licensed to do business in this state; 4-29 (2) an irrevocable letter of credit issued for the 4-30 benefit of the registrant by a supervised financial institution 4-31 whose deposits are insured by an agency of the federal government; 4-32 or 4-33 (3) a certificate of deposit in a supervised financial 4-34 institution whose deposits are insured by an agency of the federal 4-35 government, the principal of which may be withdrawn only on the 4-36 order of the secretary of state. 4-37 (b) The amount of the bond, letter of credit, or certificate 4-38 of deposit must be $10,000, and the bond, letter of credit, or 4-39 certificate of deposit must be conditioned on compliance by the 4-40 seller with this chapter. 4-41 Art. 11. SECRETARY OF STATE AS SELLER'S AGENT TO RECEIVE 4-42 SERVICE. (a) A seller shall file with the secretary of state, in 4-43 the form prescribed by the secretary of state, an irrevocable 4-44 consent appointing the secretary of state to act as the seller's 4-45 agent to receive service of any lawful process in any noncriminal 4-46 suit, action, or proceeding against the seller or the seller's 4-47 successor, executor, or administrator that may arise under this 4-48 chapter, when: 4-49 (1) an agent has not been designated under Subdivision 4-50 15, Article 12, of this chapter; 4-51 (2) the agent has resigned or died and a replacement 4-52 has not been designated under Article 9 of this chapter; or 4-53 (3) the agent cannot with reasonable diligence be 4-54 found at the designated address. 4-55 (b) Service on the secretary of state under this article has 4-56 the same force and validity as service on the seller. Service on 4-57 the secretary of state may be made by: 4-58 (1) leaving a copy of the process in the office of the 4-59 secretary of state; 4-60 (2) promptly sending by first-class mail a notice of 4-61 the service and a copy of the process to the seller's principal 4-62 business location at the last address on file with the secretary of 4-63 state; and 4-64 (3) filing the plaintiff's affidavit of compliance 4-65 with this article in the case on or before the return date of the 4-66 process, if any, or within an additional period that the court 4-67 allows. 4-68 SUBCHAPTER C. CONTENTS OF REGISTRATION STATEMENT 4-69 Art. 12. DISCLOSURE OF CERTAIN NAMES, ADDRESSES, AND 4-70 ORGANIZATIONAL INFORMATION. A registration statement must contain 5-1 the following information: 5-2 (1) the seller's name and the name under which the 5-3 seller is doing or intends to do business, if different from the 5-4 seller's name; 5-5 (2) the name of each parent and affiliated 5-6 organization of the seller that: 5-7 (A) will engage in business transactions with 5-8 purchasers relating to sales solicited by the seller; or 5-9 (B) accepts responsibility for statements made 5-10 by, or acts of, the seller relating to sales solicited by the 5-11 seller; 5-12 (3) the seller's business form and place of 5-13 organization; 5-14 (4) if the seller is a corporation, a copy of its 5-15 articles of incorporation and bylaws; 5-16 (5) if the seller is a partnership, a copy of the 5-17 partnership agreement; 5-18 (6) if the seller is operating under an assumed 5-19 business name, the location where the assumed name has been 5-20 registered; 5-21 (7) for any parent or affiliated organization 5-22 disclosed under Subdivision (2) of this article, the applicable 5-23 information that is required of a seller under Subdivisions (3)-(6) 5-24 of this article; 5-25 (8) the complete street address of each location of 5-26 the seller, designating the principal location from which the 5-27 seller will be conducting business; 5-28 (9) if the principal business location of the seller 5-29 is not in this state, a designation of its main location in the 5-30 state; 5-31 (10) a listing of each telephone number to be used by 5-32 the seller and the address where each telephone using the number is 5-33 located; 5-34 (11) the name and title of each of the seller's 5-35 officers, directors, trustees, general and limited partners, sole 5-36 proprietor, and owners, as applicable, and the name of each of 5-37 those persons who have management responsibilities in connection 5-38 with the seller's business activities; 5-39 (12) the complete address of the principal residence, 5-40 the date of birth, and the number and state of issuance of the 5-41 driver's license of each person whose name is disclosed under 5-42 Subdivision (11) of this article; 5-43 (13) the name and principal residence address of each 5-44 person the seller leaves in charge at each location from which the 5-45 seller does business in this state, and the business location at 5-46 which each of these persons is or will be in charge; 5-47 (14) the name and principal residence address of each 5-48 salesperson who solicits on behalf of the seller or a copy of the 5-49 "Employer's Quarterly Report" for employee wages the seller files 5-50 with the Texas Employment Commission and the name the salesperson 5-51 uses while soliciting; 5-52 (15) the name and address of the seller's agent in 5-53 this state, other than the secretary of state, authorized to 5-54 receive service of process; and 5-55 (16) the name and address of each financial 5-56 institution with which banking or similar monetary transactions are 5-57 made by the seller and the identification number of each of the 5-58 seller's accounts in each institution. 5-59 Art. 13. DISCLOSURE OF CERTAIN CONVICTIONS, JUDGMENTS, 5-60 ORDERS, AND BANKRUPTCIES. (a) With respect to the seller and each 5-61 person identified under Subdivision (11) or (13), Article 12, of 5-62 this chapter, a registration statement must state the identity of 5-63 each person: 5-64 (1) who has been convicted of or pleaded nolo 5-65 contendere to a felony or misdemeanor involving an alleged 5-66 violation of this chapter, or fraud, theft, embezzlement, 5-67 fraudulent conversion, or misappropriation of property; 5-68 (2) against whom has been entered a final judgment or 5-69 order in a civil or administrative action, including a stipulated 5-70 judgment or order, in which the complaint or petition alleged acts 6-1 constituting a violation of this chapter, fraud, theft, 6-2 embezzlement, fraudulent conversion, or misappropriation of 6-3 property, the use of untrue or misleading representations in an 6-4 attempt to sell or dispose of real or personal property, or the use 6-5 of unfair, unlawful, or deceptive business practices; 6-6 (3) who is subject to an injunction or restrictive 6-7 court order relating to business activity as the result of an 6-8 action brought by a federal, state, or local public agency, 6-9 including an action affecting any vocational license; or 6-10 (4) who has, during the previous seven tax years, 6-11 filed in bankruptcy, been adjudged a bankrupt, been reorganized due 6-12 to insolvency, or has been a principal, director, officer, trustee, 6-13 general or limited partner, or had management responsibilities of a 6-14 corporation, partnership, joint venture, or other business entity 6-15 that has filed in bankruptcy, been adjudged a bankrupt, or been 6-16 reorganized due to insolvency while the person held that position 6-17 or within one year after the date on which the person last held 6-18 that position. 6-19 (b) Under Subsections (a)(1), (2), and (3) of this article, 6-20 the statement must identify the court or administrative agency 6-21 rendering the conviction, judgment, or order, the docket number of 6-22 the matter, the date of conviction, judgment, or order, and the 6-23 name of the governmental agency, if any, that brought the action 6-24 resulting in the conviction, judgment, or order. Under Subsection 6-25 (a)(4) of this article, the statement must include the name and 6-26 location of the person filing in bankruptcy, adjudged a bankrupt, 6-27 or reorganized due to insolvency, and must include the date of the 6-28 filing, judgment, or reorganization order, the court having 6-29 jurisdiction, and the docket number of the matter. 6-30 Art. 14. DISCLOSURE OF CERTAIN SALES INFORMATION. The 6-31 registration statement must be accompanied by the following 6-32 information: 6-33 (1) a description of the items the seller is offering 6-34 for sale; 6-35 (2) a copy of all sales information and literature, 6-36 including scripts, outlines, instructions, and information 6-37 regarding the conduct of telephone solicitations, sample 6-38 introductions, sample closings, product information, and contest or 6-39 premium-award information, provided by the seller to salespersons 6-40 or about which the seller informs salespersons, and a copy of all 6-41 written material the seller sends to any purchaser; 6-42 (3) if the seller represents or implies, or directs 6-43 salespersons to represent or imply, to purchasers that the 6-44 purchaser will receive a specific item, including a certificate 6-45 that the purchaser must redeem to obtain the item described in the 6-46 certificate, or one or more items from among designated items, 6-47 whether the items are denominated as gifts, premiums, bonuses, 6-48 prizes, or otherwise: 6-49 (A) a list of the items described; 6-50 (B) the value of each item and the basis for the 6-51 valuation; 6-52 (C) the price paid by the seller to its supplier 6-53 for each item and the name, address, and telephone number of each 6-54 item's supplier; 6-55 (D) if the purchaser is to receive fewer than 6-56 all of the items described by the seller: 6-57 (i) the manner in which the seller 6-58 decides which item a particular purchaser is to receive; 6-59 (ii) for each item, the odds of a single 6-60 purchaser's receiving the item; and 6-61 (iii) the name and address of each 6-62 recipient who has received, during the preceding 12 months, or if 6-63 the seller has not been in business that long, during the period 6-64 the seller has been in business, the item having the greatest value 6-65 and the item with the smallest odds of being received; and 6-66 (E) all rules, regulations, terms, and 6-67 conditions a purchaser must meet in order to receive the item; 6-68 (4) if the seller is offering an item that the seller 6-69 neither manufactures nor supplies: 6-70 (A) the name, address, and telephone number of 7-1 each of the seller's suppliers and a description of each item 7-2 provided by the supplier; 7-3 (B) if the possession of the item is to be 7-4 retained by the seller or will not be transferred to the purchaser 7-5 until the purchaser has paid in full: 7-6 (i) the address of each location where the 7-7 item will be kept; 7-8 (ii) if not kept on premises owned by the 7-9 seller or at an address registered under Subdivision (8) or (9), 7-10 Article 12, of this chapter, the name of the owner of the business 7-11 at which the item will be kept; and 7-12 (iii) a copy of any contract or other 7-13 document that evidences the seller's right to store the item at the 7-14 address designated under Subparagraph (ii) of this paragraph; 7-15 (C) if the seller is not selling the item from 7-16 its own inventory but purchases the item to fill an order already 7-17 taken from a purchaser, copies of all contracts or other documents 7-18 evidencing the seller's ability to call on suppliers to fill the 7-19 seller's orders; 7-20 (D) if the seller represents to purchasers that 7-21 the seller has insurance or a surety bond of any type relating to a 7-22 purchaser's purchase of any item, a complete copy of each insurance 7-23 policy and bond; and 7-24 (E) if the seller makes any representation as to 7-25 the post-purchase earning or profit potential of an item, data to 7-26 substantiate the claims made, and if the representation relates to 7-27 previous sales made by the seller or a related entity, 7-28 substantiating data based on the experiences of at least 50 percent 7-29 of the persons who purchased that particular type of item from the 7-30 seller or related entity during the preceding six months, or if the 7-31 seller or related entity has not been in business that long, during 7-32 the period the seller or related entity has been in business, 7-33 including: 7-34 (i) the length of time the seller or 7-35 related entity has been selling the particular type of item being 7-36 offered; 7-37 (ii) the number of purchasers of the item 7-38 from the seller or related entity known to the seller or related 7-39 entity to have made at least the same earnings or profit as those 7-40 represented; and 7-41 (iii) the percentage that the number 7-42 disclosed under Subparagraph (ii) of this paragraph represents of 7-43 the total number of purchasers from the seller or related entity of 7-44 the particular type of item offered; and 7-45 (5) if the seller is offering to sell an interest in 7-46 oil, gas, or a mineral field, well, or exploration site: 7-47 (A) the seller's ownership interest, if any, in 7-48 each field, well, or site being offered for sale; 7-49 (B) the total number of interests to be sold in 7-50 each field, well, or site being offered for sale; and 7-51 (C) if, in selling an interest in any particular 7-52 field, well, or site, reference is made to an investigation of the 7-53 field, well, or site by the seller or anyone else: 7-54 (i) the name, business address, telephone 7-55 number, and professional credentials of the person who made the 7-56 investigation; and 7-57 (ii) a copy of the report and other 7-58 documents relating to the investigation prepared by the person. 7-59 SUBCHAPTER D. ADDITIONAL INFORMATION FROM SELLER 7-60 Art. 15. INFORMATION POSTED OR AVAILABLE AT SELLER'S 7-61 BUSINESS LOCATION. (a) A seller shall post the certificate of 7-62 registration in a conspicuous place at the location for which it is 7-63 issued. 7-64 (b) A seller shall make available at each of the seller's 7-65 business locations a copy of the entire registration statement and 7-66 update addenda, if any, for inspection by any purchaser or 7-67 representative of any governmental agency. 7-68 (c) A seller shall post in close proximity to the 7-69 certificate of registration the name of each individual in charge 7-70 of the location. 8-1 Art. 16. DISCLOSURES TO PROSPECTIVE PURCHASERS. A seller 8-2 shall, when the solicitation is made and before consummation of any 8-3 sales transaction, provide to each purchaser: 8-4 (1) the complete street address of the location from 8-5 which the salesperson is calling the purchaser and, if different, 8-6 the complete street address of the seller's principal location; 8-7 (2) if the seller represents or implies that a 8-8 purchaser will receive without charge a specified item or one item 8-9 from among designated items, whether the items are denominated as 8-10 gifts, premiums, bonuses, prizes, or otherwise: 8-11 (A) the information required to be filed by 8-12 Subdivisions (3)(D)(i) and (ii) and (3)(E), Article 14, of this 8-13 chapter, as appropriate; and 8-14 (B) the total number of individuals who have 8-15 actually received from the seller during the preceding 12 months, 8-16 or if the seller has not been in the business that long, during the 8-17 period the seller has been in business, the item having the 8-18 greatest value and the item with the smallest odds of being 8-19 received; 8-20 (3) if the seller is offering to sell an interest in 8-21 oil, gas, or mineral field, well, or exploration site, the 8-22 information required by Subdivision (5), Article 14, of this 8-23 chapter; and 8-24 (4) if the seller represents that an item is being 8-25 offered at a price below that usually charged for the item, the 8-26 name of the manufacturer of the item. 8-27 Art. 17. NO REFERENCE TO COMPLIANCE WITH STATUTE. A seller 8-28 may not make or authorize the making of a reference to its 8-29 compliance with this chapter to a purchaser. 8-30 SUBCHAPTER E. OFFENSES 8-31 Art. 18. VIOLATION OF CHAPTER. (a) A person commits an 8-32 offense if the person knowingly or intentionally violates Article 8-33 4, 9, 15, 16, or 17 of this chapter. Each violation constitutes a 8-34 separate offense. 8-35 (b) An offense under this article is a Class A misdemeanor. 8-36 Art. 19. SALESPERSON FOR UNREGISTERED SELLER. (a) A person 8-37 commits an offense if the person knowingly or intentionally acts as 8-38 a salesperson on behalf of a seller who violates the registration 8-39 requirements of this chapter. Each violation constitutes a 8-40 separate offense. 8-41 (b) An offense under this article is a Class A misdemeanor. 8-42 Art. 19A. CHARGE TO A CREDIT CARD ACCOUNT OR DEBIT OF A 8-43 CHECKING ACCOUNT AFTER OFFER OF FREE ITEM. (a) A seller commits 8-44 an offense if the seller knowingly: 8-45 (1) represents or implies that a purchaser will 8-46 receive without charge an item or service, regardless of whether 8-47 denominated as a gift, premium, bonus, prize, or otherwise; and 8-48 (2) requests a credit card account number or checking 8-49 account number from the purchaser for the purpose of charging to 8-50 the credit card account or debiting from the checking account an 8-51 amount as a condition precedent to the purchaser's receipt of an 8-52 item. 8-53 (b) An offense under this article is a Class A misdemeanor. 8-54 SUBCHAPTER F. ENFORCEMENT 8-55 Art. 20. INJUNCTION. The attorney general may sue in a 8-56 court of competent jurisdiction to enjoin a person from violating 8-57 this chapter. The attorney general shall notify the defendant of 8-58 the alleged prohibited conduct not later than the seventh day 8-59 before the date the suit is filed, unless the attorney general 8-60 intends to request that the court issue a temporary restraining 8-61 order, in which event notice is not required. The party bringing 8-62 the suit shall recover all reasonable costs of prosecuting these 8-63 cases including, but not limited to, costs of investigation, 8-64 depositions, witness fees, attorney's fees, and other costs of 8-65 court. 8-66 Art. 21. CIVIL PENALTIES. A person is subject to a civil 8-67 penalty of not more than $5,000 for a single violation. A person 8-68 who violates an injunction issued under Article 20 of this chapter 8-69 is liable to the state for a civil penalty of not more than $25,000 8-70 for a single violation and not more than $50,000 for all violations 9-1 of the injunction. The attorney general may bring suit to recover 9-2 the civil penalty in the court that issued the original injunction. 9-3 The party bringing the suit shall also recover all reasonable costs 9-4 of prosecuting these cases including, but not limited to, costs of 9-5 investigation, depositions, witness fees, attorney's fees, and 9-6 other costs of court. 9-7 Art. 22. DECEPTIVE TRADE PRACTICES. A violation of this 9-8 chapter is a false, misleading, or deceptive act or practice under 9-9 Subchapter E, Chapter 17, Business & Commerce Code, and its 9-10 subsequent amendments, and any public or private right or remedy 9-11 prescribed by that subchapter may be used to enforce this chapter. 9-12 Art. 23. ACTION TO RECOVER AGAINST SECURITY. (a) A person 9-13 who is injured by the bankruptcy of a seller or the seller's breach 9-14 of an agreement entered into during a telephone solicitation may 9-15 bring and maintain an action to recover against the bond, letter of 9-16 credit, or certificate of deposit required under Article 10 of this 9-17 chapter. 9-18 (b) The liability of the surety on a bond provided pursuant 9-19 to Article 10 of this chapter does not exceed the amount of the 9-20 bond, regardless of the number of claims filed or the aggregate 9-21 amount claimed. If the amount claimed exceeds the amount of the 9-22 bond, the surety shall deposit the amount of the bond with the 9-23 secretary of state for distribution to claimants entitled to 9-24 recovery, and the surety is then relieved of all liability under 9-25 the bond. 9-26 Art. 24. NO WAIVER. An attempted waiver of a provision of 9-27 this chapter is void. 9-28 Art. 25. CUMULATIVE REMEDIES. The remedies provided by this 9-29 chapter are in addition to any other procedures or remedies 9-30 provided for by other law. 9-31 SECTION 2. (a) This Act takes effect September 1, 1993. 9-32 (b) The change in law made by this Act applies only to an 9-33 offense committed on or after the effective date of this Act. For 9-34 purposes of this section, an offense is committed before the 9-35 effective date of this Act if any element of the offense occurs 9-36 before that date. 9-37 SECTION 3. The importance of this legislation and the 9-38 crowded condition of the calendars in both houses create an 9-39 emergency and an imperative public necessity that the 9-40 constitutional rule requiring bills to be read on three several 9-41 days in each house be suspended, and this rule is hereby suspended. 9-42 * * * * * 9-43 Austin, 9-44 Texas 9-45 May 24, 1993 9-46 Hon. Bob Bullock 9-47 President of the Senate 9-48 Sir: 9-49 We, your Committee on Economic Development to which was referred 9-50 H.B. No. 364, have had the same under consideration, and I am 9-51 instructed to report it back to the Senate with the recommendation 9-52 that it do pass and be printed. 9-53 Parker, 9-54 Chairman 9-55 * * * * * 9-56 WITNESSES 9-57 FOR AGAINST ON 9-58 ___________________________________________________________________ 9-59 Name: Teri Flack x 9-60 Representing: Office of the Attorney General 9-61 City: Austin 9-62 -------------------------------------------------------------------