By Coleman H.B. No. 2284
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the registration and bonding of and financial reporting
1-3 by commercial solicitors and to the prohibition of deceptive
1-4 practices by commercial solicitors.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Title 2, Business & Commerce Code, is amended by
1-7 adding Chapter 20 to read as follows:
1-8 CHAPTER 20. REGISTRATION, BONDING, REPORTING, AND
1-9 SOLICITATION BY COMMERCIAL SOLICITORS
1-10 Sec. 20.01. SCOPE OF ACT; SHORT TITLE. (a) Except as
1-11 provided by this chapter, this chapter applies to all commercial
1-12 solicitors created, organized, or doing business in Texas that are
1-13 soliciting in Texas for a charitable organization. Solicitation
1-14 from the public in Texas shall be considered doing business in
1-15 Texas.
1-16 (b) This chapter may be cited as the Commercial Solicitors
1-17 Act.
1-18 Sec. 20.02. DEFINITIONS. In this chapter and for purposes
1-19 of this chapter only:
1-20 (1) "Charitable organization" means:
1-21 (A) an organization that is exempt or has
1-22 applied for exemption from federal taxes pursuant to Section
1-23 501(c)(3) of the Internal Revenue Code of 1986;
2-1 (B) an organization that is exempt or has
2-2 applied for exemption from federal taxes pursuant to Section
2-3 501(c)(4), 501(c)(10), or 501(c)(19) of the Internal Revenue Code
2-4 of 1986 if the organization solicits contributions; or
2-5 (C) any other organization which represents
2-6 itself to be established for a charitable purpose, except for
2-7 charitable remainder trusts, charitable lead trusts and pooled
2-8 income funds--contributions to which are deductible under Section
2-9 170, 2055, or 2522 of the Internal Revenue Code of 1986.
2-10 (2) "Charitable purpose" means any purpose described
2-11 in Section 501(c)(3) of the Internal Revenue Code of 1986.
2-12 (3) "Commercial solicitor" means a person that for
2-13 compensation and on behalf of a charitable organization solicits
2-14 contributions in this state or employs, procures, or engages any
2-15 other person to solicit contributions for compensation in this
2-16 state. No lawyer, financial planner, financial advisor, planned
2-17 giving consultant, investment counselor, certified public
2-18 accountant, or employee of a financial institution who advises a
2-19 person to make a charitable contribution shall be deemed to be a
2-20 commercial solicitor if, at the time the advice is rendered, the
2-21 advisor is not under contract to solicit and receive in the
2-22 advisor's name contributions for the charitable organization that
2-23 would be the beneficiary if the advice were followed. A bona fide
2-24 salaried director, trustee, officer, employee, or volunteer of a
2-25 charitable organization shall not be deemed to be a commercial
3-1 solicitor. Receipt of prizes or awards by a volunteer for
3-2 solicitation shall not be deemed to be compensation.
3-3 (4) "Contribution" means the grant, promise, or pledge
3-4 of money, credit, property, financial assistance, or other thing of
3-5 any kind or value except for volunteer services. It does not
3-6 include bona fide fees, dues, or assessments paid by members,
3-7 provided that membership is not conferred solely as consideration
3-8 for making a contribution in response to a solicitation.
3-9 (5) "Person" means an individual, partnership,
3-10 corporation, association, or other group, however organized.
3-11 (6)(a) "Solicit" and "solicitation" mean the direct or
3-12 indirect request for a contribution on the plea or representation
3-13 that the contribution, or any portion thereof, will be used for a
3-14 charitable purpose or to benefit a charitable organization. A
3-15 solicitation shall be deemed to have taken place whether or not the
3-16 person making the solicitation receives any contribution. Without
3-17 limiting the scope of the foregoing these words shall include the
3-18 following method of requesting contributions:
3-19 (1) any oral or written request;
3-20 (2) publication of a request in newspapers, on the
3-21 radio or television, or by any telecommunications device or other
3-22 manner of transmitting information to the public;
3-23 (3) the distribution, circulation, posting, or
3-24 publishing of any handbill, written advertisement, or other
3-25 publications; or
4-1 (4) an offering for sale of any advertisement, book,
4-2 card, coupon, membership, merchandise, subscription, flower, candy,
4-3 or other tangible item if any appeal is made for any charitable
4-4 organization or purpose, or if the name of any charitable
4-5 organization is used or referred to in the appeal as an inducement
4-6 or reason for making any such sale.
4-7 (b) The words "solicit" and "solicitation" shall not include
4-8 a request for contributions from persons having some interest in
4-9 the charitable organization, such as prior donors, trustees,
4-10 directors, members, employees, former students, advisory boards,
4-11 volunteers, persons who have used the services of the charitable
4-12 organization, or direct beneficiaries or families of direct
4-13 beneficiaries of the charitable organization.
4-14 Sec. 20.03. REGISTRATION OF COMMERCIAL SOLICITORS. (a) No
4-15 commercial solicitor may solicit contributions in Texas unless the
4-16 commercial solicitor is registered under this chapter.
4-17 (b) The attorney general shall promptly register a
4-18 commercial solicitor that does all of the following:
4-19 (1) submits to the attorney general a completed
4-20 application for registration that contains the following:
4-21 (A) the legal name and any other names used by
4-22 the commercial solicitor;
4-23 (B) the street address or addresses of the
4-24 commercial solicitor;
4-25 (C) the telephone and telefax number, if any, of
5-1 the commercial solicitor;
5-2 (D) the date and state of incorporation;
5-3 (E) if not incorporated, the type of
5-4 organization and date formed;
5-5 (F) a statement as to whether the commercial
5-6 solicitor or any of its directors, officers, agents, or employees
5-7 has been involved in any court or administrative proceeding
5-8 relating to solicitation in any state. The statement shall include
5-9 a description of each proceeding, the state in which the proceeding
5-10 took place, the name of the agency or court, the date of the
5-11 proceeding, and the ultimate outcome of the proceeding;
5-12 (G) a list of all agencies and states where the
5-13 commercial solicitor is registered or has been registered including
5-14 dates of registration, registration numbers, and any other names
5-15 under which the commercial solicitor was or is registered;
5-16 (H) the names, street addresses, and telephone
5-17 numbers of the owners, officers, directors, or trustees of the
5-18 commercial solicitor;
5-19 (I) a statement as to whether any owner,
5-20 officers, directors, or trustees have been convicted of a felony
5-21 and including the state, court, and date of each such conviction;
5-22 (J) the names of each individual responsible for
5-23 custody of funds, distribution of funds, and custody of records and
5-24 of each individual authorized to sign checks; and
5-25 (K) a sworn statement that the information
6-1 included in the registration is true, correct, and complete;
6-2 (2) files with the attorney general a bond that is
6-3 approved under Section 20.04 of this code; and
6-4 (3) pays to the attorney general a $100 registration
6-5 fee.
6-6 (c) The attorney general shall issue a certificate of
6-7 registration to each commercial solicitor that is registered under
6-8 this section. Certificates issued under this subsection expire one
6-9 year from their date of issue. Renewal applications shall be
6-10 submitted to the attorney general on or before the expiration date.
6-11 Renewal applications shall include:
6-12 (1) any changes in the registration applications
6-13 previously provided to the attorney general or a statement
6-14 certifying that there are no changes;
6-15 (2) a $100 renewal fee; and
6-16 (3) evidence satisfactory to the attorney general that
6-17 the commercial solicitor maintains a bond that is approved under
6-18 Section 20.04 of this code.
6-19 (d) Within 10 working days after receiving an application
6-20 for registration or for renewal of a registration under this
6-21 section, the attorney general shall notify the commercial solicitor
6-22 of any deficiencies in the application, bond, or fee payment.
6-23 Sec. 20.04. BOND. At the time of applying for registration,
6-24 a commercial solicitor shall file with the attorney general a bond
6-25 in which the commercial solicitor is the principal obligor in the
7-1 sum of $10,000 with one or more responsible sureties whose
7-2 liability in the aggregate as sureties equals at least that sum.
7-3 The commercial solicitor shall maintain the bond in effect as long
7-4 as the registration is in effect. The bond, which may be in the
7-5 form of a rider to a larger blanket liability bond, shall run to
7-6 the state for any liabilities arising out of a violation of this
7-7 chapter or the rules promulgated under this chapter.
7-8 Sec. 20.05. SOLICITATION NOTICE. Before soliciting on
7-9 behalf of a charitable organization, a commercial solicitor shall
7-10 file with the attorney general a completed solicitation notice that
7-11 includes all of the following:
7-12 (1) the compensation and expenses to be paid to the
7-13 commercial solicitor under the contract described in Section 20.06
7-14 of this code;
7-15 (2) the projected period during which the solicitation
7-16 will take place;
7-17 (3) the street address and telephone number from which
7-18 the solicitation will be conducted;
7-19 (4) the name and street address of each person
7-20 responsible for directing and supervising the conduct of services
7-21 provided by the commercial solicitor under the contract described
7-22 in Section 20.06 of this code;
7-23 (5) a statement of whether the commercial solicitor
7-24 will at any time have custody or control of contributions and, if
7-25 not, a statement identifying, by name and street address, the
8-1 person that will have custody or control of contributions;
8-2 (6) a full and fair description of the charitable
8-3 purpose for which solicitations will be made;
8-4 (7) the signature of an owner, officer, or director of
8-5 the commercial solicitor; and
8-6 (8) written confirmation from an officer or director
8-7 of the charitable organization on whose behalf the commercial
8-8 solicitor is acting that the information contained in the
8-9 solicitation notice is true and complete to the best of the
8-10 officer's or director's knowledge.
8-11 Sec. 20.06. CONTRACT. A commercial solicitor and a
8-12 charitable organization shall enter into a written contract that
8-13 states the respective obligations of the commercial solicitor and
8-14 the charitable organization. The contract shall state the amount
8-15 of the compensation that the commercial solicitor will receive.
8-16 The compensation shall be expressed either as (1) a fixed
8-17 percentage of the gross revenue, or (2) a dollar amount. Any
8-18 expenses to be paid by the charitable organization shall be set
8-19 forth in the contract.
8-20 Sec. 20.07. REPORTING CHANGES. Within 10 working days after
8-21 any material change occurs in any solicitation notice filed with
8-22 the attorney general under Section 20.05 of this code, the
8-23 commercial solicitor shall report the change, in writing, to the
8-24 attorney general.
8-25 Sec. 20.08. FINANCIAL REPORT. Within 90 days after
9-1 completing services under a contract described in Section 20.06 of
9-2 this code and within 90 days after the close of the commercial
9-3 solicitor's fiscal year for any contract described under Section
9-4 20.06 of this code lasting more than one year, the commercial
9-5 solicitor shall account in writing to the charitable organization
9-6 for all contributions received by the commercial solicitor and all
9-7 expenses charged by the commercial solicitor to the charitable
9-8 organization under the contract. The charitable organization shall
9-9 retain the accounting for at least three years and make it
9-10 available to the attorney general upon request.
9-11 Sec. 20.09. DEPOSITING CONTRIBUTIONS. A commercial
9-12 solicitor shall deposit, in its entirety, a contribution of money
9-13 received by the commercial solicitor on behalf of a charitable
9-14 organization in an account at a financial institution, within five
9-15 days after its receipt. The charitable organization shall have
9-16 sole control of all withdrawals from the account.
9-17 Sec. 20.10. RECORD KEEPING. During the period in which a
9-18 contract described in Section 20.06 of this code is in effect and
9-19 for not less than three years after its completion, a commercial
9-20 solicitor shall retain all of the following records:
9-21 (1) the date and amount of the contribution and, if
9-22 known, the name and address of each person contributing;
9-23 (2) the name and street address of each employee or
9-24 agent of the commercial solicitor involved in the solicitation;
9-25 (3) a record of all contributions that are at any time
10-1 in the custody or control of the commercial solicitor;
10-2 (4) a record of all expenses incurred by the
10-3 commercial solicitor that the charitable organization is required
10-4 to pay; and
10-5 (5) a record of the location and account number of
10-6 each financial institution account in which the commercial
10-7 solicitor deposits contributions.
10-8 Sec. 20.11. FALSE, MISLEADING, OR DECEPTIVE ACTS IN
10-9 SOLICITATION PROHIBITED AND REMEDIES PROVIDED. (a) False,
10-10 misleading, or deceptive acts or practices in the conduct of any
10-11 solicitation by a commercial solicitor are hereby declared unlawful
10-12 and are subject to public or private action as provided by
10-13 Subchapter E, Chapter 17, of this code.
10-14 (b) False, misleading, or deceptive acts or practices
10-15 include, but are not limited to, the following acts:
10-16 (1) any act specifically enumerated in Subsection (b),
10-17 Section 17.46, of this code;
10-18 (2) causing confusion or misunderstanding as to the
10-19 sponsorship, approval, or certification of any solicitation,
10-20 including mentioning the name of a charitable organization as a
10-21 beneficiary of the solicitation unless that organization has agreed
10-22 in writing to accept benefits of the solicitation;
10-23 (3) causing confusion or misunderstanding as to the
10-24 charitable organization that is the beneficiary of the
10-25 solicitation;
11-1 (4) falsely stating that the solicitor is a volunteer,
11-2 employee, or member of the charitable organization that is the
11-3 beneficiary of the solicitation;
11-4 (5) misrepresenting the purposes for which
11-5 contributions will be used;
11-6 (6) knowingly soliciting for a renewal, annual dues,
11-7 or annual contribution or otherwise implying that the donor or
11-8 prospective donor has previously made a contribution to the
11-9 charitable organization when that is not the case;
11-10 (7) sending a solicitation that is or appears to be an
11-11 invoice or bill unless the donor or prospective donor has
11-12 specifically agreed to make a contribution; or
11-13 (8) exploiting or using the fact of filing with the
11-14 attorney general in such a manner as to lead any person to believe
11-15 that the filing in any manner constitutes an endorsement or
11-16 approval by the state.
11-17 (c) Failing to file information or filing incomplete, false,
11-18 or misleading information in any document required to be filed with
11-19 the attorney general under this section is unlawful and is subject
11-20 to action by the attorney general as provided in Section 20.13 of
11-21 this code.
11-22 (d) It is an affirmative defense to both a public and
11-23 private action under this chapter that the commercial solicitor did
11-24 not know that its client charitable organization intended to or did
11-25 use contributions for purposes other than the purpose for which the
12-1 contributions were solicited.
12-2 Sec. 20.12. AUDIT POWERS OF THE ATTORNEY GENERAL. (a) The
12-3 commercial solicitor shall make all records described in Section
12-4 20.10 of this code available for inspection by the attorney general
12-5 upon request. The attorney general shall not retain, copy, or
12-6 disclose information under Subsection (a), Section 20.10, of this
12-7 code to any person except to other law enforcement entities to the
12-8 extent necessary for investigative or law enforcement purposes.
12-9 (b) A commercial solicitor shall make these records
12-10 available to the attorney general within 10 working days after the
12-11 commercial solicitor receives the attorney general's request.
12-12 (c) This section is in addition to and does not limit any
12-13 other audit or investigative authority of the attorney general.
12-14 Sec. 20.13. REMEDIES. (a) The attorney general may
12-15 institute an action for failure to comply with any provision of
12-16 this chapter, seeking injunctive relief to restrain the person from
12-17 continuing the violation or violations and civil penalties of not
12-18 less than $1,000 and not more than $25,000 per violation.
12-19 (b) Suit may be brought against a bond filed under this
12-20 chapter.
12-21 (c) The remedies authorized by this chapter are not
12-22 exclusive but are in addition to any other procedure or remedies
12-23 provided for by any other common or statutory law.
12-24 (d) In any proceeding successfully prosecuted by the
12-25 attorney general under this chapter, the court may allow the
13-1 attorney general to recover civil penalties and the reasonable
13-2 costs, expenses, and attorney's fees incurred in bringing the suit.
13-3 Sec. 20.14. VENUE. In any proceeding under this chapter,
13-4 venue shall be in a court of competent jurisdiction in Travis
13-5 County, in the county in which the charitable organization is
13-6 located, or in the county in which the solicitation occurred.
13-7 Sec. 20.15. RULES. The attorney general may prescribe any
13-8 rules, procedures, and forms necessary for the proper
13-9 administration of this chapter.
13-10 Sec. 20.16. CONTRARY PROVISIONS INVALID. This chapter
13-11 applies without regard to contrary provisions in any contract
13-12 required by Section 20.06 of this code.
13-13 Sec. 20.17. SEVERABILITY. If any provision of this chapter
13-14 is or becomes invalid, illegal, or unenforceable in any respect,
13-15 the remaining provisions hereof shall not be in any way affected or
13-16 impaired thereby.
13-17 SECTION 2. This Act takes effect September 1, 1993.
13-18 SECTION 3. The importance of this legislation and the
13-19 crowded condition of the calendars in both houses create an
13-20 emergency and an imperative public necessity that the
13-21 constitutional rule requiring bills to be read on three several
13-22 days in each house be suspended, and this rule is hereby suspended.