By Coleman H.B. No. 2284
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the registration and bonding of an financial reporting
1-3 by persons soliciting for charitable organizations and to the
1-4 prohibition of deceptive practices in the solicitation of
1-5 contributions.
1-6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-7 SECTION 1. Subtitle C. Title 9, Property Code, is amended by
1-8 adding 122A to read as follows:
1-9 CHAPTER 122A. REGISTRATION, BONDING, REPORTING AND SOLICITATION BY
1-10 COMMERCIAL SOLICITORS
1-11 Sec. 122A.001. SCOPE OF ACT; SHORT TITLE. (a) Except as
1-12 provided by this chapter, this chapter applies to all commercial
1-13 solicitors created, organized, or doing business in Texas who are
1-14 soliciting in Texas for a charitable organization. Solicitation
1-15 from the public in Texas shall be considered doing business in
1-16 Texas.
1-17 (b) This chapter may be cited as the Commercial Solicitors
1-18 Act.
1-19 Sec. 122A.002 DEFINITIONS. In this chapter and for purposes
1-20 of this chapter only:
1-21 (1) "Charitable organization" means:
1-22 (a) an entity that is exempt or has applied for
1-23 exemption from state or local taxation as an institution of purely
2-1 public charity or from federal taxes pursuant to Section 501 (c)(3)
2-2 of the Internal Revenue Code of 1986;
2-3 (b) A civic league or other organization classified by
2-4 the Internal Revenue Service under Section 501(c)(4) of the
2-5 Internal Revenue Code of 1986 if the organization solicits
2-6 contributions for charitable purposes from the public;
2-7 (c) a domestic fraternal society, order, or
2-8 association operating under the lodge system classified by the
2-9 Internal Revenue Service under Section 501(c)(10) of the Internal
2-10 Revenue Code of 1986 if the organization solicits contributions for
2-11 charitable purposes from the public;
2-12 (d) a veteran's organization classified by the
2-13 Internal Revenue Service under Section 501(c)(19) of the Internal
2-14 Revenue Code of 1986 if the organization solicits contributions for
2-15 charitable purposes from the public;
2-16 (e) any corporation organized under the Texas
2-17 Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's
2-18 Texas Civil Statutes) for public benefit, charitable or
2-19 eleemosynary purposes and any not-for-profit foreign corporation
2-20 soliciting charitable contributions, doing business or holding
2-21 property in this state for public benefit, charitable, or
2-22 eleemosynary purposes, but not including any foreign corporation
2-23 engaged solely in the expenditure of funds in this state for
2-24 charitable or public benefit purposes;
2-25 (f) any other organization which represents itself to
3-1 be established for a charitable purpose; or
3-2 (g) any person who solicits contributions from the
3-3 public with the representation that all or part of the contribution
3-4 will be used for a charitable purpose, except any for-profit entity
3-5 which, as part of a marketing program, advertises that a portion of
3-6 the purchase price of any good or service will be contributed to a
3-7 charitable organization if the for-profit entity, as part of the
3-8 advertising or promotion discloses the following:
3-9 (i) the name of the charitable organization which will
3-10 receive contributions, and
3-11 (ii) the total amount of money or percentage of
3-12 purchase price which will be contributed;
3-13 (2) "Charitable purpose" means any charitable,
3-14 benevolent, philanthropic, patriotic, religious, social service,
3-15 welfare, educational, eleemosynary, cultural, artistic, or public
3-16 interest purpose, whether actual or purported.
3-17 (3) "Commercial solicitor", means a person who, for
3-18 compensation, solicits in this state or employs, engages or
3-19 provides, directly or indirectly, another person who is paid to
3-20 solicit in this state. "Commercial solicitor" does not include an
3-21 attorney, investment counselor or employee of a financial
3-22 institution who advises a person to make a charitable contribution,
3-23 a bona fide employee, volunteer, wholly owned subsidiary or
3-24 salaried officer of a charitable organization, an employee of a
3-25 temporary help agency who is placed with a charitable organization
4-1 or a bona fide employee of a person who employs another person to
4-2 solicit in this state. "Commercial solicitor" does not include a
4-3 person who, for compensation, plans, manages, advises, consults or
4-4 prepares material for, or with respect to, solicitation in this
4-5 state for a charitable organization, but who does not solicit, does
4-6 not employ, engage or provide any person who is paid to solicit
4-7 contributions and who does not at any time have custody or control
4-8 of contributions from a solicitation for a charitable organization
4-9 that is required to be registered under this chapter.
4-10 (4) "Contribution" means the promise or grant of any
4-11 money or property of any kind or value, including the promise to
4-12 pay, or payment for merchandise or rights of any other description
4-13 when representation is made that the whole or any part of the price
4-14 or donation will be applied to a charitable purpose.
4-15 (5) "Operating instrument" means any written
4-16 instrument that establishes or governs the operations of a
4-17 charitable organization. The term includes the original and any
4-18 amendment to:
4-19 (a) articles of incorporation and dissolution;
4-20 (b) bylaws;
4-21 (c) trust indenture or other instrument that
4-22 establishes a charitable organization.
4-23 (6) "Person" means an individual, partnership,
4-24 corporation, association, or other group, however organized.
4-25 (7) "Solicit" means to request, directly or
5-1 indirectly, a contribution and to state or imply that the
5-2 contribution will be used in whole or in part for a charitable
5-3 purpose or to benefit a charitable organization.
5-4 (8) "Solicitation" means the act or practice of
5-5 soliciting, whether or not the person soliciting receives any
5-6 contribution. "Solicitation" includes any of the following methods
5-7 of requesting or securing a contribution:
5-8 (a) an oral or written request;
5-9 (b) an announcement to the news media or by radio,
5-10 television, telephone, telegraph or other transmission of images or
5-11 information concerning the request for contributions by or for a
5-12 charitable organization or charitable purpose;
5-13 (c) the distribution or posting of a handbill, written
5-14 advertisement or other publication which directly or by implication
5-15 seeks contributions;
5-16 (d) the sale of, or offer or attempt to sell, a
5-17 membership or an advertisement, advertising space, book, card, tag,
5-18 coupon, device, magazine, merchandise, subscription, flower,
5-19 ticket, candy, cooky or other tangible item in connection with any
5-20 of the following:
5-21 (i) a request for financial support for a
5-22 charitable organization or charitable purpose;
5-23 (ii) the use of or reference to the name of a
5-24 charitable organization as a reason for making a purchase; or
5-25 (iii) a statement that all or a part of the
6-1 proceeds from the sale will be used for a charitable purpose or
6-2 will benefit a charitable organization.
6-3 (9) Solicitation "from the public" means a
6-4 solicitation to persons regardless of their connection to the
6-5 charitable organization. Soliciting only those persons having some
6-6 interest in the charitable organization such as members, alumni,
6-7 persons who have used the services of the soliciting charitable
6-8 organization or the direct beneficiaries or families of direct
6-9 beneficiaries of the soliciting charitable organization shall not
6-10 be considered solicitation from the public. Soliciting prior
6-11 donors who are not otherwise interested in the organization as
6-12 described above shall constitute a solicitation "from the public".
6-13 (10) "Trustee" means any individual, group of
6-14 individuals, corporation, or other legal entity that holds,
6-15 manages, or administers the property or affairs of a charitable
6-16 organization.
6-17 122A.003. REGISTRATION OF COMMERCIAL SOLICITORS. (a) No
6-18 commercial solicitor may solicit contributions in Texas unless the
6-19 commercial solicitor is registered under this subchapter.
6-20 (b) The Attorney General shall promptly register a
6-21 commercial solicitor that does all of the following:
6-22 (1) Submits to the Attorney General a completed
6-23 application for registration on a form provided by the Attorney
6-24 General.
6-25 (2) Files with the Attorney General a bond that
7-1 is approved under 122A.004.
7-2 (3) Pays to the Attorney General a $100
7-3 registration fee.
7-4 (c) The Attorney General shall issue a certificate of
7-5 registration to each commercial solicitor that is registered under
7-6 this subsection. Certificates issued under this paragraph expire
7-7 on September 1. Renewal applications shall be submitted to the
7-8 Attorney General on a form provided by the Attorney General, on or
7-9 before the date specified by the Attorney General and shall include
7-10 a $100 renewal fee and evidence satisfactory to the Attorney
7-11 General that the commercial solicitor maintains a bond that is
7-12 approved under Section 122A.004.
7-13 (d) Within twenty (20) days after receiving an
7-14 application for registration or for renewal of a registration under
7-15 this subsection, the Attorney General shall notify the commercial
7-16 solicitor of any deficiencies in the application, bond or fee
7-17 payment.
7-18 Sec. 122A.004. BOND. At the time of applying for
7-19 registration, a commercial solicitor shall file with and have
7-20 approved by the Attorney General, a bond in which the commercial
7-21 solicitor is the principal obligor, in the sum of $50,000, with one
7-22 or more responsible sureties whose liability in the aggregate as
7-23 sureties at least equals that sum. The commercial solicitor shall
7-24 maintain the bond in effect as long as the registration is in
7-25 effect. The bond, which may be in the form of a rider to a larger
8-1 blanket liability bond, shall run to the state and to any person
8-2 who may have a cause of action against the principal obligor of the
8-3 bond for any liabilities arising out of a violation of this
8-4 subchapter or the rules promulgated under this subchapter.
8-5 Sec. 122A.005. SOLICITATION NOTICE. Before soliciting on
8-6 behalf of a charitable organization, a commercial solicitor shall
8-7 file with the Attorney General a completed solicitation notice in
8-8 the form prescribed by the Attorney General. The solicitation
8-9 notice shall include all of the following:
8-10 (a) A copy of the contract described in Sec. 122A.006.
8-11 (b) The projected period during which the solicitation will
8-12 take place.
8-13 (c) The street address and telephone number from which the
8-14 solicitation will be conducted.
8-15 (d) The name and residence address of each person
8-16 responsible for directing and supervising the conduct of services
8-17 under the contract described in Sec. 122A.006.
8-18 (e) A statement of whether the commercial solicitor will at
8-19 any time have custody or control of contributions, and if not, a
8-20 statement identifying by name and street address, the person which
8-21 will have custody or control of contributions.
8-22 (f) A full and fair description of the charitable purpose
8-23 for which solicitations will be made.
8-24 (g) The signature of an owner, officer or director of the
8-25 commercial solicitor.
9-1 (h) Written confirmation from an officer or director of the
9-2 charitable organization on whose behalf the commercial solicitor is
9-3 acting that the solicitation notice and any accompanying material
9-4 are true and complete to the best of his/her knowledge.
9-5 Sec. 122A.006. CONTRACT. (a) A commercial solicitor and a
9-6 charitable organization shall enter into a written contract that
9-7 clearly states the respective obligations of the commercial
9-8 solicitor and the charitable organization and states the amount of
9-9 gross revenue, raised under the contract, that the charitable
9-10 organization will receive. The amount of the gross revenue that
9-11 the charitable organization will receive shall be expressed either
9-12 as (1) a fixed percentage of the gross revenue, or (2) a dollar
9-13 amount and an estimated percentage of the reasonably expected gross
9-14 revenue.
9-15 (b) The fixed or estimated percentage of the gross revenue
9-16 that the charitable organization will receive excludes any amount
9-17 which the charitable organization is to pay under the contract as
9-18 expenses, including the cost of merchandise or services sold or
9-19 events staged.
9-20 Sec. 122A.007. REPORTING CHANGES. Within 7 days after any
9-21 material change occurs in information filed with the Attorney
9-22 General under this section, the commercial solicitor shall report
9-23 the change, in writing, to the Attorney General.
9-24 Sec. 122A.008. FINANCIAL REPORT. Within 90 days after
9-25 completing services under a contract described in sub. (4) and on
10-1 the anniversary of the signing of a contract described under sub.
10-2 (4) lasting more than one year, the commercial solicitor shall
10-3 account in writing to the charitable organization for all
10-4 contributions received and all expenses incurred under the
10-5 contract. The charitable organization shall retain the accounting
10-6 for at least 3 years and make it available to the Attorney General
10-7 or to any member of the public upon request.
10-8 Sec. 122A.009. DEPOSITING CONTRIBUTIONS. A commercial
10-9 solicitor shall deposit, in its entirety, a contribution of money
10-10 received by the commercial solicitor on behalf of a charitable
10-11 organization in an account at a financial institution within 5 days
10-12 after its receipt. The account shall be in the name of the
10-13 charitable organization. The charitable organization shall have
10-14 sole control of all withdrawals from the account.
10-15 Sec. 122A.010. RECORD KEEPING. (a) During the period in
10-16 which a contract described in Sec. 122A.006 is in effect and for
10-17 not less than 3 years after its completion, a commercial solicitor
10-18 shall retain all of the following records:
10-19 1. The name and, if known to the commercial solicitor,
10-20 the address of each person contributing and the date and amount of
10-21 the contribution.
10-22 2. The name and residence address of each employee,
10-23 agent or other person involved in the solicitation.
10-24 3. A record of all contributions that are at any time
10-25 in the custody or control of the commercial solicitor.
11-1 4. A record of all expenses incurred by the commercial
11-2 solicitor which the charitable organization is required to pay.
11-3 5. A record of the location and account number of each
11-4 financial institution account in which the commercial solicitor
11-5 deposits contributions.
11-6 (b) The commercial solicitor shall make all records
11-7 described in this subsection available for inspection by the
11-8 Attorney General upon request. The Attorney General may not
11-9 disclose information under sub(a)(1) to any person except to other
11-10 law enforcement entities to the extent necessary for investigative
11-11 or law enforcement purposes.
11-12 Sec. 122A.011. FALSE, MISLEADING OR DECEPTIVE ACTS IN
11-13 SOLICITATION PROHIBITED AND REMEDIES PROVIDED. (a) False,
11-14 misleading, or deceptive acts or practices in the conduct of any
11-15 solicitation by or on behalf of any charitable organization,
11-16 whether or not the organization is required to be registered under
11-17 this Chapter, are hereby declared unlawful and are subject to
11-18 public or private action as provided by the Texas Deceptive Trade
11-19 Practices-Consumer Protection Act, Section 17.41 et seq, Business
11-20 and Commerce Code."
11-21 (b) False, misleading or deceptive acts or practices
11-22 include, but are not limited to, the following acts:
11-23 (1) any act specifically enumerated in a subdivision
11-24 of Subsection (b) of Section 17.46 of the Texas Deceptive Trade
11-25 Practices-Consumer Protection Act;
12-1 (2) causing confusion or misunderstanding as to the
12-2 sponsorship, approval or certification of any solicitation,
12-3 including mentioning the name of a charitable organization as a
12-4 beneficiary of the solicitation unless that organization has agreed
12-5 in writing to accept benefits of the solicitation.
12-6 (3) causing confusion or misunderstanding as to the
12-7 identity of the individual, entity or charitable organization
12-8 conducting the solicitation;
12-9 (4) Falsely representing or implying that the
12-10 solicitor is a volunteer;
12-11 (5) misrepresenting the purposes for which
12-12 contributions will be used;
12-13 (6) Soliciting for a renewal, annual dues, annual
12-14 contribution or otherwise implying that the consumer or prospective
12-15 donor has previously made a contribution to the charitable
12-16 organization unless that is the case;
12-17 (7) Sending a solicitation which is or appears to be
12-18 an invoice or bill unless the consumer or prospective donor has
12-19 specifically agreed to make a contribution;
12-20 (8) Exploiting or using the fact of filing with the
12-21 Attorney General in such a manner as to lead any person to believe
12-22 that the filing in any manner constitutes an endorsement or
12-23 approval by the state.
12-24 (c) Failing to file information or filing incomplete, false
12-25 or misleading information in any document required to be filed with
13-1 the Attorney General under this section is unlawful and is subject
13-2 to action by the Attorney General as provided in Section 122A.013.
13-3 Sec. 122A.012. AUDIT POWERS OF THE ATTORNEY GENERAL. (a)
13-4 Copies of each of the records required to be maintained by a
13-5 commercial solicitor under this section must be made available to
13-6 the Attorney General upon the request of the Attorney General.
13-7 (b) A commercial solicitor shall provide the information
13-8 requested to the Attorney General within ten (10) working days of
13-9 the date of the Attorney General's request.
13-10 (c) A commercial solicitor that fails to provide timely
13-11 information forfeits its surety bond to the state and must provide
13-12 the requested information and replace the bond before continuing
13-13 solicitation.
13-14 (d) This section is in addition to and does not limit any
13-15 other audit or investigative authority of the Attorney General.
13-16 122A.013 REMEDIES. (a) The Attorney General may institute
13-17 an action for failure to comply with any provision of this statute,
13-18 seeking injunctive relief to restrain the person from continuing
13-19 the violation or violations and for civil penalties not less that
13-20 $1,000 and not more than $25,000 per violation.
13-21 (b) Suit may be brought against a bond filed under this Act.
13-22 (c) The remedies authorized by this chapter are not
13-23 exclusive, but are in addition to any other procedure or remedies
13-24 provided for by any other common or statutory law.
13-25 (d) In any proceeding brought by the Attorney General under
14-1 this chapter, the Attorney General may recover civil penalties and
14-2 the reasonable expenses incurred in bringing the suit, including
14-3 court costs, investigative costs, witness fees, deposition costs
14-4 and reasonable attorney's fees.
14-5 Sec. 122A.014. VENUE. In any proceeding under this chapter,
14-6 venue shall be in a court of competent jurisdiction in Travis
14-7 County, in the county in which the charitable organization is
14-8 located or in the county in which solicitation occurred.
14-9 Sec. 122A.015. RULES. The Attorney General may prescribe
14-10 any rules, procedures and forms necessary for the proper
14-11 administration of this chapter.
14-12 Sec. 122A.016. CONTRARY PROVISIONS INVALID. This chapter
14-13 applies without regard to contrary provisions in any operating
14-14 instrument or contract.
14-15 Sec. 122A.017. SEVERABILITY. If any provision of this
14-16 chapter is or becomes invalid, illegal or unenforceable in any
14-17 respect, the remaining provisions hereof shall not be in any way
14-18 affected or impaired thereby.
14-19 SECTION 2. This Act takes effect September 1, 1993.
14-20 SECTION 3. The importance of this legislation and the
14-21 crowded condition of the calendars in both houses create an
14-22 emergency and an imperative public necessity that the
14-23 constitutional rule requiring bills to be read on three several
14-24 days in each house be suspended, and this rule is hereby suspended.