1-1                                   AN ACT
 1-2     relating to certain prohibitions applicable to a person offering a
 1-3     sweepstakes; providing a civil penalty.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1. Title 4, Business & Commerce Code, is amended by
 1-6     adding Chapter 43 to read as follows:
 1-7                          CHAPTER 43.  SWEEPSTAKES
 1-8           Sec. 43.001.  DEFINITIONS. In this chapter:
 1-9                 (1)  "Catalogues" means promotional booklets listing
1-10     merchandise for sale that are at least 24 pages long, have a
1-11     circulation of at least 250,000, and either:
1-12                       (A)  require customers to go to a physical
1-13     location to purchase the advertised items; or
1-14                       (B)  are published by a company that derives more
1-15     than 50 percent of its total gross revenue from sales occurring at
1-16     physical locations.
1-17                 (2)  "Conducting" a sweepstakes means distributing any
1-18     material that promotes a sweepstakes, describes the prize or
1-19     prizes, states one or more of the sweepstakes rules, includes any
1-20     current or future opportunity to enter the sweepstakes, or provides
1-21     any method for the recipient of the material to obtain additional
1-22     information about the sweepstakes.
1-23                 (3)  "Credit card" means:
1-24                       (A)  a card that, if covered by Texas law, would
 2-1     be a lender credit card, as defined by Section 301.002, Finance
 2-2     Code; or
 2-3                       (B)  a card that, if covered by Texas law, would
 2-4     be a lender credit card under Section 301.002, Finance Code, except
 2-5     that the obligations under the card are payable in full each month,
 2-6     not deferred, and no finance charge is assessed when the
 2-7     obligations are paid.
 2-8                 (4)  "Debit card" means a card offered by an
 2-9     institution whose deposits are insured by the Federal Deposit
2-10     Insurance Corporation or by another agency, corporation, or
2-11     instrumentality chartered by the United States government.
2-12                 (5)  "Imply" means all methods and means by which an
2-13     implication can be conveyed, including a statement, a question, a
2-14     request, conduct, a graphic, a symbol, lettering, coloring, font
2-15     size, font style, or formatting.
2-16                 (6)  "Magazines" and "newspapers" mean publications:
2-17                       (A)  in which more than 40 percent of the total
2-18     column inches in each issue consist of advertising space purchased
2-19     by companies other than the publisher, its affiliates, and the
2-20     vendors for any of them; and
2-21                       (B)  for which more than 50 percent of the total
2-22     number of copies distributed of each issue go to customers who paid
2-23     for the copy.
2-24                 (7)  "Sweepstakes" means a contest that awards one or
2-25     more prizes based on chance or the random selection of entries.
2-26           Sec. 43.002.  OFFENSES. A person conducting a sweepstakes
2-27     through the mail may not:
 3-1                 (1)  require an individual to order or purchase a good
 3-2     or service, or promise to purchase a good or service in the future,
 3-3     to enter a sweepstakes;
 3-4                 (2)  automatically enter an individual in a sweepstakes
 3-5     because the individual ordered or purchased a good or service or
 3-6     because the individual promised to order or purchase a good or
 3-7     service;
 3-8                 (3)  solicit business using an order form or purchasing
 3-9     mechanism that has any role in the operation of a sweepstakes;
3-10                 (4)  use a mechanism for entering a sweepstakes that:
3-11                       (A)  has any connection to ordering or purchasing
3-12     a good or service;
3-13                       (B)  is not identical for all individuals
3-14     entering the sweepstakes; and
3-15                       (C)  does not have printed on the entry form in a
3-16     font size at least as large as the largest font size used on the
3-17     entry form the following language: "Buying Will Not Help You Win.
3-18     Your chances of winning without making a purchase are the same as
3-19     the chances of someone who purchases something. It is illegal to
3-20     give any advantage to buyers in a sweepstakes.";
3-21                 (5)  solicit an individual to enter a sweepstakes by
3-22     invitation or other opportunity and allow the individual to choose
3-23     or indicate the preferred characteristics of a prize to be awarded
3-24     in the sweepstakes, unless those choices:
3-25                       (A)  are made on the sweepstakes entry form; and
3-26                       (B)  do not appear on and are not connected in
3-27     any way to an order form or other purchasing mechanism;
 4-1                 (6)  offer through the mail any nonsweepstakes prize,
 4-2     gift, premium, giveaway, or skill contest during the 30-day period
 4-3     immediately following the last date on which the person conducted a
 4-4     sweepstakes through the mail;
 4-5                 (7)  offer through the mail any opportunity to enter a
 4-6     sweepstakes during the 30-day period immediately following the last
 4-7     date on which the person conducted a sweepstakes through the mail;
 4-8                 (8)  ask an individual for any information or any
 4-9     action by that individual that would be consistent with the
4-10     individual winning a sweepstakes prize, unless the individual has
4-11     won a sweepstakes prize;
4-12                 (9)  provide an individual who has not yet won the
4-13     sweepstakes with any document or other item that simulates any
4-14     event, circumstance, or condition connected with being the winner
4-15     of the sweepstakes;
4-16                 (10)  send material accompanying or relating to a
4-17     sweepstakes or an offer to enter a sweepstakes that states or
4-18     implies that an individual must comply with a restriction or
4-19     condition to enter the sweepstakes, unless all individuals entering
4-20     the sweepstakes are required to comply with the identical
4-21     restriction or condition;
4-22                 (11)  use a scratch-off device or any other game piece
4-23     that suggests an element of chance or luck to convey information
4-24     about a sweepstakes or an offer to enter a sweepstakes;
4-25                 (12)  send material accompanying or relating to a
4-26     sweepstakes or an offer to enter a sweepstakes that:
4-27                       (A)  states or implies that an individual's
 5-1     chances of winning a prize in the sweepstakes are raised, lowered,
 5-2     or different in any way because of a factor or circumstance that
 5-3     has no relation to the manner in which a winner of the sweepstakes
 5-4     is selected;
 5-5                       (B)  states or implies that a winner of a
 5-6     sweepstakes prize will be selected at a time or place or in a
 5-7     manner that is different from the actual time or place at which or
 5-8     manner in which a winner is selected;
 5-9                       (C)  states or implies falsely that the
5-10     individual receiving the advertisement has received any special
5-11     treatment or personal attention from the offeror of the sweepstakes
5-12     or any officer, employee, or agent of the offeror of the
5-13     sweepstakes;
5-14                       (D)  states or implies that an individual who
5-15     orders or purchases a good or service will receive a benefit in the
5-16     sweepstakes or be treated differently in the sweepstakes compared
5-17     with an individual who did not order or purchase a good or service;
5-18                       (E)  states or implies that an individual who
5-19     does not order or purchase a good or service will suffer a
5-20     disadvantage in the sweepstakes or be treated differently in the
5-21     sweepstakes compared with an individual who ordered or purchased a
5-22     good or service; or
5-23                       (F)  states that the recipient of the material:
5-24                             (i)  is a winner if the recipient is not a
5-25     winner;
5-26                             (ii)  may be a winner;
5-27                             (iii)  will be a winner if certain
 6-1     conditions are met or if certain events occur in the future;
 6-2                             (iv)  may be or will be among the group
 6-3     from which a winner will be selected; or
 6-4                             (v)  has in any way a better chance than
 6-5     another individual of being chosen as a winner;
 6-6                 (13)  publish or cause to be published different
 6-7     advertisements for the same sweepstakes that contain inconsistent
 6-8     descriptions of the grand prize awarded through the sweepstakes;
 6-9                 (14)  award multiple prizes in a sweepstakes unless all
6-10     prizes are awarded on the same date and through the same selection
6-11     process;
6-12                 (15)  publish or cause to be published official rules
6-13     of a sweepstakes that do not uniquely identify the prizes to be
6-14     awarded and the date they will be awarded; or
6-15                 (16)  provide for entry by mail in a sweepstakes and
6-16     use:
6-17                       (A)  more than one address to accept entries in
6-18     the sweepstakes; or
6-19                       (B)  the address for entry in the sweepstakes for
6-20     any purpose other than entry in the sweepstakes.
6-21           Sec. 43.003.  APPLICATION OF CHAPTER; ACTS NOT PROHIBITED.
6-22     (a)  This chapter does not apply to any sweepstakes that is
6-23     conducted through advertisements or inserts in magazines,
6-24     newspapers, or catalogues sent through the mail.
6-25           (b)  This chapter does not apply to any charitable raffle
6-26     regulated by Chapter 2002, Occupations Code.
6-27           (c)  This chapter does not apply to any sweepstakes regulated
 7-1     by the Alcoholic Beverage Code.
 7-2           (d)  This chapter does not apply to any company regulated
 7-3     under the Public Utility Regulatory Act (Title 2, Utilities Code).
 7-4           (e)  This chapter does not apply to any company that is an
 7-5     air carrier subject to Title 49 of the United States Code.
 7-6           (f)  This chapter does not apply to a drawing for the
 7-7     opportunity to participate in a hunting, fishing, or other
 7-8     recreational event conducted by the Parks and Wildlife Department.
 7-9           (g)  If the only use of the mail is for consumers to return
7-10     their entry forms to the sponsor of the contest, then this chapter
7-11     does not apply to that sweepstakes.
7-12           (h)  This chapter does not prohibit a sweepstakes sponsor
7-13     from making a statement in the official rules of the sweepstakes
7-14     describing the method to be used in choosing a winner, and this
7-15     chapter does not prohibit a sweepstakes sponsor from notifying the
7-16     winner after the winner has been selected.
7-17           (i)  This chapter does not prohibit a sweepstakes sponsor,
7-18     after determining the winner, from obtaining an affidavit from the
7-19     person selected to verify that the person is eligible to win the
7-20     prize and has complied with the rules of the sweepstakes.
7-21           (j)  This chapter does not apply to a sweepstakes conducted
7-22     through the mail if the most valuable prize to be awarded is less
7-23     than $50,000.  The value of a prize is measured by the highest
7-24     number among its face value, its fair market value, and its
7-25     financial present value.
7-26           (k)  Sections 43.002(3) and (4)(A) do not apply to a single
7-27     sheet of paper that contains both a contest entry form and an order
 8-1     form if the order form is perforated or detachable and if the entry
 8-2     form must be separated from the order form and returned to an
 8-3     address different from the return address for the order form.
 8-4           (l)  Sections 43.002(2), (3), and (4) do not apply to a
 8-5     contest that is offered to promote a credit card or a debit card if
 8-6     the official rules of the contest provide that consumers are
 8-7     entered in the contest based on the number of purchases made or the
 8-8     amount of money spent. A person who did not qualify as an issuer as
 8-9     of January 1, 2001, is not eligible for the exceptions under this
8-10     subsection.
8-11           (m)  Sections 43.002(2), (3), and (4) do not apply to a
8-12     company that is offering a sweepstakes in which the consumer must
8-13     go to a physical location to obtain or use the goods or services
8-14     that are being sold by the company offering the sweepstakes.
8-15           (n) This chapter does not apply to any sweepstakes that is
8-16     promoting one or more food products that are regulated by the
8-17     federal Food and Drug Administration or the United States
8-18     Department of Agriculture.
8-19           (o)  This chapter does not apply to any company whose primary
8-20     business is the production, distribution, sale, and marketing of
8-21     audiovisual entertainment works, products, or sound recordings. For
8-22     purposes of this subsection, "primary  business" means that 75
8-23     percent or more of a company's business is the production,
8-24     distribution, sale, and marketing of audiovisual entertainment
8-25     works, products, or sound recordings, and "production" means the
8-26     systematic development, planning, and execution of creating the
8-27     audiovisual works, products, or sound recordings.  This chapter
 9-1     does not apply to a company that owns or operates a cable system,
 9-2     as that term is defined by 47 U.S.C. Section 522, as amended.
 9-3           Sec. 43.004.  CIVIL PENALTY. (a)  The attorney general may
 9-4     initiate an action under this chapter by filing suit in a district
 9-5     court in Travis County or in any county in which a violation
 9-6     occurred.
 9-7           (b)  For each violation found, the court shall award the
 9-8     attorney general a civil penalty of not less than $5,000 or more
 9-9     than $50,000.
9-10           (c)  If the material accompanying or relating to a
9-11     sweepstakes or an offer to enter a sweepstakes contains multiple
9-12     statements, implications, representations, or offers that are
9-13     prohibited by this chapter, each statement, implication,
9-14     representation, or offer is a separate violation and shall result
9-15     in a separate civil penalty.  Each individual who receives the
9-16     material constitutes an additional and separate group of violations
9-17     of this chapter.
9-18           (d)  Any person who provides names or addresses of residents
9-19     of this state that are used in conducting a sweepstakes that the
9-20     person knows to be in violation of this chapter is liable for the
9-21     cumulative civil penalties that result from the person's conduct.
9-22     The liability of a person who provides names or addresses does not
9-23     reduce the liability of the person who conducted the sweepstakes.
9-24           (e)  If the attorney general substantially prevails, the
9-25     court shall award the attorney general reasonable expenses incurred
9-26     in recovering a civil penalty under this section, including court
9-27     costs, reasonable attorney's fees, reasonable investigative costs,
 10-1    witness fees, and deposition expenses.
 10-2          (f)  A civil penalty recovered under this section shall be
 10-3    deposited in the state treasury.
 10-4          (g)  A court may also award injunctive relief or other
 10-5    equitable or ancillary relief that is reasonably necessary to
 10-6    prevent future violations of this chapter.
 10-7          (h)  This chapter does not create any private right of action
 10-8    for any person.
 10-9          SECTION 2. This Act takes effect November 1, 2001.
         _______________________________     _______________________________
             President of the Senate              Speaker of the House
               I certify that H.B. No. 2530 was passed by the House on April
         25, 2001, by the following vote:  Yeas 143, Nays 0, 2 present, not
         voting; that the House refused to concur in Senate amendments to
         H.B. No. 2530 on May 24, 2001, and requested the appointment of a
         conference committee to consider the differences between the two
         houses; and that the House adopted the conference committee report
         on H.B. No. 2530 on May 27, 2001, by a non-record vote; and that
         the House adopted H.C.R. No. 330 authorizing certain corrections in
         H.B. No. 2530 on May 28, 2001, by a non-record vote.
                                             _______________________________
                                                 Chief Clerk of the House
               I certify that H.B. No. 2530 was passed by the Senate, with
         amendments, on May 21, 2001, by a viva-voce vote; at the request of
         the House, the Senate appointed a conference committee to consider
         the differences between the two houses; and that the Senate adopted
         the conference committee report on H.B. No. 2530 on May 27, 2001,
         by a viva-voce vote; and that the Senate adopted H.C.R. No. 330
         authorizing certain corrections in H.B. No. 2530 on May 28, 2001,
         by a viva-voce vote.
                                             _______________________________
                                                 Secretary of the Senate
         APPROVED:  __________________________
                              Date
                    __________________________
                            Governor