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