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