77R11409 E By Junell H.B. No. 2530 Substitute the following for H.B. No. 2530: By Brimer C.S.H.B. No. 2530 A BILL TO BE ENTITLED 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) "Imply" means all methods and means by which an 1-10 implication can be conveyed, including a statement, a question, a 1-11 request, conduct, a graphic, a symbol, lettering, coloring, font 1-12 size, font style, or formatting. 1-13 (2) "Sweepstakes" means a contest that awards one or 1-14 more prizes based on chance or the random selection of entries. 1-15 Sec. 43.002. OFFENSES. A person offering a sweepstakes 1-16 primarily through the mail, exclusive of mailed newspapers and 1-17 magazines, may not: 1-18 (1) require an individual to order or purchase a good 1-19 or service, or promise to purchase a good or service in the future, 1-20 to enter a sweepstakes; 1-21 (2) automatically enter an individual in a sweepstakes 1-22 because the individual ordered or purchased a good or service or 1-23 because the individual promised to order or purchase a good or 1-24 service; 2-1 (3) solicit business using an order form or purchasing 2-2 mechanism that has any role in the operation of a sweepstakes; 2-3 (4) use a mechanism for entering a sweepstakes that: 2-4 (A) has any connection to ordering or purchasing 2-5 a good or service; 2-6 (B) is not identical for all individuals 2-7 entering the sweepstakes; and 2-8 (C) does not have printed on the front and back 2-9 of the entry form in a font size not less than 400 percent larger 2-10 than the next largest font size used on the entry form the 2-11 following language: "Buying Will Not Help You Win. Your chances of 2-12 winning without making a purchase are the same as the chances of 2-13 someone who purchases something. It is illegal to give any 2-14 advantage to buyers in a sweepstakes."; 2-15 (5) solicit an individual to enter a sweepstakes by 2-16 invitation or other opportunity and allow the individual to choose 2-17 or indicate the preferred characteristics of a prize to be awarded 2-18 in the sweepstakes, unless those choices: 2-19 (A) are made on the sweepstakes entering 2-20 mechanism; and 2-21 (B) do not appear on and are not connected in 2-22 any way to an order form or other purchasing mechanism; 2-23 (6) offer any non-sweepstakes prize, gift, premium, 2-24 giveaway, skill contest, coupon, rebate, or other incentive of any 2-25 kind, other than a competitive price on goods or services, during 2-26 the same calendar year in which the person offered an opportunity 2-27 to enter a sweepstakes; 3-1 (7) offer any opportunity to enter a sweepstakes 3-2 during the same calendar year in which the person offered a 3-3 non-sweepstakes prize, gift, premium, giveaway, skill contest, 3-4 coupon, rebate, or other incentive of any kind other than a 3-5 competitive price on goods or services; 3-6 (8) ask an individual for any information or any 3-7 action by that individual that would be consistent with the 3-8 individual winning a sweepstakes prize, unless the individual has 3-9 won a sweepstakes prize; 3-10 (9) provide an individual who has not yet won the 3-11 sweepstakes with any document or other item that simulates any 3-12 event, circumstance, or condition connected with being the winner 3-13 of the sweepstakes; 3-14 (10) send material accompanying or relating to a 3-15 sweepstakes or an offer to enter a sweepstakes that states or 3-16 implies that an individual must comply with a restriction or 3-17 condition to enter the sweepstakes, unless all individuals entering 3-18 the sweepstakes are required to comply with the identical 3-19 restriction or condition; 3-20 (11) use a scratch-off device or any other game piece 3-21 that suggests an element of chance or luck to convey information 3-22 about a sweepstakes or an offer to enter a sweepstakes; 3-23 (12) send material accompanying or relating to a 3-24 sweepstakes or an offer to enter a sweepstakes that: 3-25 (A) states or implies that an individual's 3-26 chances of winning a prize in the sweepstakes are raised, lowered, 3-27 or different in any way because of a factor or circumstance that 4-1 has no relation to the manner in which a winner of the sweepstakes 4-2 is selected; 4-3 (B) states or implies that a winner of a 4-4 sweepstakes prize will be selected at a time or place or in a 4-5 manner that is different from the actual time or place at which or 4-6 manner in which a winner is selected; 4-7 (C) states or implies falsely that the 4-8 individual receiving the advertisement has received any special 4-9 treatment or personal attention from the offeror of the sweepstakes 4-10 or any officer, employee, or agent of the offeror of the 4-11 sweepstakes; 4-12 (D) states or implies that an individual who 4-13 orders or purchases a good or service will receive a benefit in the 4-14 sweepstakes or be treated differently in the sweepstakes compared 4-15 with an individual who did not order or purchase a good or service; 4-16 (E) states or implies that an individual who 4-17 does not order or purchase a good or service will suffer a 4-18 disadvantage in the sweepstakes or be treated differently in the 4-19 sweepstakes compared with an individual who ordered or purchased a 4-20 good or service; or 4-21 (F) states or implies that the recipient of the 4-22 material: 4-23 (i) is a winner if the recipient is not a 4-24 winner; 4-25 (ii) may be a winner; 4-26 (iii) will be a winner if certain 4-27 conditions are met or if certain events occur in the future; 5-1 (iv) is, may be, or will be among the 5-2 group from which a winner will be selected; or 5-3 (v) has in any way a better chance than 5-4 another individual of being chosen as a winner; 5-5 (13) publish or cause to be published different 5-6 advertisements for the same sweepstakes that contain inconsistent 5-7 descriptions of the grand prize awarded through the sweepstakes; 5-8 (14) offer more than one sweepstakes at the same time; 5-9 (15) award multiple prizes in a sweepstakes unless all 5-10 prizes are awarded on the same date and through the same selection 5-11 process; 5-12 (16) publish or cause to be published official rules 5-13 of a sweepstakes that do not uniquely identify the prizes to be 5-14 awarded and the date they will be awarded; or 5-15 (17) provide for entry in a sweepstakes by mail and 5-16 use: 5-17 (A) more than one address to accept entries in 5-18 the sweepstakes; or 5-19 (B) the address for entry in the sweepstakes for 5-20 any purpose other than entry in the sweepstakes. 5-21 Sec. 43.003. ACTS NOT PROHIBITED. Section 43.002(12) does 5-22 not prohibit a person from making a statement in the official rules 5-23 of the sweepstakes describing the method to be used in choosing a 5-24 winner or prohibit a person from notifying the winner after the 5-25 sweepstakes has ended. 5-26 Sec. 43.004. CIVIL PENALTY. (a) The attorney general may 5-27 initiate an action under this section by filing suit in a district 6-1 court in Travis County or in any county in which a violation 6-2 occurred. 6-3 (b) For each violation found, the court shall award the 6-4 plaintiff a civil penalty of not less than $5,000 or more than 6-5 $50,000. 6-6 (c) If the material accompanying or relating to a 6-7 sweepstakes or an offer to enter a sweepstakes contains multiple 6-8 statements, implications, representations, or offers that are 6-9 prohibited by this chapter, each statement, implication, 6-10 representation, or offer is a separate violation and shall result 6-11 in a separate civil penalty. If the material is sent by mail, 6-12 facsimile, electronic mail, or other similar mass distribution, 6-13 each individual who receives the material constitutes an additional 6-14 and separate group of violations of this chapter. 6-15 (d) If another person knew or should have known that a 6-16 person was offering a sweepstakes in violation of this chapter, and 6-17 if that other person provided names and addresses of residents of 6-18 this state to the person offering the sweepstakes or provided any 6-19 services connected with the mailing, sending by facsimile, 6-20 electronic mail, or other similar mass distribution of information 6-21 about the sweepstakes or an opportunity to enter the sweepstakes, 6-22 the other party is jointly and severally liable with the person 6-23 offering the sweepstakes for the cumulative civil penalties that 6-24 result from providing those names and addresses or services. 6-25 (e) If the attorney general substantially prevails, the 6-26 court shall award the attorney general reasonable expenses incurred 6-27 in recovering a civil penalty under this section, including court 7-1 costs, reasonable attorney's fees, reasonable investigative costs, 7-2 witness fees, and deposition expenses. 7-3 (f) A civil penalty recovered under this section shall be 7-4 deposited in the state treasury. 7-5 (g) A court may also award injunctive relief or other 7-6 equitable or ancillary relief that is reasonably necessary to 7-7 prevent future violations of this chapter. 7-8 SECTION 2. This Act takes effect September 1, 2001.