1-1 AN ACT
1-2 relating to discount cards deceptively marketed as insurance.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subsection (b), Section 17.46, Business &
1-5 Commerce Code, is amended to read as follows:
1-6 (b) Except as provided in Subsection (d) of this section,
1-7 the term "false, misleading, or deceptive acts or practices"
1-8 includes, but is not limited to, the following acts:
1-9 (1) passing off goods or services as those of another;
1-10 (2) causing confusion or misunderstanding as to the
1-11 source, sponsorship, approval, or certification of goods or
1-12 services;
1-13 (3) causing confusion or misunderstanding as to
1-14 affiliation, connection, or association with, or certification by,
1-15 another;
1-16 (4) using deceptive representations or designations of
1-17 geographic origin in connection with goods or services;
1-18 (5) representing that goods or services have
1-19 sponsorship, approval, characteristics, ingredients, uses,
1-20 benefits, or quantities which they do not have or that a person has
1-21 a sponsorship, approval, status, affiliation, or connection which
1-22 he does not;
1-23 (6) representing that goods are original or new if
1-24 they are deteriorated, reconditioned, reclaimed, used, or
1-25 secondhand;
2-1 (7) representing that goods or services are of a
2-2 particular standard, quality, or grade, or that goods are of a
2-3 particular style or model, if they are of another;
2-4 (8) disparaging the goods, services, or business of
2-5 another by false or misleading representation of facts;
2-6 (9) advertising goods or services with intent not to
2-7 sell them as advertised;
2-8 (10) advertising goods or services with intent not to
2-9 supply a reasonable expectable public demand, unless the
2-10 advertisements disclosed a limitation of quantity;
2-11 (11) making false or misleading statements of fact
2-12 concerning the reasons for, existence of, or amount of price
2-13 reductions;
2-14 (12) representing that an agreement confers or
2-15 involves rights, remedies, or obligations which it does not have or
2-16 involve, or which are prohibited by law;
2-17 (13) knowingly making false or misleading statements
2-18 of fact concerning the need for parts, replacement, or repair
2-19 service;
2-20 (14) misrepresenting the authority of a salesman,
2-21 representative or agent to negotiate the final terms of a consumer
2-22 transaction;
2-23 (15) basing a charge for the repair of any item in
2-24 whole or in part on a guaranty or warranty instead of on the value
2-25 of the actual repairs made or work to be performed on the item
2-26 without stating separately the charges for the work and the charge
3-1 for the warranty or guaranty, if any;
3-2 (16) disconnecting, turning back, or resetting the
3-3 odometer of any motor vehicle so as to reduce the number of miles
3-4 indicated on the odometer gauge;
3-5 (17) advertising of any sale by fraudulently
3-6 representing that a person is going out of business;
3-7 (18) advertising, selling, or distributing a card
3-8 which purports to be a prescription drug identification card issued
3-9 under Section 19A, Article 21.07-6, Insurance Code, in accordance
3-10 with rules adopted by the commissioner of insurance, which offers a
3-11 discount on the purchase of health care goods or services from a
3-12 third party provider, and which is not evidence of insurance
3-13 coverage, unless:
3-14 (A) the discount is authorized under an
3-15 agreement between the seller of the card and the provider of those
3-16 goods and services or the discount or card is offered to members of
3-17 the seller;
3-18 (B) the seller does not represent that the card
3-19 provides insurance coverage of any kind; and
3-20 (C) the discount is not false, misleading, or
3-21 deceptive;
3-22 (19) using or employing a chain referral sales plan in
3-23 connection with the sale or offer to sell of goods, merchandise, or
3-24 anything of value, which uses the sales technique, plan,
3-25 arrangement, or agreement in which the buyer or prospective buyer
3-26 is offered the opportunity to purchase merchandise or goods and in
4-1 connection with the purchase receives the seller's promise or
4-2 representation that the buyer shall have the right to receive
4-3 compensation or consideration in any form for furnishing to the
4-4 seller the names of other prospective buyers if receipt of the
4-5 compensation or consideration is contingent upon the occurrence of
4-6 an event subsequent to the time the buyer purchases the merchandise
4-7 or goods;
4-8 (20) [(19)] representing that a guarantee or warranty
4-9 confers or involves rights or remedies which it does not have or
4-10 involve, provided, however, that nothing in this subchapter shall
4-11 be construed to expand the implied warranty of merchantability as
4-12 defined in Sections 2.314 through 2.318 and Sections 2A.212 through
4-13 2A.216 [of the Business & Commerce Code] to involve obligations in
4-14 excess of those which are appropriate to the goods;
4-15 (21) [(20)] promoting a pyramid promotional scheme, as
4-16 defined by Section 17.461;
4-17 (22) [(21)] representing that work or services have
4-18 been performed on, or parts replaced in, goods when the work or
4-19 services were not performed or the parts replaced;
4-20 (23) [(22)] filing suit founded upon a written
4-21 contractual obligation of and signed by the defendant to pay money
4-22 arising out of or based on a consumer transaction for goods,
4-23 services, loans, or extensions of credit intended primarily for
4-24 personal, family, household, or agricultural use in any county
4-25 other than in the county in which the defendant resides at the time
4-26 of the commencement of the action or in the county in which the
5-1 defendant in fact signed the contract; provided, however, that a
5-2 violation of this subsection shall not occur where it is shown by
5-3 the person filing such suit he neither knew or had reason to know
5-4 that the county in which such suit was filed was neither the county
5-5 in which the defendant resides at the commencement of the suit nor
5-6 the county in which the defendant in fact signed the contract;
5-7 (24) failing [(23) the failure] to disclose
5-8 information concerning goods or services which was known at the
5-9 time of the transaction if such failure to disclose such
5-10 information was intended to induce the consumer into a transaction
5-11 into which the consumer would not have entered had the information
5-12 been disclosed;
5-13 (25) [(24)] using the term "corporation,"
5-14 "incorporated," or an abbreviation of either of those terms in the
5-15 name of a business entity that is not incorporated under the laws
5-16 of this state or another jurisdiction; or
5-17 (26) [(25)] taking advantage of a disaster declared by
5-18 the governor under Chapter 418, Government Code, by:
5-19 (A) selling or leasing fuel, food, medicine, or
5-20 another necessity at an exorbitant or excessive price; or
5-21 (B) demanding an exorbitant or excessive price
5-22 in connection with the sale or lease of fuel, food, medicine, or
5-23 another necessity.
5-24 SECTION 2. This Act takes effect September 1, 2001.
_______________________________ _______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1637 passed the Senate on
April 11, 2001, by the following vote: Yeas 29, Nays 0, one
present not voting; and that the Senate concurred in House
amendment on May 25, 2001, by a viva-voce vote.
_______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1637 passed the House, with
amendment, on May 23, 2001, by a non-record vote.
_______________________________
Chief Clerk of the House
Approved:
_______________________________
Date
_______________________________
Governor