By:  Flores                                                       H.B. No. 3509



A BILL TO BE ENTITLED

AN ACT

relating to the sale of service contracts.                                    
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Section 5, Article 9034, Texas Civil Statutes, 
is amended by amending subsection (c) and adding new subsection (f) 
as follows:
	(c)  Each registered provider shall pay an annual 
registration fee not to exceed $2,000 as set by the commission to 
cover the costs of administrating this article.  The commissioner 
shall develop a tiered fee structure under which registration fees 
are assessed on providers based on the number of service contracts 
sold within this state in the prior 12-month period.  [The 
information submitted to the commissioner under this section 
regarding the number of service contracts sold by a provider may 
only be used by the commissioner and the department in determining 
the tiered fee structure.  Information concerning the number of 
service contracts sold by a provider under this section is a trade 
secret and subject to Section 552.110, Government Code.]
	(f)  Each registrant shall file a complete copy of each of 
its service contracts with the Commissioner.
	SECTION 2.  Section 10, Article 9034, Texas Civil Statutes, 
is amended by amending subsection (e) and adding new subsectionh 
(h) and (i) as follows:
	(e)  Each service contract must state the purchase price of 
the contract and the terms under which the contract is sold.  The 
purchase price must be preprinted on the contract and is not 
negotiable at the time of sale.  [The purchase price is not required 
to be preprinted on the contract and may be negotiated at the time 
of sale with the service contract holder.]
	(h)  The commissioner may disapprove any service contract if 
the cost to the consumer is not reasonable in relation to the 
coverage or the contract is misleading, deceptive, or duplicates 
required insurance coverage.
	(i)  A copy of the service contract must be provided to each 
consumer before the contract is purchased by the consumer.
	SECTION 3.  Section 11, Article 9034, Texas Civil Statutes, 
is amended by amending subsection (a) as follows:
	(a)  Each service contract shall require the provider to 
permit the service contract holder to return the service contract 
not later than the 30th [20th] day after [the service contract was 
mailed to the service contract holder or, if] the service contract 
is delivered to the service contract holder [at the time of sale, 
not later than the 10th day after the date of delivery].  The 
service contract holder may void the service contract at a later 
time as permitted by the service contract.
	SECTION 4.  Section 14, Article 9034, Texas Civil Statutes, 
is amended by adding new subsection (e) as follows:
	(e)  The commissioner shall annually review all complaints 
filed against sellers of service contracts and develop 
recommendations for the Texas Legislature to address consumer 
concerns.
	SECTION 5.  EFFECTIVE DATE.  This Act takes effect 
immediately if it receives a vote of two-thirds of all the members 
elected to each house, as provided by Section 39, Article III, Texas 
Constitution.  If this Act does not receive the vote necessary for 
immediate effect, this Act takes effect September 1, 2003.