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H.B. No. 1833
AN ACT
relating to disclosures required for the creation of certain
consumer contracts solicited by mail; providing a civil penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter D, Chapter 35, Business & Commerce
Code, is amended by adding Section 35.455 to read as follows:
Sec. 35.455. DISCLOSURES REQUIRED FOR CERTAIN CONSUMER
CONTRACTS SOLICITED BY MAIL. (a) Unless the context requires a
different definition, the definitions of Chapter 3 apply to this
section.
(b) This section applies only to a person that solicits
business in this state by mailing an individual a check or draft
payable to the individual. This section does not apply to a
financial institution as defined in Section 201.101, Finance Code,
or an authorized lender as defined in Section 341.001, Finance
Code, that sends a check or draft to an existing or prospective
account holder authorizing the existing or prospective account
holder to access an extension of credit.
(c) A person that makes an offer that the recipient may
accept by endorsing and negotiating the check or draft shall
clearly and conspicuously disclose on the check or draft, next to
the place for endorsement, that by signing and negotiating the
document the depositor agrees to pay for future goods or services as
a result of this contract.
(d) If a person makes an offer under Subsection (c) that
includes a free membership period, trial period, or other incentive
with a time limit, and if the offer results in a contract unless the
recipient cancels, rescinds, or revokes the offer by the end of the
time period, the offeror shall send notice to the recipient, at
least two weeks before debiting any account, of the recipient's
obligation to cancel, rescind, revoke, or otherwise terminate the
recipient's acceptance. The notice must be clear and conspicuous.
If the offeror bills the consumer by mailing an invoice, notice may
be included with the invoice.
(e) An offer is void if the offeror:
(1) does not make the disclosure required by
Subsection (c);
(2) does not give notice as required by Subsection
(d), if applicable; or
(3) provides an incentive with a time limit, including
a free trial or membership period, that is less than two weeks.
(f) If an offer described by Subsection (c) does not contain
the required disclosure, or is not followed by any notice required
by Subsection (d), or if the offeror fails to honor the recipient's
request to cancel made under the terms of the offer or as required
by Subsection (d), the delivery of any goods or services to the
recipient does not operate to form a contract between the offeror
and the recipient.
(g) A violation of this section is a deceptive trade
practice in addition to the practices described by Subchapter E,
Chapter 17, and is actionable under that subchapter.
SECTION 2. Section 35.455, Business & Commerce Code, as
added by this Act, applies only to a solicitation that is mailed on
or after September 1, 2005. A solicitation that is mailed before
September 1, 2005, is covered by the law in effect on the date the
solicitation was mailed, and the former law is continued in effect
for that purpose.
SECTION 3. This Act takes effect September 1, 2005.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 1833 was passed by the House on April
26, 2005, by a non-record vote; and that the House concurred in
Senate amendments to H.B. No. 1833 on May 23, 2005, by a non-record
vote.
______________________________
Chief Clerk of the House
I certify that H.B. No. 1833 was passed by the Senate, with
amendments, on May 19, 2005, by the following vote: Yeas 29, Nays
0.
______________________________
Secretary of the Senate
APPROVED: __________________
Date
__________________
Governor