79R5338 ATP-F
By: Elkins H.B. No. 1983
A BILL TO BE ENTITLED
AN ACT
relating to the automatic renewal of certain consumer contracts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 4, Business & Commerce Code, is amended by
adding Chapter 48 to read as follows:
CHAPTER 48. AUTOMATIC RENEWAL PROVISIONS IN CONSUMER
CONTRACTS
Sec. 48.001. DEFINITIONS. In this chapter:
(1) "Consumer" means an individual who seeks or
acquires goods or services for personal, family, or household
purposes.
(2) "Consumer contract" means a contract or agreement
in which one or more of the parties is a consumer.
(3) "Knowingly" means with actual awareness of the act
or practice that violates this chapter, which may be inferred if an
objective manifestation indicates that a person acted with actual
awareness.
(4) "Merchant" means a party to a consumer contract
other than a consumer.
Sec. 48.002. APPLICABILITY OF CHAPTER. This chapter
applies only to a consumer contract for the lease or sale of goods
or services that provides that the contract's term automatically
renews for a term exceeding one month.
Sec. 48.003. TIME FOR DECLINING CONTRACT RENEWAL. A
consumer may decline to automatically renew a contract at any time
during the contract's original or renewal term, including the date
on which the contract is executed.
Sec. 48.004. DISCLOSURE OF AUTOMATIC RENEWAL; NOTICE BY
MERCHANT. (a) A consumer contract may not contain an automatic
renewal provision unless:
(1) the contract clearly and conspicuously states:
(A) that the contract will automatically renew
for a term following the initial contract term unless the consumer
declines automatic renewal;
(B) the steps the consumer must take to prevent
the automatic renewal of the contract by declining automatic
renewal; and
(C) the means by which the merchant will notify
the consumer, as required by Subdivision (3), of the contract's
automatic renewal and the consumer's right to decline automatic
renewal;
(2) the contract includes a space for the consumer to
acknowledge receipt of the disclosures required by Subdivision (1);
and
(3) the merchant provides to the consumer, before each
automatic renewal period, written notice complying with Subsection
(b) that:
(A) informs the consumer of the automatic renewal
provision; and
(B) offers the consumer the opportunity to
decline automatic renewal at any time.
(b) The merchant shall provide the written notice required
by Subsection (a)(3) to the consumer personally, by mail, or by
prominently displaying the notice on the first page of a monthly
statement. The notice must be written in clear and understandable
language printed in a type size and style that is easy to read. The
merchant shall provide the notice:
(1) on the date the contract is executed, for an
automatic renewal following the original term of a contract that
does not exceed 30 days; or
(2) after the 61st calendar day but not later than the
30th calendar day before the last date on which the consumer may
decline automatic renewal.
Sec. 48.005. MERCHANT MUST HONOR NONRENEWAL. A merchant
may not fail or refuse to honor a consumer's request to decline the
automatic renewal of a contract made in accordance with this
chapter and any terms of the contract that do not conflict with this
chapter.
Sec. 48.006. CERTAIN AUTOMATIC RENEWAL PROVISIONS VOID. An
automatic renewal provision of a contract that violates this
chapter is void.
Sec. 48.007. RELIEF TO CONSUMERS. (a) A person who
violates this chapter is liable to a person adversely affected by
the violation for:
(1) the greater of $500 or actual damages that result
from the violation, except that only actual damages are recoverable
in a class action; and
(2) if the person adversely affected establishes that
the violation was committed knowingly, up to $1,500 or three times
the amount of the actual damages, whichever is greater.
(b) A plaintiff in an action filed under this chapter may
obtain:
(1) an order enjoining the act or failure to act that
violates this chapter;
(2) any order necessary to restore to the plaintiff
any property acquired by the defendant in violation of this
chapter; or
(3) other relief the court considers proper, including
the appointment of a receiver if the judgment against the defendant
is not satisfied within three months after the date of the final
judgment.
(c) A plaintiff who prevails in an action filed under this
section is entitled to reasonable and necessary attorney's fees,
expert witness fees, costs for copies of depositions, and court
costs.
(d) On finding that an action filed under this chapter is
groundless and was brought in bad faith or for the purpose of
harassment, the court shall award court costs and reasonable
attorney's fees to the defendant.
Sec. 48.008. ENFORCEMENT BY COURTS. The enforcement of
this chapter is not subject to an arbitration agreement.
Sec. 48.009. MERCHANT'S RIGHT TO CURE. (a) A merchant who
unknowingly or accidentally violates this chapter may cure the
violation if, before the 15th day after receiving written notice of
the violation from the attorney general, a governmental agency, or
a consumer that specifically mentions this chapter and the right to
cure under this subsection, the merchant tenders:
(1) a refund of all money collected from the consumer
after the violation of this chapter;
(2) court costs incurred by the consumer in advancing
a claim under this chapter; and
(3) reasonable and necessary attorney's fees for the
advance of the consumer's claims under this chapter.
(b) If a consumer brings a lawsuit before the consumer
notifies the merchant in writing of the violated provisions of this
chapter or the merchant is given time to cure under Subsection (a):
(1) the written pleadings that specifically reference
this chapter constitute the written notice;
(2) the merchant has 45 days after the date the
merchant is served with the pleading to cure in conformity with this
section; and
(3) the consumer's right to reasonable and necessary
attorney's fees, expert witness fees, costs for copies of
depositions, and court costs is subject to the court's discretion.
(c) If the merchant timely cures an unknowing or accidental
violation of this chapter, there is no actionable claim under this
chapter, except as provided by this section.
(d) Whether the merchant timely cured the violation is a
question for the court only.
Sec. 48.010. DECEPTIVE TRADE PRACTICE. A violation of this
chapter is a false, misleading, or deceptive act or practice as
defined by Section 17.46(b) and is actionable in a public or private
suit brought under Subchapter E, Chapter 17.
SECTION 2. The change in law made by Chapter 48, Business &
Commerce Code, as added by this Act, applies only to a contract
executed or renewed for a term on or after September 1, 2005. A
contract executed or renewed before September 1, 2005, is governed
by the law as it existed on the date the contract was executed until
that term of the contract expires, and the former law is continued
in effect for that purpose.
SECTION 3. This Act takes effect September 1, 2005.