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.