By: Chisum H.B. No. 3424

A BILL TO BE ENTITLED

AN ACT

relating to certain requirements for businesses required to obtain a registration certificate or license from the secretary of state or another licensing authority.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subchapter B, Chapter 405, Government Code, is amended by adding Section 405.022 to read as follows:

Sec. 405.022. CONSUMER PROTECTION DUTIES. (a) In this section:

(1) "business" means a person or business entity that executes contracts with consumers for services to be performed by the person or business entity and is required to obtain a registration certificate from the secretary of state or a license pursuant to Section 7.19, Chapter 62, Acts of the 76th Legislature, Regular Session, 1999, as amended; and

(2) "contract" means a written agreement between the consumer and the business in which the business agrees to provide a service to the consumer and which outlines the duties and responsibilities of the business and the consumer.

(b) A business may not impose a contract fee or other charge on a consumer in excess of the amount authorized under state laws or regulations for the type of transactions conducted by the business.

(c) A business must provide adequate notice to consumers regarding:

(1) contract terms and the rights of the consumer to cancel or renew the contract; and

(2) other duties, rights, and responsibilities of both parties under the contract.

(d) A business must maintain adequate net assets for the types of transactions conducted by the business.

(e) Before issuing or renewing a registration certificate or license to a business that is otherwise qualified to be issued a registration certificate or license, the secretary of state or licensing authority, as applicable, shall determine whether any consumer complaints regarding the business have been received by the attorney general or other state agency with regulatory authority over the business. If the secretary of state or licensing authority determines that more than five consumer complaints against the business have been received, the secretary of state or licensing authority shall review the business practices of the business before issuing the registration certificate or license. In determining whether to issue the registration certificate or license, the secretary of state or licensing authority may review:

(1) the amount of contract fees or other charges imposed on the consumer by the business;

(2) the adequacy of notice provided to the consumer regarding contract terms and the rights of the consumer to cancel or renew the contract;

(3) the adequacy of notice provided to the consumer regarding other duties, rights, and responsibilities of both parties under the contract;

(4) the adequacy of the net assets of the business; and

(5) any other unfair, deceptive, or fraudulent practices alleged in the consumer complaints.

(e) A business that is subject to review under this section shall provide to the secretary of state or licensing authority:

(1) a schedule of the standard contract fees and other charges imposed on consumers for the type of transactions conducted by the business;

(2) the language included in any standard notice provided to the consumer regarding contract terms and the rights of the consumer to cancel or renew the contract;

(3) the language included in any standard notice provided to the consumer regarding other duties, rights, and responsibilities of both parties under the contract; and

(4) other information requested by the secretary of state or licensing authority that is necessary for completing the review.

(f) The secretary of state or licensing authority may request the assistance of the attorney general or other appropriate state agency in conducting the review.

(g) If, after conducting the review, the secretary of state or licensing authority determines that the business has violated state laws or regulations governing the types of transactions conducted by the business, the secretary of state or licensing authority shall not issue a registration certificate or license to the business.

(h) The secretary of state or licensing authority may publish information on state laws and regulations that establish limits on contract fees or other charges associated with transactions conducted by businesses required to obtain a registration certificate or license.

(i) The secretary of state or licensing authority may develop a schedule of recommended limits on contract fees and recommended notice provisions that should be included in contracts for businesses required to obtain a registration certificate or license.

(j) The secretary of state or licensing authority may adopt rules necessary to enforce this section.

SECTION 2. This Act takes effect September 1, 2007.