By: Averitt S.B. No. 776

(In the Senate - Filed February 10, 2009; March 4, 2009, read first time and referred to Committee on Business and Commerce; March 20, 2009, reported adversely, with favorable Committee Substitute by the following vote: Yeas 8, Nays 0; March 20, 2009, sent to printer.)

COMMITTEE SUBSTITUTE FOR S.B. No. 776 By: Averitt

A BILL TO BE ENTITLED

AN ACT

relating to regulating the collection or solicitation of donated goods subsequently sold by for-profit entities or individuals; providing a civil penalty.

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

SECTION 1. Chapter 17, Business & Commerce Code, is amended by adding Subchapter K to read as follows:

SUBCHAPTER K. REGULATING THE COLLECTION OR SOLICITATION BY

FOR-PROFIT ENTITIES OF CERTAIN PUBLIC DONATIONS

Sec. 17.921. DEFINITIONS. In this subchapter:

(1) "Charitable organization" means an organization that is exempt from federal income tax under Section 501(a) of the Internal Revenue Code of 1986 by being listed as an exempt organization in Section 501(c) of that code.

(2) "For-profit entity" has the meaning assigned by Section 1.002, Business Organizations Code.

(3) "Household goods" mean furniture, furnishings, or personal effects used or for use in a dwelling.

(4) "Public donations receptacle" means a large container or bin in a parking lot or public place that is intended for use as a collection point for clothing or household goods donated by the public.

Sec. 17.922. REQUIRED DISCLOSURE FOR COLLECTIONS THROUGH PUBLIC RECEPTACLE. (a) A for-profit entity or individual may not use a public donations receptacle to collect donated clothing or household goods and subsequently sell the donated items unless the for-profit entity or individual attaches to the receptacle a notice that:

(1) is permanently and prominently displayed on the front and at least one side of the receptacle;

(2) is in bold print, with letters at least two inches in height and one inch in width;

(3) contains the business address, other than a post office box number, and telephone number of the for-profit entity or individual; and

(4) contains the appropriate disclosure prescribed by this section in English and Spanish.

(b) If none of the proceeds from the sale of the donated items will be given to a charitable organization, the disclosure required by Subsection (a)(4) must state:

"DONATIONS ARE NOT FOR CHARITABLE ORGANIZATIONS AND WILL BE SOLD FOR PROFIT."

(c) If any of the proceeds from the sale of the donated items will be given to a charitable organization, the disclosure required by Subsection (a)(4) must state:

"DONATIONS ARE TO (NAME OF FOR-PROFIT ENTITY OR INDIVIDUAL) AND WILL BE SOLD FOR PROFIT. _______ PERCENT (INSERT PERCENTAGE) OF ALL PROCEEDS WILL BE DONATED TO (NAME OF CHARITABLE ORGANIZATION)."

(d) If the for-profit entity or individual pays to a charitable organization a flat fee that is not contingent on the proceeds generated from the sale of the donated items and the for-profit entity or individual retains a percentage of the proceeds from the sale, the disclosure required by Subsection (a)(4) must state:

"THIS DONATION RECEPTACLE IS OPERATED BY (NAME OF FOR-PROFIT ENTITY OR INDIVIDUAL) ON BEHALF OF (NAME OF CHARITABLE ORGANIZATION). Donations are sold for profit by (name of for-profit entity or individual) and a flat fee of (insert amount) is paid to (name of charitable organization)."

Sec. 17.923. REQUIRED DISCLOSURES FOR TELEPHONE OR DOOR-TO-DOOR SOLICITATIONS. (a) A for-profit entity or individual who makes, or directs another person to make, a telephone or door-to-door solicitation requesting that the person solicited donate clothing or household goods may not subsequently sell the donated items unless the solicitor provides to each person solicited, before accepting a donation from the person, the appropriate disclaimer prescribed by this section.

(b) If none of the proceeds from the sale of the donated items will be given to a charitable organization, the solicitor must state:

"DONATIONS ARE NOT FOR CHARITABLE ORGANIZATIONS AND WILL BE SOLD FOR PROFIT."

(c) If any of the proceeds from the sale of the donated items will be given to a charitable organization, the solicitor must state:

"DONATIONS TO (NAME OF FOR-PROFIT ENTITY OR INDIVIDUAL) WILL BE SOLD FOR PROFIT AND _______ PERCENT (INSERT PERCENTAGE) OF ALL PROCEEDS WILL BE DONATED TO (NAME OF CHARITABLE ORGANIZATION)."

(d) If the for-profit entity or individual pays to a charitable organization a flat fee that is not contingent on the proceeds generated from the sale of the donated items and the for-profit entity or individual retains a percentage of the proceeds from the sale, the solicitor must state:

"SOLICITATIONS FOR DONATIONS ARE MADE BY (NAME OF FOR-PROFIT ENTITY OR INDIVIDUAL) ON BEHALF OF (NAME OF CHARITABLE ORGANIZATION). Donations will be sold for profit by (name of for-profit entity or individual) and a flat fee of (insert amount) is paid to (name of charitable organization)."

Sec. 17.924. REQUIRED DISCLOSURES FOR MAIL SOLICITATIONS. (a) A for-profit entity or individual who mails, or directs another person to mail, a solicitation requesting that the recipient donate clothing or household goods may not subsequently sell the donated items unless the solicitor includes with the mailed solicitation the appropriate disclosure prescribed by this section, prominently displayed in boldfaced type or capital letters in English and Spanish.

(b) If none of the proceeds from the sale of the donated items will be given to a charitable organization, the disclosure required by Subsection (a) must state:

"DONATIONS ARE NOT FOR CHARITABLE ORGANIZATIONS AND WILL BE SOLD FOR PROFIT."

(c) If any of the proceeds from the sale of the donated items will be given to a charitable organization, the disclosure required by Subsection (a) must state:

"DONATIONS TO (NAME OF FOR-PROFIT ENTITY OR INDIVIDUAL) WILL BE SOLD FOR PROFIT AND _______ PERCENT (INSERT PERCENTAGE) OF ALL PROCEEDS WILL BE DONATED TO (NAME OF CHARITABLE ORGANIZATION)."

(d) If the for-profit entity or individual pays to a charitable organization a flat fee that is not contingent on the proceeds generated from the sale of the donated items and the for-profit entity or individual retains a percentage of the proceeds from the sale, the disclosure required by Subsection (a) must state:

"SOLICITATIONS FOR DONATIONS ARE MADE BY (NAME OF FOR-PROFIT ENTITY OR INDIVIDUAL) ON BEHALF OF (NAME OF CHARITABLE ORGANIZATION). Donations will be sold for profit by (name of for-profit entity or individual) and a flat fee of (insert amount) is paid to (name of charitable organization)."

Sec. 17.925. LOCAL ORDINANCE OR REGULATION. Nothing in this subchapter shall be construed to limit the authority of a local government to adopt an ordinance or regulation relating to the use of public donations receptacles as a collection point for donated clothing or household goods if the ordinance or regulation is compatible with and equal to or more stringent than a requirement prescribed by this subchapter.

Sec. 17.926. CIVIL PENALTY. (a) Except as provided by Subsection (b), a person who violates this subchapter is liable to this state for a civil penalty in an amount not to exceed $500 for each violation. Each sale of a donated item is considered a separate violation for purposes of this subsection.

(b) The total amount of penalties that may be imposed under Subsection (a) may not exceed $2,000 for donated items sold during a single transaction.

(c) In determining the amount of the civil penalty imposed under this section, the court shall consider the amount necessary to deter future violations.

(d) The attorney general or the prosecuting attorney in the county in which the violation occurs may bring an action to recover the civil penalty imposed under this section. In this subsection, "prosecuting attorney" has the meaning assigned by Section 41.101, Government Code.

SECTION 2. This Act takes effect September 1, 2009.

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