|
|
|
A BILL TO BE ENTITLED
|
|
AN ACT
|
|
relating to restrictions on the automatic renewal of contracts. |
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
SECTION 1. Title 12, Business & Commerce Code, is amended by |
|
adding Chapter 606 to read as follows: |
|
CHAPTER 606. AUTOMATIC RENEWAL OF CONTRACTS |
|
Sec. 606.001. APPLICABILITY. (a) This chapter applies |
|
only to the renewal of a contract if: |
|
(1) the original contract term is for six months or |
|
more and the contract automatically renews for a term of at least |
|
one month; or |
|
(2) the price for goods or services under the contract |
|
as renewed is greater than the price of goods or services under the |
|
contract during the immediately preceding contract term. |
|
(b) This chapter does not apply to a contract: |
|
(1) with: |
|
(A) a governmental entity; |
|
(B) a bank, trust company, savings bank, savings |
|
and loan association, credit union, insurance company, or health |
|
maintenance organization organized under the laws of any state or |
|
the United States; |
|
(C) an electric utility, as defined by Section |
|
31.002, Utilities Code, if the contract is for electricity services |
|
subject to rate tariffs approved by the Public Utility Commission |
|
of Texas or a retail electric provider, as defined by Section |
|
31.002, Utilities Code; |
|
(D) a gas utility, if the contract is for natural |
|
gas service subject to Subchapter B, Chapter 104, Utilities Code; |
|
(E) a telecommunications provider, as defined by |
|
Section 51.002, Utilities Code; |
|
(F) a cable service provider or video service |
|
provider, as those terms are defined by Section 66.002, Utilities |
|
Code, or a direct-to-home satellite service provider regulated by |
|
the Federal Communications Commission; |
|
(G) an Internet service provider or provider of |
|
Internet protocol enabled services or broadband services; or |
|
(H) a provider of municipal solid waste |
|
collection services; |
|
(2) that has an original contract term of six months or |
|
more and automatically renews for a term of at least one month, if |
|
the consumer: |
|
(A) may cancel the contract after the original |
|
contract term has expired without penalty; and |
|
(B) is required to pay only a prorated amount for |
|
the portion of the renewal contract period that has elapsed before |
|
the consumer canceled the contract; or |
|
(3) for the sale, lease, or management of real |
|
property. |
|
Sec. 606.002. DEFINITIONS. In this chapter: |
|
(1) "Automatic renewal clause" means a provision of a |
|
contract that extends the term of or renews a contract if the |
|
consumer does not take a specified action. |
|
(2) "Consumer" means a person who acquires goods or |
|
services for personal, family, or household purposes. |
|
(3) "Insurance company" means any insurance company |
|
organized under the laws of this state, a commercially domiciled |
|
insurer, or an insurer authorized to engage in the business of |
|
insurance in this state. The term includes a capital stock company, |
|
mutual company, farm mutual insurance company, title insurance |
|
company, fraternal benefit society, local mutual aid association, |
|
statewide mutual assessment company, county mutual insurance |
|
company, Lloyd's plan, reciprocal or interinsurance exchange, |
|
stipulated premium insurance company, and group hospital service |
|
corporation. The term does not include the United States, a state, |
|
or an agency, authority, instrumentality, or political subdivision |
|
of a state. |
|
(4) "Seller" means a person who provides a service or |
|
sells goods. |
|
Sec. 606.003. REQUIREMENTS FOR AUTOMATIC RENEWAL. If a |
|
contract between a seller and a consumer contains an automatic |
|
renewal clause, the seller shall: |
|
(1) for a contract described by Section 606.001(a)(1), |
|
clearly and conspicuously disclose to the consumer the automatic |
|
renewal clause and the procedure for canceling the automatic |
|
renewal: |
|
(A) at the time that the seller enters into the |
|
contract with the consumer; or |
|
(B) in writing not later than the 60th day after |
|
the date the seller enters into the contract with the consumer; and |
|
(2) give the consumer written notice of the automatic |
|
renewal clause and the procedure for canceling the automatic |
|
renewal not before the 90th day and not after the 15th day before |
|
the last date on which the consumer may cancel the automatic |
|
renewal. |
|
Sec. 606.004. NOTICE OF AUTOMATIC RENEWAL. (a) Written |
|
notice provided under Section 606.003(2) must clearly and |
|
conspicuously disclose: |
|
(1) that the contract will automatically renew if the |
|
consumer does not cancel the automatic renewal; |
|
(2) the cancellation procedure; |
|
(3) a facsimile number, electronic mail address, or |
|
mailing address that a consumer may contact to cancel the automatic |
|
renewal; and |
|
(4) the dates during which the consumer may cancel the |
|
automatic renewal. |
|
(b) A seller may opt to send to a consumer written notice |
|
under Section 606.003(2) by mail, certified mail, or personal |
|
service, by including a statement in an invoice as provided by |
|
Subsection (c), or, if the consumer agrees, by written electronic |
|
communication, including electronic mail. The seller may assume |
|
that written notice deposited with the United States Postal Service |
|
with first class postage paid will be received by the consumer on |
|
the third federal business day after the notice is so deposited. |
|
(c) Notice included in an invoice must be in red ink or in |
|
boldfaced type large enough to be easily noticed. |
|
Sec. 606.005. CANCELLATION OF AUTOMATIC RENEWAL BY |
|
FACSIMILE, ELECTRONIC MAIL, OR MAIL. A seller shall allow a |
|
consumer to cancel the automatic renewal of a contract by |
|
contacting a facsimile number, electronic mail address, or mailing |
|
address provided by the seller. |
|
Sec. 606.006. CONSUMER'S RIGHT TO CANCEL. (a) A consumer |
|
may cancel the automatic renewal of a contract at any time before |
|
the beginning of the automatic renewal period, at no cost to the |
|
consumer, by following the procedure set out in the disclosure and |
|
notice provided under Sections 606.003 and 606.004. |
|
(b) If the seller fails to provide either the disclosure |
|
under Section 606.003(1), if required, or the notice required by |
|
Section 606.003(2), the consumer may cancel the automatic renewal |
|
by any reasonable means at any time, at no cost to the consumer. |
|
(c) If a consumer cancels the automatic renewal as provided |
|
by this section, the seller must cancel the automatic renewal with |
|
no additional cost to the consumer. |
|
Sec. 606.007. DECEPTIVE TRADE PRACTICE. (a) Except as |
|
provided by Subsection (b), a violation of this chapter is a false, |
|
misleading, or deceptive act or practice as defined by Section |
|
17.46(b), and any remedy under Subchapter E, Chapter 17, is |
|
available for a violation of this chapter. |
|
(b) A violation of this chapter is not a false, misleading, |
|
or deceptive act or practice if the seller can demonstrate that: |
|
(1) as a part of its routine business practice, the |
|
seller has established and implemented written procedures to comply |
|
with this chapter and enforces compliance with the procedures; |
|
(2) the violation of this chapter is the result of |
|
error; and |
|
(3) the seller prospectively canceled the renewed |
|
contract within a reasonable time after becoming aware of the error |
|
that caused the violation of this chapter, without penalty to the |
|
consumer, and has not subsequently automatically renewed or revived |
|
that same contract. |
|
(c) Subsection (b)(3) does not relieve a consumer of the |
|
consumer's duties under a contract before the date the contract is |
|
canceled. |
|
Sec. 606.008. CERTIFICATION AS CLASS ACTION PROHIBITED. A |
|
court may not certify an action brought under this chapter as a |
|
class action. |
|
SECTION 2. The change in law made by Chapter 606, Business & |
|
Commerce Code, as added by this Act, applies only to a contract |
|
executed on or after September 1, 2011. A contract executed before |
|
September 1, 2011, is governed by the law as it existed on the date |
|
the contract was executed, and the former law is continued in effect |
|
for that purpose. |
|
SECTION 3. This Act takes effect September 1, 2011. |