HB860 - Relating to requirements for subscription service contracts; providing a civil penalty.

  89R3897 MLH-D     By: Lalani H.B. No. 860       A BILL TO BE ENTITLED   AN ACT   relating to requirements for subscription service contracts;   providing a civil penalty.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Title 12, Business & Commerce Code, is amended by   adding Chapter 611 to read as follows:   CHAPTER 611. SUBSCRIPTION SERVICE CONTRACTS           Sec. 611.001.  DEFINITIONS. In this chapter:                 (1)     "Automatic renewal clause" means a provision of a   contract that extends the term of or renews a contract for a period   of at least one month 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)     "Service provider" means a business that provides   a service to a consumer.                 (4)     "Subscription service" means a service provided by   a service provider to a consumer under a contract that:                       (A)  has an automatic renewal clause; or                       (B)     continues indefinitely until canceled by a   party.           Sec.   611.002.     APPLICABILITY OF CHAPTER.   This chapter does   not apply to:                 (1)  an offering or contract of insurance; or                 (2)     evidence of coverage under Chapter 843, Insurance   Code.           Sec.   611.003.     NOTICE REQUIREMENTS FOR SUBSCRIPTION SERVICE   CONTRACTS. (a) If a service provider and a consumer enter into a   contract for a subscription service, the service provider shall:                 (1)     at the time the service provider enters into the   contract with the consumer, clearly and conspicuously disclose to   the consumer the nature of the contract;                 (2)     in the disclosure required under Subdivision (1)   or in a retainable confirmation sent to the consumer not later than   the fifth day after the date the service provider enters into the   contract with the consumer, clearly and conspicuously disclose to   the consumer the procedure for canceling the contract; and                 (3)     if the contract has a term of 12 months or more and   automatically renews for a term of more than one month, give the   consumer additional written notice of the automatic renewal and the   procedure for canceling the contract not earlier than the 90th day   and not later than the 15th day before the date the contract is set   to renew.           (b)     A service provider may provide the written notice   required under Subsection (a)(3):                 (1)  by regular mail or certified mail;                 (2)  on an invoice delivered to the consumer; or                 (3)     by written electronic communication, including   electronic mail, if agreed to by the consumer.           (c)     Notice provided under Subsection (b) must be clear and   conspicuous. For purposes of Subsection (b)(1), the service   provider may assume that written notice sent by regular mail is   received by the consumer on the third business day after the date   the notice is deposited in the mail.           Sec.   611.004.     METHOD OF   CANCELLATION. (a)   Subject to   Subsections (b) and (c), a service provider shall provide a   consumer with multiple methods for canceling a contract for a   subscription service, which may include cancellation by:                 (1)  toll-free telephone number;                 (2)  electronic mail;                 (3)     mailing address, if the service provider bills the   consumer using mail; and                 (4)     any other cost-effective, timely, and easy-to-use   method.           (b)     A service provider shall allow a consumer to cancel a   contract for a subscription service by using the same method the   consumer used to enter into the contract, including allowing   cancellation online, by mail, or by telephone.   A consumer who   enters into a contract online must be able to cancel the contract   online.           (c)     If a subscription service contract is not entered into   electronically, the service provider shall allow the consumer to   cancel the contract by mail.           Sec.   611.005.     DECEPTIVE TRADE PRACTICE. Except as provided   by Section 611.006, a violation of this chapter is a false,   misleading, or deceptive act or practice under Subchapter E,   Chapter 17, and is actionable under that subchapter.           Sec.   611.006.     NO PRIVATE CAUSE OF ACTION. A private cause   of action for a violation of this chapter may not be brought under   this chapter or under Subchapter E, Chapter 17.           Sec.   611.007.     OPPORTUNITY TO CURE. (a)   Before the attorney   general may bring an action against a service provider under   Section 611.008 for an initial violation of this chapter, the   attorney general, on behalf of a consumer, must provide written   notice to the service provider identifying the specific provisions   of this chapter that the service provider allegedly violated.           (b)     Not later than the 30th day after the date the notice   required by Subsection (a) was received by the service provider,   the service provider shall:                 (1)  cure each violation alleged in the notice; and                 (2)     provide a written statement to the attorney   general certifying that:                       (A)     each violation alleged in the notice has been   cured; and                       (B)     no further violation of this chapter will   occur.           Sec.   611.008.     CIVIL PENALTY; REMEDIES.   (a)   A service   provider who violates this chapter is liable to this state for a   civil penalty of not more than $2,000 for each violation for each   month the violation continues if the service provider:                 (1)     fails to cure the violation as provided by Section   611.007; or                 (2)     commits the violation after curing an initial   violation and providing a written statement to the attorney general   under Section 611.007.           (b)  The attorney general may bring an action to:                 (1)     recover the civil penalty imposed under this   section;                 (2)     obtain a temporary or permanent injunction to   restrain the violation; or                 (3)     seek restitution for consumers who are residents   of this state and who incurred damages as a direct result of the   violation.           (c)     An action under this section may be brought in a   district court in:                 (1)  Travis County; or                 (2)  a county in which any part of the violation occurs.           Sec.   611.009.     CONSUMER'S OBLIGATIONS UNDER CONTRACT NOT   AFFECTED. Nothing in this chapter relieves a consumer of the   consumer's duties under a contract before the date the contract is   canceled.          SECTION 2.  Chapter 611, Business & Commerce Code, as added   by this Act, applies only to a contract entered into or renewed on   or after the effective date of this Act.          SECTION 3.  This Act takes effect September 1, 2025.