HB2859 - Relating to requirements for subscription service contracts; providing a civil penalty.

  89R8391 MLH-D     By: Guerra H.B. No. 2859       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   SUBCHAPTER A.   SUBSCRIPTION SERVICE CONTRACTS GENERALLY           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)     "Seller"   means a person who sells or contracts to   sell goods.                 (4)     "Service provider" means a business that provides   a service to a consumer.                 (5)     "Subscription service" means a service provided by   a service provider or a periodic sale of goods provided by a seller   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)  a person that provides:                       (A)  an offering or contract of insurance;                       (B)     evidence of coverage under Chapter 843,   Insurance Code; or                       (C)     a service contract under Section 1304.003,   Occupations Code; or                 (2)     an affiliate of a person described by Subdivision   (1).           Sec.   611.003.     NOTICE REQUIREMENTS FOR SUBSCRIPTION SERVICE   CONTRACTS. (a) If a consumer enters into a contract with a service   provider or seller for a subscription service, the service provider   or seller shall:                 (1)     at the time the service provider or seller 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 date the consumer's first payment is due, 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 or seller 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   e-mail, if the consumer has provided contact information for a   means of electronic communication to the service provider or   seller.           (c)     Notice provided under Subsection (b) must be clear and   conspicuous. For purposes of Subsection (b)(1), the service   provider or seller 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 or seller shall provide   a consumer with one or more methods for canceling a contract for a   subscription service, which may include cancellation by:                 (1)  toll-free telephone number;                 (2)  e-mail;                 (3)     mailing address, if the service provider or seller   bills the consumer using mail; and                 (4)     any other cost-effective, timely, and easy-to-use   method.           (b)     A service provider or seller shall allow a consumer to   cancel a contract for a subscription service by using the same   method as 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 or seller shall allow the   consumer to cancel the contract by mail.   SUBCHAPTER B.   ADDITIONAL REQUIREMENTS FOR SUBSCRIPTION SERVICE   CONTRACTS FOR GOODS           Sec.   611.021.     APPLICABILITY OF SUBCHAPTER. This subchapter   applies to a person who provides a subscription service contract   for the periodic sale of goods.           Sec.   611.022.     REQUIREMENTS FOR PROMOTIONAL MATERIAL. A   seller who enters into a subscription service contract with a   consumer for the periodic sale of goods shall include in the notice   required by Section 611.003(a)(1):                 (1)     a description of the manner in which the consumer   may opt to not purchase goods during a period identified by the   consumer;                 (2)     a description of the notices the consumer will   receive under Section 611.023;                 (3)     a statement of the frequency with which the seller   will send notices under Section 611.023;                 (4)     a statement of the maximum number of notices   required by Section 611.023 that a consumer will receive in a   12-month period;                 (5)     a description of any obligation the consumer has   under the contract to purchase a minimum quantity of goods;                 (6)     a declaration of whether the bill to the customer   includes costs for shipping and handling the goods; and                 (7)     a description of the seller's duties under Section   611.024.           Sec.   611.023.     REQUIRED NOTICE BEFORE PERIODIC SALE. (a)     Not later than the 20th day before completing a periodic sale under   this subchapter, a seller shall send a notice by mail reminding the   customer of the upcoming periodic sale.           (b)  The notice required by Subsection (a) must:                 (1)  identify the goods to be sold;                 (2)     describe the process by which the consumer may   cancel or modify the periodic sale;                 (3)     provide notice that the consumer has not less than   10 days to return a request to cancel or modify the periodic sale   before the sale is completed; and                 (4)     provide assurance that the seller will credit the   consumer and pay the cost of shipping when required by Section   611.024.           (c)     A seller that sends a notice under this section shall   accompany the notice with a form that the consumer may use to cancel   or modify the periodic sale.           (d)  The form required by Subsection (c) must:                 (1)     clearly and conspicuously state that the seller   will complete the periodic sale if the consumer does not send a   request to cancel or modify the sale;                 (2)     describe how the form may be used to cancel or   modify the sale;                   (3)     state that to cancel or modify the sale, the   consumer must mail the form before the third day before the sale is   completed; and                 (4)     if the consumer entered into the subscription   service contract online, state the Internet website at which the   consumer may cancel or modify the sale online.           Sec.   611.024.     RETURN OF GOODS DUE TO LATE NOTICE OF UPCOMING   SALE. A seller shall credit a consumer and pay the cost of shipping   for any return that is necessary because:                 (1)     a periodic sale was completed despite timely   receipt by the seller of a request by the consumer to cancel or   modify the sale;                 (2)     the consumer wanted to cancel or modify a periodic   sale and:                       (A)     the notice required under this section was   not delivered to the consumer before the 15th day before the date   the sale was completed; or                       (B)     the customer mailed a request to cancel or   modify the sale that was postmarked on or before the third day   before the date the sale was completed, but the request did not   arrive before the seller fulfilled the sale; or                 (3)     a periodic sale was made to a consumer who had   canceled the subscription services contract.           Sec.   611.025.     INITIAL GOODS ON CREATION OF CONTRACT. (a)   A   seller that offers initial or bonus goods as an incentive for a   consumer to enter into a subscription services contract for the   periodic sale of goods shall ship those goods not later than the   28th day after the consumer enters into a subscription services   contract.           (b)     If a seller is unable to fulfill the sale due to   unanticipated circumstances beyond the seller's control, the   seller may offer a reasonably equivalent alternative to the   consumer and allow the consumer the opportunity to:                 (1)  accept the alternative goods; or                 (2)     cancel the subscription services contract for the   periodic sale of goods.           (c)     A seller may require the return of any [Text truncated for display. Full text available on Congress.gov.]