Bill Text: TX HB897 | 2011-2012 | 82nd Legislature | Comm Sub


Bill Title: Relating to restrictions on the automatic renewal of contracts.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2011-05-06 - Considered in Calendars [HB897 Detail]

Download: Texas-2011-HB897-Comm_Sub.html
  82R17310 ATP-D
 
  By: Howard of Fort Bend H.B. No. 897
 
  Substitute the following for H.B. No. 897:
 
  By:  Quintanilla C.S.H.B. No. 897
 
 
 
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.
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