Texas House Bill HB897

Texas 2011 - 82nd Regular

• Out of House Committee: 4/11/11
• Introduced: 1/26/11
• Refer: 2/24/11
• Report Pass: 4/6/11

Caption

Relating to restrictions on the automatic renewal of contracts.

Impact

With the establishment of Chapter 606 in the Business & Commerce Code, the bill mandates that sellers must provide clear and conspicuous disclosures about automatic renewal clauses at the time of entering a contract. Notably, consumers must be informed of cancellation procedures soon after the contract's execution. This transparency aims to protect consumers from being inadvertently locked into long-term contracts without adequate notice of renewal, thereby enhancing their rights and reducing potential loss from unwanted renewals.

Summary

House Bill 897 introduces a set of guidelines aimed at regulating the automatic renewal of contracts in Texas. The bill specifically addresses contracts that automatically renew for a term of at least one month after an initial term of six months or more, as well as contracts where the renewal price exceeds the previous term's price. The legislation applies to various sectors but excludes certain types of contracts, including those relating to governmental entities and utilities. This specificity ensures that essential services are not unduly impacted by the new rules regarding automatic renewals.

Contention

Critics of the bill argue that while it aims to protect consumers, it may impose additional burdens on businesses, particularly smaller vendors who may struggle with compliance costs. Additionally, opponents express concerns that the broad interpretation of what constitutes an automatic renewal may lead to confusion in service agreements and a chilling effect on businesses offering subscription-based services. Proponents counter that the bill is a necessary measure to promote fair trading practices and protect vulnerable consumers from deceptive practices related to automatic contract renewals.