87R4318 MLH-D
By: Guerra H.B. No. 2259
A BILL TO BE ENTITLED
AN ACT
relating to requirements for subscription service contracts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 12, Business & Commerce Code, is amended by
adding Chapter 608 to read as follows:
CHAPTER 608. SUBSCRIPTION SERVICE CONTRACTS
Sec. 608.001. 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) "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. 608.002. 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:
(A) nature of the contract; and
(B) procedure for canceling the contract;
(2) if the contract has a term of six months or more
and automatically renews for a term of at least 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; and
(3) if the contract does not automatically renew but
continues until canceled, give the consumer additional written
notice of an upcoming payment not earlier than the 30th day and not
later than the fifth day before the date the payment is due.
(b) A service provider may provide the written notice
required under Subsection (a)(2) or (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. 608.003. METHOD OF CANCELLATION. (a) A service
provider 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.
(b) This section does not prohibit the service provider from
allowing the consumer to cancel a contract by additional methods.
Sec. 608.004. 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 service provider can
demonstrate that:
(1) as a part of its routine business practice, the
service provider 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 service provider prospectively canceled the
contract for the subscription service 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.
SECTION 2. Chapter 608, 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, 2021.