Office of House Bill AnalysisH.B. 2530
By: Junell
Business & Industry


Numerous Texas citizens receive sweepstakes entries from businesses such as
Publishers Clearing House and American Family Publishers that invite people
to enter a sweepstakes in which the prize money is millions of dollars.
Because of the sometimes misleading presentation of the sweepstakes
material, many people have been deceived into thinking that they have
already won money or another prize.  New York, California, Florida, Ohio,
and Illinois are among 31 states that have filed suit against Publishers
Clearing House for deceptive trade practices.  In October 1999, Texas
Attorney General John Cornyn filed a lawsuit against Publishers Clearing
House for numerous violations of the Deceptive Trade Practices ActConsumer
Protection Act.  The suit alleges that the sweepstakes company made a
variety of misleading representations through mail order solicitations
designed to deprive money from recipients, primarily from elderly
recipients.  House 2530 delineates conduct which a person may not perform
when offering a sweepstakes and provides penalties. 


It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 


House Bill 2530 amends the Business & Commerce Code to prohibit a person
offering a sweepstakes through the mail from: 

 _requiring an individual to order or purchase a good or service or promise
to purchase a good or service to enter a sweepstakes; 

 _automatically entering an individual in a sweepstakes because the
individual ordered or purchased or promised to order or purchase a good or

 _soliciting business using an order form or purchasing mechanism that has
any role in the operation of the sweepstakes; 

 _using a mechanism for entering a sweepstakes that has any connection to
ordering or purchasing a good or service, that is not identical for all
individuals entering the sweepstakes, and does not have a statement
informing a consumer that purchasing a good or service will not help the
person win printed on the entry form; 

 _soliciting an individual to enter a sweepstakes by invitation and
allowing the individual to choose or indicate the preferred characteristics
of a prize unless the choices are made on the sweepstakes entry form and do
not appear on and are not connected in any way to an order form or other
purchasing mechanism; 

 _offering through the mail any non-sweepstakes prize or other incentive
during the 30-day  period immediately following the last date on which the
person conducted a sweepstakes through the mail; 

 _offering through the mail any opportunity to enter a sweepstakes during
the 30-day period immediately following the last date on which the person
conducted a sweepstakes through the mail; 

 _asking an individual for information or action that would be consistent
with the individual winning a sweepstakes prize unless the person has won
the prize; 

 _providing an individual who has not yet won a sweepstakes with any
document or item that simulates any event, circumstance, or condition
connected with winning the sweepstakes; 

 _sending material accompanying or relating to a sweepstakes or an offer to
enter a sweepstakes that states or implies that an individual must comply
with a restriction or condition to enter unless all individuals are
required to comply with the identical restrictions or conditions; 

 _using a scratch-off device or other game piece that suggests an element
of chance or luck to convey information about a sweepstakes or an offer to
enter a sweepstakes; 

 _sending material accompanying or relating to a sweepstakes that states or
implies that:  

 _an individual's chance of winning a prize is raised, lowered, or
different or than the winner of a prize will be selected at a time or place
due to a factor that is irrelevant to the way in which a winner is

 _that the individual has received any special treatment or personal
attention from the offeror of the sweepstakes;  

 _that an individual who orders a good or service will receive a benefit or
be treated differently in the sweepstakes or that failure to purchase a
good or service will cause the individual to suffer a disadvantage; or  

 _that the recipient of the material is a winner or if the recipient is not
a winner, the recipient may be a winner, will be a winner under certain
conditions, is, may be, or will be among a group from which a winner is
selected, or has a better chance than another individual of winning the

 _publishing or causing to be published different advertisements for the
same sweepstakes that contain inconsistent descriptions of the grand prize; 

 _awarding multiple prizes in a sweepstakes unless all prizes are awarded
on the same date through the same selection process; 

 _publishing or causing to be published official rules that do not uniquely
identify the prizes to be awarded and the date they will be awarded; or 

 _providing for entry by mail in a sweepstakes by mail and using more than
one address to accept entries or using the address for entry in the
sweepstakes for any purpose other than entry in the sweepstakes (Sec.

The bill does not apply to a sweepstakes conducted through advertisements
or inserts in magazines, newspapers, catalogues sent through the mail, a
charitable raffle, or a sweepstakes regulated by the Alcoholic Beverage
Code.  The bill does not apply to any company regulated under the Public
Utility  Regulatory Act or any company that is an air carrier subject to
federal law.  The bill does not apply to a drawing for the opportunity to
participate in a hunting, fishing, or other recreational event conducted by
the Parks and Wildlife Department.  The bill does not prohibit a
sweepstakes sponsor from making a statement in the official sweepstakes
rules describing the method used in choosing a winner,  from notifying a
winner after the winner is selected, or from obtaining an affidavit from
the winner to verify that the person is eligible to win the prize and has
complied with sweepstakes rules.  The bill does not apply to a sweepstakes
conducted through the mail if the value of the most valuable prize is less
than $50,000. 

H.B. 2530 authorizes the attorney general to initiate an action by filing
suit in the applicable court or county, and requires the court to award a
plaintiff a civil penalty of no less than $5,000 or more than $50,000 for
each violation found.  The bill provides that if the material accompanying
or relating to a sweepstakes or offer to enter a sweepstakes contains
multiple statements, implications, representations, or offers prohibited by
this bill, each is considered a separate violation and shall result in a
separate civil penalty.  The bill provides that each individual who
receives the material constitutes an additional and separate group of
violations.  The bill provides that any person who provides names or
addresses of Texas residents that are used in conducting a sweepstakes that
violates the provisions of this bill is liable for the cumulative civil
penalties that result from the person's conduct.  If the attorney general
prevails, the court is required to award the attorney general reasonable
expenses incurred in recovering a civil penalty.  The bill requires a civil
penalty to be deposited in the state treasury.  The court is also
authorized to award injunctive relief or other equitable or ancillary
relief that is reasonably necessary to prevent future violations specified
in this bill.  The bill does not create any private right of action for any


November 1, 2001.