HBA-MPM H.B. 2530 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2530 By: Junell Business & Industry 3/26/2001 Introduced BACKGROUND AND PURPOSE Numerous Texas citizens receive sweepstakes entries from business 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 Act Consumer 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 Bill 2530 delineates conduct which a person may not perform when offering a sweepstakes and provides penalties. RULEMAKING AUTHORITY 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. ANALYSIS House Bill 2530 amends the Business & Commerce Code to prohibit a person offering a sweepstakes from: _requiring an individual to order or buy a good or service or promise to buy a good or service to enter a sweepstakes; _soliciting business using an order form or purchasing mechanism that has any connection to the sweepstakes; _using a mechanism for entering a sweepstakes that has any connection to ordering or purchasing a good or service or that is not the same for all individuals entering the sweepstakes; _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 entering mechanism and do not appear on and are not connected in any way to an order form or other purchasing mechanism; _publishing an advertisement that includes an invitation or opportunity to enter a sweepstakes if the advertisement offers any gift, premium, prize, giveaway, coupon, rebate, or other economic incentive except for a competitive price on the goods or services advertised; _sending a mass advertisement to a customer or potential customer that includes an invitation to enter a sweepstakes and sending the same customer or potential customer any offer for a gift, premium, prize, giveaway, coupon, or rebate, or economic incentive except for a competitive price on goods or services originally advertised before 45 days after the original advertisement was sent; _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; _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 same restrictions or conditions; _sending material accompanying or relating to a sweepstakes that states or implies that an individual's chance of winning a prize are raised, lowered, or different or that the winner of a prize will be selected at a time or place or in a manner that is inconsistent with the manner in which a sweepstakes is awarded, or which states or implies falsely that the individual has received any special treatment or personal attention from the offeror of the sweepstakes; _publishing or causing to be published advertisements for the same sweepstakes that contain different descriptions of prizes; _offering more than one sweepstakes at the same time; _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 in a sweepstakes by mail and using more than one address to accept entries or using the address for entry in the sweepstakes to process or deal in any way with an order to buy a good or service. The bill specifies that a person in violation of these provisions is liable to the state for a civil penalty not to exceed $50,000 per violation. If an offer to enter a sweepstakes is made by mail, facsimile, electronic mail, or other similar mass distribution, the bill provides that each recipient of the offer constitutes a separate violation. The bill authorizes the attorney general to initiate an action under these provisions and to recover reasonable expenses incurred in recovering a penalty, including court costs, reasonable attorney's fees and investigative costs, witness fees, and deposition expenses. The bill provides that a recovered civil penalty shall be deposited in the state treasury. EFFECTIVE DATE September 1, 2001.