LEGISLATIVE UPDATE 2011

Transcription

1 LEGISLATIVE UPDATE 2011 BRUCE V. GRIFFITHS 1 Assistant Attorney General 2 Consumer Protection & Public Health Division Office of the Attorney General P.O. Box Austin, Texas State Bar of Texas ADVANCED CONSUMER LAW COURSE August 18-19, 2011 Houston CHAPTER 2 1 The assistance of law clerks Antonio Allen (Texas Wesleyan) and Emily Taylor (Vanderbilt) is gratefully acknowledged. This paper could not have been completed without their help. The opinions expressed herein are the opinions of the speaker and do not represent the opinions of the Office of the 2 Attorney General and do not constitute legal advice.

2

3 Bruce Griffiths is a graduate of Thomas Jefferson High School (Port Arthur, Texas), Oberlin College, and the University of Texas School of Law. He is employed as an Assistant Attorney General in the Consumer Protection and Public Health Division of the Office of the Attorney General of Texas.

4

5 TABLE OF CONTENTS I. INTRODUCTION II. DTPA AMENDMENTS A. FLORISTS B. REAL ESTATE BROKERS AND SALESPERSONS III. BUSINESS AND COMMERCE CODE A. DATING SERVICES B. FORECLOSURE RESCUE SERVICES C. RESIDENTIAL DEEDS D. DISASTER REMEDIATION IV. FINANCE CODE A. DEBT SETTLEMENT B. PAY DAY AND AUTO TITLE LENDING V. PRIVACY A. MEDICAL B. STUDENT INFORMATION VI. GENERAL CONSUMER LEGISLATION A. OCCUPATIONS CODE - BARBER SCHOOLS B. PROPERTY CODE - NOTICE OF RIGHTS OF ACTIVE MILITARY C. HEALTH AND SAFETY CODE - PERPETUAL CARE CEMETERIES D. INSURANCE CODE - TEXAS INSURANCE LAW i

6

7 LEGISLATIVE UPDATE I. INTRODUCTION This is a compilation of consumer legislation passed by the regular session of the 82nd Texas Legislature. It is not intended as a comprehensive summary or interpretation. The full text of each bill and a summary can be found at the Texas Legislature's website: II. DTPA AMENDMENTS A. FLORISTS H.B. 989 is a consumer information bill intended to ensure that consumers know whether or not they are contacting a local florist. It amends existing law, which applied only to printed telephone directories and similar on-line databases, to cover on-line and print advertising generally. 1. Amends of the DTPA to add Internet websites and print advertisements to the prohibitions against a business that derived 50 percent or more of its gross income from selling or arranging flowers from misrepresenting its geographical location. 2. Amends (d) to exclude application statute to ISP, internet website that aggregates and provides information about other businesses, publishers of print medium providing information about other businesses, or an internet service that displays or distributes advertisements for other businesses. B. REAL ESTATE BROKERS AND SALESPERSONS S.B creates a broad exemption from the DTPA for claims against licensed real estate brokers and salespersons. 1. Amends the Texas Business & Commerce Code to exempt persons licensed as a broker or salesperson from DTPA claims arising from an act or omission by the person while acting as a broker or salesperson unless: 1) there is an express misrepresentation of material fact that cannot be characterized as advice, judgment, or opinion; 2) there is a failure to disclose information in violation of 17.46(b)(24); or 3) there is an unconscionable action or course of action that cannot be characterized as advise, judgment, or opinion. Effective Date: Immediately III. BUSINESS AND COMMERCE CODE A. DATING SERVICES S.B. 488 enacts the Internet Dating Safety Act which creates notice and disclosure requirements for online dating services regarding criminal background checks of their members. The statute is enforced via civil actions by the Attorney General. 1. Amends Section 1. Subtitle C, Title 5 of the Texas Business & Commerce Code by adding Chapter Internet Dating Safety Act. 2. Adds which defines "member," "online dating service provider," and "Texas member." 3. Adds which excludes ISPs from application of Chapter Adds which defines background check as one that is national and includes search for felony convictions, sex offender status, and family violence offenses. 5. Adds which requires an online dating service provider that does not do criminal background checks on its members clearly and conspicuously disclose that fact. 6. Adds which requires an online dating service provider that does criminal background checks on its members disclose the extend of the background check. 7. Adds which requires all online dating service providers clearly and conspicuously provide safety awareness disclosures as defined by statute. 8. Adds which authorizes Attorney General to seek injunction or civil penalties ( up to $250 per Texas member registered) for violations of statute. 9. Adds which specifically states that the statute does not create a private right of action. 1

8 B. FORECLOSURE RESCUE SERVICES S.B. 767 enacts new regulations for certain residential mortgage foreclosure consulting services. Violation of these rules is a Class C misdemeanor. 1. Amends Section 1 Title 2 of the Texas Business and Commerce Code by adding Chapter 21 - Regulation of Certain Residential Foreclosure Consulting Services. 2. Adds which defines "foreclosure consultant" as a person that makes a solicitation, representation, or offer to help or actually helps a homeowner avoid foreclosure for compensation. 3. Adds which excludes attorneys, bankers, regulators, title insurers, etc. from applicability of Chapter. 4. Adds which requires a contract between homeowner and foreclosure consultant be in writing. 5. Adds which requires that foreclosure consultant provide homeowner written notice of right to cancel. 6. Adds which prohibits foreclosure consultant from charging homeowner until contract is performed unless foreclosure consultant has a surety bond. 7. Adds which prohibits foreclosure consultants from taking any power of attorney from homeowner except for document inspection, acquiring an interest in real or personal property of homeowner to secure payment of compensation, or taking assignment of wages to secure payment of compensation. C. RESIDENTIAL DEEDS S.B amends the Business and Commerce Code to address a practice that has grown up in response to greater regulation of contract for deed sales of residential real estate. In such cases, the seller or lender of the property enters into a conventional deed of trust mortgage, but requires the buyer to deed the property back to the seller at the same time. The seller can record the deed whenever he chooses to, thus avoiding the foreclosure process entirely. This bill prohibits a person from requiring or requesting that a debtor on a home loan execute a deed that conveys the property to the loan holder on or before the date the deed of trust is executed. The bill provides for a private civil remedy and enforcement by the Attorney General. It also deprives JP courts of jurisdiction in eviction actions based on deeds executed in violation of this provision. 1. Amends the Texas Business & Commerce Code to prohibit a seller of residential real estate or a person who extending credit and taking a security interest or mortgage against residential real estate from requiring a purchaser or borrower to execute and deliver to the seller or mortgagee a deed conveying the residential real estate to the seller or mortgagee. 2. Amendment to makes any deed executed in violation of this amendment voidable (except for subsequent purchaser for valuable consideration without notice). 3. Amendment to allows a buyer to bring suit to void a deed executed in violation of the statute. Suit must be brought within 4 years of recordation. Allows prevailing buyer to recover attorneys fees. 4. Amendment to to enable the attorney general to bring an action on behalf of the state for injunctive relief, to recover civil penalties ($500 per violation), or both. 5. Amendment to of the Texas Property Code deprives justice of the peace courts of jurisdiction over eviction suits if the defendant files an affidavit stating that the suit is based on a deed executed in violation of this statute. D. DISASTER REMEDIATION H.B adds ch. 57 to the Business and Commerce Code to regulate disaster remediation contracts between a contractor and a property owner or lessee. The bill defines "disaster remediation" as the removal, cleaning, sanitizing, demolition, reconstruction, or other treatment of property performed due to damage or destruction caused by a natural disaster formally declared by the governor. It is aimed at fly-by-night contractors and specifically exempts established local businesses from its requirements. It contains a DTPA tiein provision and is enforceable by means of public and private DTPA remedies. 2

9 1. Added Chapter 57. Disaster Remediation Contracts to the Texas Business & Commerce Code. 2. Added which defines "disaster remediation," "disaster remediation contractor," "natural disaster," and "Person." 3. Added which excludes application of chapter to disaster remediation contractors whose business has been located in the county where the property is located or in a county adjacent to the county where the property is located for at least a year. 4. Added which requires disaster remediation contracts to be in writing and include a conspicuous notice of the requirements of Chapter 57 of the Business & Commerce Code also prohibits disaster remediation contractors from requiring full or partial payment before work is begun, and it prohibits partial payments that are not proportionate to the work performed, including materials delivered. 6. Added which makes a violation of Chapter 57 a DTPA violation. 7. Added which prohibits waivers of Chapter 57. IV. FINANCE CODE A. DEBT SETTLEMENT S.B. 141 amends the Texas Finance Code to provide for the regulation of debt settlement businesses by the Consumer Credit Commissioner. 1. Amends of the Texas Finance Code to broader definition of "provider" and "debt management service" and define "concession," "principal amount of debt," and "settlement fee." 2. Amends to require a provider, which does not hold money in trust for consumer, have a bond in the amount of $50, Amends (a) (4) which prohibits a provider from enrolling consumer if the proposed debt management plan does not include a reduction of principal and there is no reasonable expectation that creditor will accept payments according to the plan. 4. Amends (f) to apply requirement that provider provides written report to consumer only to providers holding and disbursing money to creditors on behalf of consumer. 5. Adds to require that upon cancellation, provider immediately return money held in trust for consumer and a portion of the account set up fee. 6. Amends by deleting "fair and reasonable" language and substituting specific and detailed requirements for when and how much a provider may charge a consumer for its services. B. PAY DAY AND AUTO TITLE LENDING HB and 2594 provide for the licensing and regulation by the Consumer Credit Commissioner of payday and auto title lenders who have, for some years, operated virtually without regulation as credit services organizations. This new class of licensed payday lenders are designated as credit access businesses. of HB Amends Chapter 393 of the Finance Code by adding Subchapter C-1 - Notice and Disclosure Requirements for Certain Credit Service Organizations. 2. Amends the TX Fin. Code to add which defines "credit access business," "deferred presentment transaction," and "motor vehicle title loan." 3. Amends the TX Fin. Code to add which requires a credit access business to provide notices to consumers regarding fees, contact information for the Office of Consumer Credit Commissioner, and a statutory warning. 4. Amends the TX Fin. Code to add which requires a credit access business to provide certain statutory disclosure to consumers before obtaining or assisting a consumer in obtaining a payday or car title loan. 5. Amends the TX Fin. Code to add which allows the Consumer Credit Commissioner to assess administrative penalties against a credit access business that knowingly and willfully violates this subchapter or a rule adopted under this subchapter. 3

10 of HB Amends of Texas Finance Code to require a contract with a credit access business to include certain statutory statements including a statement that there is no prepayment penalty, that the credit access business must comply with the federal Debt Collection Practices Act, that consumer can not be threatened with criminal action related to a check or debit authorization, and that the consumer credit business must comply with federal and state regulations adopted under the law with respect to an extension of consumer credit also requires the credit access business to provide consumer with certain statutory disclosures. 3. Amends the TX Fin. Code to add Subchapter G which creates licensing and regulation of credit access businesses. 4. Amends of the Texas Finance Code to require the consumer credit commissioner to assess administrative penalties against a credit access business that knowingly and willfully violates or cause a violation of Chapter Creates of the Finance Code, requiring licensed credit access businesses to make quarterly reports to the consumer credit commissioner setting out specified statistics about the loans they have facilitated. Effective Date of both bills: January 1, 2012 V. PRIVACY A. MEDICAL HB. 300 amends the Health and Safety Code by adding a definition of disclosure of information and adding Subchapter C - Access to and use of Protected Health Information. The bill also adds prohibitions against selling and un-authorized disclosure of protected health information to the Health and Safety Code. In addition, the bill substantially increases the potential financial liability of a covered entity for unauthorized disclosure. 1. Amends Section (b) of the Texas Health and Safety Code by adding the definition of "disclose" which means the release, transfer, provide access to, or otherwise divulge information outside the entity holding the information. 2. Adds to Subchapter C requiring entities covered by the Health and Safety Code to provide training to employees on the state and federal law concerning protected health information. 3. Adds to Subchapter C requires health care provider using a electronic health records system to provide a person's electronic records to person within 15 days upon written request. 4. Adds 18a.103 to Subchapter C requiring Attorney General to maintain a Consumer Information Website providing information concerning a consumer's privacy rights regarding protected health information. 5. Adds to Subchapter C requiring Attorney General to provide report to legislature on number and type of consumer complaints about disclosure of private health information. 6. Amends Section 7. Subchapter D of the Texas Health and Safety Code by adding prohibiting a covered entity from directly or indirectly selling an individual's protected health information. 7. Amends Section 7. Subchapter D by7 adding requiring notice and authorization to disclose a person's protected health information. 8. Amends Section of the Health and Safety Code to increase the civil penalties for violation of Chapter from a range of $3,000-$250,000 to a range of $5,000-$1.500,000. B. STUDENT INFORMATION H.B requires that career schools or colleges keep certain identifying information of its students confidential. 1. Amends Section 1. Subchapter B, Chapter 132 of the Education Code by adding which defines "student information" to include a student's name, address, telephone number, social security number, address, and date of birth also defines a student's education records and any other information that could be used to reveal identifying information as "student information." 3. Makes it an offense (Class A misdemeanor) to solicit, disclose, receive, or use student information 4

11 unless permitted by the Labor Code or commission rule. VI. GENERAL CONSUMER LEGISLATION A. OCCUPATIONS CODE - BARBER SCHOOLS HB amends the Texas Occupations Code to regulate barber schools. 1. Amends Section 1 Subsection (a) (1-a) to define "barber school" as a place that teaches the practice of barbering, including a barber college. 2. Amends Section by adding Subsection to require the issuance of a Class A barber certificate to a person with an operator license, completes 300 hours of instruction in barbering, passes a standard examination, and submits application and required fee to regulating department. 3. Amends Section to replace the experience based eligibility requirements with education based requirements. 4. Amends Section by requiring an applicant for a barber school permit to provide proof of financial responsibility, submit an application, satisfy statutory equipment requirements, and pay a required fee. 5. Amends of the Occupations Code to include a definition for "barber school." 6. Amends to add requirements for the issuance of a Class A barber certificate that include completion of 300 hours of instruction and passing an exam. 7. Amends to add additional requirements for eligibility of a barber instructor license including age, education, and passage of an exam. 8. Amends to add limitations on the types of activities that can be performed by a shampoo apprentice, manicurist, barber technician, or hair weaving specialist. 9. Amends to change the requirements for the issuance of a permit for a barber school. B. PROPERTY CODE - NOTICE OF RIGHTS OF ACTIVE MILITARY HB requires notice to homeowners and tenants facing eviction or foreclosure of relief available to certain members of the military. 1. Amends Texas Property Code (d) to require a suit to evict to include a bold print notice in both English and Spanish of potential special rights to a tenant that is serving on active military duty. 2. Amends Texas Property Code to require notice to be served on a debtor whose real property is being sold under a contract of additional protections which may be due to active members of the armed forces. Effective Date: January 1, 2012 C. HEALTH AND SAFETY CODE - PERPETUAL CARE CEMETERIES S.B makes a variety of changes to the Health and Safety Code provisions governing perpetual care cemeteries and final disposition. It also provides protection to consumers purchasing or reserving lawn crypt space in a cemetery by requiring certain contractual notices. 1. Amends Texas Health and Safety Code to requiring a cemetery selling or reserving lawn crypt space to begin construction within 48 months of first sale or reservation and complete construction within 60 months of first sale or reservation. Where the cemetery does not meet these construction timing requirements, the cemetery must refund buyers entire amount paid within 30 days of the buyer's written request. 2. Amends Texas Health and Safety Code to require contracts for sale or reservation of lawn crypt to include notice of requirements and statutory options available under a fully paid contract if the person to be interred dies before completion of crypt. 3. Amends Texas Health and Safety Code allows person committing an offense under to be punished under the Texas Penal Code and be liable for civil damages in a suit by an aggrieved party or the attorney general. 5

12 D. INSURANCE CODE - TEXAS INSURANCE LAW H.B conforms Texas insurance law to the most recently adopted nationally recognized standards regarding suitability in annuity transactions. It provides stronger protections for consumers and imposes additional duties on insurers and agents to obtain suitability information from consumers before recommending the purchase of a particular annuity. 1. Added Chapter 1111A - Life Settlement Contracts to Subtitle A, Title 7 of the Insurance Code. 2. Added 1111A.002 which defines "fraudulent life settlement act" as including using false information or concealing material information in life settlement contract or insurance policy transactions and committing acts or omission furthering fraud or preventing detection of fraud. 3. Added 1111A.003 which provides licensing requirements for providers and brokers of life settlement contracts. 4. Added 1111A.006 which provides limitations on the disclosure of an insured s financial or medical information by a provider, broker, insurance company, insurance agent, information bureau, or rating agency. 5. Added 1111A.011 which requires advertisements by a broker or provider of life settlement contracts to be accurate, truthful and not misleading. 6. Added 1111A.012 which requires the brokers or providers provide written statutory disclosures to the life settlement contract owner. 6