SCUTT LAW PLLC

Texas has some surprising (and very agreeable) consumer protection codes on the books that you as a consumer should be aware of. Most of these codes are “tie-in statutes,” which means that they can be brought under the Texas Deceptive Trade Practices Act (DTPA). Since the DTPA allows very favorable remedies, this is a definite advantage to the consumer. Scutt Law, PLLC will be presenting and explaining a few of the tie-in statutes at a time in installments, so that you the consumer are aware of the protections afforded to you under these Acts. This installment covers business opportunities, door-to-door sales, motor vehicle lemon laws and credit repair services.

Business Opportunity Act [Tex. Bus. & Com. Code Ann Sections 41.001-.303]: This Act protects people who purchase or lease products, equipment, supplies or services that will be used to begin a business in which the seller will continue to participate. Think of the advertisements you see around town or in your e-mail inbox that talk about starting your own business, working from home and making lots and lots of money per week doing next to nothing (usually for some sort of start-up fee). Since many (not all) of these offers are scams, the Business Opportunity Act was designed to protect Texas consumers from these enticing albeit illegitimate “opportunities.”

Under the Act, a business opportunity is regulated by the law if all three of the following elements are present: (1) it requires you, the buyer, to pay $500 or more to start the business, AND (2) the seller promises you will earn or are likely to earn a profit exceeding the initial investment, AND (3) the seller promises any one of the following: (i) the seller will provide locations or help you find locations on property not owned by either you or the seller for the use of or operation of the products, equipment, supplies, or services the seller is leasing or selling; (ii) the seller will provide a sales, production, or marketing program; this does not apply if the arrangement is defined as a “franchise” under federal regulation and certain requirements are met; or (iii) the seller will buy back any products, supplies, or equipment purchased, or any product made, fabricated, grown or bred by the purchaser using equipment or products sold or leased by the seller.

If a business opportunity meets these criteria, under the law the business must be registered with the Secretary of State before the seller advertises it or offers it for sale. Among other things, the business also may not: (1) employ a representation, device, scheme or artifice to deceive a purchaser; (2) make an untrue statement of material fact or omit a material fact; (3) represent that the business opportunity provides or will provide income or earning potential unless the seller has documented data to support the claims and the data is disclosed to the purchaser; or (4) make a claim or representation in advertising or promotional material or in an oral sales presentation that is inconsistent with the information required to be disclosed by the Act.

Home Solicitation Act [Tex. Bus. & Com. Code Ann. Sections 39.001-.009]: This Act protects consumers from the pressure that often accompanies a sale at their residence (think door-to-door sales). The law applies to the sale of goods or services that exceeds $25 and real property that exceeds $100, and gives the consumer a three day right to cancel the transaction.

Motor Vehicle Commission Code [Tex. Motor Vehicle Comm’n Code Ann. art. 4413(36)]: This Act contains the Texas “Lemon Law,” and it protects consumers by regulating the distribution and sale of new (not used) motor vehicles. The law requires a manufacturer or distributor to make any repairs necessary to make the vehicle conform to the express warranties. If the vehicle cannot be conformed to the warranty within a reasonable number of attempts, the manufacturer or dealer must either: (1) replace the vehicle with a comparable vehicle; or (2) accept a return of the vehicle and refund the owner the full purchase price less a reasonable allowance for the owner’s use of the vehicle. The owner must also be reimbursed for reasonable incidental costs resulting from the loss .

When has the manufacturer or dealer reached a “reasonable number” of attempts to repair the vehicle? Generally, whenever: (1) the same nonconformity has been subject to repair four or more times within the first 24 months or 24,000 miles, and two of the attempts were within a period of 12 months or 12,000 miles after the date of sale (if it is a safety defect, only half as many repair attempts are required); or (2) if the vehicle is out of service for repair for 30 or more cumulative total days in 24 months or 24, 000 miles.

Credit Service Organizations [Tex. Fin. Code Ann. Sections 393.001 et seq.]: This act protects consumers who purchase the services of a credit service organization (also called a “credit repair service”). Think of the organizations that advertise that they can improve a person’s credit history or rating, or obtain an extension of credit. It should be noted that the Act does not apply to licensed lenders, licensed real estate brokers, licensed attorneys, consumer reporting agencies or nonprofit organizations.

The Act requires that the organization register with the state and post a surety bond, and, among other things, also gives the consumer the right to cancel a contract with the organization at any time before midnight of the third day after the date of the transaction.

Texas has some very beneficial consumer protection laws, and it is to your advantage as a consumer to know your rights and to act on them. Therefore, you should contact an attorney if you feel you have a claim under the DTPA or any of the tie-in statutes.

*Disclaimer: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.