HBA-MPM S.B. 957 77(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 957 By: Brown, J. E. "Buster" Insurance 5/8/2001 Engrossed BACKGROUND AND PURPOSE Current law does not provide for the use of loss damage waivers in certain rental-purchase agreements. Senate Bill 957 gives consumers the option to include in a contract a loss damage waiver that specifies that the consumer is not liable for any or all damage to rented merchandise. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Texas Department of Licensing and Regulation in SECTION 3 (Section 35.721, Business & Commerce Code) of this bill. ANALYSIS Senate Bill 957 amends the Business & Commerce Code to authorize a consumer, in addition to applicable registration fees permitted by this bill, to contract for a merchant's agreement not to hold the consumer liable for loss from all or part of any damage to merchandise (loss damage waiver). The bill specifies that a loss damage waiver is not insurance. A merchant is prohibited from selling a loss damage waiver unless the consumer agrees to the waiver in writing at or before the execution of the rental-purchase agreement. The bill also prohibits a merchant from imposing or requiring the purchase of a loss damage waiver as a mandatory charge. The bill authorizes a loss damage waiver to exclude loss or damage to merchandise caused by moisture, scratches, or vandalism, mysterious disappearance or abandonment of the merchandise, or any other damage intentionally caused by the consumer or that results from the consumer's wilful or wanton misconduct or negligence. The bill specifies that the loss damage waiver must include a statement of the total periodic charge for the waiver. In the case of a rental-purchase agreement with weekly or biweekly renewal dates, the loss damage waiver is prohibited from exceeding 10 percent of a periodic lease payment or two dollars, whichever amount is greater. In the case of a rental-purchase agreement with monthly renewal dates, the loss damage waiver is prohibited from exceeding 10 percent of the periodic lease payment or five dollars, whichever amount is greater. The bill sets forth the language of the disclosure notice that must be displayed in a loss damage waiver. The bill prohibits an employee or agent of the merchant from making oral or written representations that contradict the provisions of this bill or from using coercive language or action to persuade a consumer to purchase a loss damage waiver. S.B. 957 prohibits a merchant from selling a loss damage waiver unless the merchant registers annually with the Texas Department of Licensing and Regulation (department) and files with the department a copy of each loss damage waiver form used by the merchant. The department is authorized to charge a registration fee, set the amount of the fee by rule, and by rule adopt procedures for the registration process. The bill requires the commissioner of licensing and regulation (commissioner) to enforce the provisions of this bill and authorizes the commissioner to investigate any consumer complaint concerning the amount of loss damage waiver fees charged by a merchant. EFFECTIVE DATE September 1, 2001. Provisions regarding registration and filing requirements apply on and after January 1, 2002.