In a recent case in Texas, a jury convicted a defendant under the Texas deceptive business practices statute. The defendant appealed to the Appellate Court.

The state, in its complaint, alleged that the appellant unlawfully gave the impression to the complainant that an alarm system was the complainant’s current company, when it was actually the system of another company, and/or intentionally and recklessly misrepresented the price by telling the complainant that a new alarm installation was free when it required a new contract at additional cost. 

The elderly complainant had a home security system monitored by a company. There was a sign in front of her yard with the name of the company on it. The appellant was a door-to-door sales representative for a different monitoring company. On the day of the offense, the appellant rang the complainant’s doorbell. He pointed to the sign in the yard and said, “I’m here to update your security.”  He said that he would put a light on her sign and make it more visible from the street. He did not say what company he worked for.  He was not wearing a uniform, nametag, or anything to identify what company he worked for.  

Believing that the appellant worked for the present company that monitored her system, the complainant invited appellant into her home. He told her that installation of new features, such as wireless monitoring, would be “free.” Ultimately the complainant signed a five-year alarm monitoring agreement with the new company at a higher monthly cost than her previous service.  

A few days later the complainant cancelled the new contract. At the trial, the appellant contended that he did not represent that he was selling the complainant an alarm system from her current alarm company because, he never misrepresented for whom he worked, and she knew that she was changing her alarm service from her current company to another company when she executed the contract.  

The state contended that the statute criminalizes conduct both leading up to and during the completion of a business transaction.  Thus, the state contended that a deceptive business practice can be committed in all aspects of the transaction, and is not excused merely by a signature on a contract.  

The Appellate Court agreed with the position of the State Court in that the relevant inquiry does not focus on what the complainant knew at the time she signed the contract. Instead, it focuses on what appellant did —  what he represented — during the course of business.

The court said that a rational juror could have understood the statutory rule “representing” to include the appellant’s conduct and statement immediately after he initiated contact with the elderly complainant — pointing to her current sign and stating “I’m here to update your security.” A rational inference from this statement and conduct is that appellant was describing claimant’s current alarm company, although he was not.  

The court acknowledged that the state, at a minimum, had to prove that appellant acted recklessly. The penal code provides the standard as follows: A person acts recklessly, or is reckless, with respect to circumstances surrounding his conduct or the result of his conduct when he is aware of but consciously disregards a substantial and unjustifiable risk that the circumstances exist or the result will occur. The risk must be of such a nature and degree that its disregard constitutes a gross deviation from the standard of care that an ordinary person would exercise under all the circumstances as viewed from the actor’s standpoint.  

The state met its burden to show that the appellant made the false representation at least recklessly. The complainant did not learn that the appellant was selling an alarm system of another company until he presented the papers.     

Therefore the court affirmed the trial court’s judgment.




Q: We are an alarm company licensed to do business in State A. We have a subscriber doing business in multiple states. We have been asked by the subscriber to install a system in State B where we are not licensed. We will use a third party monitoring company to do the monitoring in State B and we have requested them to engage a subcontractor to actually do the installation of the new system in state B. We have instructed the monitoring company to make sure that the installation company is properly licensed in State B. Do we require a license in State B? 


A: If the third party monitoring company is properly licensed and the company they engage on your behalf to install the system is properly licensed, then the probability is you do not require a license. However, before giving you a definitive answer, I would check the law in State B where the activity is taking place to make sure they do not require the seller of the system who holds the contract with the subscriber to be licensed.