Texas SB 140 Turns SMS Into a Legal Minefield for Small Businesses Nationwide

Registration, bonding, and steep per-text penalties can reach beyond state lines. Here’s what’s changing—and practical ways to communicate safely.

 TL;DR

• Texas SB 140 went into effect (September 1, 2025) targeting ANY business that texts Texas residents (regardless of phone number or area code)
• Affects even legitimate customer communications: receipts with promotional content, reactivation campaigns, birthday offers, appointment reminders with calls to action
• If you’re already texting existing customers with anything that could possibly be considered as promotional as part of your workflow, you’re breaking the law right now — you must register first before sending any texts
• Devastating penalties: $500–$1,500 per violation in private statutory damages (or up to 3× actual damages for knowing/intentional) + attorneys’ fees for prevailing consumers + up to $5,000 in state civil penalties (AG enforcement). In practice, legal fees and multiple claims can push total exposure well past $20k.
• Requires invasive paperwork, $200 annual fees, $10,000 bonds, plus $500-1,000 yearly bond costs
• Impossible to comply with—businesses can’t determine if someone is actually a Texas resident
• Logistical Nightmare. You can’t text anyone before 9am (noon on Sundays) – Sounds simple, but even Texas has 2 time zones. 
• Only punishes legitimate American businesses while foreign spammers ignore it completely
• Likely unconstitutional (Commerce Clause, Due Process, First Amendment violations)

Texas SB 140 SMS Text-Messaging Law is Absolutely Crazy

I’ve had a Texas phone number for 15 years. Haven’t lived there in over a decade. That simple fact exposes everything wrong with Texas SB 140, which went into effect today—September 1, 2025. This new law is supposed to target businesses that text “Texas residents.” But how is any business supposed to figure out where I actually live?

My phone number says Texas, but I could be anywhere. I live most of the year in Costa Rica! Meanwhile, actual Texas residents might have California, New York, or Florida numbers from previous moves. The law creates an impossible standard, then punishes American businesses with devastating fines when they inevitably get it wrong.

What Texas SB 140 SMS Law Actually Demands from All American Businesses

Texas is demanding that every business texting residents register with the state through an invasive Form 3401 filing that requires:

• Complete corporate documentation: Articles of incorporation, bylaws, partnership agreements, or LLC operating agreements [1]
• Full ownership disclosure: Names, addresses, birth dates, and driver’s license details for every officer, director, partner, owner, and person with management responsibilities [2]
• Every business location: All physical addresses where your business operates [2]
• Every phone number: Each business phone number and its corresponding address [2]
• Related entity information: Details about parent companies, affiliates, and the organizing documents [2]
• Notarized disclosure statements: Additional operational details under penalty of perjury [3]
• Consent to legal service: Appointing Texas Secretary of State as your agent for lawsuits [4]
• $200 annual fee plus a $10,000 bond (costing $500-1,000 yearly to maintain) [1][3]
• Quarterly “salespeople” addendum: Every quarter you must file an addendum listing each salesperson who solicited for you in the prior quarter (name, principal residence address, and any name used while soliciting) — or satisfy this by filing your Texas Workforce Commission Employer’s Quarterly Report.
• Scripts & sales materials: Copies of scripts/outlines/instructions and all written materials sent to purchasers.

We’re only texting! Are you sure you need our salespeople and sales materials? 

Yes—even if your’re only texting.

After SB 140, Texas folded texts/MMS into “telephone solicitation” for Chapter 302. So if your salespeople send marketing texts to Texans (messages intended to induce a purchase/booking), the 302 regime applies: initial Form 3401 (with scripts/materials) and the quarterly “salespeople” addendum—unless an exemption fits.

 

Who’s Exempt—from Registration… But Not from Marketing Rules

One of the most misunderstood features of Texas SB 140 is its set of limited registration exemptions. Lawmakers carved out narrow categories of businesses that do not need to register with the Texas Secretary of State or post a bond. But these carve‑outs apply only to registration. They do not excuse anyone from following the strict anti‑marketing provisions of the law.

Exemptions from Registration (Chapter 302)

If your business falls into one of the categories below, you are relieved from registration, $10,000 surety bond, and $200 filing fee obligations:

• Publicly traded corporations and major institutions (banks, insurers, utilities, schools, or 501(c)(3) nonprofits).
• Subscription‑based sellers who only deliver goods or services through recurring, pre‑approved arrangements.
• Established companies marketing only to prior customers, provided they have operated under the same name for at least two years.
• Appointment‑setting calls that involve no sales pitch or direct transaction.
• Other regulated entities, such as certain financial or utility providers, already subject to separate state oversight.
• Brick‑and‑mortar retailers that have operated under the same business name for at least two years and derive the majority of their revenue from in-person, on-premises sales (not online, wholesale, or B2B). Note: The exemption does not explicitly extend to sales made through department stores or other third-party outlets that don’t carry the retailer’s name.

Here’s what that clause is saying, in plain English:

• It’s meant for retailers with their own storefront, operating under their own business name for 2+ years, where most sales happen face-to-face in that store.

• It’s not meant for brands whose “in-person” sales mainly happen inside someone else’s store (department stores, big-box retailers, marketplaces, pop-ups inside a grocery, etc.)—because those locations don’t bear your company’s name.

EXAMPLE: Arcadia Cosmetics sells mostly through its branded counter inside Bloomington Department Store. Arcadia wants to send marketing texts to Texas customers. Even though the purchases happen in person at a counter, the physical location is Bloomington Department Store, not an Arcadia Cosmetics store. Because the store doesn’t carry Arcadia’s name, Arcadia likely doesn’t qualify for the brick-and-mortar exemption tied to “same business name for 2+ years” at the place of sale.

What They’re Not Exempt From

Even exempt companies must play by the same marketing conduct rules as everyone else:

• Consent & opt‑out: Written consent remains mandatory; “STOP” requests must be honored immediately.
• Quiet hours: No promotional SMS before 9 a.m. or after 9 p.m., and on Sundays not before 12 p.m.
• Heavy liability: Violations are treated as deceptive trade practices under the Texas DTPA—meaning treble damages, mandatory attorney’s fees, emotional distress awards, and repeat private suits.

The bottom line: Exempt from filing, never exempt from compliance.

Texas SB 140 Penalties for SMS Marketing are Business-Killing

The financial exposure is absolutely devastating for small businesses:

• Up to $1,500 per text message: Private lawsuits can award $500-$1,500 per violation (3x with treble damages for willful violations) PLUS state penalties up to $5,000 per text
• Double penalties: State fines AND civil damages from individual lawsuits for the same text
• Attorney fees and emotional distress damages: Also recoverable by plaintiffs
• No caps on repeated claims: The same consumer can file multiple lawsuits for ongoing issues

This means a single auto-reply text could cost you thousands of dollars. Imagine if you sent out 1,000 texts last month.

This applies to ANY business sending texts to Texas residents—even if you’re located in Alaska, Florida, or anywhere else in America.

Texas SB 140 Punishes All US Businesses Before They Even Send a Message

Here’s what makes this law even more outrageous: Texas SB 140 doesn’t just punish you after sending a non-compliant text. It creates an advance punishment by requiring all non-exempt businesses to register, pay fees, and post a bond before they send a single promotional text to a Texas resident.

Why It’s Constitutionally Problematic:

• This acts like a prior restraint on speech: you must pay and register in advance or risk massive penalties
• It functions like an interstate tax on communication across state lines — unconstitutional under the Commerce Clause
• It creates a pay-to-speak system where only businesses who can afford $10,000 bond plus $200+ annually can legally communicate with customers by text
• Failure to register first: If you text without registering, you’re automatically in violation — subject to both state fines and civil lawsuits

So Texas is essentially imposing a punishment in advance — even if you only want to send normal customer messages like receipts or reminders, you must pay tribute to the state first or face devastating penalties.

How Texas SMS Law SB 140 Attacks My Business (And Yours)

My company, XealAI, runs services that help businesses capture leads and re-engage customers through three core automated SMS services. Under Texas’s new law, each of these legitimate business practices could now result in massive fines per message.

The Services That Are Now at Risk

Missed-Call Text-Backs

When a business misses a customer call, we automatically respond: “Sorry we missed your call — how can we help?” This is especially powerful for solopreneurs—imagine you’re a one-man plumbing repair business on a job site when a customer calls. If you don’t answer, they’re calling the next plumber and you’ve lost that customer. Our missed-call text-back captures them immediately, and with AI, we can even handle quick answers and appointment setting.

When you miss a call, an automatic reply like “Sorry we missed your call — how can we help?” can save the lead—especially for solo operators on job sites. Under Texas SB 140, whether that auto-text is treated as “telephone solicitation” turns on purpose and content: if the message nudges a purchase/booking, it’s solicitation; if it simply facilitates the caller’s request (scheduling a call-back, collecting details) with no promo, it’s more likely informational or transactional. SB 140 now pulls text and image messages into Texas’s solicitation framework by importing Chapter 304’s “telephone call” definition into Chapter 302

So Texas law could classify these as “solicitation” just because they’re automated and business-related, and not necessarily transactional if your automatic text back includes a link to book an appointment, a link to book a reservation, or a link to a menu. It’s a legal minefield. Businesses now face penalties for “SMS Marketing” even when they’re trying to help a customer who called them first.

A missed-call text-back like “Sorry we missed your call — please click here to schedule a call with one of our friendly sales representatives” may be exempt from SB 140’s registration and bond requirements if the recipient is a current or former customer and the physical brick-n-morter business has operated under the same name for at least two years.

However, this does not exempt the “marketing” message from the marketing rules: prior written consent is required, opt-out must be honored, quiet hour restrictions apply, and liability under the Texas Deceptive Trade Practices Act (DTPA) still exists if the text is considered solicitation or marketing.

If the missed-call text-back is purely transactional (for example, scheduling follow-up, no upsell, and no product promotion) and sent to an existing customer, it usually falls within the exemption for registration — but every remaining SB 140 marketing conduct rule still applies. If the message includes any promotional or marketing content, falls outside of allowed hours, then SB 140 penalties could still apply, whether or not the business would otherwise be registration-exempt.

👉 Bottom line: If the caller is brand-new, don’t auto-text back anything promotional without written consent. That single message could be classified as solicitation, triggering SB 140 penalties.

Reputation Management

After a service call, customers automatically receive a text: “Hello Mr. Adams. Did Bob get everything fixed for you?” If they’re happy, we send a link encouraging a Google review. If there’s a problem, we have Bob call them back to fix it before it becomes a negative review.

This system helps businesses capture positive reviews when customers are satisfied and resolve problems before they escalate—exactly the kind of customer service tool that builds successful small businesses. Now it’s potentially illegal because “solicitation for reviews” can be considered a marketing message.

Customer Reactivation Campaigns

We help businesses re-engage existing customers and leads—people they have every legitimate right to contact based on prior business relationships. Want to send “We miss you! Come back and save 10%” to a customer who bought from you last month? How about “Happy Birthday! Come by anytime this month for 10% off your next order.“ That could now cost thousands of dollars per message if they happen to be a Texas resident.

The Impossible Choice for Small Businesses

How do you even know if a customer is a Texas resident? Do you have a comprehensive CRM with the name, address, and phone number of every customer? Or are you like most small businesses with simply a list of contacts?

What are businesses supposed to do? Stop serving customers? Spend $500 to $1000 a year on a bond while still being threatened with thousands of dollars in civil fines, court costs, attorney fees, and more for each violation? Yes, each message could be considered a separate violation.

The law forces businesses into an impossible position: continue providing excellent customer service and risk bankruptcy, or abandon the tools that help them compete and grow.

Marketing Agencies Aren’t Off the Hook—Exemption ≠ Immunity

Under SB 140, agencies can face civil liability and only avoid the registration misdemeanor when the seller is truly exempt—and the facts are documented.

Why Agencies Remain Fully Liable

• Broad definition of “salesperson”: The statute explicitly sweeps in third‑party marketing contractors. An SMS provider, digital marketing firm, or lead‑gen agency is treated as a seller/agent for purposes of compliance.
• Unregistered solicitation risk: Agencies themselves can face Class A misdemeanor charges if you knowingly act as a salesperson for a seller that was required to register under Chapter 302 but didn’t.
• DTPA exposure: Consumers harmed by illegal SMS campaigns don’t just sue the brand—they can directly sue the agency. That means treble damages, attorneys’ fees, and emotional distress claims can land squarely on the service provider.

Agencies cannot hide behind client exemptions. If you are touching SMS campaigns in Texas, you must treat promotional messaging compliance as your own direct responsibility before a single message ever goes out.

Texas SB 140 Makes Normal Customer Text Communication Risky

Here’s what makes Texas SB 140 truly devastating: it can affect legitimate communication with your own customers. The law defines any business text “for the purpose of promoting goods or services” as solicitation, which could include:

• Receipts with promotional content: A receipt text saying “Thanks for your purchase! Check out our new products” could trigger penalties
• Birthday offers: “Happy Birthday! Here’s 20% off” to loyalty program members
• Appointment reminders with upsells: “Your appointment is tomorrow. Don’t forget about our new service!”
• Customer service follow-ups: “How was your experience? Leave a review and get 10% off next time”

It doesn’t matter if customers opted in, previously bought from you, or actively want these messages. Unless you fit narrow exemptions (public companies, nonprofits), you should register or face potential fines and penalties per text.

Texas SB 140 Consent, Opt-Out & Quiet Hours Make Business Operations Nearly Impossible

SB 140 doesn’t just punish businesses—it imposes clear operational mandates that make normal customer service nearly impossible:

• You must collect prior express written consent before sending promotional texts—consent can’t be pre-checked or tied to a purchase, and you must document it
• Every text must include an easy opt-out mechanism (e.g., “Reply STOP”), acted on immediately (okay so this is normal and easy) 
• You can only send messages during quiet hours: 9 AM–9 PM Monday–Saturday, and noon–9 PM on Sundays, in the recipient’s local time

Failure to follow these rules creates additional layers of legal risk—and yet SB 140 doesn’t make the job any easier on small businesses.

Now think about this real-world scenario: someone calls a roofer at 4 AM because they have a leaky roof emergency. The roofer isn’t awake yet, so to avoid losing the lead, they automate a missed-call text-back to let the customer know they received their message and to please click a link to schedule a call. Or perhaps their XealAI chatbot discovers what’s happening in a conversation with the customer and schedules an emergency appointment for them.

However, now the SMS text message can’t be sent until 9 AM local time of the customer because it is encouraging an appointment—and you aren’t necessarily even sure what that is because Texas has 2 time zones. On Sunday, you can’t send this message until noon. Any violation of this, even accidental, could cost you thousands of dollars!  Plus this is a “promotional” message even though it appears innocent. By pushing for an appointment it falls under “marketing.” So your business would need to be registered and bonded.

So the customer with the emergency roof leak has to wait hours for any response, likely calling other roofers in the meantime. The quiet hours rule doesn’t protect consumers—it forces them to wait for help when they need it most.

Why Vagueness Makes Compliance Even Worse

The law defines a “telephone solicitation” as any message sent for the purpose of encouraging the purchase of goods or services—but it doesn’t clearly separate transactional messages from promotional ones.

Because of this vagueness, almost any business message could be interpreted as “promotional”:

• A receipt that says “Thanks for your purchase — check out our new arrivals”
• An appointment reminder that adds “Ask about our new service”
• A follow-up survey that offers “10% off your next visit for leaving a review”

Even if the primary purpose is customer service, the secondary content can trigger thousands of dollars in liability per message. So businesses are forced to choose between bland, unhelpful messages or risking devastating penalties for trying to provide valuable customer service.

The bottom line: since the law is so vague, any text message to a Texas resident (regardless of phone number) opens you up to legal action.

Texas Text Message Law SB 140 Gives Foreign Spammers a Free Pass

Here’s the most infuriating part: only American companies will comply.

Foreign spam operations blasting millions of texts into Texas won’t register. Won’t pay fees. Won’t post bonds. This law won’t even slow them down.

Meanwhile, legitimate American businesses—especially small ones—get crushed under compliance costs that big corporations can absorb as pocket change. A $10,200 annual compliance cost is nothing to Amazon. It’s devastating to a local restaurant or service business.

Why Texas SB 140 SMS Law is Blatantly Unconstitutional

Commerce Clause Violation: The Constitution gives Congress—not states—power over interstate commerce. Texas is imposing what amounts to an interstate tax on business communications across state lines. They don’t have that authority.

Due Process (Vagueness): If businesses can’t determine who qualifies as a “Texas resident,” enforcement becomes arbitrary and discriminatory. When I can have a Texas number while living elsewhere, and Texas residents can have out-of-state numbers, the law creates an impossible compliance standard.

First Amendment (Chilling Effect): Even commercial speech gets constitutional protection when it’s lawful and truthful. SB 140’s penalties are so severe that businesses will abandon SMS communication entirely rather than risk thousands of dollars in fines and penalties per message. That’s a textbook chilling effect on protected speech.

Reality Check: Similar SMS Laws Are Already Entrenched

While I believe SB 140 is unconstitutional as written, the practical reality is that many states already enforce comparable SMS rules with substantial per-message penalties, and these regulatory frameworks have persisted. This suggests that Texas’s SB140 law could remain on the books for an extended period, even if later modified through litigation.

Several states have established precedents for aggressive SMS enforcement. Florida’s Telephone Solicitation Act imposes penalties ranging from $500 to $1,500 per text message. Washington’s Commercial Electronic Mail Act carries $500 penalties for each unlawful text. Connecticut’s telemarketing regulations can result in fines up to $20,000 per violation. New York’s General Business Law §399-z allows penalties up to $20,000 per violation and specifically covers “electronic messaging texts.” Oklahoma’s Telephone Solicitation Act mirrors Florida’s approach with $500 to $1,500 penalties per text message.

These existing state frameworks demonstrate that courts and regulators have generally accepted significant financial penalties for SMS violations, creating a regulatory environment where Texas’s approach, while potentially problematic, fits within established patterns of enforcement.

The Data Shows Why Texas SB 140 SMS Law Hurts Everyone

The research is crystal clear:

• Text messages have a 98% open rate compared to only 20% for emails [7]
• People are 295-400% more likely to respond to texts than phone calls, with SMS response rates at 45% versus voicemail response rates under 10% [8][9]
• Up to 80% of voicemails are never even listened to [9]
• 80% of U.S. businesses now use SMS for customer communication—a 45% increase in just two years [10]

By discouraging text communication, this law actively hurts the very consumers it claims to protect. It forces them back to inferior communication methods they’ve already abandoned.

Small businesses lose opportunities to serve customers. Customers lose convenient ways to get help. The only winners? The foreign spammers who’ll ignore this law completely.

Voice AI Solution for Texas SB 140 SMS Compliance Issues

To help small businesses adapt, XealAI is now encouraging owners to sign up for our Voice AI agents so that every call is answered 24/7/365. These voice agents don’t just pick up the phone — they can answer customer questions, create appointments, and provide immediate support, ensuring that businesses continue serving their customers without falling into the legal gray areas of texting restrictions.

While we fully expect this law to be challenged and eventually overturned, our Voice AI solution gives small businesses a powerful and compliant way forward starting today.

⚠️ Important Note on Consent ⚠️

When using our XealAI voice agent, here’s the rule under SB 140:

• Transactional texts are allowed without written consent.

  If the agent books an appointment, you can send SMS confirmations and reminders tied directly to that appointment — no written opt-in required.

  ✔ Example: “Your appointment is confirmed for Sept 12 at 3 PM.”
  ✔ Example: “Reminder: Your table is ready.”
  ✔ Example: “Thank you for your order #12345.”

• Promotional texts require written consent.

  Verbal permission with a XealAI Voice Agent isn’t enough. To send offers, upsells, or additional content, you must capture express written consent — usually via an online form that is not pre-checked and not required with a purchase.

  ❌ Example: “Watch this important video before our call tomorrow.”
  ❌ Example: “Come back this month and get 10% off.”
  ❌ Example: “Thank you for your order #12345. Watch this video on how to get a free gift”
  ❌ Example: “I’m sorry that we missed each other. Click here to book a new appointment.”
  ❌ Example: “Thank you for your purchase. We’ll send you a coupon code once a month for 10% off. 

“Written consent” isn’t a new idea brought by Texas SB 140. Federal law (TCPA) already requires businesses to get clear, written permission before sending automated marketing texts. What SB 140 does is add more state-level obligations for texting Texas residents—such as extra registration rules and tougher penalties. In short: you need written consent under federal law, and Texas has layered on additional requirements and risks for SMS marketing.

My Final Word on Texas SB 140 SMS Law

Look, I get it. This law may have been developed with old-fashioned good intentions—trying to protect consumers from spam. But we’re not in the 1990s anymore. Americans aren’t tied to landlines, and neither are their phone numbers. People move, work remotely, keep numbers from previous states, and live mobile lives that make location-based regulations obsolete.

Texas’ SB 140 is unconstitutional. It creates an interstate tax burden on American businesses, cripples small entrepreneurs, and hands a free pass to foreign spammers who will never register or pay a dime.

This law is devastating for small businesses in Texas and throughout the USA. It punishes the wrong people, does more harm than good, and should be challenged in court.

Until then, services like XealAI.com’s Voice AI agents offer a lifeline — helping small businesses serve their customers with fairness, efficiency, and the confidence that every call is answered.

Disclaimer: This article reflects my personal opinion and is presented for general informational purposes only. I am not an attorney, and nothing here constitutes legal advice. For guidance tailored to your situation, please consult a qualified legal professional. – Tony Darrick Baker