Texas SB 140 SMS Law is a Labor Day Disaster for American Businesses

 TL;DR

• Texas SB 140 went into effect today (September 1, 2025) targeting ANY business that texts Texas residents (regardless of phone number 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: Up to $20,000 per text message ($15K “treble damages” in civil court + $5K state penalty)
• 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 their 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]

But here’s the real kicker: consumers can now bypass state agencies and sue you directly under the Texas Deceptive Trade Practices Act, with unlimited repeat claims for ongoing violations [5][6]. Likewise, Texas can still fine you $5,000 per violation even after you’ve lost or settled a civil lawsuit.

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.
• Brick‑and‑mortar retailers making most of their sales in person, again with at least two years under the same name.
• 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.

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 $20,000 per text message: Private lawsuits can award $500-$5,000 per violation (up to $15,000 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 $20,000 total. Send 100 texts? That’s potentially $2 million in combined penalties.

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

Important Note: Under the Texas Deceptive Trade Practices Act, a prevailing consumer can recover reasonable attorney’s fees plus damages for mental anguish, and courts may award treble damages if the violation was knowing or intentional — significantly amplifying liability exposure.

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 businesses to register, pay fees, and post a bond before they send a single 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 $20,000 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.

But Texas law could classify these as “solicitation” just because they’re automated and business-related. Businesses now face penalties for “SMS Marketing” even when they’re simply responding to someone who called THEM first.

A missed-call text-back like “Sorry we missed your call — how can we help?” may be exempt from SB 140’s registration and bond requirements if the recipient is a current or former customer and the business has operated under the same name for at least two years. However, this does not exempt the message from the law’s core 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 can apply, whether or not the business would otherwise be registration-exempt.

👉 Bottom line: If the caller is brand-new, don’t auto-text back 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.

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? That could now cost $20,000 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 $20,000 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—Even for Exempt Clients

A dangerous false assumption has begun circulating: that if the client is exempt, the agency is safe. This is flat‑out wrong under SB 140.

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 for failing to register—even if their client falls within one of the Chapter 302 exemptions.
• 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 compliance as your own direct responsibility.

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 must register and face potential $20,000 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 will call them at a certain time. 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—and you aren’t necessarily even sure what that is because Texas has 2 time zones. On Sunday, you can’t message until noon. Any violation of this, even accidental, could cost you thousands of dollars!

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 $20,000 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 $20,000 penalties per message. That’s a textbook chilling effect on protected speech.

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.”

• Promotional texts require written consent.

  Verbal permission 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.

  ❌ Example: “Watch this important video before our call tomorrow.”
  ❌ Example: “Come back this month and get 10% off.”
  ❌ Example: “I’m sorry that we missed each other. Click here to book a new appointment.”

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