HB4281

Regular Session

Relating to a civil cause of action for fraudulent crowdfunding.

LowStandard timeline

Low Cost

Effective:2025-09-01

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

Effective Date: September 1, 2025
Compliance Deadline: August 31, 2025 (All active fundraising campaigns crossing this date must have updated terms and fund segregation in place).
Agency Rulemaking: None. This statute is enforced via civil litigation in state courts, not by a regulatory agency. Do not expect clarifying rules from the state; clarification will only come through case law (lawsuits).

Immediate Action Plan

1. Audit Active Campaigns: Identify any funds currently held for third parties. If you are holding money for a donee, disburse it immediately or document exactly why it is being held.
2. Segregate Accounts: Ensure all donation funds are deposited into a dedicated trust or escrow account, distinct from operating funds, by August 31, 2025.
3. Update ToS: Insert a "Fee Retention" clause and a "Force Majeure/Undeliverable Funds" clause into all fundraising agreements immediately.
4. Verify Insurance: Contact your broker to determine if defense costs for a Chapter 100B claim are covered under your current policy.

Operational Changes Required

Contracts

Terms of Service (ToS) & User Agreements: Platforms and organizers must update agreements to explicitly designate the collector as an agent for the donee.
Fee Disclosures: Contracts must expressly state that a specific percentage or flat fee will be retained by the collector for administrative costs. Without this explicit agreement, retaining *any* portion of the donation could be argued as "intent to keep" funds under the statute.
Beneficiary Acknowledgments: Implement a required sign-off where the intended "donee" verifies their identity and banking details *before* the campaign launches.

Hiring/Training

Finance & Accounting Staff: Staff must be trained on strict fund segregation. "Floating" donation funds to cover operating cash flow gaps is now a high-liability trigger.
Customer Support: Teams must be trained to document all attempts to contact unresponsive donees to build a defense against claims of "intent to withhold."

Reporting & Record-Keeping

Proof of Disbursement: You must maintain irrefutable proof of delivery (wire confirmations, cashed check images) for every campaign.
Unclaimed Property Logs: Create a specific log for funds where the donee cannot be located, documenting every attempt to remit payment.

Fees & Costs

Insurance Review: There are no new state fees. However, businesses must review General Liability and Directors & Officers (D&O) policies. Most policies exclude claims related to fraud or ill-gotten gains; you may be self-insuring against this risk.

Strategic Ambiguities & Considerations

The "Administrative Fee" Gap: The statute defines fraud as collecting with intent to keep donations "instead of giving the donations to the donee." It does not explicitly exempt standard processing fees.
*Risk:* A plaintiff could argue that retaining 5% for overhead constitutes keeping donations.
*Mitigation:* You must rely on contract law to define "net donations" vs. "gross donations" to protect your revenue stream.
Undeliverable Funds: The law is silent on the timeline for disbursement. It does not define how long a collector may hold funds if a donee is unresponsive before liability attaches.
*Risk:* Holding funds indefinitely looks like fraud.
*Mitigation:* Establish a strict internal policy (e.g., 90 days) after which funds are refunded to donors or redirected (cy-près), provided this is disclosed in the initial solicitation.

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Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.

Legislative Timeline

This bill's path through the Texas Legislature

TopicsCivil Remedies & Liabilities Fraud Gifts & Donations

Official Analysis

View HRO Analysis View All Bill Documents

BILL ANALYSIS

C.S.H.B. 4281

By: McQueeney

Judiciary & Civil Jurisprudence

Committee Report (Substituted)

BACKGROUND AND PURPOSE

The bill author has informed the committee that crowdfunding has become a popular way to raise funds for people who have fallen on hard times or who have experienced a tragedy but that, unfortunately, there are bad actors who capitalize and exploit tragedies by creating fraudulent crowdfunding campaigns with no intention of ensuring that the money goes to the affected people. The author has further informed the committee that under current law, this fraud is considered theft by deception but that there is no expressly provided avenue for a person's recovery of the donations that were unknowingly collected on their behalf. C.S.H.B. 4281 seeks to hold liable a person who engages in fraudulent crowdfunding by creating a pathway through use of a civil cause of action for fraudulent crowdfunding.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

C.S.H.B. 4281 amends the Civil Practice and Remedies Code to make a person who engages in fraudulent crowdfunding liable to the donee on whose behalf the donations were made or the donee's estate. The bill defines "fraudulent crowdfunding" as collecting donations on behalf of a donee with the intent to keep the donations instead of giving the donations to the donee on whose behalf the donations were made. The bill requires a court to award a claimant who prevails in such an action the following:

·125 percent of the amount of donations the defendant collected on behalf of the claimant through the fraudulent crowdfunding; and

·reasonable attorney's fees.

The bill establishes that nothing in its provisions prevents a claimant from pursuing a claim for exemplary damages for the defendant's fraudulent crowdfunding. The bill applies only to a cause of action that accrues on or after the bill's effective date.

EFFECTIVE DATE

September 1, 2025.

COMPARISON OF INTRODUCED AND SUBSTITUTE

While C.S.H.B. 4281 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.

With respect to the liability of a person who engages in fraudulent crowdfunding, the introduced made the person liable to the donee on whose behalf the donations were made, whereas the substitute makes the person liable to such a donee or the donee's estate.

While both the substitute and the introduced require a court to award a claimant who prevails in the applicable action 125 percent of the amount of donations the defendant collected on behalf of the claimant through the fraudulent crowdfunding, the substitute also requires the court to award reasonable attorney's fees, whereas the introduced did not.

House Authors

Rep. John McQueeneyRepublican · Primary Author

Joint Authors

Coauthors (1)

Aicha Davis (D)

Senate Sponsors

Sen. Kelly HancockRepublican · Primary Sponsor

Cosponsors (1)

Royce West (D)

Bill Text(with markup)

H.B. No. 4281

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

	AN ACT
	relating to a civil cause of action for fraudulent crowdfunding.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Title 4, Civil Practice and Remedies Code, is
	amended by adding Chapter 100B to read as follows:
	CHAPTER 100B. LIABILITY FOR FRAUDULENT CROWDFUNDING
	Sec. 100B.001. DEFINITION. In this chapter, "fraudulent
	crowdfunding" means collecting donations on behalf of a donee with
	the intent to keep the donations instead of giving the donations to
	the donee on whose behalf the donations were made.
	Sec. 100B.002. LIABILITY FOR FRAUDULENT CROWDFUNDING. A
	person who engages in fraudulent crowdfunding is liable to the
	donee on whose behalf the donations were made or the donee's estate.
	Sec. 100B.003. DAMAGES. (a) A court shall award a donee or
	donee's estate who prevails in an action brought under this
	chapter:
	(1) 125 percent of the amount of donations the
	defendant collected on behalf of the donee through the fraudulent
	crowdfunding; and
	(2) reasonable and necessary attorney's fees.
	(b) Nothing in this section prevents the donee or the
	donee's estate from pursuing a claim for exemplary damages under
	Chapter 41 for the defendant's fraudulent crowdfunding.
	SECTION 2. Chapter 100B, Civil Practice and Remedies Code,
	as added by this Act, applies only to a cause of action that accrues
	on or after the effective date of this Act.
	SECTION 3. This Act takes effect September 1, 2025.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


April 14, 2025

TO:	Honorable Jeff Leach, Chair, House Committee on Judiciary & Civil Jurisprudence

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	HB4281 by McQueeney (Relating to a civil cause of action for fraudulent crowdfunding.), As Introduced

No significant fiscal implication to the State is anticipated.

It is assumed that any costs associated with the bill could be absorbed using existing resources.

Local Government Impact

No significant fiscal implication to units of local government is anticipated.

Source Agencies:

212 Office of Court Administration, Texas Judicial Council

LBB Staff:

JMc, KDw, NTh

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Frequently Asked Questions

Common questions about HB4281

What does Texas HB4281 do?

HB4281 creates a specific civil cause of action for "fraudulent crowdfunding," exposing any entity collecting donations for a third party to statutory damages equal to 125% of the collected amount plus mandatory attorney's fees. This law impacts not only crowdfunding platforms but also businesses conducting employee relief funds, fiscal sponsors, and marketing agencies handling charitable campaigns. Implementation Timeline Effective Date: September 1, 2025 Compliance Deadline: August 31, 2025 (All active fundraising campaigns crossing this date must have updated terms and fund segregation in place).

Who authored HB4281?

HB4281 was authored by Texas Representative John McQueeney during the Regular Session.

When was HB4281 signed into law?

HB4281 was signed into law by Governor Greg Abbott on June 20, 2025.

How urgent is compliance with HB4281?

The compliance urgency for HB4281 is rated as "low". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of HB4281?

The cost impact of HB4281 is estimated as "low". This may vary based on industry and implementation requirements.

What topics does HB4281 address?

HB4281 addresses topics including civil remedies & liabilities, fraud and gifts & donations.

Legislative data provided by LegiScanLast updated: November 25, 2025

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