Prohibits any person, firm, partnership, association or corporation, or agent or employee thereof from offering for sale tangible or intangible goods or services which have not been actually ordered or requested by the recipient; provides that any receipt of unordered goods shall be deemed a gift to the recipient; prohibits the requesting of payment for unordered goods and services; makes related provisions including prohibiting the recipient from waiving any of his or her rights hereunder.
TITLE OF BILL: An act to amend the general business law, in relation to unordered goods and to repeal paragraph a of subdivision 2 of section 396 of such law relating thereto
PURPOSE: To prohibit any party from charging consumers for unordered or unrequested goods or services and prohibit "negative option" agreement.
SUMMARY OF PROVISIONS: Section one of the bill would repeal the existing paragraph (a) of Subdivision two of section 396 of the General Business Law, and substitute a new paragraph (a) with the provisions outlined below. Subparagraph 1 would prohibit any persons, firm, partnership, association or corporation or agent or employee thereof from offering for sale tangible or intangible goods or services which have not been actually ordered or requested by the recipient.
Any receipt of unordered goods shall be deemed a gift to the recipient. Subparagraph 2. prohibits the requesting of payment for unordered goods and services. Subparagraph 3 prohibits the proposing of any contract or contract terms for unordered or unrequested goods which purportedly become effective upon the recipient's failure to respond with a specified time. Any such proposal is deemed to be void as against public policy. Subparagraph 4 requires that any unordered or unrequested tangible goods (defined as any good sent to the recipient in a container) must be prominently marked on the container in bold letters "THIS IS A GIFT PAYMENT NOT REQUIRED FOR THIS ITEM".
Subparagraph 5 requires senders at least thirty days prior to the sending or furnishing of any unordered 0 r unrequested intangible goods or services to mail or deliver a written notice separate from any other document mailed to the recipient, containing a short, clear and coherent statement in at least 10-point bold type, that a good or service is to be sent or furnished to the recipient, the name and a short description of the good or service, the appropriate date or dates such good or service is to be sent or furnished, that the good or service is a gift, and that payment is not required.
Subparagraph 6 would exclude from coverage such membership or club arrangement in which the recipient receives goods at specified intervals or plans where the recipient agrees to receive goods without further obligation.
Subparagraph 7 excludes from the bill's provision unordered services or unrequested services in connection with the renewal or extension of such contract, providing the renewal or extension of such contract, providing the renewal was otherwise permitted by law or the terms of such contract and that no fee or charge has been imposed for the unordered or unrequested service which is in addition to the service or services which were the subject of such contract.
Subparagraph 8 permits any recipient who has been injured by any violation of the act to bring an action to enjoin the unlawful act or practice or for damages. A minimum damage amount of $50.00 IS provided for violations of the act. Prevailing plaintiffs may be awarded reason- able attorney's fees. Further, the subparagraph makes clear that the receipt of bill statements or requests for payment for unordered or unrequested goods or services itself constitutes injury under the act, even if the recipient has no 'provable economic damages.
Subparagraph 9 clarifies that this statute does not limit any rights or remedies otherwise available to recipients under other provisions of law, including but not limited to the Uniform Commercial Code, or Article 22-A of the General Business Law, New York's deceptive practices statute.
Subparagraph 10 prohibits any waiver by the recipient, by agreement or otherwise, of any of his or her rights.
EXISTING LAW: The present statute (paragraph a of subdivision 2 of section 396 of the General Business Law) prohibits businesses from offering for sale "goods, wares or merchandise" not ordered by the recipient, and declares that any such goods sent to a consumer shall be considered a "gift".
JUSTIFICATION: This statute is directed against two related unscrupulous business practice: billing for good and services which the consumer did not order or request, and "negative option plan" -- offers by businesses which purport to be accepted if not rejected by the consumer within a stated period of time. In 1966, the Legislature enacted Chapter 66 of the Laws of 1966, in response to a long-standing practice of shipping unordered goods to consumers and then demanding payments either unconditionally or unless the goods were returned at the consumer's expense. (See. Givens, Practice Commentaries. McKinney's Cons. Laws of N.Y. Book 19. Gen. Bus. Law 196 (Supp. At 99). In his memorandum in support of this legislation Attorney General Lefkowitz stated that his office had "received a virtual avalanche of complaints that reordered merchandise had been forwarded by mail or hand delivered to resident...." Many persons receiving such merchandise and particularly parents of children, to whom unordered merchandise has been delivered, had been pressured into paying for this merchandise. Although the practice appears to have abated somewhat since the enactment of Chapter 66. The Consumer Protection Board (CPB) continues to receive complaints of unordered book and merchandise.
Further, some complaints have concerned unrequested services. For example, the CPB has received complaints concerning a firm which has billed customers for telephone directory advertisements the customers never requested. As New York's unordered goods statute, contained at Subdivision 2 of Section 396 of the General Business Law, applies to "goods, wares or merchandise", it is unclear whether unsolicited services are covered by the statute. Further, the present statute's provision requiring a disclosure on the container that the merchandise is a gift appears inapplicable to intangible goods and services. This proposal seeks to address these statutory ambiguities
by making Section 396(2) applicable to unordered intangible goods (Le. computer software) and to services. Further, business continue to use deceptive and unreasonable "negative option plans" __ offers which purport to be accepted if not responded by the customer within a stated. period of time. In 1991, Telecommunications Inc. (TCI), the nation's largest cable operator, announced a controversial new plan in which subscribers were offered at no charge the Encore movie channel for a short period. However at the end of the free promotional period, TCI billed every customer who had not affirmatively indicated within the specified period that he or she did not wish the service. Present remedied against such "negative option plans" are at best inadequate under present law. Use of such a plan may be a deceptive practice under Section 349 of the General Business Law, but the CPB is unaware of a legal decision which has specifically so held. (See. Givens. Practice Commentaries McKinney's Cons. Laws of N.Y., Book 19_Gen. Bus. Law 396 (Supp. At 99.) Moreover, although contract law generally regards legal offers not binding if not affirmatively responded to, limited cases exist where a party's failure to act will lead to a binding contract. A common example of this, is the situation where the recipient of the offer uses or obtains the benefit of goods or services for a period of time without rejecting them.
This harsh legal rule is a trap for the unwary consumer. For example, where the company's service offering rapid change, such as in the area of cable television, the consumer may be unaware that the new service he or she has been offered (i.e. new television channel) requires additional payment. Finally, consumers have no private right of action under the Federal Trade Commission's "negative option rule, which is limited in scope to plans in which a seller periodically offers to send subscribers new merchandise." (16 CFR Part 425). As this proposal would prevent consumers from unfairly having to make payment for requested services as well as goods, and establishes a clear legal rule in this ear, the bill deserves enactment.
LEGISLATIVE HISTORY: First introduced in 1997. 2008-2009 S-4797 - Died in Committee; 2009-2010, S.4931 - Died in Committee
FISCAL IMPLICATIONS: None.
EFFECTIVE DATE: This act shall take effect immediately.
STATE OF NEW YORK ________________________________________________________________________ S. 336 A. 145 2011-2012 Regular Sessions S E N A T E - A S S E M B L Y (PREFILED) January 5, 2011 ___________IN SENATE -- Introduced by Sen. MONTGOMERY -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection IN ASSEMBLY -- Introduced by M. of A. ORTIZ -- read once and referred to the Committee on Consumer Affairs and Protection AN ACT to amend the general business law, in relation to unordered goods and to repeal paragraph a of subdivision 2 of section 396 of such law relating thereto THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Paragraph a of subdivision 2 of section 396 of the general business law is REPEALED and a new paragraph a is added to read as follows: A. (1) NO PERSON, FIRM, PARTNERSHIP, ASSOCIATION OR CORPORATION, OR AGENT OR EMPLOYEE THEREOF, SHALL, IN ANY MANNER, OR BY ANY MEANS, OFFER FOR SALE, LEASE, OR CHARGE ANY FEE FOR ANY TANGIBLE OR INTANGIBLE GOODS, OR SERVICES WHICH HAVE NOT BEEN ACTUALLY ORDERED OR REQUESTED BY THE RECIPIENT, EITHER ORALLY OR IN WRITING. THE RECEIPT OF ANY SUCH UNOR- DERED GOODS, OR FURNISHING OF SUCH SERVICES SHALL FOR ALL PURPOSES BE DEEMED AN UNCONDITIONAL GIFT TO THE RECIPIENT WHO MAY USE OR DISPOSE OF THE SAME IN ANY MANNER HE OR SHE SEES FIT WITHOUT ANY OBLIGATION ON HIS OR HER PART TO THE SENDER. (2) NO PERSON, FIRM, PARTNERSHIP, ASSOCIATION OR CORPORATION, OR AGENT OR EMPLOYEE THEREOF, SHALL BILL OR OTHERWISE REQUEST PAYMENT FOR GOODS OR SERVICES NOT ACTUALLY ORDERED OR REQUESTED BY THE RECIPIENT. (3) NO PERSON, FIRM, PARTNERSHIP, ASSOCIATION OR CORPORATION, OR AGENT OR EMPLOYEE THEREOF, SHALL PROPOSE A CONTRACT OR CONTRACT TERM WHICH PROVIDES FOR A FEE OR CHARGE FOR GOODS OR SERVICES NOT ACTUALLY ORDERED OR REQUESTED BY THE RECIPIENT AND WHICH PURPORTEDLY MAKES THE RECIPIENTEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD01539-01-1 S. 336 2 A. 145
LEGALLY BOUND TO MAKE PAYMENT FOR SUCH GOODS OR SERVICES UPON THE RECIP- IENT'S FAILURE TO RESPOND WITHIN A SPECIFIED PERIOD OF TIME. ANY SUCH PROPOSAL SHALL BE DEEMED TO BE VOID AS AGAINST PUBLIC POLICY AND WHOLLY UNENFORCEABLE. (4) ANY TANGIBLE GOODS SENT WHICH HAVE NOT BEEN ACTUALLY ORDERED OR REQUESTED BY THE RECIPIENT SHALL BE PROMINENTLY MARKED UPON THE CONTAIN- ER THEREOF IN BOLD LETTERS AS FOLLOWS: "THIS IS A GIFT. PAYMENT NOT REQUIRED FOR THIS ITEM." (5) AT LEAST THIRTY DAYS PRIOR TO THE SENDING OF ANY INTANGIBLE GOODS OR FURNISHING OF ANY SERVICES OFFERED FOR SALE OR LEASE WHICH HAVE NOT BEEN ACTUALLY ORDERED OR REQUESTED BY THE RECIPIENT, THE SENDER SHALL MAIL OR DELIVER A WRITTEN NOTICE SEPARATE FROM ANY OTHER DOCUMENT MAILED OR DELIVERED TO THE RECIPIENT, CONTAINING A SHORT, CLEAR AND COHERENT STATEMENT, IN A SIZE EQUAL TO AT LEAST TEN-POINT BOLD TYPE, THE NAME AND A SHORT DESCRIPTION OF THE GOOD OR SERVICE TO BE SENT OR FURNISHED, THE APPROXIMATE DATE SUCH GOOD OR SERVICE IS TO BE SENT OR FURNISHED, THAT THE GOOD OR SERVICE IS A GIFT, AND THAT PAYMENT IS NOT REQUIRED FOR THIS GOOD OR SERVICE. (6) THIS PARAGRAPH SHALL NOT APPLY TO A MEMBERSHIP OR CLUB ARRANGEMENT WHICH IS REGULATED BY THE FEDERAL TRADE COMMISSION PURSUANT TO 16 CFR 425 AS SUCH SECTION MAY FROM TIME TO TIME BE AMENDED, OR OTHER CONTRAC- TUAL PLANS OR ARRANGEMENTS SUCH AS CONTINUITY PLANS, SUBSCRIPTION ARRANGEMENTS, STANDING ORDER ARRANGEMENTS, SUPPLEMENTS AND SERIES ARRANGEMENTS UNDER WHICH THE SELLER PERIODICALLY SHIPS MERCHANDISE TO A CONSUMER WHO HAS CONSENTED IN ADVANCE TO RECEIVE SUCH MERCHANDISE ON A PERIODIC BASIS. (7) THIS PARAGRAPH SHALL NOT APPLY TO OFFERS FOR SALE OR LEASE OF UNORDERED OR UNREQUESTED SERVICES IN CONNECTION WITH THE RENEWAL OR EXTENSION OF AN EXISTING CONTRACT, PROVIDED SUCH OFFER WAS OTHERWISE PERMITTED BY LAW OR THE TERMS OF SUCH CONTRACT AND FURTHER PROVIDED THAT NO UNORDERED OR UNREQUESTED SERVICE IS OFFERED IN CONNECTION WITH THE RENEWAL OR EXTENSION FOR A FEE OR CHARGE IN ADDITION TO ANY SERVICE OR SERVICES WHICH WERE THE SUBJECT OF SUCH CONTRACT. (8) ANY RECIPIENT WHO HAS BEEN INJURED BY REASON OF ANY VIOLATION OF THIS PARAGRAPH MAY BRING AN ACTION IN HIS OR HER OWN NAME TO ENJOIN SUCH UNLAWFUL ACT OR PRACTICE, AN ACTION TO RECOVER HIS OR HER ACTUAL DAMAGES OR FIFTY DOLLARS, WHICHEVER IS GREATER, OR BOTH SUCH ACTIONS. IN ANY ACTION UNDER THIS SUBPARAGRAPH, THE COURT MAY AWARD REASONABLE ATTOR- NEY'S FEES TO A PREVAILING PLAINTIFF. ANY RECIPIENT WHO HAS RECEIVED ANY BILL STATEMENT OR REQUEST FOR PAYMENT WITH RESPECT TO ANY GOODS OR SERVICES DEEMED TO BE AN UNCONDITIONAL GIFT UNDER THIS PARAGRAPH SHALL BE DEEMED TO BE INJURED UNDER THIS SUBPARAGRAPH. (9) NOTHING IN THIS PARAGRAPH SHALL IN ANY WAY LIMIT THE RIGHTS OR REMEDIES WHICH ARE OTHERWISE AVAILABLE TO A RECIPIENT UNDER ANY OTHER PROVISION OF LAW, INCLUDING, BUT NOT LIMITED TO, THE UNIFORM COMMERCIAL CODE AND ARTICLE TWENTY-TWO-A OF THIS CHAPTER. (10) WAIVER OF RIGHTS BY ANY RECIPIENT UNDER THIS PARAGRAPH SHALL BE DEEMED CONTRARY TO PUBLIC POLICY AND SHALL BE UNENFORCEABLE AND VOID. (11) FOR THE PURPOSES OF THIS PARAGRAPH: (I) THE TERM "TANGIBLE GOOD" SHALL MEAN ANY GOOD SENT TO THE RECIPIENT BY MEANS OF A CONTAINER; AND (II) THE TERM "INTANGIBLE GOOD" SHALL MEAN ANY GOOD WHICH IS NOT A TANGIBLE GOOD. S 2. This act shall take effect immediately.