Prohibits certain practices by businesses making an automatic renewal or continuous service offer to consumers in the state.
TITLE OF BILL: An act to amend the general business law, in relation to prohibiting certain practices by businesses making an automatic renewal or continuous service offer to consumers in the state
SUMMARY OF PROVISIONS:
Section One of the bill is legislative intent. The legislation amends the General Business Law by adding a new Article 29-BB
Section Two is the definitional section and states that it shall be unlawful for any business making an automatic renewal or continuous service to a consumer in this state to do any of the following:
(a) fail to present the automatic renewal offer terms or continuous service offer terms in a clear and conspicuous manner, and in visual proximity to the request for consent to the offer, before the subscription or purchasing agreement is fulfilled;
(b) charge the consumer's credit or debit card or the consumer's account with a third party for an automatic renewal or continuous service without first obtaining the consumer's affirmative consent to the agreement containing the automatic renewal offer terms or continuous service offer terms; or
(c) fail to provide an acknowledgment that includes the automatic renewal or continuous service offer terms, cancellation policy and information regarding how to cancel in a manner that is capable of being retained by the consumer If the offer includes a free trial the business shall also disclose in the acknowledgment how to cancel and allow the consumer to cancel before the consumer pays for the goods or services.
A business making automatic renewal or continuous service offers shall provide a toll-free number, electronic mail address, a postal address only when the seller directly bills the consumer, or another cost-effective, timely, and easy-to-use mechanism for cancellation that shall be described in the acknowledgment specified under this provision.
In the case of a material change in the terms of an automatic renewal or continuous service offer that has been accepted by a consumer in this state, the business shall provide the consumer with a clear and conspicuous notice of the material change and provide information regarding how to cancel in a manner that is capable of being retained by the consumer.
The requirements of this article shall apply only prior to the completion of the initial order for automatic renewal or continuous service except as follows:
(a) the requirement provided in this section may be fulfilled after completion of the initial offer at the discretion of a business;
(b) the requirement shall be fulfilled prior to the implementation of a material change in the terms of an automatic renewal or continuous service offer that has been accepted by a consumer in this state.
In any case in which a business sends any goods, wares, merchandise or products to a consumer, under a continuous service agreement or automatic renewal of a purchase, without first obtaining the consumer's affirmative consent, the goods, wares, merchandise, or products shall for all purposes shall be deemed an unconditional gift to the consumer, who may use or dispose of the same in any manner he or she sees fit without any obligation whatsoever on the consumer's part to the business, including, but not limited to, bearing the cost of, or responsibility for, shipping any goods, wares, merchandise or products to the business.
A violation of this section shall not be a crime, provided however, that all available civil remedies that apply to a violation of this article may be employed.
If a business complies with this act in good faith, it shall not be subject to civil remedies.
The following are exempt from the requirements of this article:
(a) any service provided by a business or its affiliate where either the business or its affiliate is doing business pursuant to a franchise issued by a political subdivision of the state;
(b) any entity regulated by the department of financial services;
(c) security system alarm operators;
(d) banks, bank holding companies or the subsidiary or affiliate of either, or credit unions or other financial institutions licensed under state or federal law;
(e) service contract sellers and service contract administrators.
EXISTING LAW: New law
JUSTIFICATION: An increasing number of consumers are struggling with misleading offers known as automatic renewals of merchandise and services In a typical scenario, consumers believe they made a onetime purchase or signed up to receive a free product Consumers then continue to receive more deliveries of the merchandise, while incurring additional charges to their credit cards or bank accounts Many consumers fail to notice the agreements - generally hidden in the fine print of an order - that they unknowingly commit to while shopping.
This legislation would require that businesses provide automatic renewal or continuous service offer terms in a clear and conspicuous manner before the subscription or purchasing agreement is fulfilled, and provide consumers with a straightforward, no- or low-cost means of cancellation. Companies are also prohibited from advertising products as "free" if the item is only distributed as part of an automatic renewal agreement.
New York consumers should not be lured by false and deceptive practices - nor should it be their responsibility to comb through the fine print of a sales offer to determine if they will be trapped in an automatic renewal offer. This legislation will insure that consumers are made fully aware of the terms and conditions of any offer before they provide credit or debit card information.
LEGISLATIVE HISTORY: New bill
FISCAL IMPLICATIONS: None to the state
LOCAL FISCAL IMPLICATIONS: None to localities
EFFECTIVE DATE: This act shall take effect on the ninetieth day after it shall become law.
STATE OF NEW YORK ________________________________________________________________________ 4268 2013-2014 Regular Sessions IN SENATE March 18, 2013 ___________Introduced by Sen. HOYLMAN -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection AN ACT to amend the general business law, in relation to prohibiting certain practices by businesses making an automatic renewal or contin- uous service offer to consumers in the state THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Legislative intent. It is the intent of the legislature to end the practice of ongoing charging of consumer credit or debit cards or third party payment accounts without the consumers' explicit consent for ongoing shipments of a product or ongoing deliveries of service. S 2. The general business law is amended by adding a new article 29-BB to read as follows: ARTICLE 29-BB PROHIBITED SERVICE OFFER PRACTICES SECTION 527. DEFINITIONS. 527-A. UNLAWFUL PRACTICES. S 527. DEFINITIONS. FOR THE PURPOSES OF THIS ARTICLE, THE FOLLOWING DEFINITIONS SHALL APPLY: 1. "AUTOMATIC RENEWAL" MEANS A PLAN OR ARRANGEMENT IN WHICH A PAID SUBSCRIPTION OR PURCHASING AGREEMENT IS AUTOMATICALLY RENEWED AT THE END OF A DEFINITE TERM FOR A SUBSEQUENT TERM. 2. "AUTOMATIC RENEWAL OFFER TERMS" MEANS THE FOLLOWING CLEAR AND CONSPICUOUS DISCLOSURES: A. THAT THE SUBSCRIPTION OR PURCHASING AGREEMENT WILL CONTINUE UNTIL THE CONSUMER CANCELS; B. THE DESCRIPTION OF THE CANCELLATION POLICY THAT APPLIES TO THE OFFER; C. THE RECURRING CHARGES THAT WILL BE CHARGED TO THE CONSUMER'S CREDIT OR DEBIT CARD OR PAYMENT ACCOUNT WITH A THIRD PARTY AS PART OF THE AUTO- MATIC RENEWAL PLAN OR ARRANGEMENT, AND THAT THE AMOUNT OF THE CHARGE MAYEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD09647-01-3 S. 4268 2
CHANGE, IF THAT IS THE CASE, AND THE AMOUNT TO WHICH THE CHARGE WILL CHANGE, IF KNOWN; D. THE LENGTH OF THE AUTOMATIC RENEWAL TERM OR THAT THE SERVICE IS CONTINUOUS, UNLESS THE LENGTH OF THE TERM IS CHOSEN BY THE CONSUMER; AND E. THE MINIMUM PURCHASE OBLIGATION, IF ANY. 3. "CLEAR AND CONSPICUOUS" OR "CLEARLY AND CONSPICUOUSLY" MEANS IN LARGER TYPE THAN THE SURROUNDING TEXT, OR IN CONTRASTING TYPE, FONT, OR COLOR TO THE SURROUNDING TEXT OF THE SAME SIZE, OR SET OFF FROM THE SURROUNDING TEXT OF THE SAME SIZE BY SYMBOLS OR OTHER MARKS, IN A MANNER THAT CLEARLY CALLS ATTENTION TO THE LANGUAGE. IN THE CASE OF AN AUDIO DISCLOSURE, "CLEAR AND CONSPICUOUS" AND "CLEARLY AND CONSPICUOUSLY" MEANS IN A VOLUME AND CADENCE SUFFICIENT TO BE READILY AUDIBLE AND UNDERSTANDABLE. 4. "CONSUMER" MEANS ANY INDIVIDUAL WHO SEEKS OR ACQUIRES, BY PURCHASE OR LEASE, ANY GOODS, SERVICES, MONEY, OR CREDIT FOR PERSONAL, FAMILY, OR HOUSEHOLD PURPOSES. 5. "CONTINUOUS SERVICE" MEANS A PLAN OR ARRANGEMENT IN WHICH A SUBSCRIPTION OR PURCHASING AGREEMENT CONTINUES UNTIL THE CONSUMER CANCELS THE SERVICE. S 527. UNLAWFUL PRACTICES. 1. IT SHALL BE UNLAWFUL FOR ANY BUSINESS MAKING AN AUTOMATIC RENEWAL OR CONTINUOUS SERVICE OFFER TO A CONSUMER IN THIS STATE TO DO ANY OF THE FOLLOWING: A. FAIL TO PRESENT THE AUTOMATIC RENEWAL OFFER TERMS OR CONTINUOUS SERVICE OFFER TERMS IN A CLEAR AND CONSPICUOUS MANNER BEFORE THE SUBSCRIPTION OR PURCHASING AGREEMENT IS FULFILLED AND IN VISUAL PROXIMI- TY, OR IN THE CASE OF AN OFFER CONVEYED BY VOICE, IN TEMPORAL PROXIMITY, TO THE REQUEST FOR CONSENT TO THE OFFER; B. CHARGE THE CONSUMER'S CREDIT OR DEBIT CARD OR THE CONSUMER'S ACCOUNT WITH A THIRD PARTY FOR AN AUTOMATIC RENEWAL OR CONTINUOUS SERVICE WITHOUT FIRST OBTAINING THE CONSUMER'S AFFIRMATIVE CONSENT TO THE AGREEMENT CONTAINING THE AUTOMATIC RENEWAL OFFER TERMS OR CONTINUOUS SERVICE OFFER TERMS; OR C. FAIL TO PROVIDE AN ACKNOWLEDGMENT THAT INCLUDES THE AUTOMATIC RENEWAL OR CONTINUOUS SERVICE OFFER TERMS, CANCELLATION POLICY, AND INFORMATION REGARDING HOW TO CANCEL IN A MANNER THAT IS CAPABLE OF BEING RETAINED BY THE CONSUMER. IF THE OFFER INCLUDES A FREE TRIAL, THE BUSI- NESS SHALL ALSO DISCLOSE IN THE ACKNOWLEDGMENT HOW TO CANCEL AND ALLOW THE CONSUMER TO CANCEL BEFORE THE CONSUMER PAYS FOR THE GOODS OR SERVICES. 2. A BUSINESS MAKING AUTOMATIC RENEWAL OR CONTINUOUS SERVICE OFFERS SHALL PROVIDE A TOLL-FREE TELEPHONE NUMBER, ELECTRONIC MAIL ADDRESS, A POSTAL ADDRESS ONLY WHEN THE SELLER DIRECTLY BILLS THE CONSUMER, OR ANOTHER COST-EFFECTIVE, TIMELY, AND EASY-TO-USE MECHANISM FOR CANCELLA- TION THAT SHALL BE DESCRIBED IN THE ACKNOWLEDGMENT SPECIFIED IN PARA- GRAPH C OF SUBDIVISION ONE OF THIS SECTION. 3. IN THE CASE OF A MATERIAL CHANGE IN THE TERMS OF THE AUTOMATIC RENEWAL OR CONTINUOUS SERVICE OFFER THAT HAS BEEN ACCEPTED BY A CONSUMER IN THIS STATE, THE BUSINESS SHALL PROVIDE THE CONSUMER WITH A CLEAR AND CONSPICUOUS NOTICE OF THE MATERIAL CHANGE AND PROVIDE INFORMATION REGARDING HOW TO CANCEL IN A MANNER THAT IS CAPABLE OF BEING RETAINED BY THE CONSUMER. 4. THE REQUIREMENTS OF THIS ARTICLE SHALL APPLY ONLY PRIOR TO THE COMPLETION OF THE INITIAL ORDER FOR THE AUTOMATIC RENEWAL OR CONTINUOUS SERVICE, EXCEPT AS FOLLOWS: A. THE REQUIREMENT IN PARAGRAPH C OF SUBDIVISION ONE OF THIS SECTION MAY BE FULFILLED AFTER COMPLETION OF THE INITIAL ORDER.S. 4268 3
B. THE REQUIREMENT IN SUBDIVISION THREE OF THIS SECTION SHALL BE FULFILLED PRIOR TO IMPLEMENTATION OF THE MATERIAL CHANGE. 5. IN ANY CASE IN WHICH A BUSINESS SENDS ANY GOODS, WARES, MERCHAN- DISE, OR PRODUCTS TO A CONSUMER, UNDER A CONTINUOUS SERVICE AGREEMENT OR AUTOMATIC RENEWAL OF A PURCHASE, WITHOUT FIRST OBTAINING THE CONSUMER'S AFFIRMATIVE CONSENT, THE GOODS, WARES, MERCHANDISE, OR PRODUCTS SHALL FOR ALL PURPOSES BE DEEMED AN UNCONDITIONAL GIFT TO THE CONSUMER, WHO MAY USE OR DISPOSE OF THE SAME IN ANY MANNER HE OR SHE SEES FIT WITHOUT ANY OBLIGATION WHATSOEVER ON THE CONSUMER'S PART TO THE BUSINESS, INCLUDING, BUT NOT LIMITED TO, BEARING THE COST OF, OR RESPONSIBILITY FOR, SHIPPING ANY GOODS, WARES, MERCHANDISE, OR PRODUCTS TO THE BUSI- NESS. 6. A. NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION ONE OF THIS SECTION, A VIOLATION OF THIS SECTION SHALL NOT BE A CRIME; PROVIDED, HOWEVER, THAT ALL AVAILABLE CIVIL REMEDIES THAT APPLY TO A VIOLATION OF THIS ARTICLE MAY BE EMPLOYED. B. IF A BUSINESS COMPLIES WITH THE PROVISIONS OF THIS ARTICLE IN GOOD FAITH, IT SHALL NOT BE SUBJECT TO CIVIL REMEDIES. 7. THE FOLLOWING ARE EXEMPT FROM THE REQUIREMENTS OF THIS ARTICLE: A. ANY SERVICE PROVIDED BY A BUSINESS OR ITS AFFILIATE WHERE EITHER THE BUSINESS OR ITS AFFILIATE IS DOING BUSINESS PURSUANT TO A FRANCHISE ISSUED BY A POLITICAL SUBDIVISION OF THE STATE; B. ANY ENTITY REGULATED BY THE DEPARTMENT OF FINANCIAL SERVICES; C. SECURITY SYSTEM ALARM OPERATORS; D. BANKS, BANK HOLDING COMPANIES, OR THE SUBSIDIARY OR AFFILIATE OF EITHER, OR CREDIT UNIONS OR OTHER FINANCIAL INSTITUTIONS, LICENSED UNDER STATE OR FEDERAL LAW; AND E. SERVICE CONTRACT SELLERS AND SERVICE CONTRACT ADMINISTRATORS. S 3. This act shall take effect on the ninetieth day after it shall have become a law.