NY State Senate Bill 2009-S392

Senate Bill S392

2009-2010 Legislative Session

Provides that sellers of goods on the internet may not debit a charge account until goods are shipped or must credit the account if debited before

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Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 06, 2010	referred to consumer protection
Jan 07, 2009	referred to consumer protection

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2009-S392 (ACTIVE) - Details

See Assembly Version of this Bill:: A1031
Current Committee:: Senate Consumer Protection
Law Section:: General Business Law
Laws Affected:: Amd §396-m, Gen Bus L

2009-S392 (ACTIVE) - Summary

Provides that sellers of goods on the internet may not debit a charge account until goods are shipped or must credit the account if debited before goods shipped, at the buyer's election.

2009-S392 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S392

 TITLE OF BILL :
An act to amend the general business law, in relation to charge
accounts used in the purchase of mail-order or telephone-order
merchandise

 PURPOSE :
To protect the interest of the consumer by prohibiting credit card
accounts from being billed until the time that the purchased goods are
shipped.

 SUMMARY OF PROVISIONS :
This legislation amends Section 396-m to ensure that sellers of goods
via mail-order, telephone-order or the internet are prohibited from
charging the buyer's credit card account until such time as the goods
are shipped.

 JUSTIFICATION :
Section 396-m of the General Business Law relates to mail-order and
telephone order and internet sales. It provides that no such business
may accept an order for merchandise which is not reasonably
anticipated to be available for shipment within 30 days of the date
the seller debits the buyer's account. It further qualifies the above
in the event that the seller elects to be governed by a provision
which provides that when the seller is unable to ship the goods within

the specified time frame, due to circumstances beyond their control,
they send a notice to the customer stating the expected delay,
providing the customer with the choice to cancel the order and receive
a refund, be shipped the merchandise at a later date, or accept
substitute merchandise.

This legislation recognizes that there are situations beyond the
control of the seller and amends Section 396-m i (i) to provide that,
if the seller becomes aware that the item cannot be shipped within 30
days, they are prohibited from charging the customer's account until
such time as the merchandise is shipped. Consumers who shop for goods
through mail-order, telephone-order or the internet should not be
responsible for paying for those goods until such time as the goods
are shipped.

 LEGISLATIVE HISTORY :
2007/2008 - S.818 Remained in the Senate Committee on Consumer
Protection/A.1535 Remained in the Assembly Consumer Affairs and
Protection Committee
2005/2006 - S.532 Remained in the Senate Committee on Consumer
Protection/A.959 Remained in the Assembly Consumer Affairs and
Protection Committee
2003/2004 - S.213 Remained in Senate Consumer Protection
Committee/A.342 Remained in the Assembly Consumer Protection Committee
2001/2002 - S.1981 Remained in Senate Consumer Protection Committee

 FISCAL IMPLICATIONS :
None.

 EFFECTIVE DATE :
This act shall take effect on the first of November next succeeding
the date on which it shall have become a law.

2009-S392 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

    S. 392                                                   A. 1031

                       2009-2010 Regular Sessions

                      S E N A T E - A S S E M B L Y

                               (PREFILED)

                             January 7, 2009
                               ___________

IN  SENATE -- Introduced by Sens. BRESLIN, ADAMS, DILAN, DUANE, HASSELL-
  THOMPSON, KLEIN, KRUEGER, KRUGER, MONTGOMERY, ONORATO,  PARKER,  SAMP-
  SON,  SAVINO, SCHNEIDERMAN, SMITH, STAVISKY, VALESKY -- read twice and
  ordered printed, and when printed to be committed to the Committee  on
  Consumer Protection

IN  ASSEMBLY -- Introduced by M. of A. McENENY -- read once and referred
  to the Committee on Consumer Affairs and Protection

AN ACT to amend the general business law, in relation to charge accounts
  used in the purchase of mail-order, telephone-order or internet  mail-
  order merchandise

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Section 396-m of the general business law,  as  amended  by
chapter 802 of the laws of 1984, paragraphs a and e of subdivision 2 and
paragraph  b  of  subdivision  3 as amended by chapter 72 of the laws of
2007, paragraph h of subdivision 3 as amended by chapter 407 of the laws
of 1987 and paragraph j of subdivision 3 as amended by chapter 16 of the
laws of 2006, is amended to read as follows:
  S 396-m.  Mail-order  [or],  telephone-order  OR  INTERNET  MAIL-ORDER
merchandise.  1.  This  section  shall  apply to any mail-order business
[or], any telephone order business OR ANY INTERNET  MAIL-ORDER  BUSINESS
which  is  located  in this state or advertises a New York state mailing
address or telephone number.
  2. Definitions, as used in this section:
  a. "mail-order business" shall mean a business which is engaged in the
solicitation of orders by advertisement or otherwise for merchandise  or
services  connected  with  merchandise  to  be  shipped  to the customer
through the mail or by other carrier, upon  receipt  of  an  order  with
payment  or with charge account authorization remitted through the mail,

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.

                                                           LBD03591-01-9

S. 392                              2                            A. 1031

electronic mail or the Internet or by telephone and the  merchandise  by
its  nature  is  ready for use or consumption when advertised or offered
for sale and can be held in stock.
  b.  "merchandise"  shall  mean  tangible chattels bought for personal,
family or household purposes.
  c. "shipment" shall mean the act whereby the seller physically  places
the  merchandise into the possession of the United States postal service
or other carrier.
  d. "telephone order business" shall mean a mail order  business  which
accepts orders by telephone, or a business which is primarily engaged in
the solicitation of orders by advertisement or otherwise for merchandise
or  services  connected  with  merchandise to be shipped to the customer
through the mail or by other carrier, upon  receipt  of  an  order  with
charge  account  authorization remitted by telephone and the merchandise
by its nature is ready for use or consumption when advertised or offered
for sale and can be held in stock.
  e. "accepts orders" shall mean, in the case of a mail  order,  receipt
of  an  order with payment or with charge account authorization remitted
through the mail, electronic mail or the Internet, and, in the case of a
telephone order, receipt of an order with charge  account  authorization
and debiting the buyer's account.
  F.  "INTERNET  MAIL-ORDER  BUSINESS" SHALL MEAN AN INTERNET MAIL-ORDER
BUSINESS WHICH ACCEPTS ORDERS VIA THE INTERNET, OR A BUSINESS  WHICH  IS
PRIMARILY  ENGAGED  IN  THE  SOLICITATION  OF ORDERS BY ADVERTISEMENT OR
OTHERWISE FOR MERCHANDISE OR SERVICES CONNECTED WITH MERCHANDISE  TO  BE
SHIPPED  TO  THE  CUSTOMER  THROUGH  THE  MAIL OR BY OTHER CARRIER, UPON
RECEIPT OF AN ORDER WITH CHARGE ACCOUNT AUTHORIZATION REMITTED  VIA  THE
INTERNET  AND THE MERCHANDISE BY ITS NATURE IS READY FOR USE OR CONSUMP-
TION WHEN ADVERTISED OR OFFERED FOR SALE AND CAN BE HELD IN STOCK.
  3. No person, partnership, firm, association or corporation  or  agent
or employee thereof who conducts a mail-order business [or], a telephone
order business OR AN INTERNET MAIL-ORDER BUSINESS shall:
  a.  advertise for sale merchandise which is not reasonably anticipated
to be available for shipment within thirty days from date of publication
or broadcast of advertisement  or  from  date  catalog  or  circular  is
mailed,  unless  a  longer  period  of time is clearly and conspicuously
stated in such advertisement. Whenever the term "thirty days" appears in
this section, such term shall include a longer period of time if clearly
and conspicuously stated in such advertisement.
  b. accept orders for merchandise which is not  reasonably  anticipated
to be available for shipment within thirty days from the date of receipt
of  the order together with payment or with charge account authorization
in the case of an order remitted through the mail,  electronic  mail  or
the  Internet  or within thirty days from the date the seller debits the
buyer's account in the case of an order placed by telephone.
  c. unless the seller qualifies and elects to be governed by  paragraph
i  OF THIS SUBDIVISION, fail to either ship ordered merchandise or issue
a refund (if payment has been remitted) for ordered merchandise which is
not available within thirty days of receipt of order and payment  there-
for.
  d.  unless the seller qualifies and elects to be governed by [paragra-
graph] PARAGRAPH i OF THIS SUBDIVISION,  fail  to  either  ship  ordered
merchandise  or issue a credit (if charge-account authorization has been
given and exercised by seller) for  ordered  merchandise  which  is  not
available  within  thirty  days  of  receipt of order and charge-account
authorization therefor.

S. 392                              3                            A. 1031

  e. fail to issue a refund or credit the customer's  account  if  prom-
ised,  upon  demand  of the customer within thirty days from the date of
receipt of request for such refund provided  the  merchandise  has  been
returned, if required.
  f.  fail  to  maintain  a record of each complaint alleging failure to
ship merchandise or furnish services connected with merchandise solicit-
ed and ordered on a pre-paid basis and  the  disposition  of  each  such
complaint.  Such  record shall be kept for a period of at least eighteen
months following the disposition of such complaint.
  g. fail to maintain records showing  the  employment  of  systems  and
procedures designed to comply with requirements of this subdivision.
  h. fail to prominently feature in all advertising or other promotional
materials  containing  a  post office box address including order blanks
and forms, the legal name of  the  company  soliciting  the  order,  the
complete  street  address  of  such  company and under what conditions a
refund will be issued including but not limited to whether a refund will
be issued:
  (i) at any time, or not beyond a point in time specified; or
  (ii) in cash, or as credit or in-house  credit  only.  This  paragraph
shall  not apply to a mail-order business that has a policy of accepting
returns, for a period of not less than twenty days  after  the  date  of
delivery  of merchandise to the customer and providing a cash refund for
a cash purchase or providing a cash refund or issuing  a  credit  for  a
credit  purchase,  which  credit  is applied to the account on which the
purchase was debited, in connection with the return of  its  unused  and
undamaged  merchandise. Provided, however, that nothing contained herein
shall prohibit a mail-order business from applying a  cash  payment  for
returned  merchandise  towards  a  prior  outstanding balance. Provided,
further, that nothing contained herein shall be deemed to require a cash
refund of less than one dollar where the  mail-order  business  provides
in-house credit for such sum.
  i.  where  the seller, due to circumstances beyond his OR HER control,
is unable to make shipment within the time required by this section, the
provisions of paragraphs c and d of this subdivision shall not apply  if
the  seller  elects  to be governed by this paragraph and does either of
the following:
  (i) sends to the buyer a notice of delayed shipment, stating the dura-
tion of the expected delay, providing the buyer with the opportunity  to
express  his  OR  HER choice whether to: (A) cancel his OR HER order and
receive a refund[,]; (B) be shipped the merchandise or be furnished  the
services  by  a specified later date, PROVIDED THAT THE SELLER: (1) DOES
NOT DEBIT THE CHARGE ACCOUNT  OF  THE  BUYER  UNTIL  SUCH  TIME  AS  THE
MERCHANDISE IS SHIPPED; OR (2) WHERE THE DEBIT IS ALREADY CHARGED TO THE
BUYER'S ACCOUNT, CREDITS THE CHARGE ACCOUNT OF THE BUYER UNTIL SUCH TIME
AS  THE MERCHANDISE IS SHIPPED, AT WHICH TIME SUCH CHARGE MAY BE DEBITED
TO THE BUYER'S CHARGE ACCOUNT; or (C) to accept  substitute  merchandise
of  equivalent or superior quality. If the seller proposes to substitute
merchandise, he OR SHE shall describe it in detail,  indicating  how  it
differs  from the goods ordered. The notice shall be sent by first class
mail and accompanied by a self-addressed, postage paid device upon which
the buyer may indicate his OR HER choice, and mailed in advance  of  the
expiration  of  the thirty day period, or that time stated in the solic-
itation.  The notice shall expressly advise the  buyer  that  the  order
will  be  immediately  cancelled  and a refund forwarded where the buyer
does not choose otherwise by response within  thirty-five  days  of  the
date  of  mailing  by the seller of the above notice. If, prior to ship-

S. 392                              4                            A. 1031

ment, the seller receives a response from the buyer  requesting  refund,
such  refund shall be promptly made. If no response is received prior to
the expiration of the thirty-five day period after the date of the mail-
ing  by  the  seller of the above notice, the seller shall make a prompt
refund[.];OR
  (ii) send the customer substitute merchandise of equivalent or superi-
or quality, if the customer is extended the opportunity  to  return  the
substituted merchandise and the seller promises to refund to the custom-
er  the  postage  cost  of  returning such merchandise together with any
portion of the purchase price previously paid by the customer. Prior  to
or at the time of shipment of the substitute merchandise, a notice shall
be  provided  to  the  customer stating the right to obtain a refund and
reimbursement for the postage cost incurred in returning the substituted
merchandise.
  For purposes of subparagraphs (i) and (ii) of this paragraph, merchan-
dise may not be considered of "equivalent or superior" quality if it  is
not substantially similar to the merchandise ordered, or not fit for the
usual  purposes  for  which  such  merchandise is used, or if the seller
normally offers the substituted merchandise at a price  lower  than  the
price of the merchandise ordered.
  j.  (i) in the case of an order for merchandise placed by telephone or
by electronic means, accept an additional fee for expedited  mailing  or
shipping,  which  is  in  excess  of  the lowest charge the seller would
accept, in the regular course of business, for mailing  or  shipping  of
the merchandise ordered, when the seller does not reasonably expect such
merchandise  to be mailed or shipped within the next three business days
after the order was placed, unless:
  (A) the seller notifies the buyer, at the time the order is placed but
before payment  is  accepted,  that  the  seller  anticipates  that  the
merchandise will not actually be mailed or shipped within the next three
business days after the order is placed; or
  (B)  the  seller  contacts  the  buyer,  by telephone or by electronic
means, within the next three business days after the order was placed to
inform the buyer:
  (a) that the mailing or shipping of the  merchandise  ordered  is  not
reasonably  anticipated  to  occur  within  the next three business days
after the order was placed;
  (b) of the date the  seller  reasonably  anticipates  the  merchandise
ordered to be mailed or shipped;
  (c) that, at the buyer's option, the buyer may:
  (1) accept the reasonably anticipated delay in mailing or shipping; or
  (2)  cancel  the  order  and refund payment to the buyer within thirty
days; or
  (3) elect to have the merchandise ordered mailed  or  shipped  in  the
regular  course  of business and refund the additional fee for expedited
mailing or shipping to the buyer within thirty days; and
  (d) that, if the seller does not receive a response on the next  busi-
ness  day,  the seller will mail or ship the merchandise ordered, in the
manner originally requested by the buyer. Provided, however, that should
the buyer contact the seller before the  merchandise  ordered  has  been
mailed  or  shipped,  nothing  in  this  section  shall  be construed to
preclude the seller from agreeing to any modifications  to  the  buyer's
order which are agreed to by both the buyer and seller.
  (ii)  (A)  For  the  purposes  of  this subdivision, a seller shall be
considered to have mailed or shipped  a  buyer's  merchandise  when  the
seller  causes such merchandise, and applicable postage or shipping fee,

S. 392                              5                            A. 1031

to be physically placed in the possession of the  United  States  Postal
Service  or  other  carrier.  Nothing  in  this section shall impose any
liability on the seller for delays solely  attributable  to  the  postal
service or carrier.
  (B)  A  statement  or notice contained in the advertising material for
the  merchandise,  in  a  description  of  the  merchandise,  or  in   a
description  of the mailing and shipping options available to the buyer,
which advises the buyer of the approximate time  the  seller  reasonably
anticipates  the  merchandise to be mailed or shipped, shall satisfy the
notification requirements of this section.
  4. Whenever there shall be a violation of this section, an application
may be made by the attorney general in the name of  the  people  of  the
state  of New York to a court or justice having jurisdiction to issue an
injunction, and upon notice to the defendant of not less than five days,
to enjoin and restrain the continuance of such  violations;  and  if  it
shall  appear  to  the  satisfaction  of  the  court or justice that the
defendant has, in fact, violated this  section,  an  injunction  may  be
issued  by  such court or justice, enjoining and restraining any further
violation, without requiring proof that any person has,  in  fact,  been
injured  or  damaged  thereby. In any such proceeding the court may make
allowances to the attorney general as provided in  section  eighty-three
hundred  three, subdivision six of the civil practice law and rules, and
direct restitution. In connection with any  such  proposed  application,
the  attorney  general  is  authorized to take proof and make a determi-
nation of the relevant facts and to issue subpoenas in  accordance  with
the civil practice law and rules.
  S 2. This act shall take effect on the first of November next succeed-
ing the date on which it shall have become a law.

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