NY State Senate Bill 2009-S7607

Senate Bill S7607

2009-2010 Legislative Session

Requires disclosures and sets forth requirements and prohibitions relating to automatic renewal and continuous service offers; repealer

download bill text pdf

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
Apr 26, 2010	referred to consumer protection

2009-S7607 (ACTIVE) - Details

See Assembly Version of this Bill:: A11006
Current Committee:: Senate Consumer Protection
Law Section:: General Business Law
Laws Affected:: Add §348, Gen Bus L; rpld §§5-903 & 1-203 sub 11, Gen Ob L

2009-S7607 (ACTIVE) - Summary

Requires disclosures and sets forth requirements and prohibitions relating to automatic renewal and continuous service offers.

2009-S7607 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S7607

 TITLE OF BILL :

An act to amend the general business law, in relation to automatic
renewal and continuous service offers, and repealing section 5-903 and
subdivision 11 of section 1-203 of the general obligations law,
relating to automatic renewal contracts for service


 PURPOSE OF THE BILL :

This bill would require clear consumer disclosures by entities
offering or providing automatic renewal and continuous service
subscriptions or agreements.

 SUMMARY OF PROVISIONS :

Section 1 of the bill would add General Business Law (GBL) § 348 which
would include the following provisions:

* GBL § 348(1), which would define terms as follows:

o "automatic renewal" would be defined as a paid subscription or
purchasing agreement that is automatically renewed at the end of a
definite term for a subsequent term.

o "clear and conspicuous" or "clearly and conspicuously" would be
defined as print 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" would mean in a volume and cadence
sufficient to be readily audible and understandable.
o "consumer" would be defined as any natural person who seeks or
acquires, by purchase or lease, any goods or services for personal,
family, or household purposes.
o "continuous service" would be defined as a plan or arrangement in
which a subscription or purchasing agreement continues until the
consumer cancels such service.

* GBL § 348(2) would provide that an automatic renewal or continuous
service offer must contain clearly and conspicuously disclosed terms,
including written statements advising (a) that the subscription or
agreement will continue until canceled; (b) that the consumer may
cancel the automatic renewal or continuous service offer at any time
before it becomes effective; (c) that the recurring charges will be
billed to the consumer or charged to their credit or debit card; (d)
that the service is continuous, or setting forth the duration of the
automatic renewal term; and (e) if there is any minimum purchase
obligation.

* GBL § 348(3) would provide that an entity sending any goods under an
automatic renewal subscription or agreement, or providing services
under a continuous service subscription or agreement must have
obtained the consumer's informed affirmative express consent in order
for such subscription or agreement to be valid. In the event the
subscription or agreement is invalid, then the goods or services
provided shall be deemed an unconditional gift to the recipient
consumer, with no obligation to the entity that provided the goods or
services.

* GBL § 348(4) would provide enforcement authority for the Attorney
General of New York State.


* GBL § 348(5) would exempt any services provided by an entity or its
affiliate where the entity or affiliate (a) is doing business pursuant
to authorization issued by the New York State Public Service
Commission; (b) is regulated by the New York State Public Service
Commission, the Federal Communications Commission, or the Federal
Energy Regulatory Commission; or (c) any entity regulated by the State
Department of Insurance.

Sections 2 and 3 of the bill would repeal General Obligations Law §§
5-903 and 11-203, respectively, which govern automatic renewal
provisions in contracts for service, maintenance or repairs.

Section 4 of the bill would provide that it take effect on the January
first after it becomes law.

 EXISTING LAW :

General Obligations Law section 5-903 provides for automatic renewal
provisions in contracts for service, maintenance or repairs.

 LEGISLATIVE HISTORY :

This is new bill.

 STATEMENT IN SUPPORT :

In recent years, consumers have complained to the State Consumer
Protection Board about responding to "free trial" offers of products
marketed on television, where the consumer opts for the "free trial"
but then later, when the consumer finds his or her credit card
charged, he or she learns that the complimentary product was only
offered as part of an automatic renewal arrangement. Products and
services that are sold pursuant to an automatic renewal or continuous
service plan are not only marketed to consumers on television but are
also being advertised in print media, radio, internet and telephone
solicitations. Too often, these solicitations do not provide consumers
with clear and conspicuous disclosures to afford them the information
necessary to make an educated purchasing decision nor do they require
the consumer's affirmative express consent to such disclosures to
ensure that the deal terms have been read, understood and accepted.

This bill would ensure that consumers have pertinent information
presented in a clear and conspicuous manner when they are considering
availing themselves of a "free trial" offer, automatic renewal
subscription plan or continuous service agreement. Specifically, this
measure would require the offering entity to present all terms in a
clear and conspicuous manner before the consumer enters into such
subscription or agreement.

The bill would also prohibit a consumer's credit or debit card from
being charged for an automatic renewal or continuous service agreement
unless the offering entity has received the consumer's informed
express affirmative consent to the subscription or agreement offer
terms including the consumer's consent to a recurring charge against
his or her credit or debit card. In addition, after the consumer has
entered into an automatic renewal or continuous service subscription
or agreement, the entity offering such subscription or agreement must
provide the consumer with a writing memorializing the cost of the
agreement, cancellation and other pertinent terms for the consumer.

By ensuring consumer access, understanding and acceptance-of pertinent
price and cancellation terms before an individual enters into an
automatic renewal or continuous service subscription or agreement, the
bill would create a level playing field in the marketplace. As a
result, consumers would be able to make informed decisions regarding
whether a particular "free trial" offer is really free, whether they
are interested in engaging in a long-term commitment for a product or
service they have not used or experienced yet, and what the financial
implications of such a commitment would be.

 BUDGET IMPLICATIONS :

None.

 EFFECTIVE DATE :
The Act shall take effect on the first of January next succeeding the
date on which it shall have become a law.

2009-S7607 (ACTIVE) - Bill Text download pdf

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

                                  7607

                            I N  S E N A T E

                             April 26, 2010
                               ___________

Introduced  by  Sen.  PERALTA  -- (at request of the Consumer Protection
  Board) -- 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 automatic
  renewal and continuous service offers, and repealing section 5-903 and
  subdivision 11 of section 1-203 of the general obligations law, relat-
  ing to automatic renewal contracts for service

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

  Section 1. The general business law is amended by adding a new section
348 to read as follows:
  S  348.  AUTOMATIC  RENEWAL AND CONTINUOUS SERVICE OFFERS.  1. FOR THE
PURPOSES OF THIS SECTION, THE FOLLOWING DEFINITIONS SHALL APPLY:
  (A) "AUTOMATIC RENEWAL" MEANS A PAID SUBSCRIPTION OR PURCHASING AGREE-
MENT THAT IS AUTOMATICALLY RENEWED AT THE END OF A DEFINITE TERM  FOR  A
SUBSEQUENT TERM.
  (B)  "CLEAR  AND  CONSPICUOUS" OR "CLEARLY AND CONSPICUOUSLY" MEANS IN
LARGER TYPE THAN THE SURROUNDING TEXT,  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.
  (C)  "CONSUMER"  MEANS  ANY  NATURAL  PERSON WHO SEEKS OR ACQUIRES, BY
PURCHASE OR LEASE, ANY GOODS OR SERVICES FOR PERSONAL, FAMILY OR  HOUSE-
HOLD PURPOSES.
  (D)  "CONTINUOUS  SERVICE"  MEANS  A  PLAN  OR  ARRANGEMENT IN WHICH A
SUBSCRIPTION  OR  PURCHASING  AGREEMENT  CONTINUES  UNTIL  THE  CONSUMER
CANCELS SUCH SERVICE.
  2.  AN  AUTOMATIC RENEWAL OR CONTINUOUS SERVICE OFFER MUST CONTAIN THE
FOLLOWING TERMS, WHICH SHALL BE CLEARLY AND CONSPICUOUSLY  DISCLOSED  TO
THE CONSUMER:

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD16095-03-0

S. 7607                             2

  (A) A STATEMENT ADVISING THAT THE SUBSCRIPTION OR PURCHASING AGREEMENT
WILL CONTINUE UNTIL THE CONSUMER CANCELS SUCH SUBSCRIPTION OR PURCHASING
AGREEMENT.
  (B)  A  WRITTEN  STATEMENT  ADVISING  THAT THE CONSUMER MAY CANCEL THE
AUTOMATIC RENEWAL OR CONTINUOUS SERVICE AT ANY TIME  BEFORE  IT  BECOMES
EFFECTIVE.
  (C)  A  WRITTEN STATEMENT OF THE RECURRING CHARGES THAT WILL BE BILLED
TO THE CONSUMER OR CHARGED TO THE CONSUMER'S CREDIT  OR  DEBIT  CARD  AS
PART  OF  THE  AUTOMATIC  RENEWAL  OR CONTINUOUS SERVICE SUBSCRIPTION OR
AGREEMENT AND, IF THE AMOUNT OF THE CHARGE MAY CHANGE, THEN  THE  FUTURE
AMOUNT THAT WILL BE BILLED OR CHARGED.
  (D) THE DURATION OF THE AUTOMATIC RENEWAL TERM OR A STATEMENT ADVISING
THAT THE SERVICE IS CONTINUOUS.
  (E) THE MINIMUM PURCHASE OBLIGATION, IF ANY.
  3.  (A)  IT SHALL BE UNLAWFUL FOR ANY INDIVIDUAL, FIRM, COMPANY, PART-
NERSHIP, LIMITED LIABILITY COMPANY,  CORPORATION  OR  ENTITY  MAKING  AN
AUTOMATIC RENEWAL OR CONTINUOUS SERVICE OFFER TO A CONSUMER TO DO ANY OF
THE FOLLOWING:
  (I)  FAIL TO PRESENT THE AUTOMATIC RENEWAL OR CONTINUOUS SERVICE OFFER
TERMS IN A CLEAR AND  CONSPICUOUS  MANNER  BEFORE  THE  SUBSCRIPTION  OR
PURCHASING AGREEMENT.
  (II)  CHARGE  THE  CONSUMER'S  CREDIT  OR DEBIT CARD OR THE CONSUMER'S
ACCOUNT WITH A THIRD  PARTY  FOR  AN  AUTOMATIC  RENEWAL  OR  CONTINUOUS
SERVICE SUBSCRIPTION OR AGREEMENT WITHOUT FIRST OBTAINING THE CONSUMER'S
INFORMED  EXPRESS  AFFIRMATIVE  CONSENT  TO THE AGREEMENT CONTAINING THE
AUTOMATIC RENEWAL OR CONTINUOUS SERVICE OFFER TERMS, INCLUDING THE  TERM
AUTHORIZING  A  RECURRING  CHARGE AGAINST THE CONSUMER'S CREDIT OR DEBIT
CARD.
  (III) FAIL TO PROVIDE WITHIN TEN BUSINESS DAYS AFTER COMPLETION OF THE
INITIAL ORDER, EXCEPT WHEN THE CONSUMER IS AFFORDED THE RIGHT OF RESCIS-
SION BY THE PROVISIONS OF SECTION ONE THOUSAND SIX  HUNDRED  THIRTY-FIVE
OF  THE FEDERAL CONSUMER CREDIT PROTECTION ACT OR THE REGULATIONS THERE-
UNDER, A WRITTEN CONFIRMATION THAT MEMORIALIZES THE DATE  THE  AUTOMATIC
RENEWAL  OR  CONTINUOUS  SERVICE SUBSCRIPTION OR AGREEMENT COMMENCED AND
INCLUDES THE AUTOMATIC RENEWAL OR  CONTINUOUS  SERVICE  OFFER  COST  AND
TERMS, CANCELLATION POLICY AND INFORMATION REGARDING HOW TO CANCEL.
  (IV)  IF  THE AUTOMATIC RENEWAL OR CONTINUOUS SERVICE OFFER INCLUDES A
FREE TRIAL, SUCH OFFER SHALL DISCLOSE WHEN AND HOW TO CANCEL  AND  ALLOW
THE  CONSUMER  TO CANCEL BEFORE THE CONSUMER IS REQUIRED TO PAY FOR SUCH
GOODS OR SERVICES.
  (B) AN  INDIVIDUAL,  FIRM,  COMPANY,  PARTNERSHIP,  LIMITED  LIABILITY
COMPANY,  CORPORATION  OR  ENTITY MAKING AUTOMATIC RENEWAL OR CONTINUOUS
SERVICE OFFERS SHALL PROVIDE A TOLL FREE  TELEPHONE  NUMBER,  ELECTRONIC
MAIL  ADDRESS,  POSTAL  ADDRESS,  OR ANOTHER COST-EFFECTIVE, TIMELY, AND
EASY TO USE CONSUMER MECHANISM FOR CANCELLATION THAT SHALL BE  DESCRIBED
IN  THE  ACKNOWLEDGMENT SPECIFIED IN SUBPARAGRAPH (III) OF PARAGRAPH (A)
OF THIS SUBDIVISION.
  (C) IN THE CASE OF A CHANGE IN THE TERMS OF THE AUTOMATIC  RENEWAL  OR
CONTINUOUS SERVICE OFFER THAT HAS BEEN ACCEPTED BY A CONSUMER, THE INDI-
VIDUAL,  FIRM,  COMPANY,  PARTNERSHIP, LIMITED LIABILITY COMPANY, CORPO-
RATION OR ENTITY SHALL PROVIDE THE CONSUMER WITH A CLEAR AND CONSPICUOUS
WRITTEN NOTICE OF THE CHANGE PRIOR TO THE IMPLEMENTATION OF SUCH  CHANGE
AND  PROVIDE  THE  CONSUMER AN OPPORTUNITY TO CANCEL THE SUBSCRIPTION OR
AGREEMENT AND INFORMATION REGARDING HOW TO CANCEL.
  4. IN ANY CASE IN WHICH AN  INDIVIDUAL,  FIRM,  COMPANY,  PARTNERSHIP,
LIMITED LIABILITY COMPANY, CORPORATION OR ENTITY SENDS ANY GOODS, WARES,

S. 7607                             3

MERCHANDISE  OR  PRODUCTS  TO  A  CONSUMER UNDER AN AUTOMATIC RENEWAL OR
CONTINUOUS SERVICE SUBSCRIPTION OR AGREEMENT WITHOUT FIRST OBTAINING THE
CONSUMER'S INFORMED EXPRESS AFFIRMATIVE CONSENT AS DESCRIBED IN SUBDIVI-
SION  TWO  OF  THIS  SECTION, THE GOODS, WARES, MERCHANDISE, OR PRODUCTS
SHALL BE DEEMED AN UNCONDITIONAL GIFT TO THE CONSUMER, WITHOUT ANY OBLI-
GATION ON THE PART OF THE CONSUMER TO  THE  INDIVIDUAL,  FIRM,  COMPANY,
PARTNERSHIP,  LIMITED  LIABILITY COMPANY, CORPORATION OR ENTITY, INCLUD-
ING, BUT NOT LIMITED TO, BEARING THE COST OF OR RESPONSIBILITY FOR SHIP-
PING ANY GOODS, WARES, MERCHANDISE OR PRODUCTS TO THE INDIVIDUAL,  FIRM,
COMPANY, PARTNERSHIP, LIMITED LIABILITY COMPANY, CORPORATION OR ENTITY.
  5. 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
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 DETERMINATION OF THE RELEVANT FACTS
AND TO ISSUE SUBPOENAS IN ACCORDANCE WITH THE  CIVIL  PRACTICE  LAW  AND
RULES.
  6. THE FOLLOWING ARE EXEMPT FROM THE REQUIREMENTS OF THIS ARTICLE:
  (A) ANY SERVICE PROVIDED BY AN INDIVIDUAL, FIRM, COMPANY, PARTNERSHIP,
LIMITED  LIABILITY  COMPANY,  CORPORATION, ENTITY OR ITS AFFILIATE WHERE
EITHER THE INDIVIDUAL, FIRM,  COMPANY,  PARTNERSHIP,  LIMITED  LIABILITY
COMPANY, CORPORATION, ENTITY OR ITS AFFILIATE IS DOING BUSINESS PURSUANT
TO  A  FRANCHISE  ISSUED  BY  A  POLITICAL SUBDIVISION OF THE STATE OR A
LICENSE, FRANCHISE, CERTIFICATE OR OTHER AUTHORIZATION ISSUED BY THE NEW
YORK STATE PUBLIC SERVICE COMMISSION.
  (B) ANY SERVICE PROVIDED BY AN INDIVIDUAL, FIRM, COMPANY, PARTNERSHIP,
LIMITED LIABILITY COMPANY, CORPORATION, ENTITY OR  ITS  AFFILIATE  WHERE
EITHER  THE  INDIVIDUAL,  FIRM,  COMPANY, PARTNERSHIP, LIMITED LIABILITY
COMPANY, CORPORATION, ENTITY OR ITS AFFILIATE IS REGULATED  BY  THE  NEW
YORK STATE PUBLIC SERVICE COMMISSION, THE FEDERAL COMMUNICATIONS COMMIS-
SION, OR THE FEDERAL ENERGY REGULATORY COMMISSION.
  (C)  ANY  INDIVIDUAL,  FIRM,  COMPANY,  PARTNERSHIP, LIMITED LIABILITY
COMPANY, CORPORATION OR ENTITY REGULATED BY THE DEPARTMENT OF INSURANCE.
  S 2. Section 5-903 of the general obligations law is REPEALED.
  S 3. Subdivision 11 of section 1-203 of the general obligations law is
REPEALED.
  S 4. This act shall take effect on the first of January next  succeed-
ing the date on which it shall have become a law.

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