senate Bill S576

2011-2012 Legislative Session

Requires disclosure of early termination fees

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Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 04, 2012 referred to consumer protection
Jan 05, 2011 referred to consumer protection

S576 - Bill Details

See Assembly Version of this Bill:
A6833
Current Committee:
Law Section:
General Business Law
Laws Affected:
Add ยง390-d, Gen Bus L
Versions Introduced in 2009-2010 Legislative Session:
S6182, A9177

S576 - Bill Texts

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Requires disclosure of early termination fees.

view sponsor memo
BILL NUMBER:S576

TITLE OF BILL:
An act
to amend the general business law, in relation to the disclosure
of early termination fees

PURPOSE OR GENERAL IDEA OF BILL:
The bill requires that multi-channel video programming distributors
(which includes cable operators and satellite providers) disclose
early termination fees in a clear and conspicuous manner, with the
fee presented with the same prominence as the sales price for
programming. The bill also prevents the charging of an early
termination fee that isn't prorated. Therefore, the longer a
customer has a contract the smaller an early termination fee they
would pay. A multichannel video programming distributor
that does not adhere to the provisions of this bill would lose their
ability to assess an early termination fee.

SUMMARY OF SPECIFIC PROVISIONS:
Amends the general business law to add a new section
390-d providing
that:

* multichannel video programming distributors disclose early
termination fees in a clear and conspicuous manner, with the fee
presented with the
same prominence as the sales price for programming.
* all early termination fees are prorated.
* a multichannel video programming distributor that does not adhere to
the provisions of this bill would lose their ability to assess an
early termination fee.

JUSTIFICATION:
Contract cancellation fees are commonly used by service industries
such as subscription cable and satellite television, where they are
more specifically known as early cancellation fees (ECFS). For
example, a customer who purchases cable TV service may sign a
two-year contract and be assessed a $200 fee if the customer breaks
the contract. These fees are often assessed no matter when the
customer breaks the contract, whether it be early in the term or much
later in the contract. Fees are not prorated to account for the point
during which the contract is broken.

Additionally, particular companies require subscribers to extend their
service agreements when new equipment like a receiver is provided.
These contract extensions are often hidden, buried in the fine print
on the back of brochures provided to the consumer. Furthermore,
customers who cancel service within the extended contract period
triggered by receiving new equipment like a receiver incur early
cancellation fees, no matter how long they were customers prior to
receiving the new equipment.

In the past 3 years, over 20,000 complaints regarding ECFs have been
filed with the Better Business Bureau. Consumer interest groups have


criticized such fees as discouraging competitiveness because they
prevent users from migrating to superior services.

As described above, this legislation requires cable and satellite
companies to disclose any early cancellation fee associated with an
advertised price in the same prominence as the statement of price.
For example, the early cancellation fee would be equal in font size
and positioning as the advertised price in a print advertisement. The
bill also requires all early cancellation fees to be prorated. No
longer will a consumer pay the same rate for a cancellation fee
whether they exit an agreement within the first or final month.
Finally, companies not following these provisions will be forbidden
from assessing early termination fees.

LEGISLATIVE HISTORY:
2010 - S.6182 - Referred Consumer Protection

FISCAL IMPLICATIONS:
No costs to the state.

EFFECTIVE DATE:
This act shall take effect on the one hundred eightieth day after it
shall have become a law.

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

                                   576

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 5, 2011
                               ___________

Introduced  by  Sen.  KLEIN  -- 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 the  disclosure
  of early termination fees

  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
390-d to read as follows:
  S 390-D. EARLY TERMINATION FEE DISCLOSURE. 1.  FOR  PURPOSES  OF  THIS
SECTION:
  (A)  "EARLY  TERMINATION FEE" MEANS ANY CHARGE OR FEE THAT IS PROVIDED
FOR IN A CONTRACT OR AGREEMENT, INCLUDING ANY CONTRACT RENEWAL OR EXTEN-
SION, THAT INCLUDES THE PROVISION OF VIDEO PROGRAMMING AND  IS  ASSESSED
AGAINST  A  SUBSCRIBER WHEN A SUBSCRIBER TERMINATES FOR ANY REASON VIDEO
PROGRAMMING SERVICE PRIOR TO THE END OF THE CONTRACT OR AGREEMENT.
  (B) "CONDITIONAL SALES PRICE" MEANS  ANY  PRICE  FOR  A  SERVICE  THAT
INCLUDES  VIDEO PROGRAMMING AND WHICH IS AVAILABLE PURSUANT TO AN AGREE-
MENT THAT INCLUDES AN EARLY TERMINATION FEE.
  (C) "MULTICHANNEL VIDEO PROGRAMMING DISTRIBUTOR" SHALL HAVE THE  MEAN-
ING AS SET FORTH IN 47 U.S.C. SECTION 522 (13).
  (D)  "VIDEO  PROGRAMMING"  SHALL  HAVE  THE MEANING AS SET FORTH IN 47
U.S.C.  SECTION 522 (20).
  2. NO MULTICHANNEL  VIDEO  PROGRAMMING  DISTRIBUTOR  THAT  PROMOTES  A
CONDITIONAL  SALES  PRICE  FOR  SERVICES  THAT INCLUDE VIDEO PROGRAMMING
SHALL, IN CONNECTION WITH SUCH  PRICE,  REQUIRE  THAT  A  SUBSCRIBER  BE
SUBJECT  TO AN EARLY TERMINATION FEE UNLESS SUCH FEE AND THE TERMS UNDER
WHICH IT IS TO APPLY ARE DISCLOSED IN A CLEAR AND CONSPICUOUS MANNER  AS
FOLLOWS:
  (A) IN ANY MEDIUM USED BY THE MULTICHANNEL VIDEO PROGRAMMING DISTRIBU-
TOR  TO  PROMOTE  A CONDITIONAL SALES PRICE, THE EXISTENCE AND AMOUNT OF

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD04866-01-1

S. 576                              2

ANY EARLY TERMINATION FEE AND THE TERMS UNDER WHICH IT IS TO APPLY SHALL
BE DISCLOSED WITH THE SAME PROMINENCE AND IN THE SAME  LOCATION  AS  THE
CONDITIONAL SALES PRICE.
  (B) IN ANY SOLICITATION THAT MAY RESULT IN AN ORDER FOR VIDEO PROGRAM-
MING  SUBJECT  TO  A  CONDITIONAL SALES PRICE, WHICH FOR THE PURPOSES OF
THIS SUBDIVISION SHALL INCLUDE THE DESCRIPTION OF SERVICES,  THE  MULTI-
CHANNEL  VIDEO  PROGRAMMING DISTRIBUTOR SHALL INFORM POTENTIAL CUSTOMERS
OF ANY EARLY TERMINATION FEE AND ITS AMOUNT AND THE TERMS UNDER WHICH IT
IS TO APPLY PRIOR TO SALE.
  3. ANY EARLY TERMINATION FEE THAT IS ASSESSED IN CONNECTION  WITH  THE
TERMINATION OF A SERVICE SUBJECT TO A CONDITIONAL SALES PRICE MAY NOT BE
GREATER  THAN  THE  PRO  RATA  SHARE  OF  SUCH FEE UNDER AN AGREEMENT OR
CONTRACT CALCULATED AS FOLLOWS: THE FRACTIONAL EQUIVALENT TO THE  NUMBER
OF  MONTHS  IN THE AGREEMENT TERM THAT HAVE ELAPSED DIVIDED BY THE TOTAL
NUMBER OF MONTHS IN THE AGREEMENT TERM, MULTIPLIED BY THE AMOUNT OF  THE
EARLY  TERMINATION  FEE  DISCLOSED  PURSUANT  TO SUBDIVISION TWO OF THIS
SECTION.
  4. A MULTICHANNEL VIDEO PROGRAMMING DISTRIBUTOR THAT FAILS TO  PROVIDE
NOTICE AS REQUIRED IN SUBDIVISION TWO OF THIS SECTION OR FAILS TO ASSESS
AN  EARLY  TERMINATION  FEE IN ACCORDANCE WITH SUBDIVISION THREE OF THIS
SECTION SHALL BE PROHIBITED FROM ENFORCING AN EARLY TERMINATION  FEE  IN
CONNECTION  WITH  THE  TERMINATION  OF  SERVICE SUBJECT TO A CONDITIONAL
SALES PRICE.  FOR THE PURPOSES OF THIS SUBDIVISION, "ENFORCEMENT"  SHALL
INCLUDE  ANY  REFERENCE, WHETHER WRITTEN OR VERBAL AND IN ANY MEDIUM, TO
AN EARLY TERMINATION FEE WITH REGARD TO IMPOSING, NEGOTIATING OR WAIVING
AN EARLY TERMINATION FEE, AS AN INDUCEMENT TO  RENEW,  EXTEND  OR  ENTER
INTO  AN  AGREEMENT,  OR  RESOLVE  ANY  DISPUTE BETWEEN A CONSUMER AND A
MULTICHANNEL VIDEO PROGRAMMING DISTRIBUTOR, ITS AGENTS,  OR  ANY  PERSON
ATTEMPTING  TO  RESOLVE A DEBT BASED UPON AN EARLY TERMINATION FEE UNDER
THIS SUBDIVISION.
  5. ANY VIOLATION OF THIS SECTION SHALL BE DEEMED A  DECEPTIVE  ACT  OR
PRACTICE  PURSUANT  TO SECTION THREE HUNDRED FORTY-NINE OF THIS CHAPTER.
NOTHING IN THIS SECTION SHALL IN ANY WAY LIMIT THE  RIGHTS  OR  REMEDIES
THAT  ARE OTHERWISE AVAILABLE TO A CONSUMER OR PURCHASER UNDER ANY OTHER
LAW.
  S 2. This act shall take effect on the one hundred eightieth day after
it shall have become a law.

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