NY State Senate Bill 2013-S5632

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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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Mar 05, 2014	print number 5632a
Mar 05, 2014	amend and recommit to consumer protection
Jan 08, 2014	referred to consumer protection
May 30, 2013	referred to consumer protection

Bill Amendments

Original

A (Active)

2013-S5632 - Details

Current Committee:: Senate Consumer Protection
Law Section:: General Business Law
Laws Affected:: Add Art 30-B §§641 - 641-d, Gen Bus L

2013-S5632 - Summary

Enacts the discount buying club consumer protection act.

2013-S5632 - Sponsor Memo

                                BILL NUMBER:S5632

TITLE OF BILL:  An act to amend the general business law, in relation
to enacting the discount buying club consumer protection act

PURPOSE OR GENERAL IDEA OF BILL:

The purpose of this bill is to provide protections for purchasers of
discount buying club services.

SUMMARY OF SPECIFIC PROVISIONS:

This bill would:

-define "discount buying club" as any business that offers to sell or
arrange the sale of good to customers at prices below retail,
excluding clubs that allow customers to cancel at any time without
further obligation:

-provide that consumers may cancel a discount buying club agreement
within three business days;

-prohibit any discount buying club from making any statement during, a
sales presentation alleging that the consumer must sign a contract on
the same day or be prohibited from purchasing discount buying club
services in the future; and

-provide that the Attorney General may enforce the bill's provisions
by seeking an injunction and/or civil penalties of up to $1,000 per
violation.

JUSTIFICATION:

Discount buying clubs, which are often able to provide merchandise to
members at prices that are lower than those found at traditional
retailers, are popular with many consumers, Many discount buying clubs
offer membership terms that allow members to cancel at anytime and
receive a refund of their membership fee. This legislation would not
apply to those discount clubs.

Some discount buying clubs require consumers to agree to multi-year
contracts that contain provisions restricting a purchaser's ability to
cancel without further obligation, it has been reported that some
consumers have entered into such agreements without being properly
informed that they would not be allowed to receive a refund of their
membership fee upon cancellation. In addition, there have been
incidents in which consumers attending a sales. presentation at a
discount buying club were told that they must sign the club agreement
on the same day or hey would be banned from purchasing a membership
for life.

This bill would ensure that consumers entering into multi-year
discount buying club agreements, some of which can reportedly involve
one-time membership fees of over $3,000, are provided with basic
protections, including a right to cancel such agreements within three
business days.


This legislation is modeled on New York's door-to-door sales
protection act (Article 10-A of the Personal Property Law).
Additionally, in February of 2013 the Attorney General's office
reached a settlement with one of the largest discount buying clubs
operating in New York, This bill now reflects the provisions of that
agreement to incorporate them into law.

PRIOR LEGISLATIVE HISTORY:

New Bill.

FISCAL IMPLICATIONS:

None to the State.

EFFECTIVE DATE:

This act shall take effect on the first of January next succeeding the
date upon which it shall have become law.

2013-S5632 - Bill Text download pdf

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

                                  5632

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                              May 30, 2013
                               ___________

Introduced  by Sen. GRISANTI -- 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  enacting  the
  discount buying club consumer protection act

  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 article
30-B to read as follows:
                              ARTICLE 30-B
              DISCOUNT BUYING CLUB CONSUMER PROTECTION ACT
SECTION 641.   SHORT TITLE.
        641-A. DEFINITIONS.
        641-B. BUYER'S OR OTHER OBLIGOR'S RIGHT TO CANCEL.
        641-C. FORM OF NOTICE; STATEMENT OF BUYER'S RIGHTS.
        641-D. ENFORCEMENT; PENALTIES.
  S 641. SHORT TITLE. THIS ARTICLE SHALL BE KNOWN AND MAY  BE  CITED  AS
THE "DISCOUNT BUYING CLUB CONSUMER PROTECTION ACT".
  S  641-A.  DEFINITIONS.  AS  USED IN THIS ARTICLE, THE FOLLOWING TERMS
SHALL MEAN:
  1. "BUSINESS DAY" SHALL EXCLUDE SATURDAYS, SUNDAYS, HOLIDAYS  AND,  IN
THE  EVENT THAT THE BUYER PERSONALLY DELIVERS THE CANCELLATION NOTICE TO
THE CLUB, DAYS ON WHICH THE SELLER OF THE BUYER'S AGREEMENT IS CLOSED.
  2. "BUYER" AS USED IN THIS ARTICLE MEANS  ANY  INDIVIDUAL  WHO  ENTERS
INTO AN AGREEMENT FOR SERVICES WITH A DISCOUNT BUYING CLUB.
  3.  "DISCOUNT  BUYING  CLUB"  MEANS  ANY  PERSON, FIRM OR CORPORATION,
WHICH, IN EXCHANGE FOR VALUABLE CONSIDERATION,  OFFERS  TO  SELL  OR  TO
ARRANGE THE SALE OF GOODS OR SERVICES TO ITS CUSTOMERS AT PRICES REPRES-
ENTED  TO  BE  LOWER  THAN  ARE GENERALLY AVAILABLE. SUCH TERM SHALL NOT
INCLUDE:

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02887-03-3

S. 5632                             2

  (A) ANY COOPERATIVE BUYING ASSOCIATION OR  OTHER  GROUP  IN  WHICH  NO
PERSON IS INTENDED TO PROFIT OR ACTUALLY PROFITS BEYOND THE BENEFIT THAT
ALL MEMBERS RECEIVE FROM BUYING AT A DISCOUNT;
  (B) ANY PERSON, FIRM OR CORPORATION THAT:
  (I)  FOR  FIFTY DOLLARS OR LESS SELLS TICKETS OR COUPONS VALID FOR USE
IN OBTAINING GOODS OR SERVICES FROM A RETAIL MERCHANT; OR
  (II) AS A SERVICE COLLATERAL TO ITS PRINCIPAL  BUSINESS,  AND  FOR  NO
ADDITIONAL  CHARGE, ARRANGES FOR ITS MEMBERS OR CUSTOMERS TO PURCHASE OR
LEASE DIRECTLY FROM PARTICULAR MERCHANTS AT A SPECIFIED DISCOUNT; OR
  (III) CHARGES AN ADVANCE FEE FOR ACCESS TO SERVICE,  OR  MEMBER  BENE-
FITS,  AND  ALLOWS  THE  BUYER  TO TERMINATE MEMBERSHIP BY NOTIFYING THE
PERSON, FIRM OR CORPORATION OF INTENT TO  TERMINATE  MEMBERSHIP  WITHOUT
FURTHER OBLIGATION TO MAKE ADDITIONAL PAYMENTS.
  4. "SELLER" SHALL MEAN ANY PERSON, PARTNERSHIP, CORPORATION OR ASSOCI-
ATION ENGAGED IN THE SALE OF DISCOUNT BUYING CLUB SERVICES.
  S 641-B. BUYER'S OR OTHER OBLIGOR'S RIGHT TO CANCEL. 1. IN ADDITION TO
ANY  RIGHT OTHERWISE TO REVOKE AN OFFER, THE BUYER MAY CANCEL A DISCOUNT
BUYING CLUB AGREEMENT UNTIL MIDNIGHT OF THE THIRD BUSINESS DAY AFTER THE
DAY ON WHICH THE BUYER HAS SIGNED THE AGREEMENT.  SUCH  AGREEMENT  SHALL
IMPOSE NO LIABILITY ON THE BUYER FOR SUCH CANCELLATION. THE SELLER SHALL
PROVIDE  A  REFUND  OF  ANY FEE PAID BY THE BUYER NOT MORE THAN TEN DAYS
AFTER SUCH CANCELLATION.
  2. CANCELLATION OCCURS WHEN WRITTEN NOTICE OF CANCELLATION IS GIVEN TO
THE SELLER.  NOTICE OF CANCELLATION NEED NOT TAKE A PARTICULAR FORM  AND
IS  SUFFICIENT  IF  IT INDICATES, BY ANY FORM OF WRITTEN EXPRESSION, THE
INTENTION OR DESIRE OF THE BUYER TO  CANCEL  THE  DISCOUNT  BUYING  CLUB
AGREEMENT.
  3.  NOTICE  OF  CANCELLATION,  IF GIVEN BY MAIL, SHALL BE DEEMED GIVEN
WHEN DEPOSITED IN A MAILBOX PROPERLY ADDRESSED AND POSTAGE PREPAID.
  S 641-C. FORM OF NOTICE; STATEMENT OF BUYER'S RIGHTS. 1. IN A DISCOUNT
BUYING CLUB SERVICE SALE, THE SELLER SHALL FURNISH TO THE BUYER:
  (A) A FULLY COMPLETED RECEIPT OR COPY OF ANY AGREEMENT  PERTAINING  TO
SUCH  SALE  AT THE TIME OF ITS EXECUTION, WHICH IS IN THE SAME LANGUAGE,
E.G.  SPANISH, AS THAT PRINCIPALLY USED IN THE ORAL  SALES  PRESENTATION
AND  WHICH  SHOWS  THE DATE OF THE TRANSACTION AND CONTAINS THE NAME AND
ADDRESS OF THE SELLER, AND IN IMMEDIATE PROXIMITY TO THE SPACE  RESERVED
IN  THE  AGREEMENT  FOR  THE SIGNATURE OF THE BUYER AND IN NOT LESS THAN
TWELVE-POINT BOLD FACE TYPE, A STATEMENT IN SUBSTANTIALLY THE  FOLLOWING
FORM:
  "YOU,  THE  BUYER,  MAY  CANCEL  THIS TRANSACTION AT ANY TIME PRIOR TO
MIDNIGHT OF THE THIRD BUSINESS DAY AFTER THE DATE OF  THIS  TRANSACTION.
SEE  THE ATTACHED NOTICE OF CANCELLATION FORM FOR AN EXPLANATION OF THIS
RIGHT."; AND
  (B) AT THE TIME THE BUYER SIGNS THE DISCOUNT BUYING CLUB AGREEMENT,  A
COMPLETED  FORM  IN DUPLICATE, CAPTIONED "NOTICE OF CANCELLATION", WHICH
SHALL BE ATTACHED TO THE AGREEMENT  AND  EASILY  DETACHABLE,  AND  WHICH
SHALL CONTAIN IN NOT LESS THAN TWELVE-POINT BOLD FACE TYPE THE FOLLOWING
INFORMATION  AND  STATEMENTS IN THE SAME LANGUAGE, E.G. SPANISH, AS THAT
USED IN THE AGREEMENT:
                         NOTICE OF CANCELLATION
  (ENTER DATE OF TRANSACTION) _________________________________________
  (DATE)
  YOU MAY CANCEL THIS TRANSACTION, WITHOUT ANY  PENALTY  OR  OBLIGATION,
WITHIN THREE BUSINESS DAYS FROM THE ABOVE DATE.
  IF  YOU  CANCEL,  ANY PAYMENTS MADE BY YOU UNDER THE AGREEMENT AND ANY
NEGOTIABLE INSTRUMENT EXECUTED BY YOU WILL BE RETURNED WITHIN TEN  BUSI-

S. 5632                             3

NESS  DAYS  FOLLOWING RECEIPT BY THE SELLER OF YOUR CANCELLATION NOTICE,
AND ANY SECURITY  INTEREST  ARISING  OUT  OF  THE  TRANSACTION  WILL  BE
CANCELLED.  TO  CANCEL  THIS  TRANSACTION,  MAIL OR DELIVER A SIGNED AND
DATED COPY OF THIS CANCELLATION NOTICE OR ANY OTHER WRITTEN NOTICE TO
  (NAME  OF  SELLER),                             AT (ADDRESS OF SELLER)
__________________
  _________________________________
  (PLACE OF BUSINESS)                      NOT LATER THAN MIDNIGHT OF
  ____________________________________ (DATE)
  I HEREBY CANCEL THIS TRANSACTION.
  _________________ (DATE)
  ______________________________ (BUYER'S SIGNATURE)
THE SELLER SHALL COMPLETE BOTH COPIES BY ENTERING THE NAME OF THE  SELL-
ER, THE ADDRESS OF THE SELLER'S PLACE OF BUSINESS, THE DATE OF THE TRAN-
SACTION, AND THE DATE, NOT EARLIER THAN THE THIRD BUSINESS DAY FOLLOWING
THE  DATE  OF  THE  TRANSACTION,  BY  WHICH THE BUYER MAY GIVE NOTICE OF
CANCELLATION.
  2. THE SELLER SHALL INFORM EACH BUYER ORALLY AT THE  TIME  HE  OR  SHE
SIGNS THE AGREEMENT OF HIS OR HER RIGHT TO CANCEL.
  3.  THE  SELLER  SHALL  INFORM  EACH  BUYER IN A CLEAR AND CONSPICUOUS
MANNER PRIOR TO A CONSUMER SIGNING A CONTRACT FOR A DISCOUNT BUYING CLUB
AGREEMENT, THE RANGE OF COSTS OF SUCH AGREEMENT.
  4. A DISCOUNT BUYING CLUB AGREEMENT OR RECEIPT SHALL NOT  INCLUDE  ANY
CONFESSION  OF  JUDGMENT OR ANY WAIVER OF ANY OF THE RIGHTS TO WHICH THE
BUYER IS ENTITLED UNDER THIS ARTICLE INCLUDING SPECIFICALLY HIS  OR  HER
RIGHT TO CANCEL THE SALE IN ACCORDANCE WITH THE PROVISIONS OF THIS ARTI-
CLE.
  5. NO SELLER, OR ANY AGENT OR EMPLOYEE THEREOF, SHALL:
  (A)  DIRECTLY  OR  INDIRECTLY  REPRESENT  IN ANY MANNER DURING A SALES
PRESENTATION THAT A CONSUMER MUST SIGN AN AGREEMENT ON THE SAME  DAY  AS
SUCH PRESENTATION IN ORDER TO AVOID A LIFETIME PROHIBITION ON PURCHASING
DISCOUNT BUYING CLUB SERVICES FROM SUCH SELLER;
  (B)  USE  TERMS SUCH AS "FREE," OR ANY OTHER TERM OF SIMILAR IMPORT OR
MEANING THAT WOULD LEAD A CONSUMER TO BELIEVE THAT HE OR SHE MAY RECEIVE
SOMETHING OF VALUE ENTIRELY OR IN PART WITHOUT A REQUIREMENT OF  COMPEN-
SATION  IN ANY FORM, UNLESS ALL MATERIAL TERMS, RESTRICTIONS AND LIMITA-
TIONS OF THE OFFER ARE CLEARLY AND CONSPICUOUSLY DISCLOSED IN THE ADVER-
TISING;
  (C) OFFER ANY GIFTS, SWEEPSTAKES OR PRIZES AS A SOLICITATION TO ATTEND
A SALES PRESENTATION OPEN TO THE PUBLIC OR TO  SIGN  A  DISCOUNT  BUYING
CLUB  AGREEMENT  UNLESS THE SELLER HONORS THE GIFT, PROMOTION OR PARTIC-
IPATION IN THE SWEEPSTAKES IN ACCORDANCE WITH THE TERMS OF ITS PROMISE;
  (D) OFFER FREE TRIAL MEMBERSHIPS  WITHOUT  CLEARLY  AND  CONSPICUOUSLY
DISCLOSING  MATERIAL RESTRICTIONS, LIMITATIONS AND CONDITIONS, INCLUDING
ANY RESTRICTIONS ON THE BRANDS AND AMOUNT OF  MERCHANDISE  THAT  CAN  BE
PURCHASED;
  (E)  FAIL TO CLEARLY AND CONSPICUOUSLY DISCLOSE PRIOR TO THE SALE OF A
CLUB MEMBERSHIP ANY COSTS AND FEES ADDED TO  THE  PRICE  OF  MERCHANDISE
INCLUDING, BUT NOT LIMITED TO, FREIGHT AND SHIPPING COSTS, HANDLING FEES
AND POTENTIAL MANUFACTURER OR SUPPLIER PRICE INCREASES;
  (F) IF APPLICABLE, FAIL TO CLEARLY AND CONSPICUOUSLY DISCLOSE PRIOR TO
THE SALE OF A CLUB MEMBERSHIP THAT:
  (I)  THE FULL PRICE OF THE MERCHANDISE, PLUS APPLICABLE CHARGES, WOULD
BE REQUIRED AT THE TIME OF PLACEMENT OF THE ORDER; AND

S. 5632                             4

  (II) THE MANUFACTURER OF THE ORDERED MERCHANDISE DETERMINES THE REFUND
AND CANCELLATION POLICY AND IS THE WARRANTOR OF SAID MERCHANDISE  RATHER
THAN THE SELLER; OR
  (G)  SEEK  TO  ENFORCE  IN ANY LEGAL ACTION AND REFER OR REPORT TO ANY
CONSUMER REPORTING AGENCY, AS SUCH TERM  IS  DEFINED  IN  SECTION  THREE
HUNDRED  EIGHTY-A  OF  THIS  CHAPTER,  A BUYER'S FAILURE TO MAKE PAYMENT
UNDER ANY RETAIL INSTALLMENT CONTRACT, OBLIGATION  OR  CREDIT  AGREEMENT
PURCHASED OR ACQUIRED AND CURRENTLY MAINTAINED BY A SALES FINANCE COMPA-
NY THAT IS NOT LICENSED IN THE STATE IN COMPLIANCE WITH ARTICLE ELEVEN-B
OF THE BANKING LAW.
  S  641-D.  ENFORCEMENT;  PENALTIES.  1.  WHENEVER  THERE  SHALL  BE  A
VIOLATION OF THE PROVISIONS OF THIS ARTICLE, 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 BY A  SPECIAL  PROCEEDING
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  ARTICLE,  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  PARAGRAPH  SIX  OF SUBDIVISION (A) OF SECTION EIGHTY-THREE
HUNDRED THREE OF THE CIVIL PRACTICE LAW AND RULES, AND  DIRECT  RESTITU-
TION.  WHENEVER THE COURT SHALL DETERMINE THAT A VIOLATION OF THIS ARTI-
CLE HAS OCCURRED, THE COURT MAY IMPOSE A CIVIL PENALTY OF NOT MORE  THAN
ONE  THOUSAND  DOLLARS  FOR  EACH VIOLATION. 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.
  2.  NOTHING  IN THIS SECTION SHALL IN ANY WAY LIMIT RIGHTS OR REMEDIES
WHICH ARE OTHERWISE AVAILABLE UNDER LAW TO THE ATTORNEY GENERAL.
  S 2. If any provision of article 30-B of the general business law,  as
added  by  section one of this act, or the application of such provision
in certain circumstances shall be held  invalid,  the  validity  of  the
remainder  of  such article and its applicability to other circumstances
shall not be affected.
  S 3. This act shall take effect on the first of January next  succeed-
ing the date upon which it shall have become a law.

2013-S5632A (ACTIVE) - Details

Current Committee:: Senate Consumer Protection
Law Section:: General Business Law
Laws Affected:: Add Art 30-B §§641 - 641-d, Gen Bus L

2013-S5632A (ACTIVE) - Summary

Enacts the discount buying club consumer protection act.

2013-S5632A (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S5632A

TITLE OF BILL:  An act to amend the general business law, in relation
to enacting the discount buying club consumer protection act

PURPOSE OR GENERAL IDEA OF BILL:  The purpose of this bill is to
provide protections for purchasers of discount buying club services

SUMMARY OF SPECIFIC PROVISIONS:

This bill would:

- define "discount buying club" as any business that offers to sell or
arrange the sale of good to customers at prices below retail,
excluding clubs that allow customers to cancel at any time without
further obligation;

-provide that consumers may cancel a discount buying club agreement
within three business days;

-prohibit any discount buying club from making any statement during, a
sales presentation alleging that the consumer must sign a contract on
the same day or be prohibited from purchasing discount buying club
services in the future; and

-provide that the Attorney General may enforce the bill's provisions

by seeking an injunction and/or civil penalties of up to $1,000 per
violation.

JUSTIFICATION:  Discount buying clubs, which are often able to provide
merchandise to members at prices that are lower than those found at
traditional retailers, are popular with many consumers. Many discount
buying clubs offer membership terms that allow members to cancel at
anytime and receive a refund of their membership fee. This legislation
would not apply to those discount clubs.

Some discount buying clubs require consumers to agree to multi-year
contracts that contain provisions restricting a purchaser's ability to
cancel without further obligation. It has been reported that some
consumers have entered into such agreements without being properly
informed that they would not be allowed to receive a refund of their
membership fee upon cancellation In addition, there have been
incidents in which consumers attending a sales presentation at a
discount buying club were told that they must sign the club agreement
on the same day or hey would be banned from purchasing a membership
for life.

This bill would ensure that consumers entering into multi-year
discount buying club agreements, some of which can reportedly involve
one-time membership fees of over $3,000, are provided with basic
protections, including a right to cancel such agreements within three
business days This legislation is modeled on New York's door-to-door
sales protection act (Article 10-A of the Personal Property Law).
Additionally, in February of 2013 the Attorney General's office
reached a settlement with one of the largest discount buying clubs
operating in New York. This bill now reflects the provisions of that
agreement to incorporate them into law.


PRIOR LEGISLATIVE HISTORY:  2011-12- A.8373-A- Advanced to 3rd Reading
Calendar No. 641

FISCAL IMPLICATIONS: None to the State.

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

2013-S5632A (ACTIVE) - Bill Text download pdf

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

                                 5632--A

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                              May 30, 2013
                               ___________

Introduced  by Sen. GRISANTI -- read twice and ordered printed, and when
  printed to be committed to the Committee  on  Consumer  Protection  --
  recommitted to the Committee on Consumer Protection in accordance with
  Senate  Rule  6, sec. 8 -- committee discharged, bill amended, ordered
  reprinted as amended and recommitted to said committee

AN ACT to amend the general business law, in relation  to  enacting  the
  discount buying club consumer protection act

  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 article
30-B to read as follows:
                              ARTICLE 30-B
              DISCOUNT BUYING CLUB CONSUMER PROTECTION ACT
SECTION 641.   SHORT TITLE.
        641-A. DEFINITIONS.
        641-B. BUYER'S OR OTHER OBLIGOR'S RIGHT TO CANCEL.
        641-C. FORM OF NOTICE; STATEMENT OF BUYER'S RIGHTS.
        641-D. ENFORCEMENT; PENALTIES.
  S 641. SHORT TITLE. THIS ARTICLE SHALL BE KNOWN AND MAY  BE  CITED  AS
THE "DISCOUNT BUYING CLUB CONSUMER PROTECTION ACT".
  S  641-A.  DEFINITIONS.  AS  USED IN THIS ARTICLE, THE FOLLOWING TERMS
SHALL MEAN:
  1. "BUSINESS DAY" SHALL EXCLUDE SATURDAYS, SUNDAYS, HOLIDAYS  AND,  IN
THE  EVENT THAT THE BUYER PERSONALLY DELIVERS THE CANCELLATION NOTICE TO
THE CLUB, DAYS ON WHICH THE SELLER OF THE BUYER'S AGREEMENT IS CLOSED.
  2. "BUYER" AS USED IN THIS ARTICLE MEANS  ANY  INDIVIDUAL  WHO  ENTERS
INTO AN AGREEMENT FOR SERVICES WITH A DISCOUNT BUYING CLUB.
  3.  "DISCOUNT  BUYING  CLUB"  MEANS  ANY  PERSON, FIRM OR CORPORATION,
WHICH, IN EXCHANGE FOR VALUABLE CONSIDERATION,  OFFERS  TO  SELL  OR  TO
ARRANGE THE SALE OF GOODS OR SERVICES TO ITS CUSTOMERS AT PRICES REPRES-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02887-07-4

S. 5632--A                          2

ENTED  TO  BE  LOWER  THAN  ARE GENERALLY AVAILABLE. SUCH TERM SHALL NOT
INCLUDE:
  (A)  ANY  COOPERATIVE  BUYING  ASSOCIATION  OR OTHER GROUP IN WHICH NO
PERSON IS INTENDED TO PROFIT OR ACTUALLY PROFITS BEYOND THE BENEFIT THAT
ALL MEMBERS RECEIVE FROM BUYING AT A DISCOUNT;
  (B) ANY PERSON, FIRM OR CORPORATION THAT:
  (I) FOR FIFTY DOLLARS OR LESS SELLS TICKETS OR COUPONS VALID  FOR  USE
IN OBTAINING GOODS OR SERVICES FROM A RETAIL MERCHANT; OR
  (II)  AS  A  SERVICE  COLLATERAL TO ITS PRINCIPAL BUSINESS, AND FOR NO
ADDITIONAL CHARGE, ARRANGES FOR ITS MEMBERS OR CUSTOMERS TO PURCHASE  OR
LEASE DIRECTLY FROM PARTICULAR MERCHANTS AT A SPECIFIED DISCOUNT; OR
  (III)  CHARGES  AN  ADVANCE FEE FOR ACCESS TO SERVICE, OR MEMBER BENE-
FITS, AND ALLOWS THE BUYER TO  TERMINATE  MEMBERSHIP  BY  NOTIFYING  THE
PERSON,  FIRM  OR  CORPORATION OF INTENT TO TERMINATE MEMBERSHIP WITHOUT
FURTHER OBLIGATION TO MAKE ADDITIONAL PAYMENTS.
  4. "SELLER" SHALL MEAN ANY PERSON, PARTNERSHIP, CORPORATION OR ASSOCI-
ATION ENGAGED IN THE SALE OF DISCOUNT BUYING CLUB SERVICES.
  S 641-B. BUYER'S OR OTHER OBLIGOR'S RIGHT TO CANCEL. 1. IN ADDITION TO
ANY RIGHT OTHERWISE TO REVOKE AN OFFER, THE BUYER MAY CANCEL A  DISCOUNT
BUYING CLUB AGREEMENT UNTIL MIDNIGHT OF THE THIRD BUSINESS DAY AFTER THE
DAY  ON  WHICH  THE BUYER HAS SIGNED THE AGREEMENT. SUCH AGREEMENT SHALL
IMPOSE NO LIABILITY ON THE BUYER FOR SUCH CANCELLATION. THE SELLER SHALL
PROVIDE A REFUND OF ANY FEE PAID BY THE BUYER NOT MORE THAN TEN BUSINESS
DAYS AFTER SUCH CANCELLATION.
  2. CANCELLATION OCCURS WHEN WRITTEN NOTICE OF CANCELLATION IS GIVEN TO
THE SELLER.  NOTICE OF CANCELLATION NEED NOT TAKE A PARTICULAR FORM  AND
IS  SUFFICIENT  IF  IT INDICATES, BY ANY FORM OF WRITTEN EXPRESSION, THE
INTENTION OR DESIRE OF THE BUYER TO  CANCEL  THE  DISCOUNT  BUYING  CLUB
AGREEMENT.
  3.  NOTICE  OF  CANCELLATION,  IF GIVEN BY MAIL, SHALL BE DEEMED GIVEN
WHEN DEPOSITED IN A MAILBOX PROPERLY ADDRESSED AND POSTAGE PREPAID.
  S 641-C. FORM OF NOTICE; STATEMENT OF BUYER'S RIGHTS. 1. IN A DISCOUNT
BUYING CLUB SERVICE SALE, THE SELLER SHALL FURNISH TO THE BUYER  AT  THE
TIME  THE  BUYER  SIGNS  THE DISCOUNT BUYING CLUB AGREEMENT, A COMPLETED
FORM IN DUPLICATE, CAPTIONED "NOTICE OF CANCELLATION",  WHICH  SHALL  BE
ATTACHED TO THE AGREEMENT AND EASILY DETACHABLE, AND WHICH SHALL CONTAIN
IN NOT LESS THAN TEN-POINT TYPE THE FOLLOWING INFORMATION AND STATEMENTS
IN THE SAME LANGUAGE, E.G. SPANISH, AS THAT USED IN THE AGREEMENT:
                         NOTICE OF CANCELLATION
  (ENTER DATE OF TRANSACTION) _________________________________________
  (DATE)
  YOU  MAY  CANCEL  THIS TRANSACTION, WITHOUT ANY PENALTY OR OBLIGATION,
WITHIN THREE BUSINESS DAYS FROM THE ABOVE DATE.
  IF YOU CANCEL, ANY PROPERTY TRADED IN, ANY PAYMENTS MADE BY YOU  UNDER
THE  CONTRACT OR SALE AND ANY NEGOTIABLE INSTRUMENT EXECUTED BY YOU WILL
BE RETURNED WITHIN 10 BUSINESS DAYS FOLLOWING RECEIPT BY THE  SELLER  OF
YOUR  CANCELLATION  NOTICE, AND ANY SECURITY INTEREST ARISING OUT OF THE
TRANSACTION WILL BE CANCELLED.  IF YOU CANCEL, YOU MUST  MAKE  AVAILABLE
TO  THE  SELLER  AT YOUR RESIDENCE IN SUBSTANTIALLY AS GOOD CONDITION AS
WHEN RECEIVED, ANY GOODS DELIVERED TO YOU UNDER THIS CONTRACT  OR  SALE;
OR  YOU  MAY  IF  YOU  WISH,  COMPLY WITH THE INSTRUCTIONS OF THE SELLER
REGARDING THE RETURN SHIPMENT OF THE GOODS AT THE SELLER'S  EXPENSE  AND
RISK.  IF  YOU  DO MAKE THE GOODS AVAILABLE TO THE SELLER AND THE SELLER
DOES NOT PICK THEM UP WITHIN 20 DAYS OF  THE  DATE  OF  YOUR  NOTICE  OF
CANCELLATION, YOU MAY RETAIN OR DISPOSE OF THE GOODS WITHOUT ANY FURTHER
OBLIGATION. IF YOU FAIL TO MAKE THE GOODS AVAILABLE TO THE SELLER, OR IF

S. 5632--A                          3

YOU  AGREE TO RETURN THE GOODS TO THE SELLER AND FAIL TO DO SO, THEN YOU
REMAIN LIABLE FOR PERFORMANCE OF ALL OBLIGATIONS UNDER THE CONTRACT.  TO
CANCEL THIS TRANSACTION, MAIL OR DELIVER A SIGNED AND DATED COPY OF THIS
CANCELLATION NOTICE OR ANY OTHER WRITTEN NOTICE TO
  (NAME OF SELLER), AT (ADDRESS OF SELLER) __________________
  _________________________________
  (PLACE OF BUSINESS)  NOT LATER THAN MIDNIGHT OF
  ____________________________________ (DATE)
  I HEREBY CANCEL THIS TRANSACTION.
  _________________ (DATE)
  ______________________________ (BUYER'S SIGNATURE)
THE  SELLER SHALL COMPLETE BOTH COPIES BY ENTERING THE NAME OF THE SELL-
ER, THE ADDRESS OF THE SELLER'S PLACE OF BUSINESS, THE DATE OF THE TRAN-
SACTION, AND THE DATE, NOT EARLIER THAN THE THIRD BUSINESS DAY FOLLOWING
THE DATE OF THE TRANSACTION, BY WHICH  THE  BUYER  MAY  GIVE  NOTICE  OF
CANCELLATION.
  2.  THE  SELLER  SHALL  INFORM EACH BUYER ORALLY AT THE TIME HE OR SHE
SIGNS THE AGREEMENT OF HIS OR HER RIGHT TO CANCEL.
  3. THE SELLER SHALL INFORM EACH  BUYER  IN  A  CLEAR  AND  CONSPICUOUS
MANNER  PRIOR  TO  A BUYER SIGNING A CONTRACT FOR A DISCOUNT BUYING CLUB
AGREEMENT, THE RANGE OF COSTS OF SUCH AGREEMENT.
  4. A DISCOUNT BUYING CLUB AGREEMENT OR RECEIPT SHALL NOT  INCLUDE  ANY
CONFESSION  OF  JUDGMENT OR ANY WAIVER OF ANY OF THE RIGHTS TO WHICH THE
BUYER IS ENTITLED UNDER THIS ARTICLE INCLUDING SPECIFICALLY HIS  OR  HER
RIGHT TO CANCEL THE SALE IN ACCORDANCE WITH THE PROVISIONS OF THIS ARTI-
CLE.
  5. NO SELLER, OR ANY AGENT OR EMPLOYEE THEREOF, SHALL:
  (A)  DIRECTLY  OR  INDIRECTLY  REPRESENT  IN ANY MANNER DURING A SALES
PRESENTATION THAT A CONSUMER MUST SIGN AN AGREEMENT ON THE SAME  DAY  AS
SUCH PRESENTATION IN ORDER TO AVOID A LIFETIME PROHIBITION ON PURCHASING
DISCOUNT BUYING CLUB SERVICES FROM SUCH SELLER;
  (B)  USE  TERMS SUCH AS "FREE," OR ANY OTHER TERM OF SIMILAR IMPORT OR
MEANING THAT WOULD LEAD A CONSUMER TO BELIEVE THAT HE OR SHE MAY RECEIVE
SOMETHING OF VALUE ENTIRELY OR IN PART WITHOUT A REQUIREMENT OF  COMPEN-
SATION  IN ANY FORM, UNLESS ALL MATERIAL TERMS, RESTRICTIONS AND LIMITA-
TIONS OF THE OFFER ARE CLEARLY AND CONSPICUOUSLY DISCLOSED IN THE ADVER-
TISING;
  (C) OFFER ANY GIFTS, SWEEPSTAKES OR PRIZES AS A SOLICITATION TO ATTEND
A SALES PRESENTATION OPEN TO THE PUBLIC OR TO  SIGN  A  DISCOUNT  BUYING
CLUB  AGREEMENT  UNLESS THE SELLER HONORS THE GIFT, PROMOTION OR PARTIC-
IPATION IN THE SWEEPSTAKES IN ACCORDANCE WITH THE TERMS OF ITS PROMISE;
  (D) OFFER FREE TRIAL MEMBERSHIPS  WITHOUT  CLEARLY  AND  CONSPICUOUSLY
DISCLOSING  MATERIAL RESTRICTIONS, LIMITATIONS AND CONDITIONS, INCLUDING
ANY RESTRICTIONS ON THE BRANDS AND AMOUNT OF  MERCHANDISE  THAT  CAN  BE
PURCHASED;
  (E)  FAIL TO CLEARLY AND CONSPICUOUSLY DISCLOSE PRIOR TO THE SALE OF A
CLUB MEMBERSHIP ANY COSTS AND FEES ADDED TO  THE  PRICE  OF  MERCHANDISE
INCLUDING, BUT NOT LIMITED TO, FREIGHT AND SHIPPING COSTS, HANDLING FEES
AND POTENTIAL MANUFACTURER OR SUPPLIER PRICE INCREASES; OR
  (F) IF APPLICABLE, FAIL TO CLEARLY AND CONSPICUOUSLY DISCLOSE PRIOR TO
THE SALE OF A CLUB MEMBERSHIP THAT:
  (I)  THE FULL PRICE OF THE MERCHANDISE, PLUS APPLICABLE CHARGES, WOULD
BE REQUIRED AT THE TIME OF PLACEMENT OF THE ORDER; AND
  (II) THE MANUFACTURER OF THE ORDERED MERCHANDISE DETERMINES THE REFUND
AND CANCELLATION POLICY AND IS THE WARRANTOR OF SAID MERCHANDISE  RATHER
THAN THE SELLER.

S. 5632--A                          4

  S  641-D.  ENFORCEMENT;  PENALTIES.  1.  WHENEVER  THERE  SHALL  BE  A
VIOLATION OF THE PROVISIONS OF THIS ARTICLE, 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 BY A  SPECIAL  PROCEEDING
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  ARTICLE,  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  PARAGRAPH  SIX  OF SUBDIVISION (A) OF SECTION EIGHTY-THREE
HUNDRED THREE OF THE CIVIL PRACTICE LAW AND RULES, AND  DIRECT  RESTITU-
TION.  WHENEVER THE COURT SHALL DETERMINE THAT A VIOLATION OF THIS ARTI-
CLE HAS OCCURRED, THE COURT MAY IMPOSE A CIVIL PENALTY OF NOT MORE  THAN
ONE  THOUSAND  DOLLARS  FOR  EACH VIOLATION. 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.
  2.  NOTHING  IN THIS SECTION SHALL IN ANY WAY LIMIT RIGHTS OR REMEDIES
WHICH ARE OTHERWISE AVAILABLE UNDER LAW TO THE ATTORNEY GENERAL.
  S 2. If any provision of article 30-B of the general business law,  as
added  by  section one of this act, or the application of such provision
in certain circumstances shall be held  invalid,  the  validity  of  the
remainder  of  such article and its applicability to other circumstances
shall not be affected.
  S 3. This act shall take effect on the first of January next  succeed-
ing the date upon which it shall have become a law.

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Sponsored By

Mark Grisanti

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

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