senate Bill S1385

2013-2014 Legislative Session

Prohibits any party from charging consumers for unordered or unrequested goods or services; repealer

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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 08, 2014 referred to consumer protection
Jan 09, 2013 referred to consumer protection

S1385 - Bill Details

See Assembly Version of this Bill:
A1779
Current Committee:
Law Section:
General Business Law
Laws Affected:
Rpld & add §396 sub 2 ¶a, Gen Bus L
Versions Introduced in Previous Legislative Sessions:
2011-2012: S336, A145
2009-2010: S4931

S1385 - Bill Texts

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Prohibits any person, firm, partnership, association or corporation, or agent or employee thereof from offering for sale tangible or intangible goods or services which have not been actually ordered or requested by the recipient; provides that any receipt of unordered goods shall be deemed a gift to the recipient; prohibits the requesting of payment for unordered goods and services; makes related provisions including prohibiting the recipient from waiving any of his or her rights hereunder.

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BILL NUMBER:S1385

TITLE OF BILL: An act to amend the general business law, in relation
to unordered goods and to repeal paragraph a of subdivision 2 of
section 396 of such law relating thereto

PURPOSE: To prohibit any party from charging consumers for unordered
or unrequested goods or services and prohibit "negative option"
agreement.

SUMMARY OF PROVISIONS:

Section one of the bill would repeal the existing paragraph (a) of
Subdivision two of section 396 of the General Business Law, and
substitute a new paragraph (a) with the provisions outlined below.
Subparagraph 1 would prohibit any persons, firm, partnership,
association or corporation or agent or employee thereof from offering
for sale tangible or intangible goods or services which have not been
actually ordered or requested by the recipient.

Any receipt of unordered goods shall be deemed a gift to the
recipient. Subparagraph 2. prohibits the requesting of payment for
unordered goods and services. Subparagraph 3 prohibits the proposing
of any contract or contract terms for unordered or unrequested goods
which purportedly become effective upon the recipient's failure to
respond with a specified time. Any such proposal is deemed to be void
as against public policy. Subparagraph 4 requires that any unordered
or unrequested tangible goods (defined as any good sent to the
recipient in a container) must be prominently marked on the container
in bold letters "THIS IS A GIFT PAYMENT NOT REQUIRED FOR THIS ITEM".

Subparagraph 5 requires senders at least thirty days prior to the
sending or furnishing of any unordered or unrequested intangible goods
or services to mail or deliver a written notice separate from any
other document mailed to the recipient, containing a short, clear and
coherent statement in at least 10-point bold type, that a good or
service is to be sent or furnished to the recipient, the name and a
short description of the good or service, the appropriate date or
dates such good or service is to be sent or furnished, that the good
or service is a gift, and that payment is not required. Subparagraph
6 would exclude from coverage such membership or club arrangement in
which the recipient receives goods at specified intervals or plans
where the recipient agrees to receive goods without further
obligation.

Subparagraph 7 excludes from the bill's provision unordered services
or unrequested services in connection with the renewal or extension of
such contract, providing the renewal or extension of such contract,
providing the renewal was otherwise permitted by law or the terms of
such contract and that no fee or charge has been imposed for the
unordered or unrequested service which is in addition to the service
or services which were the subject of such contract.

Subparagraph 8 permits any recipient who has been injured by any
violation of the act to bring an action to enjoin the unlawful act or
practice or for damages. A minimum damage amount of $50.00 IS provided


for violations of the act. Prevailing plaintiffs may be awarded
reasonable attorney's fees. Further, the subparagraph makes clear that
the receipt of bill statements or requests for payment for unordered
or unrequested goods or services itself constitutes injury under the
act, even if the recipient has no 'provable economic damages.

Subparagraph 9 clarifies that this statute does not limit any rights
or remedies otherwise available to recipients under other provisions
of law, including but not limited to the Uniform Commercial Code, or
Article 22-A of the General. Business Law, New York's deceptive
practices statute.

Subparagraph 10 prohibits any waiver by the recipient, by agreement or
otherwise, of any of his or her rights.

EXISTING LAW: The present statute (paragraph a of subdivision 2 of
section 396 of the General Business Law) prohibits businesses from
offering for sale "goods, wares or merchandise" not ordered by the
recipient, and declares that any such goods sent to a consumer shall
be considered a "gift".

JUSTIFICATION: This statute is directed against two related
unscrupulous business practices: billing for goods and services which
the consumer did not order or request, and "negative option plan" --
offers by businesses which purport to be accepted if not rejected by
the consumer within a stated period of time. In 1966, the Legislature
enacted Chapter 66 of the Laws of 1966, in response to a long-standing
practice of shipping unordered goods to consumers and then demanding
payments either unconditionally or unless the goods were returned at
the consumer's expense. (See. Givens, Practice Commentaries.
McKinney's Cons. Laws of N.Y. Book 19. Gen. Bus. Law 196 (Supp. At
99). In his memorandum in support of this legislation Attorney General
Lefkowitz stated that his office had "received a virtual avalanche of
complaints that reordered merchandise had been forwarded by mail or
hand delivered to resident...." Many persons receiving such
merchandise and particularly parents of children, to whom unordered
merchandise has been delivered, had been pressured into paying for
this merchandise. Although the practice appears to have abated
somewhat since the enactment of Chapter 66. The Consumer Protection
Board (CPB) continues to receive complaints of unordered book and
merchandise.

Further, some complaints have concerned unrequested services. For
example, the CPB has received complaints concerning a firm which has
billed customers for telephone directory advertisements the customers
never requested. As New York's unordered goods statute, contained at
Subdivision 2 of Section 396 of the General Business Law, applies to
"goods, wares or merchandise", it is unclear whether unsolicited
services are covered by the statute. Further, the present statute's
provision requiring a disclosure on the container that the merchandise
is a gift appears inapplicable to intangible goods and services. This
proposal seeks to address these statutory ambiguities by making
Section 396(2) applicable to unordered intangible goods (ie. computer
software) and to services. Further, business continue to use deceptive
and unreasonable "negative option plans"offers which purport to be
accepted if not responded by the customer within a stated. period of
time. In 1991, Telecommunications Inc. (TCI), the nation's largest


cable operator, announced a controversial new plan in which
subscribers were offered at no charge the Encore movie channel for a
short period. However at the end of the free promotional period, TCI
billed every customer who had not affirmatively indicated within the
specified period that he or she did not wish the service. Present
remedied against such "negative option plans" are at best inadequate
under present law. Use of such a plan may be a deceptive practice
under Section 349 of the General Business Law, but the CPB is unaware
of a legal decision which has specifically so held. (See. Givens.
Practice Commentaries McKinney's Cons. Laws of N.Y., Book 19 Gen. Bus.
Law 396 (Supp. At 99.) Moreover, although contract law generally
regards legal offers not binding if not affirmatively responded to,
limited cases exist where a party's failure to act will lead to a
binding contract. A common example of this, is the situation where the
recipient of the offer uses or obtains the benefit of goods or
services for a period of time without rejecting them.

This harsh legal rule is a trap for the unwary consumer. For example,
where the company's service offering rapid change, such as in the area
of cable television, the consumer may be unaware that the new service
he or she has been offered (i.e. new television channel) requires
additional payment. Finally, consumers have no private right of action
under the Federal Trade Commission's "negative option rule, which is
limited in scope to plans in which a seller periodically offers to
send subscribers new merchandise." (16 CFR Part 425). As this proposal
would prevent consumers from unfairly having to make payment for
requested services as well as goods, and establishes a clear legal
rule in this ear, the bill deserves enactment.

LEGISLATIVE HISTORY: First introduced in 1997. 2008-2009 S.4797 -
Died in Committee;
2009-2010, S.4931 - Died in Committee; 2011-2012, S.336 - Died in
Committee

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: This act shall take effect immediately.

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

                                  1385

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 9, 2013
                               ___________

Introduced  by  Sen.  MONTGOMERY  -- 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 unordered goods
  and to repeal paragraph a of subdivision 2 of section 396 of such  law
  relating thereto

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

  Section 1. Paragraph a of subdivision 2 of section 396 of the  general
business  law  is  REPEALED  and  a  new paragraph a is added to read as
follows:
  A. (1) NO PERSON, FIRM, PARTNERSHIP, ASSOCIATION  OR  CORPORATION,  OR
AGENT  OR EMPLOYEE THEREOF, SHALL, IN ANY MANNER, OR BY ANY MEANS, OFFER
FOR SALE, LEASE, OR CHARGE ANY FEE FOR ANY TANGIBLE OR INTANGIBLE GOODS,
OR SERVICES WHICH HAVE NOT BEEN ACTUALLY ORDERED  OR  REQUESTED  BY  THE
RECIPIENT,  EITHER  ORALLY  OR IN WRITING. THE RECEIPT OF ANY SUCH UNOR-
DERED GOODS, OR FURNISHING OF SUCH SERVICES SHALL FOR  ALL  PURPOSES  BE
DEEMED  AN UNCONDITIONAL GIFT TO THE RECIPIENT WHO MAY USE OR DISPOSE OF
THE SAME IN ANY MANNER HE OR SHE SEES FIT WITHOUT ANY OBLIGATION ON  HIS
OR HER PART TO THE SENDER.
  (2) NO PERSON, FIRM, PARTNERSHIP, ASSOCIATION OR CORPORATION, OR AGENT
OR  EMPLOYEE  THEREOF, SHALL BILL OR OTHERWISE REQUEST PAYMENT FOR GOODS
OR SERVICES NOT ACTUALLY ORDERED OR REQUESTED BY THE RECIPIENT.
  (3) NO PERSON, FIRM, PARTNERSHIP, ASSOCIATION OR CORPORATION, OR AGENT
OR EMPLOYEE THEREOF, SHALL PROPOSE A CONTRACT  OR  CONTRACT  TERM  WHICH
PROVIDES  FOR A FEE OR CHARGE FOR GOODS OR SERVICES NOT ACTUALLY ORDERED
OR REQUESTED BY THE RECIPIENT AND WHICH PURPORTEDLY MAKES THE  RECIPIENT
LEGALLY BOUND TO MAKE PAYMENT FOR SUCH GOODS OR SERVICES UPON THE RECIP-
IENT'S  FAILURE  TO RESPOND WITHIN A SPECIFIED PERIOD OF TIME.  ANY SUCH
PROPOSAL SHALL BE DEEMED TO BE VOID AS AGAINST PUBLIC POLICY AND  WHOLLY
UNENFORCEABLE.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD03863-01-3

S. 1385                             2

  (4)  ANY  TANGIBLE  GOODS SENT WHICH HAVE NOT BEEN ACTUALLY ORDERED OR
REQUESTED BY THE RECIPIENT SHALL BE PROMINENTLY MARKED UPON THE CONTAIN-
ER THEREOF IN BOLD LETTERS AS FOLLOWS: "THIS IS A  GIFT.    PAYMENT  NOT
REQUIRED FOR THIS ITEM."
  (5)  AT LEAST THIRTY DAYS PRIOR TO THE SENDING OF ANY INTANGIBLE GOODS
OR FURNISHING OF ANY SERVICES OFFERED FOR SALE OR LEASE WHICH  HAVE  NOT
BEEN  ACTUALLY  ORDERED  OR REQUESTED BY THE RECIPIENT, THE SENDER SHALL
MAIL OR DELIVER A WRITTEN NOTICE SEPARATE FROM ANY OTHER DOCUMENT MAILED
OR DELIVERED TO THE RECIPIENT, CONTAINING A SHORT,  CLEAR  AND  COHERENT
STATEMENT, IN A SIZE EQUAL TO AT LEAST TEN-POINT BOLD TYPE, THE NAME AND
A  SHORT DESCRIPTION OF THE GOOD OR SERVICE TO BE SENT OR FURNISHED, THE
APPROXIMATE DATE SUCH GOOD OR SERVICE IS TO BE SENT OR  FURNISHED,  THAT
THE GOOD OR SERVICE IS A GIFT, AND THAT PAYMENT IS NOT REQUIRED FOR THIS
GOOD OR SERVICE.
  (6) THIS PARAGRAPH SHALL NOT APPLY TO A MEMBERSHIP OR CLUB ARRANGEMENT
WHICH  IS  REGULATED  BY THE FEDERAL TRADE COMMISSION PURSUANT TO 16 CFR
425 AS SUCH SECTION MAY FROM TIME TO TIME BE AMENDED, OR OTHER  CONTRAC-
TUAL  PLANS  OR  ARRANGEMENTS  SUCH  AS  CONTINUITY  PLANS, SUBSCRIPTION
ARRANGEMENTS,  STANDING  ORDER  ARRANGEMENTS,  SUPPLEMENTS  AND   SERIES
ARRANGEMENTS  UNDER WHICH THE SELLER PERIODICALLY SHIPS MERCHANDISE TO A
CONSUMER WHO HAS CONSENTED IN ADVANCE TO RECEIVE SUCH MERCHANDISE  ON  A
PERIODIC BASIS.
  (7)  THIS  PARAGRAPH  SHALL  NOT  APPLY TO OFFERS FOR SALE OR LEASE OF
UNORDERED OR UNREQUESTED SERVICES IN  CONNECTION  WITH  THE  RENEWAL  OR
EXTENSION  OF  AN  EXISTING  CONTRACT, PROVIDED SUCH OFFER WAS OTHERWISE
PERMITTED BY LAW OR THE TERMS OF SUCH CONTRACT AND FURTHER PROVIDED THAT
NO UNORDERED OR UNREQUESTED SERVICE IS OFFERED IN  CONNECTION  WITH  THE
RENEWAL  OR  EXTENSION FOR A FEE OR CHARGE IN ADDITION TO ANY SERVICE OR
SERVICES WHICH WERE THE SUBJECT OF SUCH CONTRACT.
  (8) ANY RECIPIENT WHO HAS BEEN INJURED BY REASON OF ANY  VIOLATION  OF
THIS PARAGRAPH MAY BRING AN ACTION IN HIS OR HER OWN NAME TO ENJOIN SUCH
UNLAWFUL ACT OR PRACTICE, AN ACTION TO RECOVER HIS OR HER ACTUAL DAMAGES
OR  FIFTY  DOLLARS,  WHICHEVER  IS GREATER, OR BOTH SUCH ACTIONS. IN ANY
ACTION UNDER THIS SUBPARAGRAPH, THE COURT MAY  AWARD  REASONABLE  ATTOR-
NEY'S FEES TO A PREVAILING PLAINTIFF. ANY RECIPIENT WHO HAS RECEIVED ANY
BILL  STATEMENT  OR  REQUEST  FOR  PAYMENT  WITH RESPECT TO ANY GOODS OR
SERVICES DEEMED TO BE AN UNCONDITIONAL GIFT UNDER THIS  PARAGRAPH  SHALL
BE DEEMED TO BE INJURED UNDER THIS SUBPARAGRAPH.
  (9)  NOTHING  IN  THIS  PARAGRAPH SHALL IN ANY WAY LIMIT THE RIGHTS OR
REMEDIES WHICH ARE OTHERWISE AVAILABLE TO A RECIPIENT  UNDER  ANY  OTHER
PROVISION  OF LAW, INCLUDING, BUT NOT LIMITED TO, THE UNIFORM COMMERCIAL
CODE AND ARTICLE TWENTY-TWO-A OF THIS CHAPTER.
  (10) WAIVER OF RIGHTS BY ANY RECIPIENT UNDER THIS PARAGRAPH  SHALL  BE
DEEMED CONTRARY TO PUBLIC POLICY AND SHALL BE UNENFORCEABLE AND VOID.
  (11)  FOR THE PURPOSES OF THIS PARAGRAPH: (I) THE TERM "TANGIBLE GOOD"
SHALL MEAN ANY GOOD SENT TO THE RECIPIENT BY MEANS OF A CONTAINER; AND
  (II) THE TERM "INTANGIBLE GOOD" SHALL MEAN ANY GOOD  WHICH  IS  NOT  A
TANGIBLE GOOD.
  S 2. This act shall take effect immediately.

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