senate Bill S4268

2013-2014 Legislative Session

Prohibits certain practices by businesses making an automatic renewal or continuous service offer to consumers in the state

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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
Mar 18, 2013 referred to consumer protection

S4268 - Bill Details

Current Committee:
Senate Consumer Protection
Law Section:
General Business Law
Laws Affected:
Add Art 29-BB ยงยง527 & 527-a, Gen Bus L

S4268 - Bill Texts

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Prohibits certain practices by businesses making an automatic renewal or continuous service offer to consumers in the state.

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BILL NUMBER:S4268

TITLE OF BILL: An act to amend the general business law, in relation
to prohibiting certain practices by businesses making an automatic
renewal or continuous service offer to consumers in the state

SUMMARY OF PROVISIONS:

Section One of the bill is legislative intent. The legislation amends
the General Business Law by adding a new Article 29-BB

Section Two is the definitional section and states that it shall be
unlawful for any business making an automatic renewal or continuous
service to a consumer in this state to do any of the following:

(a) fail to present the automatic renewal offer terms or continuous
service offer terms in a clear and conspicuous manner, and in visual
proximity to the request for consent to the offer, before the
subscription or purchasing agreement is fulfilled;

(b) charge the consumer's credit or debit card or the consumer's
account with a third party for an automatic renewal or continuous
service without first obtaining the consumer's affirmative consent to
the agreement containing the automatic renewal offer terms or
continuous service offer terms; or

(c) fail to provide an acknowledgment that includes the automatic
renewal or continuous service offer terms, cancellation policy and
information regarding how to cancel in a manner that is capable of
being retained by the consumer If the offer includes a free trial the
business shall also disclose in the acknowledgment how to cancel and
allow the consumer to cancel before the consumer pays for the goods or
services.

A business making automatic renewal or continuous service offers shall
provide a toll-free number, electronic mail address, a postal address
only when the seller directly bills the consumer, or another
cost-effective, timely, and easy-to-use mechanism for cancellation
that shall be described in the acknowledgment specified under this
provision.

In the case of a material change in the terms of an automatic renewal
or continuous service offer that has been accepted by a consumer in
this state, the business shall provide the consumer with a clear and
conspicuous notice of the material change and provide information
regarding how to cancel in a manner that is capable of being retained
by the consumer.

The requirements of this article shall apply only prior to the
completion of the initial order for automatic renewal or continuous
service except as follows:

(a) the requirement provided in this section may be fulfilled after
completion of the initial offer at the discretion of a business;


(b) the requirement shall be fulfilled prior to the implementation of
a material change in the terms of an automatic renewal or continuous
service offer that has been accepted by a consumer in this state.

In any case in which a business sends any goods, wares, merchandise or
products to a consumer, under a continuous service agreement or
automatic renewal of a purchase, without first obtaining the
consumer's affirmative consent, the goods, wares, merchandise, or
products shall for all purposes shall be deemed an unconditional gift
to the consumer, who may use or dispose of the same in any manner he
or she sees fit without any obligation whatsoever on the consumer's
part to the business, including, but not limited to, bearing the cost
of, or responsibility for, shipping any goods, wares, merchandise or
products to the business.

A violation of this section shall not be a crime, provided however,
that all available civil remedies that apply to a violation of this
article may be employed.

If a business complies with this act in good faith, it shall not be
subject to civil remedies.

The following are exempt from the requirements of this article:

(a) any service provided by a business or its affiliate where either
the business or its affiliate is doing business pursuant to a
franchise issued by a political subdivision of the state;

(b) any entity regulated by the department of financial services;

(c) security system alarm operators;

(d) banks, bank holding companies or the subsidiary or affiliate of
either, or credit unions or other financial institutions licensed
under state or federal law;

(e) service contract sellers and service contract administrators.

EXISTING LAW: New law

JUSTIFICATION: An increasing number of consumers are struggling with
misleading offers known as automatic renewals of merchandise and
services In a typical scenario, consumers believe they made a onetime
purchase or signed up to receive a free product Consumers then
continue to receive more deliveries of the merchandise, while
incurring additional charges to their credit cards or bank accounts
Many consumers fail to notice the agreements - generally hidden in the
fine print of an order - that they unknowingly commit to while
shopping.

This legislation would require that businesses provide automatic
renewal or continuous service offer terms in a clear and conspicuous
manner before the subscription or purchasing agreement is fulfilled,
and provide consumers with a straightforward, no- or low-cost means of
cancellation. Companies are also prohibited from advertising products
as "free" if the item is only distributed as part of an automatic
renewal agreement.


New York consumers should not be lured by false and deceptive
practices - nor should it be their responsibility to comb through the
fine print of a sales offer to determine if they will be trapped in an
automatic renewal offer. This legislation will insure that consumers
are made fully aware of the terms and conditions of any offer before
they provide credit or debit card information.

LEGISLATIVE HISTORY: New bill

FISCAL IMPLICATIONS: None to the state

LOCAL FISCAL IMPLICATIONS: None to localities

EFFECTIVE DATE: This act shall take effect on the ninetieth day after
it shall become law.

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

                                  4268

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                             March 18, 2013
                               ___________

Introduced  by  Sen. HOYLMAN -- 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  prohibiting
  certain practices by businesses making an automatic renewal or contin-
  uous service offer to consumers in the state

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

  Section 1. Legislative intent. It is the intent of the legislature  to
end  the  practice of ongoing charging of consumer credit or debit cards
or third party payment accounts without the consumers' explicit  consent
for ongoing shipments of a product or ongoing deliveries of service.
  S 2. The general business law is amended by adding a new article 29-BB
to read as follows:
                              ARTICLE 29-BB
                   PROHIBITED SERVICE OFFER PRACTICES
SECTION 527. DEFINITIONS.
        527-A. UNLAWFUL PRACTICES.
  S  527.  DEFINITIONS.  FOR THE PURPOSES OF THIS ARTICLE, THE FOLLOWING
DEFINITIONS SHALL APPLY:
  1. "AUTOMATIC RENEWAL" MEANS A PLAN OR ARRANGEMENT  IN  WHICH  A  PAID
SUBSCRIPTION OR PURCHASING AGREEMENT IS AUTOMATICALLY RENEWED AT THE END
OF A DEFINITE TERM FOR A SUBSEQUENT TERM.
  2.  "AUTOMATIC  RENEWAL  OFFER  TERMS"  MEANS  THE FOLLOWING CLEAR AND
CONSPICUOUS DISCLOSURES:
  A. THAT THE SUBSCRIPTION OR PURCHASING AGREEMENT WILL  CONTINUE  UNTIL
THE CONSUMER CANCELS;
  B.  THE  DESCRIPTION  OF  THE  CANCELLATION POLICY THAT APPLIES TO THE
OFFER;
  C. THE RECURRING CHARGES THAT WILL BE CHARGED TO THE CONSUMER'S CREDIT
OR DEBIT CARD OR PAYMENT ACCOUNT WITH A THIRD PARTY AS PART OF THE AUTO-
MATIC RENEWAL PLAN OR ARRANGEMENT, AND THAT THE AMOUNT OF THE CHARGE MAY

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD09647-01-3

S. 4268                             2

CHANGE, IF THAT IS THE CASE, AND THE AMOUNT TO  WHICH  THE  CHARGE  WILL
CHANGE, IF KNOWN;
  D.  THE  LENGTH  OF  THE AUTOMATIC RENEWAL TERM OR THAT THE SERVICE IS
CONTINUOUS, UNLESS THE LENGTH OF THE TERM IS CHOSEN BY THE CONSUMER; AND
  E. THE MINIMUM PURCHASE OBLIGATION, IF ANY.
  3. "CLEAR AND CONSPICUOUS" OR "CLEARLY  AND  CONSPICUOUSLY"  MEANS  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"
MEANS  IN  A  VOLUME  AND  CADENCE  SUFFICIENT TO BE READILY AUDIBLE AND
UNDERSTANDABLE.
  4. "CONSUMER" MEANS ANY INDIVIDUAL WHO SEEKS OR ACQUIRES, BY  PURCHASE
OR LEASE, ANY GOODS, SERVICES, MONEY, OR CREDIT FOR PERSONAL, FAMILY, OR
HOUSEHOLD PURPOSES.
  5.  "CONTINUOUS  SERVICE"  MEANS  A  PLAN  OR  ARRANGEMENT  IN WHICH A
SUBSCRIPTION  OR  PURCHASING  AGREEMENT  CONTINUES  UNTIL  THE  CONSUMER
CANCELS THE SERVICE.
  S  527.  UNLAWFUL  PRACTICES. 1. IT SHALL BE UNLAWFUL FOR ANY BUSINESS
MAKING AN AUTOMATIC RENEWAL OR CONTINUOUS SERVICE OFFER TO A CONSUMER IN
THIS STATE TO DO ANY OF THE FOLLOWING:
  A. FAIL TO PRESENT THE AUTOMATIC RENEWAL  OFFER  TERMS  OR  CONTINUOUS
SERVICE  OFFER  TERMS  IN  A  CLEAR  AND  CONSPICUOUS  MANNER BEFORE THE
SUBSCRIPTION OR PURCHASING AGREEMENT IS FULFILLED AND IN VISUAL PROXIMI-
TY, OR IN THE CASE OF AN OFFER CONVEYED BY VOICE, IN TEMPORAL PROXIMITY,
TO THE REQUEST FOR CONSENT TO THE OFFER;
  B. CHARGE THE CONSUMER'S  CREDIT  OR  DEBIT  CARD  OR  THE  CONSUMER'S
ACCOUNT  WITH  A  THIRD  PARTY  FOR  AN  AUTOMATIC RENEWAL OR CONTINUOUS
SERVICE WITHOUT FIRST OBTAINING THE CONSUMER'S  AFFIRMATIVE  CONSENT  TO
THE AGREEMENT CONTAINING THE AUTOMATIC RENEWAL OFFER TERMS OR CONTINUOUS
SERVICE OFFER TERMS; OR
  C.  FAIL  TO  PROVIDE  AN  ACKNOWLEDGMENT  THAT INCLUDES THE AUTOMATIC
RENEWAL OR CONTINUOUS SERVICE  OFFER  TERMS,  CANCELLATION  POLICY,  AND
INFORMATION REGARDING HOW TO CANCEL IN A MANNER THAT IS CAPABLE OF BEING
RETAINED  BY THE CONSUMER. IF THE OFFER INCLUDES A FREE TRIAL, THE BUSI-
NESS SHALL ALSO DISCLOSE IN THE ACKNOWLEDGMENT HOW TO CANCEL  AND  ALLOW
THE  CONSUMER  TO  CANCEL  BEFORE  THE  CONSUMER  PAYS  FOR THE GOODS OR
SERVICES.
  2. A BUSINESS MAKING AUTOMATIC RENEWAL OR  CONTINUOUS  SERVICE  OFFERS
SHALL  PROVIDE  A TOLL-FREE TELEPHONE NUMBER, ELECTRONIC MAIL ADDRESS, A
POSTAL ADDRESS ONLY WHEN THE SELLER  DIRECTLY  BILLS  THE  CONSUMER,  OR
ANOTHER  COST-EFFECTIVE, TIMELY, AND EASY-TO-USE MECHANISM FOR CANCELLA-
TION THAT SHALL BE DESCRIBED IN THE ACKNOWLEDGMENT  SPECIFIED  IN  PARA-
GRAPH C OF SUBDIVISION ONE OF THIS SECTION.
  3.  IN  THE  CASE  OF  A MATERIAL CHANGE IN THE TERMS OF THE AUTOMATIC
RENEWAL OR CONTINUOUS SERVICE OFFER THAT HAS BEEN ACCEPTED BY A CONSUMER
IN THIS STATE, THE BUSINESS SHALL PROVIDE THE CONSUMER WITH A CLEAR  AND
CONSPICUOUS  NOTICE  OF  THE  MATERIAL  CHANGE  AND  PROVIDE INFORMATION
REGARDING HOW TO CANCEL IN A MANNER THAT IS CAPABLE OF BEING RETAINED BY
THE CONSUMER.
  4. THE REQUIREMENTS OF THIS ARTICLE SHALL  APPLY  ONLY  PRIOR  TO  THE
COMPLETION  OF THE INITIAL ORDER FOR THE AUTOMATIC RENEWAL OR CONTINUOUS
SERVICE, EXCEPT AS FOLLOWS:
  A. THE REQUIREMENT IN PARAGRAPH C OF SUBDIVISION ONE OF  THIS  SECTION
MAY BE FULFILLED AFTER COMPLETION OF THE INITIAL ORDER.

S. 4268                             3

  B.  THE  REQUIREMENT  IN  SUBDIVISION  THREE  OF THIS SECTION SHALL BE
FULFILLED PRIOR TO IMPLEMENTATION OF THE MATERIAL CHANGE.
  5.  IN  ANY  CASE IN WHICH A BUSINESS SENDS ANY GOODS, WARES, MERCHAN-
DISE, OR PRODUCTS TO A CONSUMER, UNDER A CONTINUOUS SERVICE AGREEMENT OR
AUTOMATIC RENEWAL OF A PURCHASE, WITHOUT FIRST OBTAINING THE  CONSUMER'S
AFFIRMATIVE  CONSENT,  THE  GOODS, WARES, MERCHANDISE, OR PRODUCTS SHALL
FOR ALL PURPOSES BE DEEMED AN UNCONDITIONAL GIFT TO  THE  CONSUMER,  WHO
MAY  USE OR DISPOSE OF THE SAME IN ANY MANNER HE OR SHE SEES FIT WITHOUT
ANY OBLIGATION WHATSOEVER  ON  THE  CONSUMER'S  PART  TO  THE  BUSINESS,
INCLUDING,  BUT  NOT  LIMITED TO, BEARING THE COST OF, OR RESPONSIBILITY
FOR, SHIPPING ANY GOODS, WARES, MERCHANDISE, OR PRODUCTS  TO  THE  BUSI-
NESS.
  6.  A.  NOTWITHSTANDING  THE  PROVISIONS  OF  SUBDIVISION  ONE OF THIS
SECTION, A VIOLATION OF THIS SECTION SHALL NOT  BE  A  CRIME;  PROVIDED,
HOWEVER,  THAT ALL AVAILABLE CIVIL REMEDIES THAT APPLY TO A VIOLATION OF
THIS ARTICLE MAY BE EMPLOYED.
  B. IF A BUSINESS COMPLIES WITH THE PROVISIONS OF THIS ARTICLE IN  GOOD
FAITH, IT SHALL NOT BE SUBJECT TO CIVIL REMEDIES.
  7. THE FOLLOWING ARE EXEMPT FROM THE REQUIREMENTS OF THIS ARTICLE:
  A.  ANY  SERVICE  PROVIDED BY A BUSINESS OR ITS AFFILIATE WHERE EITHER
THE BUSINESS OR ITS AFFILIATE IS DOING BUSINESS PURSUANT TO A  FRANCHISE
ISSUED BY A POLITICAL SUBDIVISION OF THE STATE;
  B. ANY ENTITY REGULATED BY THE DEPARTMENT OF FINANCIAL SERVICES;
  C. SECURITY SYSTEM ALARM OPERATORS;
  D.  BANKS,  BANK  HOLDING COMPANIES, OR THE SUBSIDIARY OR AFFILIATE OF
EITHER, OR CREDIT UNIONS OR OTHER FINANCIAL INSTITUTIONS, LICENSED UNDER
STATE OR FEDERAL LAW; AND
  E. SERVICE CONTRACT SELLERS AND SERVICE CONTRACT ADMINISTRATORS.
  S 3. This act shall take effect on the ninetieth day  after  it  shall
have become a law.

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