Senate Bill S40A

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

                                  40--A

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 7, 2015
                               ___________

Introduced  by  Sen. HOYLMAN -- read twice and ordered printed, and when
  printed to be committed to the Committee  on  Consumer  Protection  --
  committee  discharged,  bill amended, ordered reprinted as amended and
  recommitted to said committee

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;

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

                                                           LBD01511-03-5

S. 40--A                            2

  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
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. "CONSUMER" MEANS ANY INDIVIDUAL WHO SEEKS OR ACQUIRES, BY  PURCHASE
OR LEASE, ANY GOODS, SERVICES, MONEY, OR CREDIT FOR PERSONAL, FAMILY, OR
HOUSEHOLD PURPOSES.
  4.  "CONTINUOUS  SERVICE"  MEANS  A  PLAN  OR  ARRANGEMENT  IN WHICH A
SUBSCRIPTION  OR  PURCHASING  AGREEMENT  CONTINUES  UNTIL  THE  CONSUMER
CANCELS THE SERVICE.
  S  527-A. 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.
  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

S. 40--A                            3

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. 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 RESTITU-
TION. 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 PRAC-
TICE LAW AND RULES.  WHENEVER THE COURT SHALL DETERMINE THAT A VIOLATION
OF THIS SECTION HAS OCCURRED, THE COURT MAY IMPOSE A  CIVIL  PENALTY  OF
NOT  MORE  THAN  ONE HUNDRED DOLLARS FOR A SINGLE VIOLATION AND NOT MORE
THAN FIVE HUNDRED DOLLARS  FOR  MULTIPLE  VIOLATIONS  RESULTING  FROM  A
SINGLE  ACT  OR  INCIDENT.  A KNOWING VIOLATION OF THIS SECTION SHALL BE
PUNISHABLE BY A CIVIL PENALTY OF NOT MORE THAN FIVE HUNDRED DOLLARS  FOR
A  SINGLE  VIOLATION AND NOT MORE THAN ONE THOUSAND DOLLARS FOR MULTIPLE
VIOLATIONS RESULTING FROM A SINGLE ACT OR INCIDENT. NO BUSINESS SHALL BE
DEEMED TO HAVE VIOLATED THE PROVISIONS OF THIS SECTION IF SUCH  BUSINESS
SHOWS,  BY  A  PREPONDERANCE OF THE EVIDENCE, THAT THE VIOLATION WAS NOT
INTENTIONAL AND RESULTED FROM A BONA FIDE ERROR MADE NOTWITHSTANDING THE
MAINTENANCE OF PROCEDURES REASONABLY ADOPTED TO AVOID SUCH ERROR.
  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.