Requires businesses to notify consumers of an upcoming automatic renewal or continuous service charge to the consumer's account forty-five days prior to such charge; requires businesses to include instructions on how to cancel such renewal or charge in the notice to the consumer.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A3245D
SPONSOR: Paulin TITLE OF BILL:
An act to amend the general business law, in relation to requiring busi-
nesses to notify consumers of an upcoming automatic renewal or contin-
uous service charge forty-five days prior to such charge
PURPOSE::
To require businesses to notify consumers of an upcoming automatic
renewal or continuous service charge fifteen to forty five days prior to
such Charge on the consumer's account.
SUMMARY OF PROVISIONS::
Section one of the bill amends section 527-a of the general business law
to require all businesses notify consumers of an upcoming automatic
renewal or continuous service charge to the consumer's account fifteen
to forty five days prior to such renewal or charge. The notice shall
either include instructions on how to cancel such renewal or charge
containing a model termination email with which the consumer can notify
the busi- ness of its subscription cancellation or send an email that
contains a link to a website where the consumer can terminate the
renewal Or charge.
Section two provides the effective date.
JUSTIFICATION::
In 2022, most New Yorkers pay for at'least one service' through a
subscription model. Subscription services have become more common in
recent years, but as millions of Americans stayed home during the
pandemic, they turned to digital entertainment and signed up for recur-
ring meal delivery services, exercise and diet programs, and monthly
clothing subscriptions. This gave many more businesses an incentive to
shift to a subscription model that can be paid for and accessed in the
comfort of your own home.
Most AmericanS are no longer sheltering in place, but the popularity of
these subscription services has continued to grow. The Washington Poet
reports that the "subscription economy" will grow to $1.5 trillion by
2025, more than double what it was worth in 2021.* Interestingly, most
Americans do not even realize just how much they are spending on
subscription services. CNBC news reports that close.to a third of
consumers underestimate how much they are spending on subscriptions by
$100 to $200 dollars every month. The same report explains that 42% of
people did not realize they are still paying for a subscription they no
longer use.**
While many of these services are extremely convenient and accessible,
many businesses have adopted deceptive subscription marketing practices
that make it very easy to sign up but far more difficult to cancel. In
addition, users often unknowingly sign-up or agree to automatic
renewals, meaning the company will automatically charge a 'user's
account when their contract ends so that the user is then locked in for
another year of service.
Recently, complaints around this issue have grown exponentially. Just
last year, the Federal Trade Commission (FTC) announced its intention to
crack down on these deceptive marketing practices - winning a $10
million settlement from a children's education company that unfairly
billed users and made it difficult for them to cancel the service. Over
200,000 Americans are receiving refunds as a result of the settlement,
demonstrating just how common this issue is for people. This bill wbuld
require a business to notify a consumer of an upcoming automatic renewal
or continuous service charge 15 to 30 days prior to such charge on a
customer's account. The notice must include instructions on how to
cancel their subscription in one of two descriptive methods. This legis-
lation will ensure transparency from subscription service companies and
help protect New Yorkers- from deceptive marketing practices that these
companies often utilize.
LEGISLATIVE HISTORY::
New Bill.
FISCAL IMPLICATIONS::
None to the state.
EFFECTIVE DATE::
This act shall take effect immediately.
* https://www.washingtonpost.com/business/2021/06/02/ automatic-rene-
wals-ftcsubscriptions/
** https://www.cnbc.com/2022/06/02/consumers-spend-133-more- monthlyon-
subscriptionsthan-they-realize.html
