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S01475 Summary:

BILL NOS01475A
 
SAME ASSAME AS A03173-A
 
SPONSORHOYLMAN
 
COSPNSR
 
MLTSPNSR
 
Add Art 29-BB §§527 & 527-a, Gen Bus L
 
Prohibits certain practices by businesses making an automatic renewal or continuous service offer to consumers in the state; provides exemptions.
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S01475 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         1475--A
            Cal. No. 73
 
                               2019-2020 Regular Sessions
 
                    IN SENATE
 
                                    January 15, 2019
                                       ___________
 
        Introduced  by  Sen. HOYLMAN -- read twice and ordered printed, and when
          printed to be committed to the Committee  on  Consumer  Protection  --
          reported  favorably  from  said committee, ordered to first and second
          report, ordered to a third reading,  amended  and  ordered  reprinted,
          retaining its place in the order of third reading

        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:
 
     1    Section  1. Legislative intent. It is the intent of the legislature to
     2  end the practice of ongoing charging of consumer credit or  debit  cards
     3  or  third party payment accounts without the consumers' explicit consent
     4  for ongoing shipments of a product or ongoing deliveries of service.
     5    § 2. The general business law is amended by adding a new article 29-BB
     6  to read as follows:
     7                                ARTICLE 29-BB
     8                     PROHIBITED SERVICE OFFER PRACTICES
     9  Section 527.    Definitions.
    10          527-a.  Unlawful practices.
    11    § 527. Definitions. For the purposes of this  article,  the  following
    12  definitions shall apply:
    13    1.  "Automatic  renewal"  means  a plan or arrangement in which a paid
    14  subscription or purchasing agreement is automatically renewed at the end
    15  of a definite term for a subsequent term.
    16    2. "Automatic renewal offer  terms"  means  the  following  clear  and
    17  conspicuous disclosures:
    18    a.  that  the subscription or purchasing agreement will continue until
    19  the consumer cancels;
    20    b. the description of the cancellation  policy  that  applies  to  the
    21  offer;
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD01191-04-9

        S. 1475--A                          2
 
     1    c. the recurring charges that will be charged to the consumer's credit
     2  or debit card or payment account with a third party as part of the auto-
     3  matic renewal plan or arrangement, and that the amount of the charge may
     4  change,  if  that  is  the case, and the amount to which the charge will
     5  change, if known;
     6    d.  the  length  of  the automatic renewal term or that the service is
     7  continuous, unless the length of the term is chosen by the consumer; and
     8    e. the minimum purchase obligation, if any.
     9    3. "Clear and conspicuous" means in larger type than  the  surrounding
    10  text,  or in contrasting type, font, or color to the surrounding text of
    11  the same size, or set off from the surrounding text of the same size  by
    12  symbols  or other marks, in a manner that clearly calls attention to the
    13  language. In the case of an audio disclosure,  "clear  and  conspicuous"
    14  means  in  a  volume  and  cadence  sufficient to be readily audible and
    15  understandable.
    16    4. "Consumer" means any individual who seeks or acquires, by  purchase
    17  or lease, any goods, services, money, or credit for personal, family, or
    18  household purposes.
    19    5.  "Continuous  service"  means  a  plan  or  arrangement  in which a
    20  subscription  or  purchasing  agreement  continues  until  the  consumer
    21  cancels the service.
    22    §  527-a. Unlawful practices. 1. It shall be unlawful for any business
    23  making an automatic renewal or continuous service offer to a consumer in
    24  this state to do any of the following:
    25    a. fail to present the automatic renewal  offer  terms  or  continuous
    26  service  offer  terms  in  a  clear  and  conspicuous  manner before the
    27  subscription or purchasing agreement is fulfilled and in visual proximi-
    28  ty, or in the case of an offer conveyed by voice, in temporal proximity,
    29  to the request for consent to the offer.  If the offer also  includes  a
    30  free  gift  or  trial,  the  offer shall include a clear and conspicuous
    31  explanation of the price that will be charged after the  trial  ends  or
    32  the  manner  in  which  the subscription or purchasing agreement pricing
    33  will change upon conclusion of the trial;
    34    b. charge the consumer's  credit  or  debit  card  or  the  consumer's
    35  account  with  a  third  party  for  an  automatic renewal or continuous
    36  service without first obtaining the consumer's  affirmative  consent  to
    37  the agreement containing the automatic renewal offer terms or continuous
    38  service  offer  terms, including the terms of an automatic renewal offer
    39  or continuous service offer that is made at a promotional or  discounted
    40  price for a limited period of time; or
    41    c.  fail  to  provide  an  acknowledgment  that includes the automatic
    42  renewal or continuous service  offer  terms,  cancellation  policy,  and
    43  information regarding how to cancel in a manner that is capable of being
    44  retained  by  the  consumer. If the offer includes a free gift or trial,
    45  the business shall also disclose in the acknowledgment how to cancel and
    46  allow the consumer to cancel before the consumer pays for the  goods  or
    47  services.
    48    2.  A  business  that  makes  an automatic renewal offer or continuous
    49  service offer shall provide a  toll-free  telephone  number,  electronic
    50  mail  address,  a postal address only when the seller directly bills the
    51  consumer, or another cost-effective, timely, and  easy-to-use  mechanism
    52  for cancellation that shall be described in the acknowledgment specified
    53  in paragraph c of subdivision one of this section.
    54    3. In addition to the requirements of subdivision two of this section,
    55  a  consumer who accepts an automatic renewal or continuous service offer
    56  online shall be allowed to terminate the automatic renewal or continuous

        S. 1475--A                          3
 
     1  service exclusively  online,  which  may  include  a  termination  email
     2  formatted  and  provided by the business that a consumer can send to the
     3  business without additional information.
     4    4.  In  the  case  of  a material change in the terms of the automatic
     5  renewal or continuous service offer that has been accepted by a consumer
     6  in this state, the business shall provide the consumer with a clear  and
     7  conspicuous  notice  of  the  material  change  and  provide information
     8  regarding how to cancel in a manner that is capable of being retained by
     9  the consumer.
    10    5. The requirements of this article shall  apply  only  prior  to  the
    11  completion  of the initial order for the automatic renewal or continuous
    12  service, except as follows:
    13    a. The requirement in paragraph c of subdivision one of  this  section
    14  may be fulfilled after completion of the initial order.
    15    b.  The  requirement  in  subdivision  four  of  this section shall be
    16  fulfilled prior to implementation of the material change.
    17    6. In any case in which a business sends any  goods,  wares,  merchan-
    18  dise, or products to a consumer, under a continuous service agreement or
    19  automatic  renewal of a purchase, without first obtaining the consumer's
    20  affirmative consent, the goods, wares, merchandise,  or  products  shall
    21  for  all  purposes  be deemed an unconditional gift to the consumer, who
    22  may use or dispose of the same in any manner he or she sees fit  without
    23  any  obligation  whatsoever  on  the  consumer's  part  to the business,
    24  including, but not limited to, bearing the cost  of,  or  responsibility
    25  for,  shipping  any  goods, wares, merchandise, or products to the busi-
    26  ness.
    27    7. Whenever there shall be a violation of this section, an application
    28  may be made by the attorney general in the name of  the  people  of  the
    29  state  of New York to a court or justice having jurisdiction to issue an
    30  injunction, and upon notice to the defendant of not less than five days,
    31  to enjoin and restrain the continuance of such  violations;  and  if  it
    32  shall  appear  to  the  satisfaction  of  the  court or justice that the
    33  defendant has in fact, violated  this  section,  an  injunction  may  be
    34  issued  by  such court or justice, enjoining and restraining any further
    35  violation, without requiring proof that any person has,  in  fact,  been
    36  injured  or  damaged thereby.  In any such proceeding the court may make
    37  allowances to the attorney general as provided in  section  eighty-three
    38  hundred  three  of the civil practice law and rules, and direct restitu-
    39  tion. In connection with any such  proposed  application,  the  attorney
    40  general  is  authorized  to  take  proof and make a determination of the
    41  relevant facts and to issue subpoenas in accordance with the civil prac-
    42  tice law and rules.  Whenever the court shall determine that a violation
    43  of this section has occurred, the court may impose a  civil  penalty  of
    44  not  more  than  one hundred dollars for a single violation and not more
    45  than five hundred dollars  for  multiple  violations  resulting  from  a
    46  single  act  or  incident.  A knowing violation of this section shall be
    47  punishable by a civil penalty of not more than five hundred dollars  for
    48  a  single  violation and not more than one thousand dollars for multiple
    49  violations resulting from a single act or incident. No business shall be
    50  deemed to have violated the provisions of this section if such  business
    51  shows,  by  a  preponderance of the evidence, that the violation was not
    52  intentional and resulted from a bona fide error made notwithstanding the
    53  maintenance of procedures reasonably adopted to avoid such error.
    54    8. The following are exempt from the requirements of this article:

        S. 1475--A                          4
 
     1    a. any service provided by a business or its  affiliate  where  either
     2  the  business or its affiliate is doing business pursuant to a franchise
     3  issued by a political subdivision of the state;
     4    b. any entity regulated by the department of financial services;
     5    c. security system alarm operators;
     6    d.  banks,  bank  holding companies, or the subsidiary or affiliate of
     7  either, or credit unions or other financial institutions, licensed under
     8  state or federal law; and
     9    e. sellers and administrators of a service contract, as defined pursu-
    10  ant to section seven thousand nine hundred two of the insurance law.
    11    § 3. This act shall take effect on the ninetieth day  after  it  shall
    12  have become a law.
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