Legislators Celebrate Signing of Law to Restrict Auto-Renewal Contracts

Legislation from Assemblyman Jeffrey Dinowitz and State Senator Brad Hoylman will make it easier to cancel automatically renewing contracts such as gym memberships

Albany, NY – Notoriously difficult-to-cancel contracts will soon be reined in under recently signed legislation from State Senator Brad Hoylman and Assemblyman Jeffrey Dinowitz. The legislation (A3173/S1475) was signed by Governor Andrew Cuomo on November 11 and takes effect in 90 days.

The legislation requires businesses making automatic renewal or continuous service offers to clearly present the terms of the agreement and would prohibit businesses from charging consumers without their affirmative consent.

Furthermore, the legislation mandates that consumers are able to terminate an automatic renewal or continuous service agreement online if that is how they originally signed up. Regardless of how the agreement was entered, all businesses would have to provide a cost-effective, timely, and easy-to-use mechanism for cancellation such as a toll-free telephone number or e-mail address. Many consumers discovered recently that contracts such as gym memberships often require an in-person appearance or certified letter to cancel even if they were originally entered into online.

The bill also includes requirements that any “free” giveaways (goods wares, merchandise, or products sent to a consumer) be considered an unconditional gift with no obligation whatsoever to the consumer, unless the business has obtained the customer’s affirmative consent to enter into an automatic renewal or continuous service agreement.

The Attorney General of New York State would be empowered to seek an injunction for violations and would allow the court to impose civil penalties for violations that were intentional and did not result from a bona fide error.

New York joins states such as California, Oregon, and Virginia in having comprehensive automatic renewal and continuous service laws. At least 25 states have some form of regulation of this type of contract.

Assemblyman Jeffrey Dinowitz said: “Consumers have long maligned the onerous and occasionally impossible processes that are required to stop sending their hard-earned money to businesses like gyms or bait-and-switch scams. This new law will add a layer of protection for consumers and will force an end to these predatory business practices. On behalf of New York’s consumers, thank you to State Senator Hoylman for his partnership on this legislation and to Governor Cuomo for signing it into law.”

State Senator Brad Hoylman said: “Exercising during this pandemic is hard enough – New Yorkers shouldn’t have to jump through hoops or visit a gym in person simply to quit their membership. Too many gyms, subscription boxes and other companies use misleading offers and promotions to lock unwitting customers into long-term contracts that are ridiculously difficult to get out of. This has been an issue for years, but during the pandemic, it poses a unique and severe risk to immunocompromised and elderly New Yorkers who should not have to risk their health to cancel memberships they no longer can use. I’m grateful to Governor Cuomo for signing this bill, Leader Andrea-Stewart Cousins for supporting our legislation in the Senate, and Assembly Member Dinowitz and Speaker Carl Heastie for passing it through the Assembly as well.”