Bill Text: CA SB340 | 2009-2010 | Regular Session | Amended

California Senate Bill 340 (Prior Session Legislation)

NOTE: There are more recent revisions of this legislation. Read Latest Draft

Bill Title: Advertising: automatic renewal and continuous service

Spectrum: Partisan Bill (Democrat 3-0)

Status: (Passed) 2009-10-11 - Chaptered by Secretary of State. Chapter 350, Statutes of 2009. [SB340 Detail]

Download: California-2009-SB340-Amended.html

BILL NUMBER: SB 340	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 21, 2009
	AMENDED IN SENATE  APRIL 2, 2009

INTRODUCED BY   Senator Yee
   (Coauthor: Senator DeSaulnier)
   (Coauthor: Assembly Member Torlakson)

                        FEBRUARY 25, 2009

   An act to add Article 9 (commencing with Section 17600) to Chapter
1 of Part 3 of Division 7 of the Business and Professions Code,
relating to advertising.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 340, as amended, Yee. Advertising: automatic renewal purchases.

   Existing law prohibits any person with intent directly or
indirectly to dispose of real or personal property or to perform
services, professional or otherwise, or anything of any nature
whatsoever or to induce the public to enter into any obligation
relating thereto, from making or disseminating or causing to be made
or disseminated before the public in this state, or in any state, any
statement concerning that property or those services that is untrue
or misleading, and that is known to be untrue or misleading, or for
any person to make or disseminate or cause to be made or disseminated
a statement as part of a plan or scheme with the intent not to sell
that property or those services so advertised at the price stated. A
violation of these provisions is a crime, punishable by specified
penalties, and a violation of those provisions is subject to
specified civil liability.
   This bill would require all printed marketing materials containing
an offer with automatic renewal offer terms, as defined, to have all
automatic renewal offer terms appear on an order form in the
immediate proximity to the area on the form at which the customer
selects the subscription or purchasing agreement billing terms or
where the subscription or purchasing agreement billing terms are
described. The bill would require the order form to clearly and
conspicuously disclose that the customer is agreeing to an automatic
renewal subscription or purchasing agreement. The bill would impose
similar requirements for any automatic renewal offer made over the
telephone or on an Internet Web page.
   The bill would require, in any automatic renewal offer, a business
to clearly and conspicuously state the automatic renewal offer terms
and obtain the customer's affirmative consent to those terms before
fulfilling any subscription or purchasing agreement on an automatic
renewal basis. The bill would also require an automatic renewal
subscription or purchasing agreement to clearly and conspicuously
display a toll-free telephone number, if available, or other
specified means that the customer could use for cancellation.
   The bill would also prohibit a business from representing a
product as free if the cost of the product is incorporated into the
price of the accompanying item to be purchased under automatic
renewal conditions. 
   The bill would also make continuous renewals, as defined, subject
to these provisions. 
   A violation of these provisions would not be a crime, but would be
subject to enforcement by any available civil remedies.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Article 9 (commencing with Section 17600) is added to
Chapter 1 of Part 3 of Division 7 of the Business and Professions
Code, to read:

      Article 9.  Automatic Purchase Renewals


   17600.  It is the intent of the Legislature to end the practice of
charging consumer credit cards without their explicit consent for
ongoing shipments of a product or ongoing deliveries of service.
   17601.  For the purposes of this title:
   (a) "Automatic renewal" means a plan or arrangement in which a
subscription or purchasing agreement is automatically renewed at the
end of a definite term for a subsequent term.
   (b) "Automatic renewal offer terms" means the following clear and
conspicuous disclosures:
   (1) That the subscription or purchasing agreement will continue
unless the customer notifies the business to stop.
   (2) That the customer has the right to cancel.
   (3) That the customer will be billed, credit card charged, or
other appropriate description of the payment method.
   (4) The length of the automatic renewal term or that the renewal
is continuous, unless the length of the term is chosen by the
customer.
   (5) That the price for future automatic renewal terms may change.
   (6) The minimum purchase obligation, if any.
   (c) "Clear and conspicuous" or "clearly and conspicuously" means
 a statement or communication, written or oral  
, with respect to a written statement or communication,  ,
presented in a font, size, color, location, and contrast against the
background in which it appears, compared to the other matter with
which it is presented, so that it is readily understandable,
noticeable, and readable. With respect to any promotional materials
communicated through any nonprint medium, including such formats as
telephone, television, radio, CD-ROM, DVD, or  other
electronic, magnetic, or interactive media, audio disclosures shall
be delivered in a volume and cadence sufficient to be readily audible
and understandable. 
   (d) "Continuous renewal" means a plan or arrangement in which a
subscription or purchasing agreement is continuously renewed until
the customer cancels the renewal.  
   (d) 
    (e)  "Customer" means a person who accepts an offer or
portion or features of an offer. 
   (e) 
    (f)  "Marketing materials" include any offer,
solicitation, script, product description, publication, or other
promotional materials, renewal notice, purchase order device,
fulfillment material, or any agreement for the sale or trial viewing
of products that are delivered  by mail, in person 
 in person or by mail  , television or radio broadcast,
e-mail, Internet, Internet Web page, or telephone or other
telecommunication device, or appearing in any newspaper or magazine
 or on any insert thereto,   , on any insert
thereto, or on any  Internet link or pop-up window. 
   17601.5.  All automatic renewal provisions in this article shall
apply to continuous renewals as defined in subdivision (d) of Section
17601. 
   17602.  All printed marketing materials containing an offer with
an automatic renewal term shall comply with the following:
   (a) The customer's agreement to the automatic renewal offer terms
shall be obtained in accordance with either paragraph (1) or (2) so
that the customer is given the opportunity to expressly consent to
the offer.
   (1) All automatic renewal offer terms shall appear on the order
form in immediate proximity to the area on the form at which the
customer selects the subscription or purchasing agreement billing
terms or where the subscription or purchasing agreement billing terms
are described  ,  and the order form shall clearly and
conspicuously disclose that the customer is agreeing to an automatic
renewal subscription or purchasing agreement. The automatic renewal
offer terms shall also appear on materials that can be retained by
the customer.
   (2)  All   Both  of the following:
   (A) On the front of the order form, the marketing materials shall
(i) refer to the subscription or purchasing agreement using the term
"automatic renewal" or "continuous renewal," (ii) clearly and
conspicuously state that the customer is agreeing to the automatic
renewal, and (iii) specify where the full terms of the automatic
renewal offer may be found.
   (B) The marketing materials shall clearly and conspicuously state
the automatic renewal offer terms and these shall be presented
together preceded by a title identifying them specifically as the
"Automatic Renewal Terms," "Automatic Renewal Conditions," "Automatic
Renewal Obligations," "Continuous Renewal Service Terms," or other
description of similar import.
   (b) In addition to the requirements of subdivision (a) above, all
marketing materials that offer an automatic renewal, when viewed as a
whole, shall clearly and conspicuously disclose the material terms
of the automatic renewal offer and shall not misrepresent the
material terms of the offer.
   (c) In addition to the requirements of subdivisions (a) and (b)
above, an automatic renewal shall clearly and conspicuously describe
the cancellation policy and how to cancel, including, but not limited
to, a toll-free telephone number if available, other telephone
number, postal address, or electronic mechanism on the Internet Web
site or a published page of printed material.
   17603.  In any automatic renewal offer made over the telephone, a
business shall clearly and conspicuously state the automatic renewal
offer terms prior to obtaining a customer's consent and payment
information. The business shall obtain a clear affirmative statement
from the customer agreeing to the automatic renewal offer terms after
they have been stated to the customer. The business shall send a
written acknowledgment to any customer who accepts an automatic
renewal offer over the telephone, and that acknowledgment shall
contain the toll-free telephone number if available, other telephone
number, postal address, or electronic mechanism for cancellation. An
offer consisting of printed material that directs the customer to a
telephone number as the method of ordering shall be considered an
offer made over the telephone for purposes of this title provided
that, if the printed material contains all of the automatic renewal
offer terms, the business shall not be required to send a written
acknowledgment to customers of such an offer.  In any automatic
renewal offer made over the telephone, a business shall comply with
Section 310.1(a)(6)(i) and Section 310.5(a)(5) of Title 16 of the
Code of Federal Regulations. 
   17604.  In any automatic renewal offer made on an Internet Web
page, the business shall clearly and conspicuously disclose the
automatic renewal offer terms prior to the button or icon on which
the customer must click to submit the order (the submit button). In
addition, in any automatic renewal offer made on an Internet Web page
on which the automatic renewal offer terms do not appear immediately
above the submit button, the customer shall be required to
affirmatively consent to the automatic renewal offer terms, such as
by clicking "OK," checking an unchecked box, or otherwise taking an
affirmative action immediately adjacent to the automatic renewal
offer terms before the customer submits the order. The automatic
renewal offer terms shall be preceded by a title identifying them as
the "Automatic Renewal Terms," "Automatic Renewal Conditions,"
"Automatic Renewal Obligations," "Continuous Renewal Service Terms,"
or other description of similar import. An offer consisting of
printed material that directs the customer to an Internet Web page as
the method of ordering shall be considered an offer made on an
Internet Web page for purposes of this title.
   17605.  In any automatic renewal offer, a business shall clearly
and conspicuously state the automatic renewal offer terms and obtain
the customer's affirmative consent to those terms before fulfilling
any subscription or purchasing agreement on an automatic renewal
basis. In addition, all marketing materials that offer an automatic
renewal subscription or purchasing agreement shall clearly and
conspicuously display the cancellation policy and how to cancel.
   17606.  No business shall represent that a product is "free" if
the cost of the product is incorporated into the price of the
accompanying item to be purchased under automatic renewal conditions.

   17607.  Notwithstanding Section 17534, a violation of this article
shall not be a crime. However, all available civil remedies that are
applicable to a violation of this article may be employed.