House File 229 - Enrolled




                              HOUSE FILE       
                              BY  COMMITTEE ON COMMERCE

                              (SUCCESSOR TO HSB 89)
 \5
                                   A BILL FOR
 \1
                                         House File 229

                             AN ACT
 RELATING TO THE REGULATION OF FREE OFFERS AND BUYING CLUB
    MEMBERSHIPS.

 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
    Section 1.  Section 552A.3, Code 2015, is amended to read as
 follows:
    552A.3  Right of cancellation == requirement of writing.
    The requirements of sections 555A.1 through 555A.5, relating
 to door=to=door sales, shall apply to sales of buying club
 memberships, irrespective of the place or manner of sale or the
 purpose for which they are purchased, except that in connection
 with the sale of a buying club membership transacted through
 the internet by a company primarily engaged in the sale of
 goods through the internet, section 555A.4, subsections 1 and 3
 shall not apply. In addition to the requirements of chapter
 555A, a contract shall not be enforceable against a person
 acquiring a membership in a buying club unless the contract is
 in writing and signed by the purchaser.
    Sec. 2.  Section 714.16, subsection 2, Code 2015, is amended
 by adding the following new paragraph:
    NEW PARAGRAPH.  o.  (1)  It is an unlawful practice for
 a person to make a free offer to a consumer, or impose a
 financial obligation on the consumer as a result of the
 consumer's acceptance of a free offer, unless the person
 provides the consumer with clear and conspicuous information
 regarding the terms of the free offer before the consumer
 agrees to accept the free offer, including at a minimum all of
 the following:
    (a)  Identification of all goods or services, or enrollments
 in a membership, subscription, or service contract, that the
 consumer will receive or incur a financial obligation for as a
 result of accepting the free offer.
    (b)  The cost to the consumer of any financial obligation
 the consumer will incur if the consumer accepts the free offer,
 including any fees or charges.
    (c)  Any requirement, if applicable, that the consumer take
 affirmative action to reject the free offer and instructions
 about how the consumer is to indicate the consumer's rejection
 of the free offer.
    (d)  A statement, if applicable, that by accepting the free
 offer, the consumer will become obligated for additional goods
 or services, or enrollment in a membership, subscription, or
 service contract, unless the consumer takes affirmative action
 to cancel the free offer or otherwise reject receipt of the
 additional goods or services or the enrollment in a membership,
 subscription, or service contract.
    (e)  The consumer's right to cancel the free offer using
 procedures specifically intended for that purpose that, at a
 minimum, enable the consumer to cancel by calling a toll=free
 telephone number or to cancel in a manner substantially similar
 to that by which the consumer accepted the free offer.
    (f)  The time period during which the consumer must cancel in
 order to avoid incurring a financial obligation as a result of
 accepting the free offer.
    (g)  If applicable, the consumer's right to receive a credit
 on goods or services received as a result of accepting the free
 offer when the goods or services are returned or rejected, and
 the time period during which the goods or services must be
 returned or rejected for the purpose of receiving a credit.
    (2)  It is an unlawful practice for a person to cause
 a consumer to incur a financial obligation as a result of
 accepting a free offer unless one of the following occurs:
    (a)  The person obtains the consumer's billing information
 directly from the consumer. For purposes of this subparagraph
 division, a person obtains a consumer's billing information
 directly from the consumer if the billing information is
 obtained by the person or by the person's agent or employee.
    (b)  The consumer gives affirmative consent at the time the
 consumer accepts a free offer for the person to provide billing
 information to a person other than the person making the free
 offer.
    (3)  It is an unlawful practice for a person to impose
 a financial obligation on a consumer as a result of the
 consumer's acceptance of a free offer unless the consumer's
 affirmative consent to the terms of the free offer as disclosed
 in subparagraph (1) is obtained.
    (4)  It is an unlawful practice for a person that makes a
 free offer to a consumer to fail or refuse to cancel the free
 offer if the consumer has used, or made reasonable efforts to
 attempt to use, one of the procedures required to be available
 to the consumer as described in subparagraph (1), subparagraph
 division (e).
    (5)  This paragraph "o" does not apply to free offers made
 in connection with services that are subject to the federal
 Communications Act of 1934, 47 U.S.C. {151 et seq.
    (6)  For purposes of this paragraph "o":
    (a)  "Affirmative consent" means a consumer's agreement to
 incur a financial obligation as a result of accepting a free
 offer, or to provide the consumer's billing information, given
 or made in the manner specifically identified for the consumer
 to indicate the consumer's agreement.
    (b)  "Billing information" means any record or information
 compiled or maintained with respect to a consumer that
 identifies the consumer and provides a means by which the
 consumer's financial obligation incurred by accepting a free
 offer may be paid or otherwise satisfied, including but not
 limited to information pertaining to a consumer's credit card,
 payment card, charge card, debit card, checking, savings,
 or other banking account, and electronic funds transfer
 information.
    (c)  "Clear and conspicuous information" means language that
 is readily understandable and presented in such size, color,
 contrast, and location, or audibility and cadence, compared to
 other language, as to be readily noticed and understood, and
 that is in close proximity to the request for consent to a free
 offer.
    (d)  "Consumer" means an individual who seeks to accept or
 accepts a free offer.
    (e)  (i)  "Free offer" means an offer of goods or services
 without cost, or for a one=time payment to cover only
 incidental charges such as shipping or handling, to a consumer
 that, if accepted, causes the consumer to incur a financial
 obligation for any of the following:
    (A)  The goods or services received.
    (B)  Additional goods or services other than those initially
 received.
    (C)  Enrollment in a membership, subscription, or service
 contract as a result of accepting the offer.
    (ii)  "Free offer" does not include a free good or service
 that is received by a consumer as a result of the consumer's
 entering into an agreement for enrollment in a membership,
 subscription, or service contract that is not otherwise a free
 offer or a consequence of the consumer's agreement to accept
 a free offer.
    (iii)  "Free offer" does not include enrollment in a
 subscription to a publication, including but not limited to a
 magazine, newspaper, or other periodical, if the consumer may
 cancel the subscription at any time and receive a refund for
 issues not yet distributed, or in the case of a newspaper, a
 refund for newspapers that would otherwise be distributed after
 the expiration of the current month.


                                                             
                               KRAIG PAULSEN
                               Speaker of the House


                                                             
                               PAM JOCHUM
                               President of the Senate
    I hereby certify that this bill originated in the House and
 is known as House File 229, Eighty=sixth General Assembly.


                                                             
                               CARMINE BOAL
                               Chief Clerk of the House
 Approved                , 2015


                                                             
                               TERRY E. BRANSTAD
                               Governor

                             -1-