Bill Text: NY A03173 | 2019-2020 | General Assembly | Amended

Bill Title: Prohibits certain practices by businesses making an automatic renewal or continuous service offer to consumers in the state; provides exemptions.

Spectrum: Partisan Bill (Democrat 14-0)

Status: (Introduced) 2019-05-03 - print number 3173a [A03173 Detail]

Download: New_York-2019-A03173-Amended.html

                STATE OF NEW YORK
                               2019-2020 Regular Sessions
                   IN ASSEMBLY
                                    January 28, 2019
        Introduced  by  M.  of  A.  DINOWITZ,  GOTTFRIED, ARROYO, STIRPE, GALEF,
          JOYNER, PICHARDO, ABINANTI, FAHY, SEAWRIGHT -- Multi-Sponsored  by  --
          M.  of A. BRAUNSTEIN, COOK, GLICK, RIVERA -- read once and referred to
          the  Committee  on  Consumer  Affairs  and  Protection  --   committee
          discharged, bill amended, ordered reprinted as amended and recommitted
          to said committee
        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
     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;
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        A. 3173--A                          2
     1    b. the description of the cancellation  policy  that  applies  to  the
     2  offer;
     3    c. the recurring charges that will be charged to the consumer's credit
     4  or debit card or payment account with a third party as part of the auto-
     5  matic renewal plan or arrangement, and that the amount of the charge may
     6  change,  if  that  is  the case, and the amount to which the charge will
     7  change, if known;
     8    d. the length of the automatic renewal term or  that  the  service  is
     9  continuous, unless the length of the term is chosen by the consumer; and
    10    e. the minimum purchase obligation, if any.
    11    3.  "Clear  and conspicuous" means in larger type than the surrounding
    12  text, or in contrasting type, font, or color to the surrounding text  of
    13  the  same size, or set off from the surrounding text of the same size by
    14  symbols or other marks, in a manner that clearly calls attention to  the
    15  language.  In  the  case of an audio disclosure, "clear and conspicuous"
    16  means in a volume and cadence  sufficient  to  be  readily  audible  and
    17  understandable.
    18    4.  "Consumer" means any individual who seeks or acquires, by purchase
    19  or lease, any goods, services, money, or credit for personal, family, or
    20  household purposes.
    21    5. "Continuous service"  means  a  plan  or  arrangement  in  which  a
    22  subscription  or  purchasing  agreement  continues  until  the  consumer
    23  cancels the service.
    24    § 527-a. Unlawful practices. 1. It shall be unlawful for any  business
    25  making an automatic renewal or continuous service offer to a consumer in
    26  this state to do any of the following:
    27    a.  fail  to  present  the automatic renewal offer terms or continuous
    28  service offer terms  in  a  clear  and  conspicuous  manner  before  the
    29  subscription or purchasing agreement is fulfilled and in visual proximi-
    30  ty, or in the case of an offer conveyed by voice, in temporal proximity,
    31  to  the  request for consent to the offer.  If the offer also includes a
    32  free gift or trial, the offer shall  include  a  clear  and  conspicuous
    33  explanation  of  the  price that will be charged after the trial ends or
    34  the manner in which the subscription  or  purchasing  agreement  pricing
    35  will change upon conclusion of the trial;
    36    b.  charge  the  consumer's  credit  or  debit  card or the consumer's
    37  account with a third  party  for  an  automatic  renewal  or  continuous
    38  service  without  first  obtaining the consumer's affirmative consent to
    39  the agreement containing the automatic renewal offer terms or continuous
    40  service offer terms, including the terms of an automatic  renewal  offer
    41  or  continuous service offer that is made at a promotional or discounted
    42  price for a limited period of time; or
    43    c. fail to provide  an  acknowledgment  that  includes  the  automatic
    44  renewal  or  continuous  service  offer  terms, cancellation policy, and
    45  information regarding how to cancel in a manner that is capable of being
    46  retained by the consumer. If the offer includes a free  gift  or  trial,
    47  the business shall also disclose in the acknowledgment how to cancel and
    48  allow  the  consumer to cancel before the consumer pays for the goods or
    49  services.
    50    2. A business that makes an  automatic  renewal  offer  or  continuous
    51  service  offer  shall  provide  a toll-free telephone number, electronic
    52  mail address, a postal address only when the seller directly  bills  the
    53  consumer,  or  another cost-effective, timely, and easy-to-use mechanism
    54  for cancellation that shall be described in the acknowledgment specified
    55  in paragraph c of subdivision one of this section.

        A. 3173--A                          3
     1    3. In addition to the requirements of subdivision two of this section,
     2  a consumer who accepts an automatic renewal or continuous service  offer
     3  online shall be allowed to terminate the automatic renewal or continuous
     4  service  exclusively  online,  which  may  include  a  termination email
     5  formatted  and  provided by the business that a consumer can send to the
     6  business without additional information.
     7    4. In the case of a material change in  the  terms  of  the  automatic
     8  renewal or continuous service offer that has been accepted by a consumer
     9  in  this state, the business shall provide the consumer with a clear and
    10  conspicuous notice  of  the  material  change  and  provide  information
    11  regarding how to cancel in a manner that is capable of being retained by
    12  the consumer.
    13    5.  The  requirements  of  this  article shall apply only prior to the
    14  completion of the initial order for the automatic renewal or  continuous
    15  service, except as follows:
    16    a.  The  requirement in paragraph c of subdivision one of this section
    17  may be fulfilled after completion of the initial order.
    18    b. The requirement in  subdivision  four  of  this  section  shall  be
    19  fulfilled prior to implementation of the material change.
    20    6.  In  any  case in which a business sends any goods, wares, merchan-
    21  dise, or products to a consumer, under a continuous service agreement or
    22  automatic renewal of a purchase, without first obtaining the  consumer's
    23  affirmative  consent,  the  goods, wares, merchandise, or products shall
    24  for all purposes be deemed an unconditional gift to  the  consumer,  who
    25  may  use or dispose of the same in any manner he or she sees fit without
    26  any obligation whatsoever  on  the  consumer's  part  to  the  business,
    27  including,  but  not  limited to, bearing the cost of, or responsibility
    28  for, shipping any goods, wares, merchandise, or products  to  the  busi-
    29  ness.
    30    7. Whenever there shall be a violation of this section, an application
    31  may  be  made  by  the attorney general in the name of the people of the
    32  state of New York to a court or justice having jurisdiction to issue  an
    33  injunction, and upon notice to the defendant of not less than five days,
    34  to  enjoin  and  restrain  the continuance of such violations; and if it
    35  shall appear to the satisfaction  of  the  court  or  justice  that  the
    36  defendant  has  in  fact,  violated  this  section, an injunction may be
    37  issued by such court or justice, enjoining and restraining  any  further
    38  violation,  without  requiring  proof that any person has, in fact, been
    39  injured or damaged thereby.  In any such proceeding the court  may  make
    40  allowances  to  the attorney general as provided in section eighty-three
    41  hundred three of the civil practice law and rules, and  direct  restitu-
    42  tion.  In  connection  with  any such proposed application, the attorney
    43  general is authorized to take proof and  make  a  determination  of  the
    44  relevant facts and to issue subpoenas in accordance with the civil prac-
    45  tice law and rules.  Whenever the court shall determine that a violation
    46  of  this  section  has occurred, the court may impose a civil penalty of
    47  not more than one hundred dollars for a single violation  and  not  more
    48  than  five  hundred  dollars  for  multiple  violations resulting from a
    49  single act or incident. A knowing violation of  this  section  shall  be
    50  punishable  by a civil penalty of not more than five hundred dollars for
    51  a single violation and not more than one thousand dollars  for  multiple
    52  violations resulting from a single act or incident. No business shall be
    53  deemed  to have violated the provisions of this section if such business
    54  shows, by a preponderance of the evidence, that the  violation  was  not
    55  intentional and resulted from a bona fide error made notwithstanding the
    56  maintenance of procedures reasonably adopted to avoid such error.

        A. 3173--A                          4
     1    8. The following are exempt from the requirements of this article:
     2    a.  any  service  provided by a business or its affiliate where either
     3  the business or its affiliate is doing business pursuant to a  franchise
     4  issued by a political subdivision of the state;
     5    b. any entity regulated by the department of financial services;
     6    c. security system alarm operators;
     7    d.  banks,  bank  holding companies, or the subsidiary or affiliate of
     8  either, or credit unions or other financial institutions, licensed under
     9  state or federal law; and
    10    e. sellers and administrators of a service contract, as defined pursu-
    11  ant to section seven thousand nine hundred two of the insurance law.
    12    § 3. This act shall take effect on the ninetieth day  after  it  shall
    13  have become a law.