Bill Text: NY S01475 | 2019-2020 | General Assembly | Introduced

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

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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 1-0)

Status: (Passed) 2020-11-11 - SIGNED CHAP.267 [S01475 Detail]

Download: New_York-2019-S01475-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________
                                          1475
                               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
        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;
    22    c. the recurring charges that will be charged to the consumer's credit
    23  or debit card or payment account with a third party as part of the auto-
    24  matic renewal plan or arrangement, and that the amount of the charge may
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD01191-01-9
        S. 1475                             2
     1  change, if that is the case, and the amount to  which  the  charge  will
     2  change, if known;
     3    d.  the  length  of  the automatic renewal term or that the service is
     4  continuous, unless the length of the term is chosen by the consumer; and
     5    e. the minimum purchase obligation, if any.
     6    3. "Consumer" means any individual who seeks or acquires, by  purchase
     7  or lease, any goods, services, money, or credit for personal, family, or
     8  household purposes.
     9    4.  "Continuous  service"  means  a  plan  or  arrangement  in which a
    10  subscription  or  purchasing  agreement  continues  until  the  consumer
    11  cancels the service.
    12    §  527-a. Unlawful practices. 1. It shall be unlawful for any business
    13  making an automatic renewal or continuous service offer to a consumer in
    14  this state to do any of the following:
    15    a. fail to present the automatic renewal  offer  terms  or  continuous
    16  service  offer  terms  in  a  clear  and  conspicuous  manner before the
    17  subscription or purchasing agreement is fulfilled and in visual proximi-
    18  ty, or in the case of an offer conveyed by voice, in temporal proximity,
    19  to the request for consent to the offer;
    20    b. charge the consumer's  credit  or  debit  card  or  the  consumer's
    21  account  with  a  third  party  for  an  automatic renewal or continuous
    22  service without first obtaining the consumer's  affirmative  consent  to
    23  the agreement containing the automatic renewal offer terms or continuous
    24  service offer terms; or
    25    c.  fail  to  provide  an  acknowledgment  that includes the automatic
    26  renewal or continuous service  offer  terms,  cancellation  policy,  and
    27  information regarding how to cancel in a manner that is capable of being
    28  retained  by the consumer. If the offer includes a free trial, the busi-
    29  ness shall also disclose in the acknowledgment how to cancel  and  allow
    30  the  consumer  to  cancel  before  the  consumer  pays  for the goods or
    31  services.
    32    2. A business making automatic renewal or  continuous  service  offers
    33  shall  provide  a toll-free telephone number, electronic mail address, a
    34  postal address only when the seller  directly  bills  the  consumer,  or
    35  another  cost-effective, timely, and easy-to-use mechanism for cancella-
    36  tion that shall be described in the acknowledgment  specified  in  para-
    37  graph c of subdivision one of this section.
    38    3.  In  the  case  of  a material change in the terms of the automatic
    39  renewal or continuous service offer that has been accepted by a consumer
    40  in this state, the business shall provide the consumer with a clear  and
    41  conspicuous  notice  of  the  material  change  and  provide information
    42  regarding how to cancel in a manner that is capable of being retained by
    43  the consumer.
    44    4. The requirements of this article shall  apply  only  prior  to  the
    45  completion  of the initial order for the automatic renewal or continuous
    46  service, except as follows:
    47    a. The requirement in paragraph c of subdivision one of  this  section
    48  may be fulfilled after completion of the initial order.
    49    b.  The  requirement  in  subdivision  three  of this section shall be
    50  fulfilled prior to implementation of the material change.
    51    5. In any case in which a business sends any  goods,  wares,  merchan-
    52  dise, or products to a consumer, under a continuous service agreement or
    53  automatic  renewal of a purchase, without first obtaining the consumer's
    54  affirmative consent, the goods, wares, merchandise,  or  products  shall
    55  for  all  purposes  be deemed an unconditional gift to the consumer, who
    56  may use or dispose of the same in any manner he or she sees fit  without
        S. 1475                             3
     1  any  obligation  whatsoever  on  the  consumer's  part  to the business,
     2  including, but not limited to, bearing the cost  of,  or  responsibility
     3  for,  shipping  any  goods, wares, merchandise, or products to the busi-
     4  ness.
     5    6. Whenever there shall be a violation of this section, an application
     6  may  be  made  by  the attorney general in the name of the people of the
     7  state of New York to a court or justice having jurisdiction to issue  an
     8  injunction, and upon notice to the defendant of not less than five days,
     9  to  enjoin  and  restrain  the continuance of such violations; and if it
    10  shall appear to the satisfaction  of  the  court  or  justice  that  the
    11  defendant  has  in  fact,  violated  this  section, an injunction may be
    12  issued by such court or justice, enjoining and restraining  any  further
    13  violation,  without  requiring  proof that any person has, in fact, been
    14  injured or damaged thereby.  In any such proceeding the court  may  make
    15  allowances  to  the attorney general as provided in section eighty-three
    16  hundred three of the civil practice law and rules, and  direct  restitu-
    17  tion.  In  connection  with  any such proposed application, the attorney
    18  general is authorized to take proof and  make  a  determination  of  the
    19  relevant facts and to issue subpoenas in accordance with the civil prac-
    20  tice law and rules.  Whenever the court shall determine that a violation
    21  of  this  section  has occurred, the court may impose a civil penalty of
    22  not more than one hundred dollars for a single violation  and  not  more
    23  than  five  hundred  dollars  for  multiple  violations resulting from a
    24  single act or incident. A knowing violation of  this  section  shall  be
    25  punishable  by a civil penalty of not more than five hundred dollars for
    26  a single violation and not more than one thousand dollars  for  multiple
    27  violations resulting from a single act or incident. No business shall be
    28  deemed  to have violated the provisions of this section if such business
    29  shows, by a preponderance of the evidence, that the  violation  was  not
    30  intentional and resulted from a bona fide error made notwithstanding the
    31  maintenance of procedures reasonably adopted to avoid such error.
    32    7. The following are exempt from the requirements of this article:
    33    a.  any  service  provided by a business or its affiliate where either
    34  the business or its affiliate is doing business pursuant to a  franchise
    35  issued by a political subdivision of the state;
    36    b. any entity regulated by the department of financial services;
    37    c. security system alarm operators;
    38    d.  banks,  bank  holding companies, or the subsidiary or affiliate of
    39  either, or credit unions or other financial institutions, licensed under
    40  state or federal law; and
    41    e. service contract sellers and service contract administrators.
    42    § 3. This act shall take effect on the ninetieth day  after  it  shall
    43  have become a law.