Requires disclosures and sets forth requirements and prohibitions relating to automatic renewal and continuous service offers; repealer

* GBL § 348(1), which would define terms as follows:

o "automatic renewal" would be defined as a paid subscription or purchasing agreement that is automatically renewed at the end of a definite term for a subsequent term. o "clear and conspicuous" or "clearly and conspicuously" would be defined as print in larger type than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same size, or set off from the surrounding text of the same size by symbols or other marks, in a manner that clearly calls attention to the language. In the case of an audio disclosure, "clear and conspicuous" and "clearly and conspicuously" would mean in a volume and cadence sufficient to be readily audible and understandable. o "consumer" would be defined as any natural person who seeks or acquires, by purchase or lease, any goods or services for personal, family, or household purposes. o "continuous service" would be defined as a plan or arrangement in which a subscription or purchasing agreement continues until the consumer cancels such service.

* GBL § 348(2) would provide that an automatic renewal or continuous service offer must contain clearly and conspicuously disclosed terms, including written statements advising (a) that the subscription or agreement will continue until canceled; (b) that the consumer may cancel the automatic renewal or continuous service offer at any time before it becomes effective; (c) that the recurring charges will be billed to the consumer or charged to their credit or debit card; (d) that the service is continuous, or setting forth the duration of the automatic renewal term; and (e) if there is any minimum purchase obligation.

* GBL § 348(3) would provide that an entity sending any goods under an automatic renewal subscription or agreement, or providing services under a continuous service subscription or agreement must have obtained the consumer's informed affirmative express consent in order for such subscription or agreement to be valid. In the event the subscription or agreement is invalid, then the goods or services provided shall be deemed an unconditional gift to the recipient consumer, with no obligation to the entity that provided the goods or services.

* GBL § 348(4) would provide enforcement authority for the Attorney General of New York State.

* GBL § 348(5) would exempt any services provided by an entity or its affiliate where the entity or affiliate (a) is doing business pursuant to authorization issued by the New York State Public Service Commission; (b) is regulated by the New York State Public Service Commission, the Federal Communications Commission, or the Federal Energy Regulatory Commission; or (c) any entity regulated by the State Department of Insurance.

Sections 2 and 3 of the bill would repeal General Obligations Law §§ 5-903 and 11-203, respectively, which govern automatic renewal provisions in contracts for service, maintenance or repairs.

Section 4 of the bill would provide that it take effect on the January first after it becomes law.

Existing law

General Obligations Law section 5-903 provides for automatic renewal provisions in contracts for service, maintenance or repairs.

Legislative history

This is new bill.

Statement in support

In recent years, consumers have complained to the State Consumer Protection Board about responding to "free trial" offers of products marketed on television, where the consumer opts for the "free trial" but then later, when the consumer finds his or her credit card charged, he or she learns that the complimentary product was only offered as part of an automatic renewal arrangement. Products and services that are sold pursuant to an automatic renewal or continuous service plan are not only marketed to consumers on television but are also being advertised in print media, radio, internet and telephone solicitations. Too often, these solicitations do not provide consumers with clear and conspicuous disclosures to afford them the information necessary to make an educated purchasing decision nor do they require the consumer's affirmative express consent to such disclosures to ensure that the deal terms have been read, understood and accepted.

This bill would ensure that consumers have pertinent information presented in a clear and conspicuous manner when they are considering availing themselves of a "free trial" offer, automatic renewal subscription plan or continuous service agreement. Specifically, this measure would require the offering entity to present all terms in a clear and conspicuous manner before the consumer enters into such subscription or agreement.

The bill would also prohibit a consumer's credit or debit card from being charged for an automatic renewal or continuous service agreement unless the offering entity has received the consumer's informed express affirmative consent to the subscription or agreement offer terms including the consumer's consent to a recurring charge against his or her credit or debit card. In addition, after the consumer has entered into an automatic renewal or continuous service subscription or agreement, the entity offering such subscription or agreement must provide the consumer with a writing memorializing the cost of the agreement, cancellation and other pertinent terms for the consumer.

By ensuring consumer access, understanding and acceptance-of pertinent price and cancellation terms before an individual enters into an automatic renewal or continuous service subscription or agreement, the bill would create a level playing field in the marketplace. As a result, consumers would be able to make informed decisions regarding whether a particular "free trial" offer is really free, whether they are interested in engaging in a long-term commitment for a product or service they have not used or experienced yet, and what the financial implications of such a commitment would be.

Budget implications

None.

Effective date

The Act shall take effect on the first of January next succeeding the date on which it shall have become a law.