Enacts the discount buying club consumer protection act

BILL NUMBER:S5632A

Title of bill

An act to amend the general business law, in relation to enacting the discount buying club consumer protection act

Purpose or general idea of bill

The purpose of this bill is to provide protections for purchasers of discount buying club services

Summary of specific provisions

This bill would:

- define "discount buying club" as any business that offers to sell or arrange the sale of good to customers at prices below retail, excluding clubs that allow customers to cancel at any time without further obligation;

-provide that consumers may cancel a discount buying club agreement within three business days;

-prohibit any discount buying club from making any statement during, a sales presentation alleging that the consumer must sign a contract on the same day or be prohibited from purchasing discount buying club services in the future; and

-provide that the Attorney General may enforce the bill's provisions by seeking an injunction and/or civil penalties of up to $1,000 per violation.

Justification

Discount buying clubs, which are often able to provide merchandise to members at prices that are lower than those found at traditional retailers, are popular with many consumers. Many discount buying clubs offer membership terms that allow members to cancel at anytime and receive a refund of their membership fee. This legislation would not apply to those discount clubs.

Some discount buying clubs require consumers to agree to multi-year contracts that contain provisions restricting a purchaser's ability to cancel without further obligation. It has been reported that some consumers have entered into such agreements without being properly informed that they would not be allowed to receive a refund of their membership fee upon cancellation In addition, there have been incidents in which consumers attending a sales presentation at a discount buying club were told that they must sign the club agreement on the same day or hey would be banned from purchasing a membership for life.

This bill would ensure that consumers entering into multi-year discount buying club agreements, some of which can reportedly involve one-time membership fees of over $3,000, are provided with basic protections, including a right to cancel such agreements within three business days This legislation is modeled on New York's door-to-door sales protection act (Article 10-A of the Personal Property Law). Additionally, in February of 2013 the Attorney General's office reached a settlement with one of the largest discount buying clubs operating in New York. This bill now reflects the provisions of that agreement to incorporate them into law.

Prior legislative history

2011-12- A.8373-A- Advanced to 3rd Reading Calendar No. 641

Fiscal implications

None to the State.

Effective date

This act shall take effect on the first of January next succeeding the date upon which it shall have become law.