S T A T E   O F   N E W   Y O R K
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                                 2135--A

                       2015-2016 Regular Sessions

                          I N  A S S E M B L Y

                            January 15, 2015
                               ___________

Introduced  by M. of A. DINOWITZ, SKOUFIS, SCARBOROUGH, GOTTFRIED, HOOP-
  ER, ARROYO, SILVER, STIRPE, GALEF, JOYNER, PICHARDO -- Multi-Sponsored
  by -- M. of A. BRAUNSTEIN, COOK, GLICK, HIKIND, MAGEE, RIVERA,  ROBIN-
  SON,  SCHIMEL  --  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:

  Section  1. Legislative intent. It is the intent of the legislature to
end the practice of ongoing charging of consumer credit or  debit  cards
or  third party payment accounts without the consumers' explicit consent
for ongoing shipments of a product or ongoing deliveries of service.
  S 2. The general business law is amended by adding a new article 29-BB
to read as follows:
                              ARTICLE 29-BB
                   PROHIBITED SERVICE OFFER PRACTICES
SECTION 527. DEFINITIONS.
        527-A. UNLAWFUL PRACTICES.
  S 527. DEFINITIONS. FOR THE PURPOSES OF THIS  ARTICLE,  THE  FOLLOWING
DEFINITIONS SHALL APPLY:
  1.  "AUTOMATIC  RENEWAL"  MEANS  A PLAN OR ARRANGEMENT IN WHICH A PAID
SUBSCRIPTION OR PURCHASING AGREEMENT IS AUTOMATICALLY RENEWED AT THE END
OF A DEFINITE TERM FOR A SUBSEQUENT TERM.
  2. "AUTOMATIC RENEWAL OFFER  TERMS"  MEANS  THE  FOLLOWING  CLEAR  AND
CONSPICUOUS DISCLOSURES:
  A.  THAT  THE SUBSCRIPTION OR PURCHASING AGREEMENT WILL CONTINUE UNTIL
THE CONSUMER CANCELS;

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD01511-02-5

              

A. 2135--A                          2

  B. THE DESCRIPTION OF THE CANCELLATION  POLICY  THAT  APPLIES  TO  THE
OFFER;
  C. THE RECURRING CHARGES THAT WILL BE CHARGED TO THE CONSUMER'S CREDIT
OR DEBIT CARD OR PAYMENT ACCOUNT WITH A THIRD PARTY AS PART OF THE AUTO-
MATIC RENEWAL PLAN OR ARRANGEMENT, AND THAT THE AMOUNT OF THE CHARGE MAY
CHANGE,  IF  THAT  IS  THE CASE, AND THE AMOUNT TO WHICH THE CHARGE WILL
CHANGE, IF KNOWN;
  D. THE LENGTH OF THE AUTOMATIC RENEWAL TERM OR  THAT  THE  SERVICE  IS
CONTINUOUS, UNLESS THE LENGTH OF THE TERM IS CHOSEN BY THE CONSUMER; AND
  E. THE MINIMUM PURCHASE OBLIGATION, IF ANY.
  3.  "CONSUMER" MEANS ANY INDIVIDUAL WHO SEEKS OR ACQUIRES, BY PURCHASE
OR LEASE, ANY GOODS, SERVICES, MONEY, OR CREDIT FOR PERSONAL, FAMILY, OR
HOUSEHOLD PURPOSES.
  4. "CONTINUOUS SERVICE"  MEANS  A  PLAN  OR  ARRANGEMENT  IN  WHICH  A
SUBSCRIPTION  OR  PURCHASING  AGREEMENT  CONTINUES  UNTIL  THE  CONSUMER
CANCELS THE SERVICE.
  S 527-A. UNLAWFUL PRACTICES. 1. IT SHALL BE UNLAWFUL FOR ANY  BUSINESS
MAKING AN AUTOMATIC RENEWAL OR CONTINUOUS SERVICE OFFER TO A CONSUMER IN
THIS STATE TO DO ANY OF THE FOLLOWING:
  A.  FAIL  TO  PRESENT  THE AUTOMATIC RENEWAL OFFER TERMS OR CONTINUOUS
SERVICE OFFER TERMS  IN  A  CLEAR  AND  CONSPICUOUS  MANNER  BEFORE  THE
SUBSCRIPTION OR PURCHASING AGREEMENT IS FULFILLED AND IN VISUAL PROXIMI-
TY, OR IN THE CASE OF AN OFFER CONVEYED BY VOICE, IN TEMPORAL PROXIMITY,
TO THE REQUEST FOR CONSENT TO THE OFFER;
  B.  CHARGE  THE  CONSUMER'S  CREDIT  OR  DEBIT  CARD OR THE CONSUMER'S
ACCOUNT WITH A THIRD  PARTY  FOR  AN  AUTOMATIC  RENEWAL  OR  CONTINUOUS
SERVICE  WITHOUT  FIRST  OBTAINING THE CONSUMER'S AFFIRMATIVE CONSENT TO
THE AGREEMENT CONTAINING THE AUTOMATIC RENEWAL OFFER TERMS OR CONTINUOUS
SERVICE OFFER TERMS; OR
  C. FAIL TO PROVIDE  AN  ACKNOWLEDGMENT  THAT  INCLUDES  THE  AUTOMATIC
RENEWAL  OR  CONTINUOUS  SERVICE  OFFER  TERMS, CANCELLATION POLICY, AND
INFORMATION REGARDING HOW TO CANCEL IN A MANNER THAT IS CAPABLE OF BEING
RETAINED BY THE CONSUMER. IF THE OFFER INCLUDES A FREE TRIAL, THE  BUSI-
NESS  SHALL  ALSO DISCLOSE IN THE ACKNOWLEDGMENT HOW TO CANCEL AND ALLOW
THE CONSUMER TO CANCEL  BEFORE  THE  CONSUMER  PAYS  FOR  THE  GOODS  OR
SERVICES.
  2.  A  BUSINESS  MAKING AUTOMATIC RENEWAL OR CONTINUOUS SERVICE OFFERS
SHALL PROVIDE A TOLL-FREE TELEPHONE NUMBER, ELECTRONIC MAIL  ADDRESS,  A
POSTAL  ADDRESS  ONLY  WHEN  THE  SELLER DIRECTLY BILLS THE CONSUMER, OR
ANOTHER COST-EFFECTIVE, TIMELY, AND EASY-TO-USE MECHANISM FOR  CANCELLA-
TION  THAT  SHALL  BE DESCRIBED IN THE ACKNOWLEDGMENT SPECIFIED IN PARA-
GRAPH C OF SUBDIVISION ONE OF THIS SECTION.
  3. IN THE CASE OF A MATERIAL CHANGE IN  THE  TERMS  OF  THE  AUTOMATIC
RENEWAL OR CONTINUOUS SERVICE OFFER THAT HAS BEEN ACCEPTED BY A CONSUMER
IN  THIS STATE, THE BUSINESS SHALL PROVIDE THE CONSUMER WITH A CLEAR AND
CONSPICUOUS NOTICE  OF  THE  MATERIAL  CHANGE  AND  PROVIDE  INFORMATION
REGARDING HOW TO CANCEL IN A MANNER THAT IS CAPABLE OF BEING RETAINED BY
THE CONSUMER.
  4.  THE  REQUIREMENTS  OF  THIS  ARTICLE SHALL APPLY ONLY PRIOR TO THE
COMPLETION OF THE INITIAL ORDER FOR THE AUTOMATIC RENEWAL OR  CONTINUOUS
SERVICE, EXCEPT AS FOLLOWS:
  A.  THE  REQUIREMENT IN PARAGRAPH C OF SUBDIVISION ONE OF THIS SECTION
MAY BE FULFILLED AFTER COMPLETION OF THE INITIAL ORDER.
  B. THE REQUIREMENT IN SUBDIVISION  THREE  OF  THIS  SECTION  SHALL  BE
FULFILLED PRIOR TO IMPLEMENTATION OF THE MATERIAL CHANGE.

A. 2135--A                          3

  5.  IN  ANY  CASE IN WHICH A BUSINESS SENDS ANY GOODS, WARES, MERCHAN-
DISE, OR PRODUCTS TO A CONSUMER, UNDER A CONTINUOUS SERVICE AGREEMENT OR
AUTOMATIC RENEWAL OF A PURCHASE, WITHOUT FIRST OBTAINING THE  CONSUMER'S
AFFIRMATIVE  CONSENT,  THE  GOODS, WARES, MERCHANDISE, OR PRODUCTS SHALL
FOR  ALL  PURPOSES  BE DEEMED AN UNCONDITIONAL GIFT TO THE CONSUMER, WHO
MAY USE OR DISPOSE OF THE SAME IN ANY MANNER HE OR SHE SEES FIT  WITHOUT
ANY  OBLIGATION  WHATSOEVER  ON  THE  CONSUMER'S  PART  TO THE BUSINESS,
INCLUDING, BUT NOT LIMITED TO, BEARING THE COST  OF,  OR  RESPONSIBILITY
FOR,  SHIPPING  ANY  GOODS, WARES, MERCHANDISE, OR PRODUCTS TO THE BUSI-
NESS.
  6. WHENEVER THERE SHALL BE A VIOLATION OF THIS SECTION, AN APPLICATION
MAY BE MADE BY THE ATTORNEY GENERAL IN THE NAME OF  THE  PEOPLE  OF  THE
STATE  OF NEW YORK TO A COURT OR JUSTICE HAVING JURISDICTION TO ISSUE AN
INJUNCTION, AND UPON NOTICE TO THE DEFENDANT OF NOT LESS THAN FIVE DAYS,
TO ENJOIN AND RESTRAIN THE CONTINUANCE OF SUCH  VIOLATIONS;  AND  IF  IT
SHALL  APPEAR  TO  THE  SATISFACTION  OF  THE  COURT OR JUSTICE THAT THE
DEFENDANT HAS IN FACT, VIOLATED  THIS  SECTION,  AN  INJUNCTION  MAY  BE
ISSUED  BY  SUCH COURT OR JUSTICE, ENJOINING AND RESTRAINING ANY FURTHER
VIOLATION, WITHOUT REQUIRING PROOF THAT ANY PERSON HAS,  IN  FACT,  BEEN
INJURED  OR  DAMAGED THEREBY.  IN ANY SUCH PROCEEDING THE COURT MAY MAKE
ALLOWANCES TO THE ATTORNEY GENERAL AS PROVIDED IN  SECTION  EIGHTY-THREE
HUNDRED  THREE  OF THE CIVIL PRACTICE LAW AND RULES, AND DIRECT RESTITU-
TION. IN CONNECTION WITH ANY SUCH  PROPOSED  APPLICATION,  THE  ATTORNEY
GENERAL  IS  AUTHORIZED  TO  TAKE  PROOF AND MAKE A DETERMINATION OF THE
RELEVANT FACTS AND TO ISSUE SUBPOENAS IN ACCORDANCE WITH THE CIVIL PRAC-
TICE LAW AND RULES.  WHENEVER THE COURT SHALL DETERMINE THAT A VIOLATION
OF THIS SECTION HAS OCCURRED, THE COURT MAY IMPOSE A  CIVIL  PENALTY  OF
NOT  MORE  THAN  ONE HUNDRED DOLLARS FOR A SINGLE VIOLATION AND NOT MORE
THAN FIVE HUNDRED DOLLARS  FOR  MULTIPLE  VIOLATIONS  RESULTING  FROM  A
SINGLE  ACT  OR  INCIDENT.  A KNOWING VIOLATION OF THIS SECTION SHALL BE
PUNISHABLE BY A CIVIL PENALTY OF NOT MORE THAN FIVE HUNDRED DOLLARS  FOR
A  SINGLE  VIOLATION AND NOT MORE THAN ONE THOUSAND DOLLARS FOR MULTIPLE
VIOLATIONS RESULTING FROM A SINGLE ACT OR INCIDENT. NO BUSINESS SHALL BE
DEEMED TO HAVE VIOLATED THE PROVISIONS OF THIS SECTION IF SUCH  BUSINESS
SHOWS,  BY  A  PREPONDERANCE OF THE EVIDENCE, THAT THE VIOLATION WAS NOT
INTENTIONAL AND RESULTED FROM A BONA FIDE ERROR MADE NOTWITHSTANDING THE
MAINTENANCE OF PROCEDURES REASONABLY ADOPTED TO AVOID SUCH ERROR.
  7. THE FOLLOWING ARE EXEMPT FROM THE REQUIREMENTS OF THIS ARTICLE:
  A. ANY SERVICE PROVIDED BY A BUSINESS OR ITS  AFFILIATE  WHERE  EITHER
THE  BUSINESS OR ITS AFFILIATE IS DOING BUSINESS PURSUANT TO A FRANCHISE
ISSUED BY A POLITICAL SUBDIVISION OF THE STATE;
  B. ANY ENTITY REGULATED BY THE DEPARTMENT OF FINANCIAL SERVICES;
  C. SECURITY SYSTEM ALARM OPERATORS;
  D. BANKS, BANK HOLDING COMPANIES, OR THE SUBSIDIARY  OR  AFFILIATE  OF
EITHER, OR CREDIT UNIONS OR OTHER FINANCIAL INSTITUTIONS, LICENSED UNDER
STATE OR FEDERAL LAW; AND
  E. SERVICE CONTRACT SELLERS AND SERVICE CONTRACT ADMINISTRATORS.
  S  3.  This  act shall take effect on the ninetieth day after it shall
have become a law.