S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5223
 
                        2017-2018 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 7, 2017
                                ___________
 
 Introduced  by  M.  of  A. DINOWITZ, SKOUFIS, GOTTFRIED, HOOPER, ARROYO,
   STIRPE, GALEF, JOYNER, PICHARDO -- Multi-Sponsored  by  --  M.  of  A.
   BRAUNSTEIN,  COOK,  GLICK,  HIKIND,  MAGEE,  RIVERA  --  read once and
   referred to the Committee on Consumer Affairs and 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:
 
   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.
   § 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.
   §  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;
   B.  THE  DESCRIPTION  OF  THE  CANCELLATION POLICY THAT APPLIES TO THE
 OFFER;
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD03600-01-7
              

 A. 5223                             2
 
   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.
   §  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.
   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

 A. 5223                             3
 
 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.
   §  3.  This  act shall take effect on the ninetieth day after it shall
 have become a law.