BILL NUMBER: S433

SPONSOR: SKOUFIS
 
TITLE OF BILL:

An act to amend the election law, in relation to recurring contributions
solicited by a candidate, political campaign, political committee, party
committee, or not-for-profit or for-profit entity

 
PURPOSE:

To require affirmative consent for recurring contributions solicited by
a candidate, political campaign, political committee, party committee,
not-for-profit entity or for-profit entity; to prohibit a recurring
contribution as a default in solicitations and provide for the refund of
such recurring contributions and penalties for violation of this
section.

 
SUMMARY OF PROVISIONS:

Section 1 amends the Election Law by adding a new section 14-114-a with
the following provision:  Subdivision 1 requires any candidate, poli-
              

tical campaign, political committee, party committee, not-for-profit
entity or for-profit entity soliciting a recurring contribution to
receive the affirmative consent of the contributor at the time of the
initial contribution.

Subdivision 2 prohibits the solicitation of a contribution, whether
electronically or by paper, to have as its default, a recurring contrib-
ution.

Passive action by the contributor, such as failing to uncheck a pre-
checked box, shall not meet the requirements of affirmative consent
under this section.

Subdivision 3 requires that all solicitations for contributions as
described in subdivision one of this section shall state that such
contribution may be cancelled by the contributor at any time.

Subdivision 4 requires that any candidate, political campaign, political
committee, party committee, not-for-profit entity, or for-profit entity
accepting a recurring donation shall: (a) provide contributors with a
receipt for the initial contribution and each recurring contribution
that clearly discloses all of the terms and conditions of the contrib-
ution within 24 hours of the initial contribution and each recurring
contribution; (b) provide all the information needed to cancel recurring
contributions in each communication with respect to the recurring
contribution and any solicitation for additional contributions; and

(c) to immediately cancel recurring contributions upon the request of
the contributor.

Subdivision 5 states provides for a penalty as follows: any entity that
violates the provisions of this section shall return the entire amount
of the contributions made, less the initial installment of the contrib-
ution, and pay a civil fine equal to five times the amount of the
contribution to be refunded or one thousand dollars, whichever is great-
er.

Section 2 sets forth the effective date which is immediately.

 
JUSTIFICATION:

As long as there are politicians, there will be political donations.
Unfortunately, there will also be campaigns that try to game the system
by fraudulently soliciting contributions and tricking vulnerable donors
into giving more than they intend-or can even afford. Predatory
fundraising hurts donors and fosters mistrust of the system, which, in
turn, impacts honest campaigns and political organizations.

One of the most blatant examples of predatory fundraising occurs when a
donor believes they are making a one-time online contribution and is
tricked into unknowingly authorizing a recurring contribution.  This
usually happens when the donor is required to uncheck a box-often
appearing in a very small, hard to read type to opt-out of authorizing
recurring contributions.

Perhaps the most high-profile and egregious example of this practice was
committed by the 2020 Trump campaign. Not only did its solicitation
emails include a pre-checked recurring contribution box, they also
included another pre-checked box that increased the contribution
frequency from once a month to once a week. These practices were high-
lighted in a New York Times article that was first published on April 3,
2021 and later updated on April 14, 2021.  Victims of this type of
predatory fundraising have been defrauded of tens and even hundreds of
thousands of dollars, maxing out credit cards and encountering other
financial difficulties before realizing they've been scammed. Most
victims are seniors who are less technologically savvy.

This legislation will prohibit default recurring contributions and
require campaigns and political organizations to obtain clear consent
from any donor who wishes to set up a recurring contribution. It will
also enable donors to cancel a recurring contribution at any time.

A prohibition without a penalty does not deter predatory fundraising.
This is why this bill has a strict penalty. Any entity that violates
this law will be required to return the amount of contributions made,
less the initial installment of the contribution, and to pay a civil
penalty equal to five times the amount to be refunded or one thousand
dollars, whichever is greater.

 
LEGISLATIVE HISTORY:

Senate

2022: 59431, Referred to Elections Assembly

2022: A8182A, Ordered to third reading

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
This act shall take effect immediately.