Bill Text: CA SB340 | 2009-2010 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Advertising: automatic renewal and continuous service

Spectrum: Partisan Bill (Democrat 3-0)

Status: (Passed) 2009-10-11 - Chaptered by Secretary of State. Chapter 350, Statutes of 2009. [SB340 Detail]

Download: California-2009-SB340-Introduced.html

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BILL NUMBER: SB 340	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Yee

                        FEBRUARY 25, 2009

   An act to add Article 9 (commencing with Section 17600) to Chapter
1 of Part 3 of Division 7 of the Business and Professions Code,
relating to advertising.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 340, as introduced, Yee. Advertising: automatic renewal
purchases.
   Existing law prohibits any person with intent directly or
indirectly to dispose of real or personal property or to perform
services, professional or otherwise, or anything of any nature
whatsoever or to induce the public to enter into any obligation
relating thereto, from making or disseminating or causing to be made
or disseminated before the public in this state, or in any state, any
statement concerning that property or those services that is untrue
or misleading, and that is known to be untrue or misleading, or for
any person to make or disseminate or cause to be made or disseminated
a statement as part of a plan or scheme with the intent not to sell
that property or those services so advertised at the price stated. A
violation of these provisions is a crime, punishable by specified
penalties, and a violation of those provisions is subject to
specified civil liability.
   This bill would require all printed marketing materials containing
an offer with automatic renewal offer terms, as defined, to have all
automatic renewal offer terms appear on an order form in the
immediate proximity to the area on the form at which the customer
selects the subscription or purchasing agreement billing terms or
where the subscription or purchasing agreement billing terms are
described. The bill would require the order form to clearly and
conspicuously disclose that the customer is agreeing to an automatic
renewal subscription or purchasing agreement. The bill would impose
similar requirements for any automatic renewal offer made over the
telephone or on an Internet Web page.
   The bill would require, in any automatic renewal offer, a business
to clearly and conspicuously state the automatic renewal offer terms
and obtain the customer's affirmative consent to those terms before
fulfilling any subscription or purchasing agreement on an automatic
renewal basis. The bill would also require all marketing materials
that offer an automatic renewal subscription or purchasing agreement
to clearly and conspicuously display a toll-free telephone number the
customer could use for cancellation.
   The bill would also prohibit a business from representing a
product as free if the cost of the product is incorporated into the
price of the accompanying item to be purchased under automatic
renewal conditions.
   A violation of these provisions would not be a crime, but would be
subject to enforcement by any available civil remedies.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Article 9 (commencing with Section 17600) is added to
Chapter 1 of Part 3 of Division 7 of the Business and Professions
Code, to read:

      Article 9.  Automatic Purchase Renewals


   17600.  It is the intent of the Legislature to end the practice of
charging consumer credit cards without their explicit consent for
ongoing shipments of a product or ongoing deliveries of service.
   17601.  For the purposes of this title:
   (a) "Automatic renewal" means a plan or arrangement in which a
subscription or purchasing agreement is automatically renewed at the
end of a definite term for a subsequent term.
   (b) "Automatic renewal offer terms" means the following clear and
conspicuous disclosures:
   (1) That the subscription or purchasing agreement will continue
unless the customer notifies the business to stop.
   (2) That the customer may cancel at any time.
   (3) That the customer will be billed, credit card charged, or
other appropriate description of the payment method depending on the
method described to the customer, or chosen by the customer on the
front of the order form, and that the bill, charge, or other payment
method will take place before the start of each new automatic renewal
term.
   (4) The length of the automatic renewal term, unless the length of
the term is disclosed or chosen by the customer on the order form.
   (5) That the price paid by the customer for future automatic
renewal terms may change over time.
   (6) The minimum purchase obligation, if there is one.
   (7) All other material terms and conditions of the automatic
renewal feature, if any.
   (c) "Clear and conspicuous" or "clearly and conspicuously" means a
statement or communication, written or oral, presented in a font,
size, color, location, and contrast against the background in which
it appears, compared to the other matter with which it is presented,
so that it is readily understandable, noticeable, and readable. If
that statement or communication modifies, explains, or clarifies
other information with which it is presented, it must be presented so
that it is in close proximity to the other information and in the
same manner (audible or visible) so it is easily noticeable and
readily understandable and it must not be obscured in any manner.
With respect to any promotional materials communicated through any
nonprint medium, including such formats as telephone, television,
radio, CD-ROM, DVD, other electronic, magnetic, or interactive media,
audio disclosures shall be delivered in a volume and cadence
sufficient to be readily audible and understandable.
   (d) "Customer" means a person who responds to and accepts an offer
or portion or features of an offer.
   (e) "Marketing materials" include any offer, solicitation, script,
product description, publication, or other promotional materials,
renewal notice, purchase order device, fulfillment material, or any
agreement for the sale or trial viewing of products that are
delivered by mail, in person, television or radio broadcast, e-mail,
Internet, Internet Web page, or telephone or other telecommunication
device, or appearing in any newspaper or magazine or on any insert
thereto, or Internet Web page, Internet link or pop-up window.
   17602.  All printed marketing materials containing an offer with
an automatic renewal term shall comply with the following:
   (a) The customer's agreement to the automatic renewal offer terms
shall be obtained in accordance with either paragraph (1) or (2) so
that the customer is given the opportunity to expressly consent to
the offer.
   (1) All automatic renewal offer terms shall appear on the order
form in immediate proximity to the area on the form at which the
customer selects the subscription or purchasing agreement billing
terms or where the subscription or purchasing agreement billing terms
are described and the order form shall clearly and conspicuously
disclose that the customer is agreeing to an automatic renewal
subscription or purchasing agreement. The automatic renewal offer
terms shall also appear on materials that can be retained by the
customer.
   (2) All of the following:
   (A) On the front of the order form, the marketing materials shall
(i) refer to the subscription or purchasing agreement using the term
"automatic renewal," (ii) clearly and conspicuously state that the
customer is agreeing to the automatic renewal, and (iii) specify
where the full terms of the automatic renewal offer may be found.
   (B) The marketing materials shall clearly and conspicuously state
the automatic renewal offer terms on the first page or front side of
the document in which they are placed, presented together preceded by
a title identifying them specifically as the "Automatic Renewal
Terms," "Automatic Renewal Conditions," "Automatic Renewal
Obligations," or other description of similar import. However, the
automatic renewal offer terms may appear on the reverse side of the
order form if all of the following conditions are met:
   (i) The subscription or purchasing agreement is being offered to
the customer as part of a bundled offer from a bank on an application
form for a new credit card.
   (ii) All or substantially all of the terms of the credit card
application are presented on the reverse of the application form.
   (iii) On the front of the application is a clear and conspicuous
statement indicating that the customer has read and is agreeing to
the terms of an "automatic renewal" subscription or purchasing
agreement and that statement is in immediate proximity to both an
affirmative action required by the customer, such as a signature or
the checking of an unchecked box and a clear and conspicuous
statement directing the customer to the automatic renewal offer terms
on the back of the application form.
   (iv) The affirmative action required by clause (iii) of this
subparagraph shall be in addition to the action taken by the customer
indicating acceptance of the credit card application terms.
   (v) The automatic renewal offer terms are presented together
preceded by a title identifying them as the "Automatic Renewal Terms,"
"Automatic Renewal," "Automatic Renewal Obligations," or other
description of similar import and are presented in a manner that
conspicuously sets them apart from the credit card terms.
   (vi) When taken as a whole, the offer effectively conveys to a
consumer that he or she is obtaining a product or service for which
he or she may incur charges, and that the product or service is
subject to automatic renewal.
   (b) In addition to the requirements of subdivision (a) above, all
marketing materials that offer an automatic renewal, when viewed as a
whole, shall clearly and conspicuously disclose the material terms
of the automatic renewal offer and shall not misrepresent the
material terms of the offer.
   (c) In addition to the requirements of subdivisions (a) and (b)
above, all marketing materials that offer an automatic renewal shall
clearly and conspicuously describe the methods by which the customer
may cancel, including, but not limited to, a toll-free telephone
number and shall include in all marketing materials the toll-free
telephone number that may be used for cancellation.
   17603.  In any automatic renewal offer made over the telephone, a
business shall clearly and conspicuously state the automatic renewal
offer terms prior to obtaining a customer's consent and payment
information. The business shall obtain a clear affirmative statement
from the customer agreeing to the automatic renewal offer terms after
they have been stated to the customer. The business shall send a
written acknowledgment to any customer who accepts an automatic
renewal offer over the telephone, and that acknowledgment shall
contain the toll-free telephone number for cancellation. An offer
consisting of printed material that directs the customer to a
telephone number as the method of ordering shall be considered an
offer made over the telephone for purposes of this title provided
that, if the printed material contains all of the automatic renewal
offer terms, the business shall not be required to send a written
acknowledgment to customers of such an offer.
   17604.  In any automatic renewal offer made on an Internet Web
page, the business shall clearly and conspicuously disclose the
automatic renewal offer terms prior to the button or icon on which
the customer must click to submit the order (the submit button). In
addition, in any automatic renewal offer made on an Internet Web page
on which the automatic renewal offer terms do not appear immediately
above the submit button, the customer shall be required to
affirmatively consent to the automatic renewal offer terms, such as
by clicking "OK," checking an unchecked box, or otherwise taking an
affirmative action immediately adjacent to the automatic renewal
offer terms before the customer submits the order. The automatic
renewal offer terms shall be preceded by a title identifying them as
the "Automatic Renewal Terms," "Automatic Renewal Conditions,"
"Automatic Renewal Obligations," or other description of similar
import. An offer consisting of printed material that directs the
customer to an Internet Web page as the method of ordering shall be
considered an offer made on an Internet Web page for purposes of this
title.
   17605.  In any automatic renewal offer, a business shall clearly
and conspicuously state the automatic renewal offer terms and obtain
the customer's affirmative consent to those terms before fulfilling
any subscription or purchasing agreement on an automatic renewal
basis. In addition, all marketing materials that offer an automatic
renewal subscription or purchasing agreement shall clearly and
conspicuously display a toll-free telephone number the customer may
use for cancellation.
   17606.  No business shall represent that a product is "free" if
the cost of the product is incorporated into the price of the
accompanying item to be purchased under automatic renewal conditions.

   17607.  Notwithstanding Section 17534, a violation of this article
shall not be a crime. However, all available civil remedies that are
applicable to a violation of this article may be employed.