Bill Text: CA SB340 | 2009-2010 | Regular Session | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
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-Amended.html
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-Amended.html
BILL NUMBER: SB 340 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JUNE 16, 2009
AMENDED IN SENATE APRIL 21, 2009
AMENDED IN SENATE APRIL 2, 2009
INTRODUCED BY Senator Yee
(Coauthor: Senator DeSaulnier)
(Coauthor: Assembly Member Torlakson)
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 amended, 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 an automatic renewal
subscription or purchasing agreement to clearly and conspicuously
display a toll-free telephone number, if available, or other
specified means that 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.
The bill would also make continuous renewals, as defined, subject
to these provisions.
This bill would require all marketing materials containing an
offer with an automatic renewal, as defined, to comply with specified
requirements, including that the automatic renewal offer terms, as
defined, be presented in a clear and conspicuous manner before the
subscription or purchasing agreement is fulfilled, that the business
obtain the customer's consent to the terms, and that the marketing
materials comply with various other requirements. The bill would
require, for printed marketing materials, that the automatic renewal
offer terms be presented together preceded by a title identifying
them as the "Automatic Renewal Terms," "Continuous Service Terms," or
other similar description, in accordance with certain procedures.
The bill would impose similar requirements for automatic renewals and
continuous service offers made on an Internet Web page. The bill
would also require, in any automatic renewal offer made over the
telephone, that the business comply with federal regulations, as
specified.
The bill would provide that in any case in which a business sends
any goods, wares, merchandise, or products to a customer, under a
continuous service agreement or automatic renewal of a purchase,
without first obtaining the customer's affirmative consent, the
goods, wares, merchandise, or products shall for all purposes be
deemed an unconditional gift to the customer.
A violation of these provisions would not be a crime, but would be
subject to enforcement by any available civil remedies , except
as specified .
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
article :
(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
cancels .
(2) That the customer has the right to cancel
The description of the cancellation policy .
(3) That the customer will be billed, credit card
that his or her online payment account will be
charged, or other appropriate description of the
payment method.
(4) The length of the automatic renewal term or that the
renewal service is continuous, unless the length
of the term is chosen by the customer.
(5) That the price for future automatic renewal terms may change.
(6) The minimum purchase obligation, if any.
(c) "Clear and conspicuous" or "clearly and conspicuously"
means, with respect to a written statement or
communication,, 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. With respect to any
promotional materials communicated through any nonprint medium,
including such formats as telephone, television, radio, CD-ROM, DVD,
or other electronic, magnetic, or interactive media, audio
disclosures shall be delivered in a volume and cadence sufficient to
be readily audible and understandable.
(d) "Continuous renewal" means a plan or arrangement in which a
subscription or purchasing agreement is continuously renewed until
the customer cancels the renewal.
(e) "Customer"
means a person who accepts an offer or portion or features of an
offer. means in larger type than the surrounding text,
or in contrasting type, font, or color to the surrounding text of
the same size, or set off from the surrounding text of the same size
by symbols or other marks, in a manner that clearly calls attention
to the language. With respect to any communication through any
nonprint medium, audio disclosures shall be delivered in a volume and
cadence sufficient to be readily audible and understandable.
(d) "Continuous service" means a plan or arrangement in which a
subscription or purchasing agreement continues until the customer
cancels the service.
(e) "Customer" means a person who accepts an offer or portion or
features of an offer, but does not mean commercial customers,
including those accepting an offer through business-to-business
contracts.
(f) "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 in person or by mail, television or radio broadcast,
e-mail, Internet, Internet Web page, or telephone or other
telecommunication device, or appearing in any newspaper or magazine,
on any insert thereto, or on any Internet link or pop-up window.
17601.5. All automatic renewal provisions in this article shall
apply to continuous renewals as defined in subdivision (d) of Section
17601.
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) Both 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" or "continuous 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 and these shall be presented
together preceded by a title identifying them specifically as the
"Automatic Renewal Terms," "Automatic Renewal Conditions," "Automatic
Renewal Obligations," "Continuous Renewal Service Terms," or other
description of similar import.
(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, an automatic renewal shall clearly and conspicuously describe
the cancellation policy and how to cancel, including, but not limited
to, a toll-free telephone number if available, other telephone
number, postal address, or electronic mechanism on the Internet Web
site or a published page of printed material.
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 if available, other telephone
number, postal address, or electronic mechanism 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. In any automatic
renewal offer made over the telephone, a business shall comply with
Section 310.1(a)(6)(i) and Section 310.5(a)(5) of Title 16 of the
Code of Federal Regulations.
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," "Continuous Renewal Service Terms,"
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 the cancellation policy and how to cancel.
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.
17602. All marketing materials containing an offer with an
automatic renewal shall comply with all of the following:
(a) The automatic renewal offer terms shall be presented in a
clear and conspicuous manner and these terms, as well as the
cancellation policy, shall be presented before the subscription or
purchasing agreement is fulfilled.
(b) The business shall obtain the customer's affirmative consent
that he or she agrees to the automatic renewal offer terms.
(c) The automatic renewal offer terms, cancellation policy, and
how to cancel shall appear in a written acknowledgment that can be
retained by the customer. The written acknowledgment may be mailed to
the customer separately or included with a welcome letter or the
first invoice or first delivery of the subscription or purchase. The
customer's ability to store or print the automatic renewal offer
terms, cancellation policy, and how to cancel shall comply with this
subdivision. If the offer includes a free trial, the business shall
disclose how to cancel before the customer pays for the goods or
services.
(d) A business making automatic renewal offers shall provide a
toll-free telephone number or another cost-effective and consumer
friendly mechanism for cancellation to be described in the written
acknowledgment.
(e) The marketing materials, when viewed as a whole, shall not
misrepresent the material terms of the offer.
(f) The requirements of this article shall apply prior to the
completion of the initial order and then again only prior to any
material change in the terms of the automatic renewal.
17603. For printed marketing materials, the automatic renewal
offer terms shall be presented together, preceded by a title
identifying them as the "Automatic Renewal Terms," "Continuous
Service Terms," or other similar description. The automatic renewal
terms shall be presented in accordance with either of the following:
(a) The automatic renewal offer terms shall appear on the order
form.
(b) On the order form, the offer shall clearly and conspicuously
(1) refer to the subscription or purchasing agreement using the term
"automatic renewal," "continuous service," or other words of similar
meaning, (2) state that the customer is agreeing to the automatic
renewal, and (3) specify where the full terms of the automatic
renewal offer may be found.
17604. In any automatic renewal offer made over the telephone, a
business shall comply with Section 310.4(a)(6)(i)(C) and Section
310.5(a)(5) of Title 16 of the Code of Federal Regulations. An offer
consisting of printed material that directs the customer to place an
inbound call to a telephone number as the method of ordering shall be
considered an offer made over the telephone.
17605. In any automatic renewal or continuous service offer made
on an Internet Web page, the automatic renewal offer terms shall be
preceded by a title identifying them as the "Automatic Renewal Terms,"
"Continuous Service Terms," or other similar description.
17606. All automatic renewal provisions in this article shall
apply to a continuous service. Marketing materials for month-to-month
contracts containing an offer with an automatic renewal shall be
required to comply with the requirements of this article only prior
to the completion of the initial order and then again only prior to
any material change in the terms of the automatic renewal.
17607. In any case in which a business sends any goods, wares,
merchandise, or products to a customer, under a continuous service
agreement or automatic renewal of a purchase, without first obtaining
the customer's affirmative consent to automatic renewal offer terms
or to any material change in the terms of the automatic renewal, as
described in this article, the goods, wares, merchandise, or products
shall for all purposes be deemed an unconditional gift to the
customer, who may use or dispose of the same in any manner he or she
sees fit without any obligation whatsoever on the customer'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 business.
17608. (a) Notwithstanding Section 17534, a violation of this
article shall not be a crime. However, all available civil remedies
that apply to a violation of this article may be employed.
(b) If a business complies with the provisions of this article in
good faith, it shall not be subject to civil remedies.
17609. 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 or a
license, franchise, certificate, or other authorization issued by the
California Public Utilities Commission (CPUC).
(b) Any service provided by a business or its affiliate where
either the business or its affiliate is regulated by the CPUC, the
Federal Communication Commission, or the Federal Energy Regulation
Commission.
(c) Any entity regulated by the Department of Insurance.
(d) Alarm company operators, as defined in Section 7590.2, and
regulated pursuant to Chapter 11.6 (commencing with Section 7590) of
Division 3.
17610. This article shall become operative on June 1, 2010.
