BILL NUMBER: SB 340 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JULY 2, 2009
AMENDED IN ASSEMBLY JUNE 24, 2009
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 and
continuous service offers.
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.
The bill would, on and after June 1, 2010, make it unlawful for
any business making an automatic renewal, as defined, or continuous
service, as defined, offer to a consumer in this state to, among
other things, fail to present the automatic renewal offer terms or
continuous service offer terms in a clear and conspicuous manner,
charge the consumer for an automatic renewal or continuous service
without first obtaining the consumer's affirmative consent, and to
fail to provide 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. In the
case of a material change in the terms of the automatic renewal or
continuous service offer, the bill would require the business to
provide the consumer with a clear and conspicuous notice of the
material change and information regarding how to cancel. The bill
would declare the intent of the Legislature in this regard.
The bill would provide that in any case in which a business sends
any goods, wares, merchandise, or products to a customer
consumer , under a continuous service agreement
or automatic renewal of a purchase, without first obtaining the
customer's consumer's affirmative
consent, the goods, wares, merchandise, or products shall for all
purposes be deemed an unconditional gift to the customer
consumer .
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
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.
17601. For the purposes of this article, the following
definitions shall apply:
(a) "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.
(b) "Automatic renewal offer terms" means the following clear and
conspicuous disclosures:
(1) That the subscription or purchasing agreement will continue
until the consumer cancels.
(2) The description of the cancellation policy that applies to the
offer.
(3) 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 automatic 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.
(4) The length of the automatic renewal term or that the service
is continuous, unless the length of the term is chosen by the
consumer.
(5) The minimum purchase obligation, if any.
(c) "Clear and conspicuous" or "clearly and conspicuously" 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. In the
case of an audio disclosure, "clear and conspicuous" and "clearly and
conspicuously" means in a volume and cadence sufficient to be
readily audible and understandable.
(d) "Consumer" means any individual who seeks or acquires, by
purchase or lease, any goods, services, money, or credit for
personal, family, or household purposes.
(d)
(e) "Continuous service" means a plan or arrangement in
which a subscription or purchasing agreement continues until the
consumer cancels the service.
17602. (a) 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:
(1) 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 proximity, or in the case of an offer conveyed by voice, in
temporal proximity, to the request for consent to the offer.
(2) 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.
(3) Fail to provide 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 business shall disclose how
to cancel and allow the consumer to cancel before the consumer pays
for the goods or services.
(b) 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
customer consumer , or another
cost-effective, timely, and easy-to-use mechanism for cancellation
that shall be described in the written acknowledgment.
(c) 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.
(d) 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:
(1) The requirement in paragraph (3) of subdivision (a) may be
fulfilled after completion of the initial order.
(2) The requirement in subdivision (c) shall be fulfilled prior to
implementation of such material change.
17603. In any case in which a business sends any goods, wares,
merchandise, or products to a consumer, under a continuous service
agreement or automatic renewal of a purchase, without first obtaining
the consumer's affirmative consent as described in Section 17602 to
automatic renewal offer terms, 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
customer's 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
business.
17604. (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.
17605. 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 Regulatory
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.
(e) A bank, bank holding company, or the subsidiary or affiliate
of either, or a credit union or other financial institution, licensed
under state or federal law.
17606. This article shall become operative on June 1, 2010.