Reforming Automatic Renewal and Continuous Service Offers Act
The bill aims to regulate automatic renewal and continuous service offers by requiring businesses to provide clear terms and obtain customer consent. It includes provisions for free trials, cancellation policies, refund processes, and notification of changes. Exemptions are provided for specific industries, and subscriptions exceeding one month must notify customers before expiration. Failure to comply with these regulations may result in the offer being considered an automatic renewal.
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Presentation Transcript
HB 106 AN ACT relating to the termination of automatic renewal offers and continuous service offers. Sponsors: Rep Susan Westrom, Rep Buddy Wheatley
Breakdown Summary Section 1 contains definitions relevant to the bill. Within this Section is a definition for business that was inserted by House Committee Substitute 1. In that definition, HCS 1 provided exemptions for banks, credit unions, savings associations, consumer loan companies, and insurers. House Floor Amendment 1 provided further exemptions. For the service contract industry, an exemption was provided for any person or entity providing a service contract as described in KRS 304.5-070. HFA 1 also, at the request of General Motors and the Alliance of Automotive Innovation, provided an exemption for in- vehicle subscription services. The Senate Committee Substitute further modifies this definition to exempt providers of in-vehicle, roadside assistance, and travel subscription services at the request of AAA. The Senate Committee Substitute defines consumer as an individual who acquires goods and services for personal, family, or household purposes to clarify that the bill does not apply to business to business agreements, as requested by Lexis Nexis Risk Solutions.
Section 2 is the meat of the bill. It requires that: The business provides the terms of the offer in a clear and conspicuous manner. These must be provided close in time and, if the offer is written, close in visual proximity, to the request for the customer s affirmative consent to agree to the offer. If the offer includes a free trial, it must also explain, in a clear and conspicuous manner, the price that the customer will be charged at the end of the free trial. Obtain the customer s affirmative consent to the offer for a continuous service or automatic renewal. Provide the customer with an acknowledgment detailing the terms of the offer, the cancellation and refund policies, and how to cancel and obtain a refund. These details must be presented in a manner that is easy for the customer to understand and, if the offer includes a free trial, must include how to cancel the offer prior to the conclusion of the free trial so as to avoid a charge. Provide a cost-effective, easy to use method for cancellation or obtaining a refund, such as a toll- free telephone number, email address, or postal address. Allow a consumer who accepts an automatic renewal or continuous service in one medium, such as online, the option to cancel the service or obtain a refund using the same medium. Allow a customer to change his or her method of payment. Provide the customer with advance notice of any material change to the terms of an automatic renewal or continuous service that he or she has accepted, prior to implementation of that material change. Such notice must be made in a clear and conspicuous manner.
Section 3 deals with subscriptions and gift subscriptions as defined in the bill. It requires that: For any subscription exceeding one (1) month, the business must notify the customer of the impending expiration of the subscription at least one (1) month, but no more than two (2) months, prior to the expiration of the subscription. If any business provides a subscription to a customer but then continues to bill or charge the customer after the conclusion of the subscription, then that subscription shall be considered an automatic renewal or continuous service and, therefore, be subject to the other provisions of the bill. If a business continues to bill or charge the purchaser of a gift subscription, or begins to bill or charge the recipient of a gift subscription without first obtaining his or her affirmative consent to a purchasing agreement, then it shall be considered an automatic renewal or continuous service and, therefore, be subject to the other provisions of the bill.
Section 4 deals with memberships and gift memberships as defined in the bill. It requires that: For any membership exceeding one (1) month, the business must notify the customer of the impending expiration of the membership at least one (1) month, but no more than two (2) months, prior to the expiration of the membership. If any business provides a membership to a customer but then continues to bill or charge the customer after the conclusion of the membership, then that membership shall be considered an automatic renewal or continuous service and, therefore, be subject to the other provisions of the bill. If a business continues to bill or charge the purchaser of a gift membership, or begins to bill or charge the recipient of a gift membership without first obtaining his or her affirmative consent to a purchasing agreement, then it shall be considered an automatic renewal or continuous service and, therefore, be subject to the other provisions of the bill.
Sections 5-7 Section 5 provides that if a business fails to obtain a customer s affirmative consent to any automatic renewal or continuous service, as required by Section 2 of the bill, then any goods, services, or access to facilities provided to the customer in accordance with the automatic renewal or continuous service shall be considered an unconditional gift to the consumer. Section 6 was added by House Floor Amendment 1 at the request of AT&T, Comcast, and Verizon. It creates an exemption for services provided by businesses operating pursuant to a franchise issued by a political subdivision or regulated by the Kentucky Public Service Commission, the Federal Communications Commission, or the Federal Energy Regulatory Commission. Section 7 provides that any business violating Sections 2, 3, 4, or 5 shall be fined $5,000 for each offense. However, it also provides that no civil penalty shall be enforced against a business that makes a good faith effort to comply with Sections 2, 3, 4, or 5. House Floor Amendment 1 also changed the measure of time that a business must send reminders about the expiration of subscriptions and memberships under Sections 3 and 4 form days to months.
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