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AB-2811 Advertising: automatic renewal and continuous service offers: notice and online termination.(2019-2020)

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Date Published: 05/12/2020 09:00 PM
AB2811:v97#DOCUMENT

Amended  IN  Assembly  May 12, 2020
Amended  IN  Assembly  May 04, 2020

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 2811


Introduced by Assembly Member Berman

February 20, 2020


An act to amend Section 17602 of the Business and Professions Code, relating to business regulation.


LEGISLATIVE COUNSEL'S DIGEST


AB 2811, as amended, Berman. Advertising: automatic renewal and continuous service offers: notice and online termination.
Existing law regulates automatic renewal offers and continuous service offers that businesses make to California consumers. Existing law makes it unlawful for a business that makes an automatic renewal offer or continuous service offer to a consumer in this state, among other things, to fail to present the automatic renewal or continuous service offer terms in a clear and conspicuous manner, to charge the consumer for an automatic renewal or continuous service without first obtaining the consumer’s affirmative consent, and to fail to provide an acknowledgment that includes 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, as specified.
This bill would also make it unlawful for the business to fail to provide a consumer who has accepted a free gift or trial included in an automatic renewal offer or continuous service offer, or an automatic renewal offer or continuous service offer that is made at a promotional or discounted price for a limited period of time, with 3 to 7 days’ notice before the first charge is made to the consumer’s credit or debit card or the consumer’s account with a third party. The bill would require the notice to explain how to cancel with a notice explaining how to cancel an automatic renewal offer or continuous service offer if the consumer accepted a free gift or trial, lasting for a predetermined period of time, that was included in an automatic renewal offer or continuous service offer or accepted an automatic renewal offer or continuous service offer at a promotional or discounted price, and the applicability of that price was limited to a predetermined period of time. The bill would require the notice to be provided at least 3 days before and at most 7 days before the expiration of the predetermined period of time and, if sent electronically, to include a link that directs the consumer to the cancellation process. The bill would exempt from the notice requirement a business that charges the consumer on a consumption basis according to their usage of the goods or services.
Under existing law, if a consumer accepts an automatic renewal or continuous service offer online, then the business is required to allow the consumer to terminate the offer exclusively online, which may include a termination email formatted and provided by the business.
This bill would revise and recast those provisions to additionally require the business to allow a consumer to terminate the automatic renewal or continuous service offer at will, and without engaging any further steps that impact or restrict the consumer’s ability to terminate immediately. The bill would require the business to provide a method of termination that is either on the internet website in the form of a direct link or button to cancel or by the email described above.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 17602 of the Business and Professions Code is amended to read:

17602.
 (a) It is unlawful for any business that makes an automatic renewal offer 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. If the offer also includes a free gift or trial, the offer shall include a clear and conspicuous explanation of the price that will be charged after the trial ends or the manner in which the subscription or purchasing agreement pricing will change upon conclusion of the trial.
(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, including the terms of an automatic renewal offer or continuous service offer that is made at a promotional or discounted price for a limited period of time.
(3) Fail to provide an acknowledgment that includes the automatic renewal offer terms 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 automatic renewal offer or continuous service offer includes a free gift or trial, the business shall also disclose in the acknowledgment how to cancel, and allow the consumer to cancel, the automatic renewal or continuous service before the consumer pays for the goods or services.
(4) (A) Fail to provide a consumer who has accepted a free gift or trial included in an automatic renewal offer or continuous service offer, or an automatic renewal offer or continuous service offer that is made at a promotional or discounted price for a limited period of time, with three to seven days’ notice before the first charge is made to the consumer’s credit or debit card or the consumer’s account with a third party. The notice shall explain how to cancel and, if the notice is sent electronically, include a link that directs the consumer to the cancellation process. with a notice explaining how to cancel an automatic renewal offer or continuous service offer if either of the following is true:
(i) The consumer accepted a free gift or trial, lasting for a predetermined period of time, that was included in an automatic renewal offer or continuous service offer.
(ii) The consumer accepted an automatic renewal offer or continuous service offer at a promotional or discounted price, and the applicability of that price was limited to a predetermined period of time.
(B) This paragraph shall not apply to a business if it charges the consumer on a consumption basis according to their usage of the goods or services. The notice required pursuant to subparagraph (A) shall be provided at least three days before and at most seven days before the expiration of the predetermined period of time for which the free gift or trial, or promotional or discounted price, applies.
(C) If the notice required pursuant to subparagraph (A) is sent electronically, the notice shall include a link that directs the consumer to the cancellation process.
(b) A business that makes an automatic renewal offer or continuous service offer shall provide a toll-free telephone number, electronic mail address, a postal address if the seller directly bills the consumer, or it shall provide another cost-effective, timely, and easy-to-use mechanism for cancellation that shall be described in the acknowledgment specified in paragraph (3) of subdivision (a).
(c) In addition to the requirements of subdivision (b), a business that allows a consumer to accept an automatic renewal or continuous service offer online shall allow a consumer to terminate the automatic renewal or continuous service exclusively online, at will, and without engaging any further steps that impact or restrict the consumer’s ability to terminate the automatic renewal or continuous service immediately. The business shall provide a method of termination that is either on the internet website in the form of a direct link or button to cancel or by a termination email formatted and provided by the business that a consumer can send to the business without additional information.
(d) In the case of a material change in the terms of the automatic renewal or continuous service 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.
(e) 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 (d) shall be fulfilled prior to implementation of the material change.
(f) This section shall become operative on July 1, 2018.