Code Section Group

Business and Professions Code - BPC

DIVISION 7. GENERAL BUSINESS REGULATIONS [16000 - 18001]

  ( Division 7 added by Stats. 1941, Ch. 61. )

PART 3. REPRESENTATIONS TO THE PUBLIC [17500 - 17930]

  ( Part 3 added by Stats. 1941, Ch. 63. )

CHAPTER 1. Advertising [17500 - 17606]

  ( Chapter 1 added by Stats. 1941, Ch. 63. )

ARTICLE 9. Automatic Purchase Renewals [17600 - 17606]
  ( Article 9 added by Stats. 2009, Ch. 350, Sec. 1. )

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.

(Added by Stats. 2009, Ch. 350, Sec. 1. Effective January 1, 2010. Section operative December 1, 2010, pursuant to Section 17606.)

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.

(e) “Continuous service” means a plan or arrangement in which a subscription or purchasing agreement continues until the consumer cancels the service.

(Added by Stats. 2009, Ch. 350, Sec. 1. Effective January 1, 2010. Section operative December 1, 2010, pursuant to Section 17606.)

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 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. If the offer includes a free trial, the business shall also disclose in the acknowledgment 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 consumer, or 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 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 the material change.

(Added by Stats. 2009, Ch. 350, Sec. 1. Effective January 1, 2010. Section operative December 1, 2010, pursuant to Section 17606.)

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, 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 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.

(Added by Stats. 2009, Ch. 350, Sec. 1. Effective January 1, 2010. Section operative December 1, 2010, pursuant to Section 17606.)

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.

(Added by Stats. 2009, Ch. 350, Sec. 1. Effective January 1, 2010. Section operative December 1, 2010, pursuant to Section 17606.)

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 Communications 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.

(f) Service contract sellers and service contract administrators regulated by the Bureau of Electronic and Appliance Repair pursuant to Article 4.5 (commencing with Section 9855) of Chapter 20 of Division 3.

(Added by Stats. 2009, Ch. 350, Sec. 1. Effective January 1, 2010. Section operative December 1, 2010, pursuant to Section 17606.)

17606.
  

This article shall become operative on December 1, 2010.

(Added by Stats. 2009, Ch. 350, Sec. 1. Effective January 1, 2010. Note: This section prescribes a delayed operative date for Article 9, commencing with Section 17600.)

BPCBusiness and Professions Code - BPC9