BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 340|
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UNFINISHED BUSINESS
Bill No: SB 340
Author: Yee (D)
Amended: 8/20/09
Vote: 21
SENATE JUDICIARY COMMITTEE : 5-0, 4/14/09
AYES: Corbett, Harman, Florez, Leno, Walters
SENATE FLOOR : 37-0, 4/23/09 (Consent)
AYES: Aanestad, Alquist, Ashburn, Benoit, Calderon,
Cedillo, Cogdill, Corbett, Correa, Cox, Denham,
DeSaulnier, Dutton, Florez, Hancock, Hollingsworth, Huff,
Kehoe, Leno, Liu, Lowenthal, Maldonado, Negrete McLeod,
Oropeza, Padilla, Pavley, Romero, Runner, Simitian,
Steinberg, Strickland, Walters, Wiggins, Wolk, Wright,
Wyland, Yee
NO VOTE RECORDED: Ducheny, Harman
ASSEMBLY FLOOR : 77-0, 8/24/09 - See last page for vote
SUBJECT : Advertising: automatic renewal and continuous
service
offers
SOURCE : Author
DIGEST : This bill requires any business making an
automatic renewal or continuous service offer to clearly
and conspicuously, as defined, disclose terms of the offer
and obtain the consumer's affirmative consent to the offer.
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Assembly Amendments (1) made numerous technical changes and
recast language with the same intent as it left the Senate,
and includes continuous service offers, (2) added a
December 1, 2010 operative date, and (3) expands list of
companies that are exempted from the provisions of this
bill.
ANALYSIS : Existing law:
1.Provides, under the Unfair Competition Law, that unfair
competition includes any unlawful, unfair, or fraudulent
business act or practice, including any unfair,
deceptive, or untrue advertising, or any act prohibited
by the False Advertising Act.
2.Prohibits any person with the intent, directly or
indirectly, to sell any goods or services by making or
disseminating statements that the person knows, or should
know, to be untrue or misleading, and prohibits any
person from making or disseminating any untrue or
misleading statement as part of a plan or scheme to sell
goods or services at other than the stated or advertised
price.
This bill:
1.On or after December 1, 2010, makes it unlawful for any
business making an automatic renewal offer or a
continuous service offer to a consumer to do any of the
following:
A. Fail to present the automatic renewal or continuous
service in a conspicuous manner, as defined, 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;
B. Charge the consumer's credit or debit card or the
consumer's account with a third party for an automatic
renewal or continuous service offer without first
obtaining the consumer's affirmative consent; or,
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C. Fail to provide an acknowledgement 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 disclose how to cancel and
allow the consumer to cancel before the consumer pays
for the goods or services.
2.Requires a business making automatic renewal or
continuous service offers to provide a toll-free
telephone number, electronic mail address, a postal
address if the seller directly bills the consumer, or
another cost-effective, timely, and easy-to-use mechanism
for cancellation that shall be described in the written
acknowledgment.
3.Specifies that in the case of a material change in the
terms of an automatic renewal or continuous service offer
that has been accepted by the consumer, 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.
4.Specifies that the requirements of this bill shall only
apply to the completion of the initial order for the
automatic renewal or continuous service, except as
provided.
5.Provides that in any case in which a business sends any
goods, wares, merchandise, or products to a consumer,
under a continuous service or automatic renewal, without
first obtaining the consumer's affirmative consent, in
the manner required by this bill, then the goods, wares,
merchandise, or products shall be deemed an unconditional
gift to the consumer, and the business shall bear any
shipping or other related costs.
6.Provides that violation of the provisions of this bill
shall not be a crime, but that all civil remedies that
apply to a violation may be employed. Specifies, however,
that if a business complies with the provisions of this
bill in good faith, it shall not be subject to civil
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remedies.
7.Exempts from the provisions of this bill:
A. Any service provided by certain businesses or
entities, including those regulated by the California
Public Utilities Commission, the Federal
Communications Commission, or the Federal Energy
Regulatory Commission.
B. Service contract sellers regulated by the Bureau of
Electronic and Appliance Repair.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 8/26/09)
California Public Interest Research Group
Consumer Federation of California
American Federation of State, County and Municipal
Employees
California Alliance for Consumer Protection
ARGUMENTS IN SUPPORT : According to the author's office:
It has become increasingly common for consumers to
complain about unwanted charges on their credit cards
for products or services that the consumer did not
explicitly request or know they were agreeing to.
Consumers report they believed they were making a
one-time purchase of a product, only to receive
continued shipments of the product and charges on
their credit card. These unforeseen charges are often
the result of agreements enumerated in the "fine
print" on an order or advertisement that the consumer
responded to. The onus falls on the consumer to end
these product shipments and stop the unwanted charges
to their credit card.
A widespread instance of these violations resulted in
the 2006 Time, Inc. case, in which Time settled a
multi-state investigation into its automatic renewal
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offers and solicitations. The states launched their
probe after receiving complaints from consumers that
Time was billing them or charging their credit cards
for unwanted magazine subscriptions. The states'
investigation found that these mail solicitations
misled some consumers into paying for unwanted or
unordered subscriptions.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,
DeVore, Duvall, Emmerson, Eng, Evans, Feuer, Fletcher,
Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani,
Garrick, Gilmore, Hagman, Harkey, Hayashi, Hernandez,
Hill, Huber, Huffman, Jeffries, Jones, Knight, Krekorian,
Lieu, Logue, Bonnie Lowenthal, Ma, Mendoza, Miller,
Monning, Nava, Nestande, Niello, Nielsen, John A. Perez,
V. Manuel Perez, Portantino, Ruskin, Salas, Silva,
Skinner, Smyth, Solorio, Audra Strickland, Swanson,
Torlakson, Torres, Torrico, Tran, Villines, Yamada, Bass
NO VOTE RECORDED: Hall, Saldana
RJG:nl 8/26/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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