BILL NUMBER: SB 916 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Ackerman
FEBRUARY 23, 2001
An act to amend Section 1812.101 of the Civil Code, relating to
discount buying organizations.
LEGISLATIVE COUNSEL'S DIGEST
SB 916, as introduced, Ackerman. Discount buying organizations.
Existing law regulates membership contracts for discount buying
organizations, as defined. Certain discount buying organizations are
exempted from these provisions, including organizations that provide
a full refund of membership fees, as specified, maintain a bond of
$20,000,and comply with certain other requirements.
This bill would additionally exclude certain discount buying
organizations limiting refunds to members who were charged with goods
or services without authorization or who did not receive promised
services, that maintain a bond of $50,000, and that comply with other
specified requirements, from the above-described provisions of law.
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. Section 1812.101 of the Civil Code is amended to read:
1812.101. For the purpose of this title, the following
definitions shall be used:
(a) "Discount buying organization" means any person or persons,
corporation, unincorporated association, or other organization which,
for a consideration, provides or purports to provide its clients or
the clients or members of any other discount buying organization with
the ability to purchase goods or services at discount prices, except
that such an organization shall not include: (1) any discount
buying organization in which the total consideration paid by each
client or member in any manner whatsoever for the purchase of
discount buying services from the organization (A) does not exceed a
one-time fee of fifty dollars ($50) or an annual fee of twenty-five
dollars ($25) to be paid on a yearly basis, or (B) does not exceed a
one-time or annual fee of fifty dollars ($50) and the organization
provides a majority of the goods and services through purchases by
members who walk in to a fixed location operated by the organization;
(2) any discount buying organization in which the total
consideration paid by each client or member in any manner whatsoever
for the purchase of discount buying services from the organization
does not exceed a one-time or annual fee of one hundred dollars
($100) and the organization (A) offers buying services to clients or
members through toll-free telephone access, computer access, or video
shopping terminals; (B) (i) during the first year of
membership of each member, upon the request of the member, provides a
full refund of membership fees, exclusive of any fees, however
designated, not exceeding ten dollars ($10) in the aggregate, without
conditions other than the surrender of materials which allow the
member to access or use the service , or (ii) if a publicly
traded corporation, limits refunds to those members who
were charged for goods or services without authorization or did not
receive the services promised with membership, and maintains a
procedure for the submission of a disputed refund to an independent
third-party arbitrator and assumes all parties' arbitration costs;
(C) provides at least 15 toll-free service lines to California
customers devoted exclusively to customer service questions and
complaints; and (D) maintains a bond which meets the requirements of
Sections 1812.103 and 1812.104, except that the principal sum of the
bond need only be twenty thousand dollars ($20,000) or, in the
case of a corporation described in clause (ii) of subparagraph (B),
fifty thousand dollars ($50,000) ; or (3) any discount buying
organization in which persons receive discount buying services
incidentally as part of a package of services provided to or
available to the individual on account of his or her membership in
the organization, which is not organized for the profit of any person
or corporation, and which does not have as one of its primary
purposes or businesses, the provision of discount buying services.
A discount buying organization does not include any person,
corporation, unincorporated association, or other organization,
which, for a consideration collected from another entity, provides or
purports to provide the clients of the other entity with the ability
to purchase goods or services at discount prices, if the clients of
the other entity do not order from, or pay any money to, that person,
corporation, unincorporated association, or other organization;
however, the entity from which the customer purchases the right to
obtain goods or services at discount prices, shall comply with the
requirements of this title.
(b) "Contract for discount buying services" means a contract
between one party (hereinafter referred to as the "buyer") who is
purchasing the service for personal or family use, and a discount
buying organization, whereby the buyer for a consideration receives
the right to obtain goods or services from the discount buying
organization, or to utilize the discount buying organization services
in obtaining goods and services, at discount prices.
(c) "Discount prices" means prices which are represented to be
lower on most or all offered goods or services than those generally
charged for the items in the locality in which the representation is
made.
This definition is not intended to affect the degree of savings
which must be offered on an item or selection of items in order to
truthfully and without misleading consumers represent an item,
selection of items, or entire store as being "discount" or
"discounted."