BILL NUMBER: AB 547 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Gatto
FEBRUARY 16, 2011
An act to amend Section 1812.101 of the Civil Code, relating to
discount buying organizations.
LEGISLATIVE COUNSEL'S DIGEST
AB 547, as introduced, Gatto. Discount buying organizations.
Existing law regulates membership contracts for discount buying
organizations. Discount buying organization is defined for these
purposes to include any person or persons, corporation,
unincorporated association, or other organization that, 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. Certain
discount buying organizations are exempted from these provisions.
This bill would make a technical change by referring in that
definition to an entity, among other technical, nonsubstantive
changes.
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 apply :
(a) "Discount buying organization" means any person or persons,
corporation, unincorporated association, or other organization
which or entity that , 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 a discount buying organization does not include any of the
following:
(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
that either:
(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.
(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 does
is described by all of the following in subparagraphs (A) to
(F), inclusive, and but subject to
subparagraph (G):
(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
or destruction of materials which that
allow the member to access or use the service.
(ii) (I) The organization shall establish an escrow account of
fifty thousand dollars ($50,000) for the purpose of providing refunds
to members, pursuant to clause (i). If the fifty thousand dollars
($50,000) deposited in escrow is depleted during the first year of
the existence of the escrow account, the organization shall ,
within three business days of depletion , replenish
the account in the amount of fifty thousand dollars ($50,000). For
each calendar year thereafter, the organization shall deposit in the
account an amount equal to refunds made from the account in the prior
calendar year, but not less than fifty thousand dollars ($50,000).
At any time the balance in the escrow account decreases to 50 percent
of the amount funded that year, the organization shall ,
within three business days , replenish the account back to
the balance required at the beginning of that calendar year. The
organization shall provide proof of the establishment of the escrow
account to the Secretary of State and shall maintain records of all
member requests for refunds and refunds made pursuant to this clause.
The records shall be made available for review upon request
by of the Attorney General, any district
attorney, or the Department of Justice.
(II) The escrow account shall be established and maintained at a
federally insured bank or federally insured financial institution
independent of the organization with escrow instructions making the
bank or financial institution or an officer or employee thereof the
escrow trustee.
(III) Refunds shall be made from the escrow account to any member
who provides proof of membership while a California resident and
requests, in writing, a membership refund, and has not previously
been refunded his or her membership fee. The escrow trustee shall
issue the refund within 10 days of the date the written request is
received by the escrow trustee. In addition, requests for refunds may
be made directly to , and paid directly by ,
the organization.
(IV) Proof of creation of the escrow account, and membership
refund information, shall be provided to the members in the following
form:
"The ____ (organization) has established an escrow account for the
refund of membership fees at ____ (financial institution). Refunds
from the escrow account may, in addition to other remedies and
sources available to you, be obtained by mailing a written request
along with proof of membership to ____ (escrow trustee). This refund
request shall not affect or limit any other remedy at law available
to you."
(C) Provides at least 15 toll-free service lines to California
consumers devoted exclusively to customer service questions and
complaints.
(D) Maintains a bond which that
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).
(E) (i) Possesses an unrevoked acknowledgment from the Attorney
General that the organization has provided to the Attorney General,
to the Attorney General's reasonable satisfaction, marketing
procedures and documents that clearly explain membership fee
cancellation and refund terms , which include:
(I) The amount of the initial membership fee and how and
when it will be collected the process and
timing for its collection .
(II) If applicable, that a member must
shall be advised, before any charges are applied, that they
need not provide billing information in order to be charged a
membership fee, in circumstances in which the telemarketing firm has
prior access to the member's billing information.
(III) In the case of trial membership offers, the duration of the
trial period , and notice that if the member
does not cancel within the trial period , he or she will
automatically be charged the membership fee.
(IV) Specifically how The
specific process by which the member may cancel membership.
(V) The written disclosure, printed in capital letters with a
minimum 14-point boldface type, indicating who to contact, both
directly through the company and through the escrow account, for a
refund.
(VI) The written disclosure made at the time of solicitation and
at the time an enrollment package is sent to consumers.
(ii) When an organization provides documentation that clearly
explains membership fee cancellation and refund terms to the Attorney
General's reasonable satisfaction, which includes the information
required by subclauses (I) to (VI), inclusive, of clause (i) of
subparagraph (E), the Attorney General shall issue a revocable
acknowledgment to the organization for it to obtain this exception.
The acknowledgment issued by the Attorney General is not evidence of
the adequacy or accuracy of the organization's actual disclosures and
representations provided to consumers. No organization in any
marketing to consumers may make any reference to an acknowledgment
issued by the Attorney General under this clause.
(F) Provides the disclosures listed in subclauses (I) to (VI),
inclusive, of clause (i) of subparagraph (E) to every prospective
member.
(G) The exemption provided in paragraph (2) is null and
void if the organization fails to comply with the conditions set
forth in this section , or if the Attorney General's office
revokes the exemption due to a an
organization not being in full compliance with all of the provisions
of this section.
(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 organization,
and which does not have as one of its primary purposes or businesses,
the provision of discount buying services.
(4) Any person, corporation, unincorporated association, or other
organization or entity , 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,
or entity. 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 ,
here after referred to as the "buyer")
"buyer," who is purchasing the service
services 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
tha t 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 that 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."