Requires businesses to notify consumers of an upcoming automatic renewal or continuous service charge to the consumer's account forty-five days prior to such charge; requires businesses to include instructions on how to cancel such renewal or charge in the notice to the consumer.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A3245D
SPONSOR: Paulin
 
TITLE OF BILL:
An act to amend the general business law, in relation to requiring busi-
nesses to notify consumers of an upcoming automatic renewal or contin-
uous service charge forty-five days prior to such charge
 
PURPOSE::
To require businesses to notify consumers of an upcoming automatic
renewal or continuous service charge fifteen to forty five days prior to
such Charge on the consumer's account.
 
SUMMARY OF PROVISIONS::
Section one of the bill amends section 527-a of the general business law
to require all businesses notify consumers of an upcoming automatic
renewal or continuous service charge to the consumer's account fifteen
to forty five days prior to such renewal or charge. The notice shall
either include instructions on how to cancel such renewal or charge
containing a model termination email with which the consumer can notify
the busi- ness of its subscription cancellation or send an email that
contains a link to a website where the consumer can terminate the
renewal Or charge.
Section two provides the effective date.
 
JUSTIFICATION::
In 2022, most New Yorkers pay for at'least one service' through a
subscription model. Subscription services have become more common in
recent years, but as millions of Americans stayed home during the
pandemic, they turned to digital entertainment and signed up for recur-
ring meal delivery services, exercise and diet programs, and monthly
clothing subscriptions. This gave many more businesses an incentive to
shift to a subscription model that can be paid for and accessed in the
comfort of your own home.
Most AmericanS are no longer sheltering in place, but the popularity of
these subscription services has continued to grow. The Washington Poet
reports that the "subscription economy" will grow to $1.5 trillion by
2025, more than double what it was worth in 2021.* Interestingly, most
Americans do not even realize just how much they are spending on
subscription services. CNBC news reports that close.to a third of
consumers underestimate how much they are spending on subscriptions by
$100 to $200 dollars every month. The same report explains that 42% of
people did not realize they are still paying for a subscription they no
longer use.**
While many of these services are extremely convenient and accessible,
many businesses have adopted deceptive subscription marketing practices
that make it very easy to sign up but far more difficult to cancel. In
addition, users often unknowingly sign-up or agree to automatic
renewals, meaning the company will automatically charge a 'user's
account when their contract ends so that the user is then locked in for
another year of service.
Recently, complaints around this issue have grown exponentially. Just
last year, the Federal Trade Commission (FTC) announced its intention to
crack down on these deceptive marketing practices - winning a $10
million settlement from a children's education company that unfairly
billed users and made it difficult for them to cancel the service. Over
200,000 Americans are receiving refunds as a result of the settlement,
demonstrating just how common this issue is for people. This bill wbuld
require a business to notify a consumer of an upcoming automatic renewal
or continuous service charge 15 to 30 days prior to such charge on a
customer's account. The notice must include instructions on how to
cancel their subscription in one of two descriptive methods. This legis-
lation will ensure transparency from subscription service companies and
help protect New Yorkers- from deceptive marketing practices that these
companies often utilize.
 
LEGISLATIVE HISTORY::
New Bill.
 
FISCAL IMPLICATIONS::
None to the state.
 
EFFECTIVE DATE::
This act shall take effect immediately.
* https://www.washingtonpost.com/business/2021/06/02/ automatic-rene-
wals-ftcsubscriptions/
** https://www.cnbc.com/2022/06/02/consumers-spend-133-more- monthlyon-
subscriptionsthan-they-realize.html
STATE OF NEW YORK
________________________________________________________________________
3245--D
Cal. No. 37
2023-2024 Regular Sessions
IN ASSEMBLY
February 2, 2023
___________
Introduced by M. of A. PAULIN, SAYEGH -- read once and referred to the
Committee on Consumer Affairs and Protection -- committee discharged,
bill amended, ordered reprinted as amended and recommitted to said
committee -- reported from committee, advanced to a third reading,
amended and ordered reprinted, retaining its place on the order of
third reading -- again amended on third reading, ordered reprinted,
retaining its place on the order of third reading -- again amended on
third reading, ordered reprinted, retaining its place on the order of
third reading
AN ACT to amend the general business law, in relation to requiring busi-
nesses to notify consumers of an upcoming automatic renewal or contin-
uous service charge forty-five days prior to such charge
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subdivisions 3 and 8 of section 527-a of the general busi-
2 ness law, as added by chapter 267 of the laws of 2020, are amended to
3 read as follows:
4 3. a. In addition to the requirements of subdivision two of this
5 section, a consumer who accepts an automatic renewal or continuous
6 service offer online shall be allowed to terminate the automatic renewal
7 or continuous service exclusively online, which may include a termi-
8 nation email formatted and provided by the business that a consumer can
9 send to the business without additional information.
10 b. A business that allows a consumer to accept an automatic renewal or
11 continuous service offer for an initial paid term of one year or longer,
12 provided that such automatic renewal or continuous service renews for a
13 paid term of six months or longer, shall notify such consumer of such
14 upcoming automatic renewal or continuous service charge to such consum-
15 er's account at least fifteen days before, but not more than forty-five
16 days before, the cancellation deadline for such automatic renewal. Such
17 notice shall include instructions on how to cancel such renewal charge.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD03135-07-3
A. 3245--D 2
1 c. The provisions of paragraph b of this subdivision shall not apply
2 to any business, or subsidiary or affiliate thereof, regulated by the
3 public service commission or the federal communications commission.
4 8. The following are exempt from the requirements of this article:
5 a. any service provided by a business or its affiliate where either
6 the business or its affiliate is doing business pursuant to a franchise
7 issued by a political subdivision of the state;
8 b. any entity, or subsidiary or affiliate thereof, regulated by the
9 department of financial services;
10 c. security system alarm operators;
11 d. banks, bank holding companies, or the subsidiary or affiliate of
12 either, or credit unions or other financial institutions, licensed under
13 state or federal law; and
14 e. sellers and administrators of a service contract, as defined pursu-
15 ant to section seven thousand nine hundred two of the insurance law.
16 § 2. This act shall take effect immediately.