A3515

An Act concerning automatic renewal or continuous service offers and supplementing P.L.1960, c.39 (C.56:8-1 et seq.).

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. Every business that makes an automatic renewal offer or continuous service offer to a consumer in this State shall:

(1) 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. If the offer also includes a free gift or trial, the offer shall include a clear and conspicuous explanation of the price that will be charged after the trial ends or the manner in which the subscription or purchasing agreement pricing will change upon conclusion of the trial;

(2) obtain the consumer’s affirmative consent to the agreement containing the automatic renewal offer terms or continuous service offer terms, including the terms of an automatic renewal offer or continuous service offer that is made at a promotional or discounted price for a limited period of time, prior to charging the consumer’s credit or debit card or the consumer’s account with a third party for an automatic renewal or continuous service; and

(3) provide an acknowledgment that includes the automatic renewal offer terms 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 automatic renewal offer or continuous service offer includes a free gift or trial, the business shall also disclose in the acknowledgement how to cancel, and allow the consumer to cancel, the automatic renewal or continuous service before the consumer pays for the goods or services.

b. A business that makes an automatic service offer or continuous service offer shall provide a toll-free telephone number, electronic mail address, 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 acknowledgement pursuant to paragraph (3) of subsection a. of this section.

c. In addition to the requirements contained in subsection b. of this section, a consumer who accepts an automatic renewal or continuous service offer online shall be allowed to terminate the automatic renewal or continuous service exclusively online, which may include a termination email formatted and provided by the business that a consumer may send to the business without additional information.

d. In the case of a material change in the terms of the automatic renewal or continuous service that has been previously accepted by a consumer, the business shall provide the consumer with 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.

e. The requirements imposed pursuant to this section shall only apply prior to the completion of the initial order for the automatic renewal or continuous service, except that the requirement contained in paragraph (3) of subsection a. of this section may be fulfilled after completion of the initial order and the requirement contained in subsection d. of this section shall be fulfilled prior to the implementation of the material change.

f. In any case where a business sends any goods, wares, merchandise, or products to a consumer under an automatic renewal or continuous service agreement without first obtaining the consumer’s affirmative consent pursuant to this section, the goods, wares, merchandise, or products shall be deemed an unconditional gift to the consumer. The consumer may dispose of the goods, wares, merchandise, or products in any manner without any obligation to the business including, but not limited to, bearing the cost or responsibility for shipping the goods, wares, merchandise, or products to the business. If the consumer has been charged for the goods, wares, merchandise, or products, the business shall provide a full refund to the consumer within 30 days of the request for a refund by the consumer.

g. A violation of this section shall be an unlawful practice pursuant to P.L.1960, c.39 (C.56:8-1 et seq.).

h. As used in this section:

“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.

“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, that the amount of the charge may change, 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; and

(5) the minimum purchase obligation, if any.

“Clear and conspicuous” 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, this term means in a volume and cadence sufficient to be readily audible and understandable.

“Consumer” means any individual who seeks or acquires, by purchase or lease, any goods, services, money, or credit for personal, family, or household purposes.

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

2. This act shall take effect on the first day of the fourth month after enactment.

STATEMENT

This bill imposes certain requirements on businesses that make automatic renewal or continuous service offers.

Under the bill, every business that makes an automatic renewal offer or continuous service offer to a consumer in this State is required to:

1) present the automatic renewal or continuous service offer terms in a clear and conspicuous manner before the subscription or purchasing agreement is fulfilled and in visual proximity or temporal proximity to the request for consent. If the offer includes a free gift or trial, the offer is required to include a clear and conspicuous explanation of the price that will be charged after the trial ends or the manner in which the subscription or purchasing agreement pricing will change upon conclusion of the trial;

2) obtain the consumer’s affirmative consent to the agreement containing the automatic renewal or continuous service offer terms, including the terms of an offer that is made at a promotional or discounted price for a limited period of time, prior to charging the consumer for an automatic renewal or continuous service; and

3) provide an acknowledgement that includes the automatic renewal or continuous service offer terms, cancellation policy, and information regarding how to cancel. If the automatic renewal or continuous service offer includes a free gift or trial, the business is required to disclose in the acknowledgement how to cancel, and allow the consumer to cancel, the automatic renewal or continuous service before the consumer pays for the goods or services. This requirement may be fulfilled after the completion of the initial order.

In addition, the bill requires a business that makes an automatic renewal or continuous service offer to provide a toll-free telephone number, electronic mail address, postal address if the seller directly bills the consumer, or another cost-effective, timely, and easy-to-use mechanism for cancellation. In addition, a consumer who accepts an automatic renewal or continuous service offer online is required to be allowed to terminate the automatic renewal or continuous service exclusively online.

Further, under the bill, if there is a material change in the terms of the automatic renewal or continuous service that has previously been accepted by the consumer, the business is required to provide the consumer with clear and conspicuous notice of the material change and information regarding how to cancel the automatic renewal or continuous service prior to implementing the change.

The bill also provides that in any case where a business sends any goods, wares, merchandise, or products to a consumer under an automatic renewal or continuous service agreement without first obtaining the consumer’s affirmative consent, the goods, wares, merchandise, or products are to be deemed an unconditional gift to the consumer. The consumer may dispose of the goods, wares, merchandise, or products in any manner without any obligation to the business. If the consumer has been charged for the goods, wares, merchandise, or products, the business is required to provide a full refund to the consumer within 30 days of the request for a refund by the consumer.

A violation of the bill’s provisions is an unlawful practice under the consumer fraud act. An unlawful practice under the consumer fraud act is punishable by a monetary penalty of not more than $10,000 for a first offense and not more than $20,000 for any subsequent offense. In addition, violations may result in cease and desist orders issued by the Attorney General, the assessment of punitive damages, and the awarding of treble damages and costs to the injured party.

Under the bill, “automatic renewal” is defined as 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. In addition, “continuous service” means a plan or arrangement in which a subscription or purchasing agreement continues until the consumer cancels the service.