States Active on the Consumer Protection Front; MPA Fighting Numerous Proposals to Restrict Automatic Renewals and Free Trials
As is customary when states are in a tight fiscal bind, 2011 has seen the introduction of more than a dozen bills seeking to restrict automatic renewals and free trial offers. In another common feature - states adopting provisions passed in other states - a number of the bills introduced this year contain elements of the automatic renewal law passed by California in 2010. So far none of the proposed bills has passed.
An automatic renewals bill in Hawaii has progressed the furthest this year, passing the House and one committee in the Senate. It is now pending before another Senate committee. It contains some provisions troubling to publishers: it uses the California definition of clear and conspicuous, which requires automatic renewal disclosures to be at least as large as surrounding text, and only allows electronic notice if the sale was conducted electronically or the consumer elects to receive email. However, in a nod to complaints raised about these provisions, the effective date was changed in the Senate to July 2050, to allow further discussion and modifications in response to industry concerns.
In Indiana, an automatic renewal bill has passed out of the Senate, and is set to be heard by a committee in the House on April 7th. The bill’s definition of clear and conspicuous is even worse than in California, requiring a bold font at least two font sizes larger than the predominate font of the document. However, the bill does contain an exemption for contracts that allow written cancellation by the consumer month to month after the initial contract period has expired. A similar provision is contained in a Texas bill, which provides an exemption if cancellation is allowed with a prorated payment. That bill was on a House committee agenda for March 14 but was held over.
Oregon’s automatic renewal bill is based on the California law, which in addition to the definition of clear and conspicuous requires that automatic renewal terms must be in visual proximity to the request for consent. The bill has not moved since introduction and is unlikely to make its April 21 deadline for action. Similarly, bills in Kansas and Iowa did not make their crossover deadlines and are dead for this year. The Kansas bill would have eliminated all negative option offers.
With not much time remaining, an automatic renewals bill was just introduced in Nevada, with a hearing in the Senate Commerce committee on April 6. It would require a renewal notice be sent to a consumer 30 days prior to renewal, as well as written notice of the original sale terms in a manner capable of being retained by the consumer. A seller could not charge a credit card before providing such written notice.
Of the trial offers bills introduced in Oregon, Texas, and Massachusetts, the most troubling is the bill in Texas. That bill, which had been on the House committee agenda for March 21 but was held over, would require a marketer to send consumers a form that the consumers would have to fill out at the end of a free trial indicating their consent to pay. A seller could not charge a consumer without receipt of the signed form.
For some of the states the legislative year is almost over, but in others the legislature continues its work through the year. MPA will continue to lobby to ensure that any legislation that progresses contains workable provisions for publishers, both for online and offline subscription sales offers.