County of Los Angeles Department of Consumer Affairs New Consumer Laws 2010

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CONTRACTS – RENEWALS

SB 340 (Chap. 350); adds B&P section 17600.

Effective Dec. 1, 2010

Background: Many consumers complaint that companies often bill the consumers’ credit and debit cards and bank accounts for contracts for products or services renewed without their knowledge.

The new law: Aims to prevent the practice of charging consumers’ credit or debit cards or other accounts without the consumers' explicit consent for ongoing shipments of product or deliveries of service. Under this new law, businesses making an automatic renewal or continuous service offer must:

• Present the automatic renewal offer terms or continuous service offer terms in a clear and conspicuous manner.
• Not charge the consumer's credit or debit card or other account for an automatic renewal or continuous service without first obtaining the consumer's affirmative consent.
• Provide an acknowledgment that includes the automatic renewal or continuous service offer terms, cancellation policy, and information regarding how to cancel in a manner the consumer can retain it. If the offer includes a free trial, the business has to disclose in the acknowledgment how to cancel and allow the consumer to cancel before the consumer pays for the goods or services.
• Provide a toll-free telephone number, electronic mail address, a postal address (only when the seller directly bills the consumer) or another cost-effective, timely, and easy-to-use mechanism for cancellation.

If there is a material change in the terms of the automatic renewal or continuous service offer that has been accepted by a consumer, provide the consumer with a clear and conspicuous notice of the material change and provide information regarding how to cancel in a manner that the consumer can retain.

Failure to comply with the above provisions makes the product or service a gift.

The following are exempt from this statute: Any service provided by a business or its affiliate where either the business or its affiliate is regulated by the CPUC, the FCC, the Federal Energy Regulatory Commission, the Department of Insurance. Alarm companies. Financial institutions. Service contract sellers and service contract administrators regulated by the Bureau of Electronic and Appliance Repair.

For more information:
County of Los Angeles Department of Consumer Affairs
B-96 Kenneth Hahn Hall of Administration
500 W. Temple Street * Los Angeles, CA 90012-2706
Telephone (800) 593-8222 (within the County) * (213) 974-1452
Web site: dca.lacounty.gov