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BILL AS INTRODUCED 2007-2008

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H.305

Introduced by Representatives Kupersmith of S. Burlington, Bissonnette of Winooski, Botzow of Pownal, Consejo of Sheldon, Davis of Washington, Kitzmiller of Montpelier, Livingston of Manchester and Shand of Weathersfield

Referred to Committee on

Date:

Subject:  Commerce and trade; consumer fraud; discount membership plan

Statement of purpose:  This bill proposes to require discount membership plans to have written contracts, express written authorization, and special protections for the purchaser when the seller already has the purchaser’s account information; and to provide an extended right to cancel, limits on automatic renewals, and on plan length.

AN ACT RELATING TO DISCOUNT MEMBERSHIP PLANS

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  9 V.S.A. chapter 63, subchapter 1C is added to read:

Subchapter 1C.  Discount Membership Plans

§ 2470aa.  DEFINITIONS

As used in this subchapter:

(1)  A “discount membership plan” is a plan or program that entitles consumers to receive discounts on the purchase of goods or services, or both, in whole or in part, from any third party.

(2)  “Preacquired account information” means any information that enables a seller or telemarketer to cause a charge to be placed against a consumer’s account without obtaining the account number directly from the consumer during the telemarketing transaction pursuant to which the account will be charged.

(3)  “Telemarketing transaction” means the sale of a discount membership plan that is solicited or consummated in whole or in part over the telephone.

§ 2470bb.  APPLICABILITY

A discount membership plan shall be considered a good or service within the meaning of subsection 2451a(b) and shall be subject to subchapter 1 of this chapter.  In the event of an inconsistency between this subchapter and subchapter 1, this subchapter shall apply.

§ 2470cc.  Contract and authorization

No person may charge a consumer’s credit or bank account, or otherwise initiate payment from the consumer, in connection with the sale of a discount membership plan until the consumer has:

(1)  Received a free‑standing written agreement or accessed a separate, downloadable internet web page that states, clearly and conspicuously:

(A)  At the top of the written agreement, in boldface type of a minimum size of 14 points, in an easily readable font type and in upper‑case letters, the words, “DISCOUNT MEMBERSHIP PLAN AGREEMENT—PLEASE READ,” or at the top of the web page, in an easily readable font type and in upper‑case letters, the words, “DISCOUNT MEMBERSHIP PLAN AGREEMENT—PLEASE READ AND DOWNLOAD”; 

(B)  A description of the goods and services on which a discount is available;

(C)  The cost of the plan, including the amount of any periodic charges, how often such charges are imposed, and the method of payment;

(D)  The amount, or a good faith estimate, of the typical discount on each category of goods and services;

(E)  The right to cancel and to terminate the plan, as required by section 2470dd of this subchapter;

(F)  The maximum length of membership, as described in section 2470ee of this subchapter; and

(G)  Any other material terms or conditions.

(2)  Provided express written authorization for the charge or payment.  For this purpose, an electronic signature in conformance with chapter 20 of this title is sufficient.

§ 2470dd.  PREACQUIRED ACCOUNT INFORMATION

In addition to the requirements of section 2470cc of this chapter, in any telemarketing sale of a discount membership plan involving preacquired account information, the seller or telemarketer shall, prior to charging a consumer’s credit or bank account, or otherwise initiating payment from the consumer:

(1)  Obtain from the consumer the last four digits of the account number to be charged;

(2)  Obtain from the consumer his or her express agreement to be charged using the account number referred to in subsection (a) of this section; and

(3)  Make and maintain for a period of at least four years an audio recording of the entire telemarketing call or calls.

§ 2470ee.  CANCELLATION AND TERMINATION

(a)  In addition to any other right to revoke an offer, a consumer may cancel the purchase of a discount membership plan until midnight on the 30th day after the day on which the consumer has received the agreement required by section 2470cc of this subchapter, including the notices required by this section.

(b)  Cancellation occurs when notice of cancellation is given to the seller of the discount membership plan as designated on the Right to Cancel notice described in this section.

(c)  Notice of cancellation shall be deemed given when deposited in a mailbox properly addressed and postage prepaid, or e‑mailed to the e‑mail address of the seller of the discount membership plan at the e‑mail address contained in the Right to Cancel notice described in this section.

(d)  Any agreement required by this subchapter shall include, on the first page of the agreement required by section 2470cc of this subchapter and in boldface type of a minimum size of 12 points, using an easily readable font style and not in all upper‑case letters, a statement in substantially the following form:

You may cancel your discount membership plan at any time before midnight of the 30th day after the date you receive this agreement.  See the attached notice of your Right to Cancel for an explanation.

(e)  Any agreement required by this subchapter shall also include, in boldface type of a minimum size of 12 points, using an easily readable font style and not in all upper‑case letters, two copies of a notice in substantially the following form:

RIGHT TO CANCEL

You may cancel your discount membership plan, without any penalty or obligation, within 30 days of the date you receive this agreement.

If you cancel, any payments made by you will be returned or credited within 10 days after your cancellation notice is received by the company named below.  Notice of cancellation is considered given when deposited in a mailbox, properly addressed and postage prepaid, or e‑mailed to the e‑mail address below.

To cancel this transaction, sign and date a copy of this Right to Cancel notice or any other written notice and mail it to…………………at ……………………..,

                                (seller )                                (address)

or e‑mail a statement that you wish to cancel to ……………………………..               (e‑mail address)

no later than midnight of the 30th day after the day you receive this agreement. 

I hereby cancel this transaction.

……………………............... ………..(date)                                          (consumer’s signature)

(f)  Before being given to the consumer, the Right to Cancel notice shall state the name of the seller of the discount membership plan and the seller’s mailing and e‑mail addresses.

(1)  In addition to the written statement and Right to Cancel notice required by this section, in the case of any discount membership plan offered over the telephone the seller or marketer shall orally inform the buyer of his or her right to cancel at the time of the offer.

(2)  If a consumer cancels his or her purchase of a discount membership plan within the first 30 days after the date of receipt of the agreement required by this section, the seller shall, within 10 business days, tender or credit a full refund to the member of all money paid by the consumer in connection with the plan.

(g)  In addition to the right to cancel described in this subchapter, a consumer may terminate a discount membership plan at any time by providing notice to the seller by one of the methods described in this section.  In that case, the consumer shall not be obligated to make any further payments under the plan, nor shall the consumer be entitled to any discounts under the plan for any period of time after the last month for which payment has been made.

(h)  If the seller of a discount membership plan cancels the plan for any reason other than nonpayment by the consumer, the seller shall make pro rata reimbursement of all periodic charges to the consumer.  Prior to such cancellation, the seller shall first provide reasonable notice and an explanation of the cancellation in writing to the consumer.

§ 2470ff.  MAXIMUM LENGTH OF PLAN; NO AUTO RENEWALS

(a)  No person shall renew, or arrange for the renewal, of a discount membership plan beyond the term expressly authorized by the consumer without complying with all of the requirements of this subchapter.

(b)  Notwithstanding any other provision of this subchapter or section, no person shall sell, or offer for sale, a discount membership plan lasting longer than 18 months, exclusive of any renewals in conformance with subsection (a) of this section. 

§ 2470gg.  VIOLATIONS

(a)  A violation of this subchapter is deemed to be a violation of section 2453 of this title.

(b)  The attorney general has the same authority to make rules, conduct civil investigations, enter into assurances of discontinuance, and bring civil actions as is provided under subchapter 1 of this chapter.



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us