House Study Bill 756
HOUSE FILE
BY (PROPOSED COMMITTEE ON
COMMERCE BILL BY
CHAIRPERSON PETERSEN)
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act providing for restrictions relating to cancellation
2 provisions applicable to cellular telephone service contracts.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
4 TLSB 6551HC 82
5 rn/nh/14
PAG LIN
1 1 Section 1. Section 537.1301, subsection 13, paragraph a,
1 2 unnumbered paragraph 1, Code 2007, is amended to read as
1 3 follows:
1 4 Except as provided in paragraph "b" paragraphs "b" and "c",
1 5 a consumer credit sale is a sale of goods, services, or an
1 6 interest in land in which all of the following are applicable:
1 7 Sec. 2. Section 537.1301, subsection 13, Code 2007, is
1 8 amended by adding the following new paragraph:
1 9 NEW PARAGRAPH. c. Notwithstanding paragraph "a", a
1 10 cellular telephone service contract pursuant to which charges
1 11 are incurred and billed on a month=to=month basis shall
1 12 constitute a consumer credit sale strictly for purposes of the
1 13 cancellation provisions of section 537.3310.
1 14 Sec. 3. Section 537.3310, subsection 1, Code 2007, is
1 15 amended to read as follows:
1 16 1. In a consumer credit transaction, other than a consumer
1 17 rental purchase agreement, if performance by a creditor is by
1 18 delivery of goods, services, or both, in four or more
1 19 installments, either on demand of the consumer or by
1 20 prearranged scheduled performance, or if performance is by a
1 21 cellular telephone service provider by delivery of goods,
1 22 services, or both on a month=to=month basis whereby charges
1 23 are incurred and billed on a month=to=month basis, the
1 24 consumer may cancel the obligation with respect to that part
1 25 which has not been performed on the date of cancellation.
1 26 Sec. 4. Section 537.3310, Code 2007, is amended by adding
1 27 the following new subsection:
1 28 NEW SUBSECTION. 6. In a consumer credit transaction
1 29 consisting of a cellular telephone service contract as
1 30 specified in subsection 1, the maximum early termination
1 31 penalty or cancellation fee which may be imposed is an amount
1 32 equivalent to the charges due and payable on a monthly basis.
1 33 EXPLANATION
1 34 This bill imposes restrictions relating to cancellation
1 35 provisions applicable to cellular telephone service contracts.
2 1 The bill provides that a cellular telephone service
2 2 contract pursuant to which charges are incurred and billed on
2 3 a month=to=month basis falls within the definition of a
2 4 consumer credit sale set forth in Code section 537.1307. The
2 5 bill states, however, that the definition extends to such
2 6 cellular telephone service contracts strictly for purposes of
2 7 applying cancellation provisions contained in Code section
2 8 537.3310. Accordingly, a consumer subject to a cellular
2 9 telephone service contract would have the right to cancel an
2 10 obligation with respect to that part of the obligation which
2 11 has not been performed on the date of cancellation, a creditor
2 12 would be entitled to recover only that part of the cash price
2 13 and charges attributable to the part of the obligation which
2 14 has already been performed, and cancellation would be
2 15 effective when the consumer mails or delivers a written notice
2 16 of cancellation.
2 17 The bill provides that the maximum early termination
2 18 penalty or cancellation fee which can be imposed with regard
2 19 to a cellular telephone service contract is an amount
2 20 equivalent to the charges due and payable on a monthly basis.
2 21 LSB 6551HC 82
2 22 rn/nh/14