S.F. 2146 Section 1. NEW SECTION . 554E.1 Definitions. 1 As used in this chapter, unless the context otherwise 2 requires: 3 1. “Account debit arrangement” means an agreement between a 4 depository institution and a person permitting the depository 5 institution to debit the person’s account to collect fees or 6 other amounts due to a third party. 7 2. “Consumer” means a person who is a resident of this 8 state, and to whom any of the following apply: 9 a. The person is a buyer, lessee, or debtor to whom credit 10 is granted in a consumer credit transaction. 11 b. The person has an account or other contractual 12 arrangement with a depository institution. 13 3. “Consumer credit transaction” means the same as defined 14 in section 537.1301. 15 4. “Depository institution” means the same as defined in 16 section 502.102. 17 5. “Lender” means the same as defined in section 537.1301. 18 Sec. 2. NEW SECTION . 554E.2 Cancellation of recurring 19 charges. 20 1. A consumer may cancel, with immediate, prospective 21 effect, a recurring payment to a third-party vendor of goods or 22 services made on the consumer’s behalf by any of the following: 23 a. A lender pursuant to a consumer credit transaction. 24 b. A depository institution pursuant to an account debit 25 arrangement. 26 c. A provider of financial services that may make such 27 payments pursuant to an agreement with the consumer. 28 2. A lender, depository institution, or provider of 29 financial services that makes a payment to a third party on 30 behalf of a consumer shall implement a procedure for the 31 immediate and prospective cancellation of such payments upon 32 the receipt of a request from the consumer, which request may 33 be transmitted in writing, electronically, or verbally. 34 3. Nothing in this chapter affects a preexisting 35 -1- LSB 5665XS (7) 88 ja/rn 1/ 4

S.F. 2146 installment contract for previously delivered goods or services 1 or a contract between a consumer and a lender who loaned money 2 to the consumer for the purchase of goods or services. 3 Sec. 3. Section 714.16, subsection 2, paragraph o, 4 subparagraph (2), Code 2020, is amended to read as follows: 5 (2) It is an unlawful practice for a person to cause a 6 consumer to incur a charge or other financial obligation as a 7 result of accepting a free offer unless , one of the following 8 occurs: 9 (a) The person obtains the consumer’s billing information 10 directly from the consumer. For purposes of this subparagraph 11 division, a person obtains a consumer’s billing information 12 directly from the consumer if the billing information is 13 obtained by the person or by the person’s agent or employee. 14 (b) The consumer gives affirmative consent at the time 15 the consumer accepts a free offer for the person to provide 16 billing information to a person other than the person making 17 the free offer after the completion of delivery of goods or 18 services without charge pursuant to the free offer, and before 19 any charge or other financial obligation is incurred, the 20 consumer consents to the charge or financial obligation in 21 writing, electronically, or verbally, and the person imposing 22 the financial obligation records the verbal consent . 23 EXPLANATION 24 The inclusion of this explanation does not constitute agreement with 25 the explanation’s substance by the members of the general assembly. 26 This bill relates to fees charged in conjunction with free 27 trials and the cancellation of recurring charges. 28 The bill defines “account debit arrangement” as an agreement 29 between a depository institution and a person permitting the 30 depository institution to debit the person’s account to collect 31 fees due to a third party. The bill defines “consumer” as a 32 person who is a resident of the state, and to whom either of 33 the following apply: the person is a buyer, lessee, or debtor 34 to whom credit is granted in a consumer credit transaction; 35 -2- LSB 5665XS (7) 88 ja/rn 2/ 4

S.F. 2146 or the person has an account with a depository institution. 1 The bill defines “consumer credit transaction” by reference to 2 Code section 537.1301, as a consumer credit sale or consumer 3 loan, a refinancing or consolidation thereof, a consumer lease, 4 or a consumer rental purchase agreement. The bill defines 5 “depository institution” by reference to Code section 502.102, 6 as a bank, savings institution, trust company, credit union, 7 or similar institution that is organized or chartered under 8 the laws of a state or of the United States. The bill defines 9 “lender” by reference to Code section 537.1301, as a person who 10 makes a loan or takes an assignment of a right to payment. 11 Pursuant to the bill, a consumer may cancel a recurring 12 payment to a third-party vendor of goods or services made on 13 the consumer’s behalf by a lender pursuant to a consumer credit 14 transaction; a depository institution pursuant to an account 15 debit arrangement; or a provider of financial services that may 16 make such payments pursuant to any agreement with the consumer. 17 The bill also requires a lender, depository institution, or 18 provider of financial services that makes a payment to a third 19 party on behalf of a consumer to implement a procedure for the 20 immediate cancellation of such payments upon the receipt of a 21 request from the consumer. 22 The bill provides that nothing in the new Code chapter 23 affects a preexisting lawful installment contract or a contract 24 between a consumer and a lender who loaned money to the 25 consumer for the purchase of goods or services. 26 Current law provides it is an unlawful practice for a 27 person to cause a consumer to incur a financial obligation as 28 a result of accepting a free offer unless either the person 29 obtains the consumer’s billing information directly from the 30 consumer, or the consumer gives affirmative consent at the time 31 the consumer accepts a free offer for the person to provide 32 billing information to a person other than the person making 33 the free offer. The bill modifies this provision by providing 34 it is an unlawful practice for a person to cause a consumer to 35 -3- LSB 5665XS (7) 88 ja/rn 3/ 4

S.F. 2146 incur a charge or other financial obligation as a result of 1 accepting a free offer unless, after the completion of delivery 2 of goods or services pursuant to the free offer, and before any 3 charge or other financial obligation is incurred, the consumer 4 consents to the charge or financial obligation. Several types 5 of remedies are available if a court finds that a person has 6 committed an unlawful practice, including injunctive relief, 7 disgorgement of moneys or property, and a civil penalty not to 8 exceed $40,000 per violation. 9 -4- LSB 5665XS (7) 88 ja/rn 4/ 4