Senate File 2082 - Introduced SENATE FILE 2082 BY DICKEY A BILL FOR An Act prohibiting negative option billing practices in 1 subscription contracts and including applicability 2 provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5090XS (11) 89 es/rn

S.F. 2082 Section 1. NEW SECTION . 555.1 Definitions. 1 As used in this chapter, unless the context otherwise 2 requires: 3 1. “Customer” means a resident of this state who has entered 4 into a contract for a subscription for goods and services. 5 2. “Negative option billing” means a contract for a 6 subscription for goods or services which is automatically 7 renewed unless notice is provided by a customer to a seller to 8 terminate the contract. 9 3. “Seller” means a person who sells goods or services to 10 a customer. 11 Sec. 2. NEW SECTION . 555.2 Negative option billing —— 12 prohibition. 13 1. A contract for a subscription of goods or services shall 14 not contain a negative option billing provision. Prior to 15 renewal of a contract for a subscription for goods or services, 16 the seller shall provide a customer written notice complying 17 with the requirements of subsection 2 that informs the customer 18 that the contract shall terminate on a date specified in the 19 contract and that renewal is conditioned upon receipt from the 20 customer of acceptance of the subscription contract renewal. 21 2. Notice provided pursuant to subsection 1 shall be in 22 writing in clear and understandable language printed in an 23 easy-to-read type, size, and style, and shall be delivered by 24 regular mail, sent through electronic mail, or prominently 25 displayed on the first page of a monthly statement, and 26 supplied at least thirty days prior to the termination date 27 specified in the contract. The notice shall also provide 28 clearly understandable instructions for notification by the 29 customer to the seller of acceptance of contract renewal. 30 3. A seller shall not be held liable for cancellation of 31 a subscription contract if no notification of acceptance was 32 received from a customer. A customer may provide evidence that 33 the customer sent notification of acceptance of a contract 34 renewal. Upon satisfactory evidence that such notification 35 -1- LSB 5090XS (11) 89 es/rn 1/ 3

S.F. 2082 was sent by the customer but not received by the seller, a 1 seller shall provide the customer with a contract renewal under 2 the original terms and conditions as if notification had been 3 received by the seller in a timely manner. 4 Sec. 3. NEW SECTION . 555.3 Penalties. 5 A seller who violates a provision of this chapter shall 6 return to the customer the amount charged and collected by the 7 seller plus ten percent of the amount charged and collected 8 from the final unauthorized billing period. The seller shall 9 have thirty days from collecting the unauthorized amount to 10 return the unauthorized amount collected back to the customer. 11 Sec. 4. APPLICABILITY. This Act applies to contracts for 12 subscription goods or services entered into on or after the 13 effective date of this Act. 14 EXPLANATION 15 The inclusion of this explanation does not constitute agreement with 16 the explanation’s substance by the members of the general assembly. 17 This bill prohibits the practice of negative option billing. 18 The bill defines “negative option billing” to mean a 19 contract for a subscription for goods or services which is 20 automatically renewed unless notice is provided by a customer 21 to a seller to terminate the contract. 22 The bill provides that a seller must provide customers 23 with a clear and readable notice, either through writing, 24 mail, or on a monthly statement at least 30 days before the 25 end of the contract, of the process by which a customer may 26 renew a subscription to the seller. If the seller does not 27 receive a notification from the customer that the customer 28 wishes to renew the subscription, the seller must not renew the 29 subscription service. 30 The bill provides that if a seller cancels a subscription 31 contract after notification of acceptance was sent but not 32 received, the seller must reinstate the subscription contract. 33 The bill provides that a violation of the bill’s provisions 34 shall result in the seller refunding a customer the 35 -2- LSB 5090XS (11) 89 es/rn 2/ 3

S.F. 2082 unauthorized charge amount plus a 10 percent penalty within 30 1 days of the charge. 2 The bill applies to contracts for subscription goods or 3 services entered into on or after the effective date of the 4 bill. 5 -3- LSB 5090XS (11) 89 es/rn 3/ 3