A455

An Act concerning the cancellation of subscription services by consumers, supplementing P.L.1960, c.39 (C.56:8-1 et seq.), and repealing section 1 of P.L.2023, c.241.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. For the purposes of this section:

“Automatic renewal” means a plan or arrangement in which a paid subscription service is automatically renewed at the end of a definite term for a subsequent term.

“Clear and conspicuous” means in larger type than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same size, or set off from the surrounding text of the same size by symbols or other marks, in a manner that clearly calls attention to the language.

“Consumer” means a resident of this State to whom a subscription service is sold.

“Negative option feature” means a provision within a subscription service offer or agreement in which a consumer’s silence or failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the subscription service provider as acceptance of the subscription service.

“Subscription service provider” means a person who sells a subscription service to a consumer.

“Subscription service” means an offer or agreement for any service, including for a health club as defined in section 1 of P.L.1987, c.238 (C.56:8-39), provided on a subscription basis in exchange for a recurring payment, including, but not limited to, a weekly, monthly, or annual payment charged to and made by a consumer.

b. A subscription service provider shall make available to a consumer the option to cancel or terminate a subscription service using the same medium through which the subscription service was activated or the same medium in which the consumer is accustomed to interacting with the subscription service provider including, but not limited to, in person, by telephone, by mail, by email, or online, in accordance with the established billing terms and conditions of the subscription service.

c. If a subscription service provider makes available the option to cancel or terminate a subscription service online, as required by subsection b. of this section, the providershall make available to the consumer, in an easily accessible location, a direct link or button on the subscription service provider’s Internet website through which a consumer can initiate termination of the subscription service. The direct link or button shall be in a prominent location immediately accessible through:

(1) a customer account or profile on the subscription service provider’s Internet website, or the user settings on a consumer’s smartphone or tablet; or

(2) a termination email formatted and provided by the subscription service provider that a consumer can email to the subscription service provider without being required to provide any additional information.

d. A subscription service provider that utilizes a negative option feature as part of the offer or agreement of a subscription service shall not:

(1) misrepresent any material fact made while marketing;

(2) fail to clearly and conspicuously disclose material terms prior to obtaining a consumer’s billing information;

(3) fail to obtain a consumer’s express informed consent before charging the consumer for the initial purchase of a subscription service; and

(4) fail to provide a simple mechanism to cancel the negative option feature.

e. It shall be an unlawful practice and a violation of P.L.1960, c.39 (C.56:8-1 et seq.) for any subscription service provider offering subscription services to consumers in this State to violate the provisions of this section. The Attorney General or the Director of the Division of Consumer Affairs may bring an action under this section to obtain a temporary or permanent injunction prohibiting the use of any method, act, or practice in violation of this section, and restitution for consumers who are residents of New Jersey and incurred a loss of money or property as the direct result of a violation of this section.

Notwithstanding any other provision of law to the contrary, there shall be no private right of action for a violation of this section, and a violation of this section shall not serve as the basis for a private right of action under any other provision of law.

f. This section shall not apply to any service provided by a business or its affiliate where either the business or its affiliate is licensed or regulated pursuant to State or federal law including, but not limited to, by the Board of Public Utilities, Federal Communications Commission, Federal Energy Regulatory Commission, Department of Banking and Insurance, or Division of Consumer Affairs in the Department of Law and Public Safety.

2. Section 1 of P.L.2023, c.241 (C.56:8-42.1) is repealed.

3. This act shall take effect on the first day of the fourth month next following the date of enactment.

STATEMENT

This bill requires a cancellation option for any subscription service and establishes certain standards pertaining to the use of negative option features.

Under current law, subscription service providers of health club services are required to provide consumers with an online cancellation option. This bill repeals and replaces current law and expands the term “subscription service” to apply to any subscription service provider.

In addition, the bill requires subscription service providers to make available to consumers the option to cancel or terminate a subscription service using the same medium through which the subscription service was activated or the same medium in which the consumer is accustomed to interacting with the subscription service provider, including, but not limited to, in person, by telephone, by mail, by email, or online, in accordance with the established billing terms and conditions of the subscription service.

Under the provisions of the bill, if a subscription service provider makes available the option to cancel or terminate a subscription service online, the provider is to make available to the consumer, in an easily accessible location, a direct link or button on the subscription service provider’s Internet website through which a consumer can initiate termination of the automatic renewal of the subscription service.

The bill provides that before charging the consumer for the initial purchase of a subscription service, a subscription service provider that utilizes a negative option feature as part of the offer or agreement of a subscription service is required to obtain a consumer’s express informed consent.

Under the bill, a “negative option feature” is defined as a provision within a subscription service offer or agreement in which a consumer’s silence or failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the subscription service provider as acceptance of the subscription service. A subscription service provider that utilizes a negative option feature as part of the offer or agreement of a subscription service is not to: misrepresent any material fact made while marketing; fail to clearly and conspicuously disclose material terms prior to obtaining a consumer’s billing information; fail to obtain a consumer’s express informed consent before charging the consumer; and fail to provide a simple mechanism to cancel charges.

The bill provides that its provisions do not apply to any service provided by a business or its affiliate where either the business or its affiliate is licensed or regulated pursuant to State or federal law including, but not limited to, by the Board of Public Utilities, Federal Communications Commission, Federal Energy Regulatory Commission, Department of Banking and Insurance, or Division of Consumer Affairs in the Department of Law and Public Safety.

The bill allows the Attorney General or the Director of the Division of Consumer Affairs to seek a temporary or permanent injunction to stop any practices that violate the provisions of this bill, and to secure restitution for New Jersey residents who have suffered financial losses due to such violations. Additionally, the bill prohibits individuals from pursuing a private right of action for violations under this bill, and prohibits these violations from serving as the basis for a private right of action under any other law.

It is an unlawful practice for a subscription service provider to violate the provisions of this bill. An unlawful practice under the consumer fraud act is punishable by a monetary penalty of not more than $10,000 for a first offense and not more than $20,000 for any subsequent offense. In addition, violations may result in cease and desist orders issued by the Attorney General, the assessment of punitive damages, and the awarding of treble damages and costs to the injured party.