HF 4408

as introduced - 93rd Legislature (2023 - 2024) Posted on 03/07/2024 04:41pm

A bill for an act
relating to contracts; defining indefinite subscription agreement and related terms;
regulating certain contracts subject to automatic renewal clauses or continuous
service; requiring seller notice to consumers; providing for consumer rights in
connection with the termination of certain contracts; providing civil penalties;
proposing coding for new law in Minnesota Statutes, chapter 325G.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [325G.56] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin For purposes of sections 325G.56 to 325G.62, the terms defined
in this section have the meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin Automatic renewal. new text end

new text begin "Automatic renewal" means a plan or arrangement in
which a subscription or purchasing agreement is automatically renewed at the end of a
definite term for a subsequent term.
new text end

new text begin Subd. 3. new text end

new text begin Clear and conspicuous. new text end

new text begin "Clear and conspicuous" means the display of text in
a manner that clearly calls attention to the text, including but not limited to displaying the
text: (1) in larger type than the surrounding text; (2) in contrasting type, font, or color to
the surrounding text of the same size; or (3) set off from the surrounding text of the same
size by symbols or other marks. In the case of an audio disclosure, clear and conspicuous
means in a volume and cadence sufficient to be readily audible and understandable.
new text end

new text begin Subd. 4. new text end

new text begin Consumer. new text end

new text begin "Consumer" means any individual who seeks or acquires, by
purchase or lease, any goods, services, money, or credit for personal, family, or household
purposes.
new text end

new text begin Subd. 5. new text end

new text begin Continuous service. new text end

new text begin "Continuous service" means a plan or arrangement in
which a subscription or purchasing agreement continues until the consumer terminates the
agreement.
new text end

new text begin Subd. 6. new text end

new text begin Indefinite subscription agreement. new text end

new text begin "Indefinite subscription agreement" means
a subscription or purchasing agreement:
new text end

new text begin (1) between a seller and a consumer in Minnesota; and
new text end

new text begin (2) subject to automatic renewal or continuous service.
new text end

new text begin Indefinite subscription agreements include but are not limited to contracts, as defined in
section 325G.23, subdivision 3, subject to automatic renewal or continuous service.
new text end

new text begin Subd. 7. new text end

new text begin Offer terms. new text end

new text begin "Offer terms" means the following disclosures:
new text end

new text begin (1) the indefinite subscription agreement continues until the consumer terminates the
agreement;
new text end

new text begin (2) the description of the cancellation policy that applies to the indefinite subscription
agreement;
new text end

new text begin (3) the recurring charges that are charged to the consumer's credit or debit card or payment
account with a third party as part of the plan or arrangement and that the amount of the
charge may change, if that is the case, and the amount to which the charge changes, if
known;
new text end

new text begin (4) the length of the automatic renewal term or that the service is continuous, unless the
length of the term is definite and chosen by the consumer; and
new text end

new text begin (5) the minimum purchase obligation, if any.
new text end

new text begin Subd. 8. new text end

new text begin Seller. new text end

new text begin "Seller" means: (1) a seller, lessor, licensor, or professional who
advertises, solicits, or engages in consumer transactions; or (2) a manufacturer, distributor,
or licensor who advertises and sells, leases, or licenses goods or services to be resold, leased,
or sublicensed by other persons in consumer transactions.
new text end

Sec. 2.

new text begin [325G.57] REQUIREMENTS FOR AUTOMATIC RENEWAL OR
CONTINUOUS SERVICE.
new text end

new text begin Subdivision 1. new text end

new text begin Notices upon offer. new text end

new text begin A seller making an offer for an indefinite subscription
agreement must, before the consumer accepts the offer, present the offer terms: (1) in a
clear and conspicuous manner to the consumer; and (2) in visual proximity or, in the case
of an offer conveyed by voice, in temporal proximity to the offer's proposal.
new text end

new text begin Subd. 2. new text end

new text begin Confirmation upon consumer consent. new text end

new text begin A seller making an offer for an
indefinite subscription agreement must, in a timely manner after the consumer accepts the
offer, provide the consumer with confirmation of the consumer's acceptance of the offer.
The confirmation must be provided in a manner that is capable of being retained by the
consumer and must include the following:
new text end

new text begin (1) the offer terms;
new text end

new text begin (2) if the offer includes a free trial, information indicating how to cancel the free trial
before the consumer pays or becomes obligated to pay for any goods or services in connection
with the free trial; and
new text end

new text begin (3) the following options to terminate the indefinite subscription agreement, which
options must be easy to use, expeditious, and accessible for all consumers:
new text end

new text begin (i) a toll-free telephone number;
new text end

new text begin (ii) an email address;
new text end

new text begin (iii) a postal address;
new text end

new text begin (iv) if a seller makes offers for an indefinite subscription agreement through an online
website, a clear and conspicuous online option; and
new text end

new text begin (v) if a consumer enters into the indefinite subscription agreement through any means
other than those described in items (i) to (iv), an option substantially similar to, as easy to
use, and as accessible as the initial means used for the consumer to accept the agreement.
new text end

new text begin Subd. 3. new text end

new text begin Material changes. new text end

new text begin (a) Upon a material change in the terms of the indefinite
subscription agreement, the seller must provide to the consumer in a timely manner, and in
any case prior to the implementation of the material change, a clear and conspicuous notice
of the material change and provide information indicating how to terminate the agreement.
The notice must be provided in a manner that is capable of being retained by the consumer.
new text end

new text begin (b) A material change in the terms of an indefinite subscription agreement that violates
this subdivision is void and unenforceable.
new text end

new text begin Subd. 4. new text end

new text begin Free trials. new text end

new text begin A seller making an offer for an indefinite subscription agreement
that includes a free trial lasting more than 30 days must notify the consumer of the consumer's
option to cancel the free trial before the end of the trial period to avoid an obligation to pay
for the goods or services. The notice under this subdivision must be provided no fewer than
five days and no more than 30 days before the date the free trial period ends.
new text end

new text begin Subd. 5. new text end

new text begin Notice in advance of automatic renewal. new text end

new text begin (a) If an indefinite subscription
agreement is subject to automatic renewal, the seller must give the consumer written notice
of the automatic renewal no fewer than five days and no more than 30 days before the last
date on which the consumer may terminate the contract before the contract renews for
another term.
new text end

new text begin (b) The notice required under this subdivision must include the information required in
the confirmation described in subdivision 2.
new text end

new text begin (c) The notice required under this subdivision must be provided in a separate, individual
mailing.
new text end

new text begin Subd. 6. new text end

new text begin Periodic notice of continuous service. new text end

new text begin (a) If an indefinite subscription
agreement is subject to continuous service, the seller must give the consumer written notice
of the continuous service at intervals that are reasonable in relation to the goods or services
provided under the agreement, but no less frequent than once per calendar year.
new text end

new text begin (b) The notice required under this subdivision must include the information required in
the confirmation described in subdivision 2.
new text end

new text begin (c) The notice required under this subdivision must be provided in a separate, individual
mailing.
new text end

Sec. 3.

new text begin [325G.58] PROHIBITED CONDUCT.
new text end

new text begin Subdivision 1. new text end

new text begin Charges prior to effective date. new text end

new text begin A seller must not charge the consumer's
credit or debit card or the consumer's account with a third party in connection with an
indefinite subscription agreement before the agreement has been (1) duly authorized by the
seller and consumer, and (2) made effective.
new text end

new text begin Subd. 2. new text end

new text begin Right of first refusal. new text end

new text begin An indefinite subscription agreement must not require
the consumer to permit the seller to match any offer the consumer has received. A provision
in an indefinite subscription agreement that violates this subdivision is void and
unenforceable.
new text end

Sec. 4.

new text begin [325G.59] CONSUMER'S RIGHT TO TERMINATE.
new text end

new text begin Subdivision 1. new text end

new text begin Termination of agreement subject to automatic renewal. new text end

new text begin A consumer
may terminate an indefinite subscription agreement subject to automatic renewal at any
time by following the procedure set forth in the confirmation described in section 325G.57,
subdivision 2. A termination under this subdivision is effective at the end of the term in
which notice of termination is provided by the consumer, unless the consumer specifies a
termination date occurring at the end of a subsequent term, in which event the termination
is effective on the date specified by the consumer.
new text end

new text begin Subd. 2. new text end

new text begin Termination of agreement subject to continuous service. new text end

new text begin A consumer may
terminate an indefinite subscription agreement subject to continuous service at any time by
following the procedure set forth in the confirmation described in section 325G.57,
subdivision 2. A termination under this subdivision is effective immediately unless the
consumer specifies a future termination date, in which event the termination is effective on
the date specified by the consumer.
new text end

new text begin Subd. 3. new text end

new text begin Termination in absence of confirmation or notice. new text end

new text begin If the seller fails to provide
either the confirmation required under section 325G.57, subdivision 2, or a notice required
by section 325G.57, subdivision 5 or 6, the consumer may terminate the indefinite
subscription agreement at any time by any reasonable means, including but not limited to
by mail, email, telephone, an online option, or the means by which the consumer entered
into the agreement, at no cost to the consumer.
new text end

Sec. 5.

new text begin [325G.60] UNCONDITIONAL GIFTS.
new text end

new text begin Any good, including but not limited to any ware, merchandise, or product, is an
unconditional gift to the consumer if a seller sends the good under an indefinite subscription
agreement without first obtaining the consumer's affirmative consent to the agreement and
to receive the good, in accordance with section 325G.57. The consumer may use or dispose
of the good in any manner without any obligation to the seller, including but not limited to
any obligation relating to shipping the good.
new text end

Sec. 6.

new text begin [325G.61] EXEMPTION.
new text end

new text begin Sections 325G.56 to 325G.62 do not apply to contracts governed by another state or a
federal statute or regulation specifically intended to regulate automatic renewal or continuous
service.
new text end

Sec. 7.

new text begin [325G.62] ENFORCEMENT.
new text end

new text begin (a) Sections 325G.56 to 325G.61 may be enforced by the attorney general under section
8.31.
new text end

new text begin (b) A seller is not subject to civil penalties under paragraph (a) if the seller has made a
good faith effort to comply with each applicable provision of sections 325G.56 to 325G.61.
new text end

Sec. 8. new text begin EFFECTIVE DATE.
new text end

new text begin This act is effective January 1, 2024, and applies to contracts entered into, modified, or
renewed on or after that date.
new text end