SF 1651

1st Engrossment - 89th Legislature (2015 - 2016) Posted on 04/01/2016 09:14am

A bill for an act
relating to contracts; regulating automatic renewal clauses in consumer contracts;
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] AUTOMATIC RENEWAL OF CONSUMER CONTRACTS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For purposes of this section:
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new text begin (1) "automatic renewal clause" means a provision of a contract that extends the
term of or renews a contract if the consumer does not take a specified action, provided
the original contract term is for one year or more and the contract automatically renews
for more than one month;
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new text begin (2) "consumer" means a person who acquires goods or services for personal, family,
or household purposes; and
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new text begin (3) "seller" means a person who provides a service or sells or leases goods to the
consumer.
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new text begin Subd. 2. new text end

new text begin Requirements for automatic renewal. new text end

new text begin If a contract between a seller and a
consumer contains an automatic renewal clause, the seller shall:
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new text begin (1) clearly and conspicuously disclose to the consumer the automatic renewal clause
and the procedure for canceling the contract at the time that the seller enters into the
contract with the consumer; and
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new text begin (2) give the consumer written notice of the automatic renewal clause and the
procedure for canceling the contract no less than 30 days and no more than 60 days
before the last date on which the consumer may cancel the contract before it renews for
another term.
new text end

new text begin Subd. 3. new text end

new text begin Notice of automatic renewal. new text end

new text begin (a) Written notice provided under this
section must clearly and conspicuously disclose:
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new text begin (1) that the contract will automatically renew if the consumer does not cancel the
contract;
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new text begin (2) the cancellation procedure, which shall allow for cancellation by regular mail
or e-mail; and
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new text begin (3) the dates during which the consumer may cancel the contract.
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new text begin (b) Written notice under this section must be made in a stand-alone mailing using
boldfaced type.
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new text begin Subd. 4. new text end

new text begin Consumer's right to cancel. new text end

new text begin (a) A consumer may cancel the automatic
renewal of a contract at any time before the date on which the contract renews for another
term, at no cost to the consumer, by following the procedure set out in the disclosure and
notice provided under this section or by standard mail or e-mail.
new text end

new text begin (b) If the seller fails to provide either the disclosure or the written notice required by
subdivision 2, the consumer may cancel the contract by any reasonable means at any time,
including by standard mail, e-mail, or telephone, at no cost to the consumer.
new text end

new text begin Subd. 5. new text end

new text begin Right of first refusal. new text end

new text begin A contract subject to this section shall not require
that the consumer has to permit the seller to match any offer the consumer has received. A
provision in a contract that violates this subdivision is void and unenforceable.
new text end

new text begin Subd. 6. new text end

new text begin Exemption. new text end

new text begin (a) This section shall not apply to a class of contracts
governed by other specific provisions related to automatic or guaranteed renewal in state
or federal statute or regulation.
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new text begin (b) This section does not apply to contracts when the consumer may cancel at
any time and receive a refund for goods or services not yet provided, if notice of this
cancellation right is given in the manner provided in subdivision 3, and the consumer may
cancel by any reasonable means, including by standard mail, e-mail, or telephone.
new text end

new text begin Subd. 7. new text end

new text begin Enforcement. new text end

new text begin This section may be enforced by the attorney general
under section 8.31.
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new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2017, for contracts entered
into, modified, or renewed on or after that date.
new text end