1.1                          A bill for an act 
  1.2             relating to consumer protection; regulating service 
  1.3             and membership contracts; restricting automatic 
  1.4             renewal provisions; proposing coding for new law in 
  1.5             Minnesota Statutes, chapter 325G. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  [325G.53] [DEFINITIONS.] 
  1.8      Subdivision 1.  [SCOPE.] For the purposes of sections 
  1.9   325G.53 to 325G.57, the terms defined in this section have the 
  1.10  meanings given them. 
  1.11     Subd. 2.  [AUTOMATIC RENEWAL PROVISION.] "Automatic renewal 
  1.12  provision" means a contract provision stating that the contract 
  1.13  will be renewed for a specified additional period unless the 
  1.14  purchaser notifies the provider that the purchaser declines 
  1.15  renewal of the contract for the specified additional period. 
  1.16     Subd. 3.  [CANCELLATION DATE.] "Cancellation date" means 
  1.17  the date by which the purchaser is required to notify the 
  1.18  provider that the purchaser declines renewal under a contract 
  1.19  containing an automatic renewal provision. 
  1.20     Subd. 4.  [MEMBERSHIP CONTRACT.] "Membership contract" 
  1.21  means either: 
  1.22     (1) any contract governed under sections 325G.23 to 
  1.23  325G.28; or 
  1.24     (2) any contract that allows the purchaser to obtain access 
  1.25  to any merchandise or services, or provides the purchaser 
  2.1   discounts or benefits related to the purchase of any merchandise 
  2.2   or services, that are made available to the purchaser as a 
  2.3   result of entering the contract with the provider. 
  2.4      Subd. 5.  [PROVIDER.] "Provider" means the person that 
  2.5   supplies the services or membership, or receives compensation 
  2.6   for services or membership, under a service contract or 
  2.7   membership contract. 
  2.8      Subd. 6.  [PURCHASER.] "Purchaser" means a person residing 
  2.9   in Minnesota that enters a service contract or membership 
  2.10  contract and pays, or promises to pay, consideration to the 
  2.11  provider. 
  2.12     Subd. 7.  [SERVICE CONTRACT.] "Service contract" means a 
  2.13  contract for services of any kind, whether for business or 
  2.14  personal use. 
  2.15     Sec. 2.  [325G.54] [AUTOMATIC RENEWAL PROHIBITED WITHOUT 
  2.16  WRITTEN ACCEPTANCE BY CONSUMER; NOTICE REQUIRED.] 
  2.17     Subdivision 1.  [RENEWAL NOTICE AND WRITTEN CONSENT 
  2.18  REQUIRED.] An automatic renewal provision in a service contract 
  2.19  or membership contract is not enforceable by the provider unless 
  2.20  the provider provides a renewal notice to the purchaser pursuant 
  2.21  to this section. 
  2.22     Subd. 2.  [TIMING OF RENEWAL NOTICE.] The renewal notice 
  2.23  shall be furnished to the purchaser no earlier than 30 days and 
  2.24  no later than 20 days prior to the cancellation date of the 
  2.25  service contract or membership contract. 
  2.26     Subd. 3.  [CONTENT OF RENEWAL NOTICE.] The renewal notice 
  2.27  shall be on its own page and shall not be included with any 
  2.28  other information or documents, except that the provider may 
  2.29  include a return envelope and the notice may appear on the 
  2.30  letterhead of the provider.  The notice shall appear in at least 
  2.31  12-point type with the case and bolding as follows and shall 
  2.32  state the following: 
  2.33           "NOTICE REGARDING AUTOMATIC CONTRACT RENEWAL 
  2.34     Your contract with (enter provider name) for (enter type of 
  2.35  service or membership) will be <b>automatically renewed</b> unless we 
  2.36  hear from you.  You must let us know if you do not want your 
  3.1   contract with us automatically renewed.  If we do not hear from 
  3.2   you, your contract will be renewed for another (enter term of 
  3.3   renewal). 
  3.4      To prevent automatic renewal of your contract, sign this 
  3.5   form and put it in the U.S. Mail to us by (enter date three days 
  3.6   prior to cancellation).  Mail it to us at:  (enter provider's 
  3.7   address for cancellation). 
  3.8      (OPTIONAL:  If you have any questions about this matter, 
  3.9   please call us at (enter provider's phone number)). 
  3.10     I HEREBY DECLINE AUTOMATIC RENEWAL OF MY CONTRACT. 
  3.11       ...........................   ............. 
  3.12           Customer Signature            Date" 
  3.13     Subd. 4.  [DECLINATION OF RENEWAL FOR A CONTRACT CONTAINING 
  3.14  AN AUTOMATIC RENEWAL PROVISION.] A purchaser may decline renewal 
  3.15  of a service contract or membership contract containing an 
  3.16  automatic renewal provision by signing the declination clause at 
  3.17  the bottom of the renewal notice required by this section and 
  3.18  depositing the signed notice in the United States mail at least 
  3.19  three days prior to the cancellation date, or by otherwise 
  3.20  delivering the renewal notice with the signed declination clause 
  3.21  to the provider by the cancellation date.  Nothing in this 
  3.22  section shall be construed to limit the right of the purchaser 
  3.23  to cancel the service contract or membership contract at any 
  3.24  other time or by any other method permitted under the contract 
  3.25  or under other law. 
  3.26     Sec. 3.  [325G.55] [PROHIBITIONS IN AUTOMATIC RENEWAL 
  3.27  CONTRACTS.] 
  3.28     Subdivision 1.  [ONE-YEAR RENEWAL.] No service contract or 
  3.29  membership contract shall contain an automatic renewal provision 
  3.30  with a renewal term in excess of one year. 
  3.31     Subd. 2.  [PRICE INCREASES.] No service contract or 
  3.32  membership contract shall contain an automatic renewal provision 
  3.33  that permits the provider to charge a higher price for the 
  3.34  service or membership during the renewal term. 
  3.35     Sec. 4.  [325G.56] [EXCLUSIONS.] 
  3.36     Subdivision 1.  [MONTHLY AUTOMATIC RENEWALS.] Sections 
  4.1   325G.54 and 325G.55 do not prevent the enforcement of an 
  4.2   automatic renewal provision for which the renewal period is one 
  4.3   month or less. 
  4.4      Subd. 2.  [SPECIFIC TRANSACTIONS.] Sections 325G.54 and 
  4.5   325G.55 do not apply to renewal of a contract solely for 
  4.6   insurance, a contract solely for financial services, a lease of 
  4.7   real property governed by section 504.21, or a landscape 
  4.8   application contract governed by section 325F.245. 
  4.9      Subd. 3.  [CONTRACTS OVER $20,000.] Sections 325G.54 and 
  4.10  325G.55 do not apply to renewal of a contract that requires 
  4.11  payment by the purchaser of over $20,000 during the renewal term.
  4.12     Sec. 5.  [325G.57] [VIOLATIONS.] 
  4.13     A violation of section 325G.54 or 325G.55 is a deceptive 
  4.14  practice under section 325F.69, subdivision 1.