SF 3920

1st Engrossment - 93rd Legislature (2023 - 2024) Posted on 03/21/2024 09:28am

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; amending Minnesota Statutes
2022, sections 325G.24; 325G.25, subdivision 1; proposing coding for new law
in Minnesota Statutes, chapter 325G; repealing Minnesota Statutes 2022, section
325G.25, subdivision 1a.

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

Section 1.

Minnesota Statutes 2022, section 325G.24, is amended to read:

325G.24 RIGHT OF CANCELLATION.

new text begin Subdivision 1. new text end

new text begin Right of cancellation. new text end

new text begin (a) new text end Any person who has elected to become a
member of a club may new text begin unilaterally new text end cancel such membership new text begin , in the person's exclusive
discretion, new text end by giving deleted text begin written deleted text end notice of cancellation new text begin at new text end any time before midnight of the third
business day following the date on which membership was attained. deleted text begin Notice of cancellation
may be given personally or by mail.
deleted text end

new text begin (b) new text end If given by mail, the notice is effective upon deposit in a mailbox, properly addressed
and postage prepaid. deleted text begin Notice of cancellation need not take a particular form and is sufficient
if it indicates, by any form of written expression, the intention of the member not to be
bound by the contract.
deleted text end

new text begin (c) new text end Cancellation new text begin under this subdivision new text end shall be without liability on the part of the member
and the member shall be entitled to a refund, within ten days after notice of cancellation is
given, of the entire consideration paid for the contract. deleted text begin Rights of cancellation may not be
waived or otherwise surrendered.
deleted text end

new text begin Subd. 2. new text end

new text begin Right of member unilateral termination. new text end

new text begin (a) Any person who has elected to
become a member of a club may unilaterally terminate such membership, in the person's
exclusive discretion, by giving notice of termination at any time.
new text end

new text begin (b) If given by mail, the notice is effective upon deposit in a mailbox, properly addressed,
and postage prepaid.
new text end

new text begin (c) A club must not impose a termination fee or any other liability on the member for
termination under this subdivision.
new text end

new text begin (d) Termination under this subdivision will be effective at the end of the membership
term in which the member provides the notice of termination. If membership is at-will
without a defined membership term, then termination under this subdivision will be effective
immediately, unless the member indicates a future effective date of termination, in which
event the date indicated by the member will be the effective date of termination.
new text end

new text begin (e) If a member provides notice of termination at any time before midnight of the third
business day following the date on which membership was attained, the club must treat the
notice as a notice of cancellation under subdivision 1, unless the member specifically
provides for a future termination effective date.
new text end

new text begin Subd. 3. new text end

new text begin Notice requirements. new text end

new text begin (a) A club must accept a notice of cancellation or notice
of termination that has been given:
new text end

new text begin (1) verbally, including but not limited to personally or over the phone to customer or
account service members;
new text end

new text begin (2) in writing, including but not limited to via mail, email, or an online message through
the club's website directed to customer or account service members;
new text end

new text begin (3) through a termination election as described in section 325G.60; or
new text end

new text begin (4) in any other manner or medium by which the member initially accepted membership
to the club and that is no more burdensome to the member than was the initial acceptance.
new text end

new text begin (b) The process to cancel must be stated clearly and be easily accessible and completed
with ease.
new text end

new text begin Subd. 4. new text end

new text begin No waiver. new text end

new text begin A right of cancellation or right of termination under this section
may not be waived or otherwise surrendered.
new text end

Sec. 2.

Minnesota Statutes 2022, section 325G.25, subdivision 1, is amended to read:

Subdivision 1.

Form and content.

A copy of every contract shall be delivered to the
member at the time the contract is signed. Every contract must be in writing, must be signed
by the member, must designate the date on which the member signed the contract and must
state, clearly and conspicuously in boldface type of a minimum size of 14 points, the
following:

"MEMBERS' RIGHT TO CANCEL"

"If you wish to cancel this contract, you may cancel new text begin in-person, over the phone, new text end by
delivering or mailing a written notice to the club new text begin , via email or an online message through
the club's website, through the "termination election" provided on the club's website (if
applicable) and as described in Minnesota Statutes, section 325G.60, or in any other manner
or medium by which you initially accepted membership to the club new text end . The notice must new text begin be
provided to the club new text end deleted text begin say that you do not wish to be bound by the contract and must be
delivered or mailed deleted text end before midnight of the third business day after you sign this contract.
deleted text begin The notice must be delivered or mailed to: (Insert name and mailing address of club). deleted text end If
you cancel, the club will return, within ten days of the date on which you give notice of
cancellation, any payments you have made."

new text begin "MEMBERS' RIGHT TO UNILATERAL TERMINATION"
new text end

new text begin "You may unilaterally terminate this contract in your exclusive discretion at any time.
If you terminate, your membership will terminate at the end of the membership term in
which you provided the club with notice of termination. If your membership is at-will
without a defined membership term, then your membership will terminate immediately,
unless you indicate a future effective date of termination. If you wish to terminate this
contract, you may terminate in-person, over the phone, by delivering or mailing a written
notice to the club, via email or an online message through the club's website, through the
"termination election" provided on the club's website (if applicable) and as described in
Minnesota Statutes, section 325G.60, or in any other manner or medium by which you
initially accepted membership to the club. The club may not impose a termination fee or
any other liability on you for termination."
new text end

new text begin "NOTICE INFORMATION"
new text end

new text begin "If you wish to provide notice of cancellation or notice of termination to the club:
new text end

new text begin In-person or by mail, the applicable address is: [Insert name and mailing address of
club];
new text end

new text begin Over the phone, the applicable phone number is: [Insert phone number of club];
new text end

new text begin Via email, the applicable email address is: [Insert email address of club];
new text end

new text begin On the club's website, the applicable website address is: [Insert address, if applicable]."
new text end

Sec. 3.

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 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 calls attention to the language. 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. Consumer includes, but is not limited to, a member as defined in section 325G.23,
unless the context clearly indicates otherwise.
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 the state; 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, 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) that the indefinite subscription agreement will continue 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 will be 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 will change,
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 a seller, lessor, licensor, or professional who advertises,
solicits, or engages in consumer transactions, or 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. Seller includes, but is not limited to, a club as
defined in section 325G.23, unless the context clearly indicates otherwise.
new text end

Sec. 4.

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 in a clear
and conspicuous manner to the consumer and 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,
in a manner that is capable of being retained by the consumer, that includes 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 on 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) options for termination of the indefinite subscription agreement, which options must
be easy to use, cost-effective, and timely for all consumers:
new text end

new text begin (i) if a seller makes offers for an indefinite subscription agreement through an online
website, a termination election as set forth in section 325G.60; and
new text end

new text begin (ii) if a consumer enters into the indefinite subscription agreement through any means
other than a toll-free telephone number, an electronic mail address, or a postal address, then
an option substantially similar to, as easy to use, and as accessible as the initial means of
consumer acceptance of the agreement.
new text end

new text begin A communication of the required information through electronic mail is sufficient to meet
the requirements of this subdivision.
new text end

new text begin Subd. 3. new text end

new text begin Material changes. new text end

new text begin 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 regarding how to terminate the agreement
in a manner that is capable of being retained by the consumer. A material change in the
terms of an indefinite subscription agreement in violation of 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, no fewer than five days and no
more than 30 days before the end of any such free trial, 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.
new text end

new text begin Subd. 5. 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 least once per calendar year via mail or electronic mail.
new text end

new text begin (b) The notice required under this subdivision must include the terms of the service and
how to terminate or manage the service.
new text end

Sec. 5.

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

new text begin Subdivision 1. new text end

new text begin Definition; agreement. new text end

new text begin For purposes of this section, "agreement" means
an indefinite subscription agreement, as defined in section 325G.56, and a contract, as
defined in section 325G.23.
new text end

new text begin Subd. 2. 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 agreement
before the agreement has been duly authorized by the seller and consumer and made effective.
new text end

new text begin Subd. 3. new text end

new text begin Right of first refusal. new text end

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

new text begin Subd. 4. new text end

new text begin No abusive tactics or offers upon notice. new text end

new text begin (a) A seller that has received a notice
of cancellation or notice of termination of an agreement from a consumer cannot:
new text end

new text begin (1) make any misrepresentation or undertake any unfair or abusive tactic to delay,
unreasonably delay, or avoid the cancellation or termination of the agreement; or
new text end

new text begin (2) make or provide additional benefits, contract modifications, gifts, or similar offers
to the consumer until the seller has obtained permission from the consumer, granted by the
consumer after notice of cancellation or termination was given to the seller, for the seller
to engage in any such activity.
new text end

new text begin (b) A seller can only seek a consumer's permission under this paragraph once per
cancellation or termination attempt. A consumer's grant of permission under this paragraph
is limited to the immediate cancellation or termination attempt and does not apply to
subsequent attempts.
new text end

new text begin Subd. 5. new text end

new text begin Exceptions. new text end

new text begin This section does not prohibit a seller from:
new text end

new text begin (1) asking the consumer the reasons for cancellation or termination, provided that a
consumer is not required to answer as a condition of cancellation or termination;
new text end

new text begin (2) informing the consumer that there may be consequences of cancelling or terminating
the subscription; or
new text end

new text begin (3) verifying the identity of the consumer.
new text end

Sec. 6.

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 as of the date specified by the consumer, if the option is available.
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) 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 must take effect no later than 31 days
from the date of a verified consumer's notice of termination unless the consumer specifies
a future termination date, in which event the termination is effective as of such date.
new text end

new text begin (b) This subdivision does not require a seller to provide an option to set a future
termination date.
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, the consumer may terminate the indefinite subscription
agreement by any reasonable means at any time, including but not limited to by mail,
electronic mail, telephone, an online option, a termination election under section 325G.60,
or the means by which the consumer entered into the agreement, at no cost to the consumer.
new text end

Sec. 7.

new text begin [325G.60] TERMINATION ELECTION REQUIREMENT.
new text end

new text begin Subdivision 1. new text end

new text begin Definition; agreement. new text end

new text begin For purposes of this section, "agreement" means
an indefinite subscription agreement, as defined in section 325G.56, and a contract, as
defined in section 325G.23.
new text end

new text begin Subd. 2. new text end

new text begin Termination election required. new text end

new text begin (a) If a seller has a website with profile or
subscription management capabilities, then such website must include a termination election
on the website. The termination election must be clear and conspicuous on the website and
must use plain language to convey that any consumer may use the termination election to
terminate the agreement at any time. The termination election must only require a consumer
to input information that is necessary to process the termination. The termination election
must include a checkbox, submission button, or similarly common and simple mechanism
for the member to indicate a desire to terminate the agreement.
new text end

new text begin (b) For purposes of this section, "termination election" means a simple and easily
accessible means for a consumer to quickly provide notice of termination, and that does not
include undue complexity, confusion, or misrepresentation by the seller.
new text end

Sec. 8.

new text begin [325G.61] 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 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 of the good.
new text end

Sec. 9.

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

new text begin Sections 325G.56 to 325G.61 do not apply to:
new text end

new text begin (1) contracts governed by another state or federal statute or regulation specifically
intended to regulate automatic renewal or continuous service;
new text end

new text begin (2) any licensee as defined in section 60A.985, subdivision 8, and any affiliate of such
a licensee as defined in section 60D.15, subdivision 2;
new text end

new text begin (3) an individual or business licensed by the Department of Labor and Industry as a
technology system contractor or power limited technician as defined in section 326B.31;
new text end

new text begin (4) any service provided by a business or its affiliate where either the business or its
affiliate is licensed or regulated by the Public Utilities Commission, the Federal
Communications Commission, or the Federal Energy Regulatory Commission; or
new text end

new text begin (5) any person or entity registered or licensed with the Financial Industry Regulatory
Authority, the Securities and Exchange Commission, or under the Minnesota Securities
Act.
new text end

Sec. 10. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2022, section 325G.25, subdivision 1a, new text end new text begin is repealed.
new text end

Sec. 11. new text begin EFFECTIVE DATE.
new text end

new text begin This act is effective August 1, 2025, and applies to contracts entered into, modified, or
renewed on or after that date.
new text end

APPENDIX

Repealed Minnesota Statutes: S3920-1

325G.25 CONTRACT REGULATION.

Subd. 1a.

Alternative cancellation notice.

In lieu of the notice of cancellation required by subdivision 1, the seller may provide notice in a manner which conforms to applicable federal law or regulation or section 325G.08 so long as the notice provides the information required by subdivision 1.