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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

                            CHAPTER 125-S.F.No. 420 
                  An act relating to consumer protection; regulating 
                  membership travel contracts; amending Minnesota 
                  Statutes 2002, sections 325G.50; 325G.51; proposing 
                  coding for new law in Minnesota Statutes, chapter 325G.
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 2002, section 325G.50, is 
        amended to read: 
           325G.50 [MEMBERSHIP TRAVEL CONTRACTS; CANCELLATION.] 
           Subdivision 1.  [DEFINITIONS.] For purposes of subdivision 
        2 this section and section 325G.505, the following terms have 
        the meanings given them: 
           (a) "Membership travel contract" or "contract" means an 
        agreement offered or sold in this state evidencing a buyer's 
        right to make travel arrangements from or through a membership 
        travel operator and includes a membership that provides for this 
        use. 
           (b) "Membership travel operator" means a person offering or 
        selling membership travel contracts paid for by a fee or 
        periodic payments. 
           (c) "Travel arrangements" means travel reservations or 
        accommodations, tickets for domestic or foreign travel by air, 
        rail, ship, bus, or other medium of transportation, or hotel or 
        other lodging accommodations for members. 
           Subd. 2.  [BUYER'S RIGHT TO CANCEL.] In addition to other 
        rights the buyer may have, the buyer may cancel a membership 
        travel contract until midnight of the third tenth business day 
        after the day on which the contract was signed by the buyer. 
           To be effective, a notice of cancellation must be given by 
        the buyer in writing to the membership travel operator at the 
        operator's address.  This address must be included in the 
        membership travel contract.  The notice, if given by mail, is 
        effective upon deposit in a mailbox, properly addressed to the 
        operator and postage prepaid.  The notice is sufficient if it 
        shows, by any form of written expression, the buyer's intention 
        not to be bound by the membership travel contract. 
           Cancellation is without liability on the part of the buyer 
        and the buyer is entitled to a refund, within ten days after 
        notice of cancellation is given, of the entire consideration 
        paid for the contract.  Rights of cancellation may not be waived 
        or otherwise surrendered. 
           Subd. 3.  [WRITTEN NOTICE TO MEMBERS.] A copy of the 
        contract must be delivered to the buyer at the time the contract 
        is signed.  The contract must be in writing, must be signed by 
        the buyer, must designate the date on which the buyer signed the 
        contract, and must state, clearly and conspicuously, in boldface 
        type of a minimum size of 14 points immediately adjacent to the 
        buyer's signature, the following: 
                           "MEMBERS' RIGHT TO CANCEL 
           If you wish to cancel this contract, you may cancel by 
        delivering or mailing a written notice to the membership travel 
        operator.  The notice must say that you do not wish to be bound 
        by the contract and must be delivered or mailed before midnight 
        of the third tenth business day after you sign this contract.  
        The notice must be delivered or mailed to:  (Insert name and 
        mailing address of membership travel operator).  If you cancel, 
        the membership travel operator will return, within ten days of 
        the date on which you give notice of cancellation, any payments 
        you have made." 
           Subd. 3a.  [ORAL NOTICE TO MEMBERS.] At the time the 
        contract is signed by the buyer, the membership travel operator 
        shall orally inform the buyer of the buyer's right to cancel the 
        contract within ten business days of the contract signing. 
           Subd. 4.  [CANCELLATION AT ANY TIME.] (a) A contract which 
        does not contain the notice specified in subdivision 3 may be 
        canceled by the buyer at any time by giving notice of 
        cancellation by any means. 
           (b) If the oral notice required by subdivision 3a has not 
        been given to the buyer at the time the contract was signed, the 
        buyer may cancel the contract at any time by giving notice of 
        cancellation by any means. 
           Sec. 2.  [325G.505] [MEMBERSHIP TRAVEL CONTRACTS IN EXCESS 
        OF $500.] 
           Subdivision 1.  [SCOPE.] This section applies to a 
        membership travel operator who offers or sells membership travel 
        contracts when the cost of the membership travel contract to the 
        consumer is $500 or more.  This section does not apply to a 
        membership travel club that offers travel benefits solely for 
        motor vehicle use. 
           Subd. 2.  [PUBLIC OFFERING STATEMENT.] A membership travel 
        operator shall prepare and distribute to any prospective 
        purchaser, before a membership travel contract is executed by 
        the prospective purchaser, a public offering statement that 
        clearly and prominently discloses the following: 
           (1) the name and principal address of the membership travel 
        operator; 
           (2) the length of time that the membership travel operator 
        has been in business and the length of time that the membership 
        travel operator has been selling in Minnesota, and the length of 
        time that the membership travel operator has been selling in 
        states other than Minnesota, membership travel contracts 
        substantially similar to the membership travel contracts offered 
        to the prospective purchaser; 
           (3) the percentage of Minnesota purchasers of membership 
        travel contracts during the previous two years who exercised 
        their right to cancel, requested a refund, or made a complaint, 
        based on the information kept pursuant to subdivision 4, or if 
        the travel club has been operating in Minnesota for less than 
        two years, the number of membership travel contracts that have 
        been sold in Minnesota and the number of these customers who 
        have exercised their right to cancel, requested a refund, or 
        made a complaint as required to be recorded in subdivision 4; 
           (4) to the extent applicable to either the membership 
        travel operator, or any parent or controlling entity of the 
        membership travel operator, or any executive, partner, director, 
        or owner of a 20 percent or more interest in the membership 
        travel operator or in any parent or controlling entity of the 
        membership travel operator, or any other membership travel 
        operator in this or any other state which has an executive, 
        partner, director, or owner of a 20 percent or more interest in 
        common with the membership travel operator or in any parent or 
        controlling entity of the membership travel operator, the 
        existence and nature of the following types of legal actions: 
           (i) any indictment, conviction, judgment, decree, assurance 
        of discontinuance or similar settlement document, or order of 
        any court or administrative agency for, or pending lawsuit 
        alleging, violation of a federal or state law or regulation in 
        connection with activities relating to the rendition of travel 
        services or involving any criminal law or involving any consumer 
        fraud, false advertising, deceptive trade practices, or similar 
        consumer protection law; or 
           (ii) any unsatisfied judgments or bankruptcy filing; and 
           (5) if the membership travel operator uses a third-party 
        travel agent or membership travel operator to make travel 
        arrangements provided for in the contract, the name, physical 
        and Internet address, and telephone number of the third party or 
        parties, and a statement of the services provided by the third 
        party or parties that can be purchased directly from the third 
        party or parties. 
           Subd. 3.  [ORAL DISCLOSURES.] A membership travel operator 
        shall orally disclose to any prospective purchaser, before a 
        membership travel contract is executed by the prospective 
        purchaser, the information in the public offering statement as 
        required in subdivision 2, clauses (1), (2), and (3), and 
        whether the membership travel operator uses a third-party travel 
        agent or membership travel operator to make travel arrangements 
        provided for in the contract. 
           Subd. 4.  [COMPLAINT RECORD KEEPING.] A membership travel 
        operator shall keep written records of all buyers of a 
        membership travel contract who either exercised their right to 
        cancel, requested, in writing or orally, a partial or full 
        refund of the price paid for the contract, or made a written or 
        oral complaint about their purchase of the the contract, the 
        solicitation for the contract, or any aspect of the membership 
        travel contract sale or service. 
           Subd. 5.  [FAILURE TO PROVIDE DISCLOSURES.] The right to 
        cancel provided under section 325G.50 shall continue until ten 
        business days after the disclosures required under this section 
        are fully provided to the purchaser. 
           Sec. 3.  Minnesota Statutes 2002, section 325G.51, is 
        amended to read: 
           325G.51 [PENALTIES; REMEDIES.] 
           A person who violates section 325G.50 or 325G.505 is 
        subject to the penalties and remedies provided in section 8.31. 
           Presented to the governor May 24, 2003 
           Signed by the governor May 28, 2003, 12:50 p.m.