MI Chamber Voices Concerns About Unintended Consequences of HB 4843

Summary

In this memorandum dated Oct. 3, 2023, Wendy Block of the Michigan Chamber of Commerce tells members of the House Economic Development and Small Business Committee of the Chamber's concerns about HB 4843, a bill on subscription services and automatic renewal. The memo states that consumers spend $219 per month on average on various subscriptions. It lists three items of concern: the bill's disclosure mandates and consent requirements, the intended scope of the bill, and exposure of more businesses to litigation and class action lawsuits under the MI Consumer Protection Act. It suggests defining the terms "automatic renewal provision" and "consumer contract" or "contract."

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MICHIGAN
CHAMBER.

of Commerce

MEMORANDUM

TO: Members of the House Economic Development and Small Business Committee
FROM: Wendy Block, Michigan Chamber of Commerce

SUBJECT: MI Chamber Voices Concerns About Unintended Consequences of HB 4843
DATE: Oct. 3, 2023

This memo is to voice the Michigan Chamber’s concerns regarding HB 4843. While the bill is intended to provide
consumer protections for consumers entering into subscription services and automatic renewal cycles, we are
concerned it could jeopardize the very mechanism making this effortless experience possible.

On average, consumers spend $219 per month on various subscriptions, most of which renew automatically.! These
subscriptions, which are extremely popular among consumers, cover a wide range of products and services, including
apps, audio/video streaming, on-demand delivery, news/magazines, software, food/beverage, consumer products, and
more. Recurring subscriptions and trial offers, while convenient, also allow consumers to try new products and
offerings without a jong-term commitment. And the recurring nature saves consumers from the hassle of manually
renewing their subscriptions on a monthly or annual basis.

While we are still soliciting feedback from cur members, there are three items of specific concern and question:

e We are concerned that the bill's prescriptive disclosure mandates and consent requirements could restrict
businesses—big and small--from making offers to better suit the needs of consumers considering cancellations
{page 12).

e We have received questions about the intended scope of the bill {i.e., who/what it is intending to regulate),
especially given that some of this activity is already regulated at the federal level. We would respectfully
suggest this clarification could be accomplished by defining the term “automatic renewal provision” and
“consumer contract” or “contract” (pages 9 and 12).

« We are concerned that HB 4843 is a backdoor avenue for plaintiff attorneys and the state to seek monetary
relief for simple missteps and subject more businesses to litigation and class action lawsuits under the Ml
Consumer Protection Act. The threat of penalties and litigation could have a chilling effect on subscription
services as businesses may choose to avoid the legal and financial uncertainty tied to the legislation.

Bottom line: We certainly understand the bill sponsor's desire to protect consumers and generally agree that
companies should be transparent about their subscription terms and renewal dates and make it easy for customers

to cancel, we are concerned HB 4843 may nat be the best way to accomplish this goal.

Please do not hesitate to contact me with any questions at 517-371-7678 or wblock@michamber.com.


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