Senate Bill Report — SB 5207, As of January 22, 2025

Summary

A Senate Bill Report on SB 5207, as of January 22, 2025, an act relating to requiring refunds to consumers for early cancellation of term-based subscriptions to electronic media services, with Senators MacEwen, Dozier, Hasegawa, Nobles and Valdez as sponsors. The brief summary says the bill directs electronic media services to provide refunds to consumers on a pro rata basis when requested and makes failure or refusal to issue a refund a violation subject to the Consumer Protection Act. The background describes the Federal Trade Commission Click-to-Cancel rule, finalized on January 15, 2025. The report lists a fiscal note requested on January 13, 2025.

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                            SENATE BILL REPORT
                                  SB 5207

                                      As of January 22, 2025

Title: An act relating to requiring refunds to consumers for early cancellation of term-based
     subscriptions to electronic media services.

Brief Description: Requiring refunds to consumers for early cancellation of term-based
     subscriptions to electronic media services.

Sponsors: Senators MacEwen, Dozier, Hasegawa, Nobles and Valdez.

Brief History:
     Committee Activity: Business, Financial Services & Trade: 1/23/25.


                                     Brief Summary of Bill
           • Directs electronic media services to provide refunds to consumers on a
             pro rata basis when requested.
           • Defines the failure or refusal of an electronic media service to issue a
             subscription refund as a violation that is subject to the Consumer
             Protection Act.


SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES & TRADE

     Staff: Clint McCarthy (786-7319)

     Background: Efforts by States to Clarify Consumer Rights in the Use of Subscription
     Services. A number of states have passed laws regulating automatic renewal payments for
     subscriptions and services in the last year. A number of states have passed laws requiring
     companies that provide goods and services through subscriptions to give notice prior to an
     automatic renewal of a subscription and make it easier for consumers to cancel
     subscriptions. Prior notice requirements range from 14 to 60 days. Examples of states that
     have made statutory changes on automatic renewal subscription services in 2024 include:




     This analysis was prepared by non-partisan legislative staff for the use of legislative
     members in their deliberations. This analysis is not part of the legislation nor does it
     constitute a statement of legislative intent.

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         • Tennessee;
         • Minnesota;
         • California; and
         • Virginia.

     The Federal Trade Commission Issues the Click-to-Cancel Rule, Effective January 15,
     2025. On January 15, 2025, the Federal Trade Commission finalized the Click-to-Cancel
     rule that imposed requirements on companies that use subscription services. This rule
     requires easy cancellation and record keeping of consent, and broadly prohibits
     misrepresentation in connection with the sale of a product or service through a negative
     option. Negative option marketing broadly refers to a category of commercial transactions
     in which sellers interpret a customer's failure to take an affirmative action, either to reject an
     offer or cancel an agreement, as assent to be charged for goods or services.

     Click-to-Cancel has a number of new requirements in place, including:
         • it must be as easy to cancel the subscription as it is to provide consent to the service;
         • cancellation must be available through the same medium as to sign-up;
         • cancellation online must be easy to find and cannot require interacting with a live or
           virtual representative;
         • cancellation requests must be honored promptly when made to a live person or
           recorded message; and
         • cancellation must be offered by phone when the consumer initially consented in
           person.

     The final rule is silent on refunds due to early cancellation of a subscription initiated by a
     consumer.

     Summary of Bill: Definition of Electronic Media Service. The term "electronic media" is
     defined as any combination of intangible music, news, software, games, or other intangible
     forms of information or entertainment. Electronic media services are any commercial
     service that provide electronic media. These services are provided to consumers through a
     subscription arrangement where there is an agreement between the electronic media service
     and the consumer where the consumer receives access to the electronic media in exchange
     for money during either a set term or on a regularly recurring basis.

     Contractual Obligations of an Electronic Media Service to a Consumer. Electronic media
     services are obligated to disburse refunds due to consumer when a consumer cancels a
     subscription. The amount of the refund must be calculated on a pro rata basis of time. The
     basis of the amount of the refund must be based on the amounts paid up to cancellation and
     upon the charges agreed to by the consumer.

     Automatic Renewal of Subscriptions. Electronic media services are permitted to continue to
     offer automatic renewal of any subscription to a consumer.



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     Violations. Electronic media services that fail or refuse to offer a subscription refund to a
     consumer are in violation of this act. A private right of action concerning electronic media
     services is not permitted. Subscriptions offered by an electronic media services are subject
     to the Consumer Protection Act.

     Appropriation: None.

     Fiscal Note: Requested on January 13, 2025.

     Creates Committee/Commission/Task Force that includes Legislative members: No.

     Effective Date: Ninety days after adjournment of session in which bill is passed.




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