Senate Commerce Committee Statement to Senate, No. 3877 — State of New Jersey (December 12, 2024)

Summary

The Senate Commerce Committee of the State of New Jersey, in a statement dated December 12, 2024, reports favorably and with committee amendments Senate Bill No. 3877. As amended, the bill requires a cancellation option for any subscription service, replacing a law covering health club services. Providers must let consumers cancel through the same medium used to activate the service, and those offering online cancellation must provide a direct link or button. Providers using a negative option feature may not misrepresent material facts, fail to disclose material terms, charge without express informed consent, or fail to provide a simple cancellation mechanism. The amendments exempt businesses licensed or regulated under State or federal law, and violations carry penalties of up to $10,000 and $20,000.

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SENATE COMMERCE COMMITTEE

STATEMENT TO

SENATE, No.
3877

with
committee amendments

STATE
OF NEW JERSEY

DATED: DECEMBER
12, 2024

The Senate Commerce Committee reports favorably and
with committee amendments Senate Bill No. 3877.

As amended, this bill requires a cancellation option
for any subscription service and establishes certain standards pertaining to
the use of negative option features. Under current law, subscription service
providers of health club services are required to provide consumers with an
online cancellation option. This bill repeals and replaces current law and
expands the term “subscription service” to apply to any subscription service
provider. In addition, the bill requires subscription service providers to
make available to consumers the option to cancel or terminate a subscription
service using the same medium through which the subscription service was
activated or the same medium in which the consumer is accustomed to interacting
with the subscription service provider, including, but not limited to, in
person, by telephone, by mail, by email, or online, in accordance with the
established billing terms and conditions of the subscription service. Under the
provisions of the bill, a subscription service provider that makes available
the option to cancel or terminate a subscription service online, is to provide
to any consumer, in an easily accessible location, a direct link or button on
the subscription service provider’s Internet website through which a consumer
can initiate termination of the automatic renewal of the subscription service.

Under the bill, a “negative option feature” is defined
as a provision within a subscription service offer or agreement in which a
consumer’s silence or failure to take an affirmative action to reject goods or
services or to cancel the agreement is interpreted by the subscription service
provider as acceptance of the subscription service. A subscription service
provider that utilizes a negative option feature as part of the offer or
agreement of a subscription service is not to: misrepresent any material fact
made while marketing; fail to clearly and conspicuously disclose material terms
prior to obtaining a consumer’s billing information; fail to obtain a
consumer’s express informed consent before charging the consumer; and fail to
provide a simple mechanism to cancel and immediately halt charges.

The committee amended the bill to stipulate that its provisions
do not apply to any service provided by a business or its affiliate where
either the business or its affiliate is licensed or regulated pursuant to State
or federal law, including, but not by the Board of Public Utilities, Federal
Communications Commission, Federal Energy Regulatory Commission, Department of
Banking and Insurance or Division of Consumer Affairs in the Department of Law
and Public Safety.

It is an unlawful practice for a subscription service
provider to violate the provisions of this bill. An unlawful practice under the
consumer fraud act is punishable by a monetary penalty of not more than $10,000
for a first offense and not more than $20,000 for any subsequent offense. In
addition, violations may result in cease and desist orders issued by the
Attorney General, the assessment of punitive damages, and the awarding of
treble damages and costs to the injured party. It is the intent of the sponsor
to make it easier for consumers to cancel their subscription services.

COMMITTEE AMENDMENTS

The committee amended the bill to stipulate that its provisions
do not apply to any service provided by a business or its affiliate where
either the business or its affiliate is licensed or regulated pursuant to State
or federal law, including, but not by the Board of Public Utilities, Federal
Communications Commission, Federal Energy Regulatory Commission, Department of
Banking and Insurance or Division of Consumer Affairs in the Department of Law
and Public Safety.

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