House File 229 - Reprinted
HOUSE FILE
BY COMMITTEE ON COMMERCE
(SUCCESSOR TO HSB 89)
(As Amended and Passed by the House March 10, 2015)
A BILL FOR
1 An Act relating to the regulation of free offers and buying
2 club memberships.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
HF 229 (3) 86
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PAG LIN
1 1 Section 1. Section 552A.2, Code 2015, is amended by adding
1 2 the following new subsection:
1 3 NEW SUBSECTION. 7. The sale of goods or services transacted
1 4 through the internet.
1 5 Sec. 2. Section 552A.3, Code 2015, is amended to read as
1 6 follows:
1 7 552A.3 Right of cancellation == requirement of writing.
1 8 The requirements of sections 555A.1 through 555A.5, relating
1 9 to door=to=door sales, shall apply to sales of buying club
1 10 memberships, irrespective of the place or manner of sale or
1 11 the purpose for which they are purchased subject to regulation
1 12 under this chapter. In addition to the requirements of chapter
1 13 555A, a contract shall not be enforceable against a person
1 14 acquiring a membership in a buying club unless the contract is
1 15 in writing and signed by the purchaser.
1 16 Sec. 3. Section 714.16, subsection 2, Code 2015, is amended
1 17 by adding the following new paragraph:
1 18 NEW PARAGRAPH. o. (1) It is an unlawful practice for
1 19 a person to make a free offer to a consumer, or impose a
1 20 financial obligation on the consumer as a result of the
1 21 consumer's acceptance of a free offer, unless the person
1 22 provides the consumer with clear and conspicuous information
1 23 regarding the terms of the free offer before the consumer
1 24 agrees to accept the free offer, including at a minimum all of
1 25 the following:
1 26 (a) Identification of all goods or services, or enrollments
1 27 in a membership, subscription, or service contract, that the
1 28 consumer will receive or incur a financial obligation for as a
1 29 result of accepting the free offer.
1 30 (b) The cost to the consumer of any financial obligation
1 31 the consumer will incur if the consumer accepts the free offer,
1 32 including any fees or charges.
1 33 (c) Any requirement, if applicable, that the consumer take
1 34 affirmative action to reject the free offer and instructions
1 35 about how the consumer is to indicate the consumer's rejection
2 1 of the free offer.
2 2 (d) A statement, if applicable, that by accepting the free
2 3 offer, the consumer will become obligated for additional goods
2 4 or services, or enrollment in a membership, subscription, or
2 5 service contract, unless the consumer takes affirmative action
2 6 to cancel the free offer or otherwise reject receipt of the
2 7 additional goods or services or the enrollment in a membership,
2 8 subscription, or service contract.
2 9 (e) Except as provided in subparagraph division (h), the
2 10 consumer's right to cancel the free offer using procedures
2 11 specifically intended for that purpose that, at a minimum,
2 12 enable the consumer to cancel by calling a toll=free telephone
2 13 number or to cancel in a manner substantially similar to that
2 14 by which the consumer accepted the free offer.
2 15 (f) The time period during which the consumer must cancel in
2 16 order to avoid incurring a financial obligation as a result of
2 17 accepting the free offer.
2 18 (g) If applicable, the consumer's right to receive a credit
2 19 on goods or services received as a result of accepting the free
2 20 offer when the goods or services are returned or rejected, and
2 21 the time period during which the goods or services must be
2 22 returned or rejected for the purpose of receiving a credit.
2 23 (h) With respect to a free offer that is for a publication,
2 24 including but not limited to a magazine, newspaper, or other
2 25 periodical, a statement that the consumer will receive, at
2 26 the time the consumer receives an invoice to pay for the
2 27 publication, information regarding the consumer's right to
2 28 cancel the free offer and an explanation of the procedure to
2 29 cancel the free offer, including but not limited to written
2 30 notice of cancellation by mail to the person providing the free
2 31 offer.
2 32 (2) It is an unlawful practice for a person to cause
2 33 a consumer to incur a financial obligation as a result of
2 34 accepting a free offer unless one of the following occurs:
2 35 (a) The person obtains the consumer's billing information
3 1 directly from the consumer. For purposes of this subparagraph
3 2 division, a person obtains a consumer's billing information
3 3 directly from the consumer if the billing information is
3 4 obtained by the person or by the person's agent or employee.
3 5 (b) The consumer gives affirmative consent at the time the
3 6 consumer accepts a free offer for the person to provide billing
3 7 information to a person other than the person making the free
3 8 offer.
3 9 (3) It is an unlawful practice for a person to impose
3 10 a financial obligation on a consumer as a result of the
3 11 consumer's acceptance of a free offer unless the consumer's
3 12 affirmative consent to the terms of the free offer as disclosed
3 13 in subparagraph (1) is obtained.
3 14 (4) It is an unlawful practice for a person that makes a
3 15 free offer to a consumer to fail or refuse to cancel the free
3 16 offer if the consumer has used, or made reasonable efforts to
3 17 attempt to use, one of the procedures required to be available
3 18 to the consumer as described in subparagraph (1), subparagraph
3 19 division (e).
3 20 (5) This paragraph "o" does not apply to free offers made
3 21 in connection with services that are subject to the federal
3 22 Communications Act of 1934, 47 U.S.C. {151 et seq.
3 23 (6) For purposes of this paragraph "o":
3 24 (a) "Affirmative consent" means a consumer's agreement to
3 25 incur a financial obligation as a result of accepting a free
3 26 offer, or to provide the consumer's billing information, given
3 27 or made in the manner specifically identified for the consumer
3 28 to indicate the consumer's agreement.
3 29 (b) "Billing information" means any record or information
3 30 compiled or maintained with respect to a consumer that
3 31 identifies the consumer and provides a means by which the
3 32 consumer's financial obligation incurred by accepting a free
3 33 offer may be paid or otherwise satisfied, including but not
3 34 limited to information pertaining to a consumer's credit card,
3 35 payment card, charge card, debit card, checking, savings,
4 1 or other banking account, and electronic funds transfer
4 2 information.
4 3 (c) "Clear and conspicuous information" means language that
4 4 is readily understandable and presented in such size, color,
4 5 contrast, and location, or audibility and cadence, compared to
4 6 other language, as to be readily noticed and understood, and
4 7 that is in close proximity to the request for consent to a free
4 8 offer.
4 9 (d) "Consumer" means an individual who seeks to accept or
4 10 accepts a free offer.
4 11 (e) (i) "Free offer" means an offer of goods or services
4 12 without cost, or for a one=time payment to cover only
4 13 incidental charges such as shipping or handling, to a consumer
4 14 that, if accepted, causes the consumer to incur a financial
4 15 obligation for any of the following:
4 16 (A) The goods or services received.
4 17 (B) Additional goods or services other than those initially
4 18 received.
4 19 (C) Enrollment in a membership, subscription, or service
4 20 contract as a result of accepting the offer.
4 21 (ii) "Free offer" does not include a free good or service
4 22 that is received by a consumer as a result of the consumer's
4 23 entering into an agreement for enrollment in a membership,
4 24 subscription, or service contract that is not otherwise a free
4 25 offer or a consequence of the consumer's agreement to accept
4 26 a free offer.
HF 229 (3) 86
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