House File 229 - Enrolled
HOUSE FILE
BY COMMITTEE ON COMMERCE
(SUCCESSOR TO HSB 89)
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A BILL FOR
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House File 229
AN ACT
RELATING TO THE REGULATION OF FREE OFFERS AND BUYING CLUB
MEMBERSHIPS.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
Section 1. Section 552A.3, Code 2015, is amended to read as
follows:
552A.3 Right of cancellation == requirement of writing.
The requirements of sections 555A.1 through 555A.5, relating
to door=to=door sales, shall apply to sales of buying club
memberships, irrespective of the place or manner of sale or the
purpose for which they are purchased, except that in connection
with the sale of a buying club membership transacted through
the internet by a company primarily engaged in the sale of
goods through the internet, section 555A.4, subsections 1 and 3
shall not apply. In addition to the requirements of chapter
555A, a contract shall not be enforceable against a person
acquiring a membership in a buying club unless the contract is
in writing and signed by the purchaser.
Sec. 2. Section 714.16, subsection 2, Code 2015, is amended
by adding the following new paragraph:
NEW PARAGRAPH. o. (1) It is an unlawful practice for
a person to make a free offer to a consumer, or impose a
financial obligation on the consumer as a result of the
consumer's acceptance of a free offer, unless the person
provides the consumer with clear and conspicuous information
regarding the terms of the free offer before the consumer
agrees to accept the free offer, including at a minimum all of
the following:
(a) Identification of all goods or services, or enrollments
in a membership, subscription, or service contract, that the
consumer will receive or incur a financial obligation for as a
result of accepting the free offer.
(b) The cost to the consumer of any financial obligation
the consumer will incur if the consumer accepts the free offer,
including any fees or charges.
(c) Any requirement, if applicable, that the consumer take
affirmative action to reject the free offer and instructions
about how the consumer is to indicate the consumer's rejection
of the free offer.
(d) A statement, if applicable, that by accepting the free
offer, the consumer will become obligated for additional goods
or services, or enrollment in a membership, subscription, or
service contract, unless the consumer takes affirmative action
to cancel the free offer or otherwise reject receipt of the
additional goods or services or the enrollment in a membership,
subscription, or service contract.
(e) The consumer's right to cancel the free offer using
procedures specifically intended for that purpose that, at a
minimum, enable the consumer to cancel by calling a toll=free
telephone number or to cancel in a manner substantially similar
to that by which the consumer accepted the free offer.
(f) The time period during which the consumer must cancel in
order to avoid incurring a financial obligation as a result of
accepting the free offer.
(g) If applicable, the consumer's right to receive a credit
on goods or services received as a result of accepting the free
offer when the goods or services are returned or rejected, and
the time period during which the goods or services must be
returned or rejected for the purpose of receiving a credit.
(2) It is an unlawful practice for a person to cause
a consumer to incur a financial obligation as a result of
accepting a free offer unless one of the following occurs:
(a) The person obtains the consumer's billing information
directly from the consumer. For purposes of this subparagraph
division, a person obtains a consumer's billing information
directly from the consumer if the billing information is
obtained by the person or by the person's agent or employee.
(b) The consumer gives affirmative consent at the time the
consumer accepts a free offer for the person to provide billing
information to a person other than the person making the free
offer.
(3) It is an unlawful practice for a person to impose
a financial obligation on a consumer as a result of the
consumer's acceptance of a free offer unless the consumer's
affirmative consent to the terms of the free offer as disclosed
in subparagraph (1) is obtained.
(4) It is an unlawful practice for a person that makes a
free offer to a consumer to fail or refuse to cancel the free
offer if the consumer has used, or made reasonable efforts to
attempt to use, one of the procedures required to be available
to the consumer as described in subparagraph (1), subparagraph
division (e).
(5) This paragraph "o" does not apply to free offers made
in connection with services that are subject to the federal
Communications Act of 1934, 47 U.S.C. {151 et seq.
(6) For purposes of this paragraph "o":
(a) "Affirmative consent" means a consumer's agreement to
incur a financial obligation as a result of accepting a free
offer, or to provide the consumer's billing information, given
or made in the manner specifically identified for the consumer
to indicate the consumer's agreement.
(b) "Billing information" means any record or information
compiled or maintained with respect to a consumer that
identifies the consumer and provides a means by which the
consumer's financial obligation incurred by accepting a free
offer may be paid or otherwise satisfied, including but not
limited to information pertaining to a consumer's credit card,
payment card, charge card, debit card, checking, savings,
or other banking account, and electronic funds transfer
information.
(c) "Clear and conspicuous information" means language that
is readily understandable and presented in such size, color,
contrast, and location, or audibility and cadence, compared to
other language, as to be readily noticed and understood, and
that is in close proximity to the request for consent to a free
offer.
(d) "Consumer" means an individual who seeks to accept or
accepts a free offer.
(e) (i) "Free offer" means an offer of goods or services
without cost, or for a one=time payment to cover only
incidental charges such as shipping or handling, to a consumer
that, if accepted, causes the consumer to incur a financial
obligation for any of the following:
(A) The goods or services received.
(B) Additional goods or services other than those initially
received.
(C) Enrollment in a membership, subscription, or service
contract as a result of accepting the offer.
(ii) "Free offer" does not include a free good or service
that is received by a consumer as a result of the consumer's
entering into an agreement for enrollment in a membership,
subscription, or service contract that is not otherwise a free
offer or a consequence of the consumer's agreement to accept
a free offer.
(iii) "Free offer" does not include enrollment in a
subscription to a publication, including but not limited to a
magazine, newspaper, or other periodical, if the consumer may
cancel the subscription at any time and receive a refund for
issues not yet distributed, or in the case of a newspaper, a
refund for newspapers that would otherwise be distributed after
the expiration of the current month.
KRAIG PAULSEN
Speaker of the House
PAM JOCHUM
President of the Senate
I hereby certify that this bill originated in the House and
is known as House File 229, Eighty=sixth General Assembly.
CARMINE BOAL
Chief Clerk of the House
Approved , 2015
TERRY E. BRANSTAD
Governor
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