HB2970 98TH GENERAL ASSEMBLY

LRB098 08222 JLS 38320 b

98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB2970

Introduced , by Rep. Mike Smiddy

SYNOPSIS AS INTRODUCED:

815 ILCS 601/5
815 ILCS 601/10
815 ILCS 601/20

Amends the Automatic Contract Renewal Act. Expands scope of the Act to cover contracts containing a negative option feature. Defines terms. Requires additional disclosures regarding those contracts. Provides that it is a violation of the Act to fail to promptly terminate a contract upon written request or to ship substituted merchandise without the express consent of the consumer. Effective immediately.

A BILL FOR

AN ACT concerning business.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Automatic Contract Renewal Act is amended by changing Sections 5, 10, and 20 as follows:

(815 ILCS 601/5)

Sec. 5. Definition. In this Act:

"Contract" means a written agreement between 2 or more parties.

"Contract-complete consumer" means a consumer who has purchased the minimum quantity of merchandise required by the terms of a negative option plan.

"Negative option feature" means a contractual plan or arrangement under which a seller periodically sends to consumers an announcement that identifies merchandise (other than annual supplements to previously acquired merchandise) it proposes to send to consumers under the plan and the consumers thereafter receive and are billed for the merchandise identified in each announcement, unless by a date or within a time specified by the seller with respect to each announcement the consumers, in conformity with the provisions of the plan, instruct the seller not to send the identified merchandise.

"Parties" include individuals and other legal entities, but do not include the federal government, this State or another state, a unit of local government, or a school district.

"Seller" means a person, firm, partnership, association, corporation, limited liability company, or any other entity that sells or offers to sell products or services.

(Source: P.A. 91-674, eff. 6-1-00.)

(815 ILCS 601/10)

Sec. 10. Automatic renewal; requirements.

(a) Any person, firm, partnership, association, or corporation that sells or offers to sell any products or services to a consumer pursuant to a contract, where such contract automatically renews unless the consumer cancels the contract, shall disclose the automatic renewal clause clearly and conspicuously in the contract, including the cancellation procedure.

(b) Any person, firm, partnership, association, or corporation that sells or offers to sell any products or services to a consumer pursuant to a contract, where such contract term is a specified term of 12 months or more, and where such contract automatically renews for a specified term of more than one month unless the consumer cancels the contract, shall notify the consumer in writing of the automatic renewal. Written notice shall be provided to the consumer no less than 30 days and no more than 60 days before the cancellation deadline pursuant to the automatic renewal clause. Such written notice shall disclose clearly and conspicuously:

(i) that unless the consumer cancels the contract it will automatically renew; and

(ii) where the consumer can obtain details of the automatic renewal provision and cancellation procedure (for example, by contacting the business at a specified telephone number or address or by referring to the contract).

(b-5) A seller that sells or offers to sell products or services to a consumer under a contract that includes a negative option feature must disclose truthfully in a clear and conspicuous manner all material terms and conditions of the negative option feature including, but not limited to, the fact that the consumer's account will be charged unless the consumer takes an affirmative action to avoid the charge, the date the charge will be submitted for payment, and the specific steps the consumer must take to avoid the charge. It is a violation of this Act for a seller to fail to terminate promptly the contract of a properly identified contract-complete consumer upon his written request. It is a violation of this Act for a seller to ship without the express consent of the consumer, substituted merchandise for that ordered by the consumer.

(c) A person, firm, partnership, association, or corporation will not be liable for a violation of this Act or the Consumer Fraud and Deceptive Business Practices Act if such person, firm, partnership, association, or corporation demonstrates that, as part of its routine business practice:

(i) it has established and implemented written procedures to comply with this Act and enforces compliance with the procedures;

(ii) any failure to comply with this Act is the result of error; and

(iii) where an error has caused a failure to comply with this Act, it provides a full refund or credit for all amounts billed to or paid by the consumer from the date of the renewal until the date of the termination of the account, or the date of the subsequent notice of renewal, whichever occurs first.

(Source: P.A. 93-950, eff. 1-1-05.)

(815 ILCS 601/20)

Sec. 20. Applicability.

(a) This Act does not apply to a contract entered into before the effective date of this Act.

(b) This amendatory Act of the 93rd General Assembly does not apply to a contract entered into before the effective date of this amendatory Act of the 93rd General Assembly. This amendatory Act of the 98th General Assembly does not apply to a contract entered into before the effective date of this amendatory Act of the 98th General Assembly.

(c) This Act does not apply to business-to-business contracts.

(d) This Act does not apply to banks, trust companies, savings and loan associations, savings banks, or credit unions licensed or organized under the laws of any state or the United States, or any foreign bank maintaining a branch or agency licensed or organized under the laws of any state of the United States, or any subsidiary or affiliate thereof.

(e) This Act does not apply to a contract that is extended beyond the original term of the contract as the result of the consumer's initiation of a change in the original contract terms.

(Source: P.A. 93-950, eff. 1-1-05.)

Section 99. Effective date. This Act takes effect upon becoming law.