“To provide for automatic renewal protections, and for other purposes.”
No CRS summary available for this bill.
This section establishes consumer protections for contracts containing automatic renewal provisions, free-to-pay conversions, or negative options. Specifically, it requires sellers to (1) disclose such features and cancellation procedures clearly and conspicuously; (2) for automatic renewals, provide notice at least 7 days before each renewal (or longer as determined by the Federal Trade Commission (FTC)) in the same manner as contract signup, offer easy cancellation via online mechanism and toll-free phone/email/mail/other timely method, obtain annual express informed consent to renew, and—for contracts unused for 6 consecutive months since last consent—obtain new consent and offer prorated refund rights before charging; (3) for free trials, provide at least 7 days' notice (or longer per FTC) before expiration or charging, along with easy cancellation options and express informed consent before any charge; (4) void renewal provisions and provide full refunds upon violation, with contract termination; and (5) disregard consent obtained via dark patterns (i.e., manipulative interfaces). The FTC may exempt certain service contracts and adjust notice periods; requirements take effect 1 year after enactment.
This section establishes Federal Trade Commission (FTC) enforcement of this Act by treating violations of section 2 or rules promulgated under this Act as violations of a rule under FTC Act section 18(a)(1)(B) (15 U.S.C. 57a(a)(1)(B)), which authorizes FTC mag rulemaking (i.e., notice-and-comment procedures) to define unfair or deceptive acts or practices. The section further (1) incorporates applicable terms of the FTC Act (15 U.S.C. 41 et seq.) for enforcement manner, means, jurisdiction, powers, and duties; (2) subjects violators to FTC Act penalties and entitles them to its privileges and immunities; (3) preserves other FTC authority under law; and (4) directs the FTC to promulgate, in accordance with APA section 553 (5 U.S.C. 553), rules necessary to implement the Act or prevent unfair or deceptive acts or practices regarding free trials, automatic renewals, or other contracts under which a consumer's silence or failure to affirmatively reject goods, services, or an agreement is interpreted by the seller as acceptance.
This section defines terms used in the Act, including "(1) Commission" (i.e., the Federal Trade Commission); "(2) consumer" (i.e., any person who seeks or acquires, by purchase or lease, any goods or services); "(3) dark patterns" (i.e., a user interface that has the substantial effect of subverting or impairing user autonomy, decision making, or choice); "(4) free-to-pay conversion" and "(5) negative option feature" (as defined in 16 C.F.R. § 310.2); "(6) service contract" (i.e., a contract for repair, replacement, or maintenance of property, or indemnification for such, including for motor vehicles or residential property due to defects, wear and tear, power surges, towing, or road hazards); and "(7) simply cancel" (i.e., a contract cancellation mechanism at least as easy to use as the mechanism used to consent to the contract).