On December 13, 2023, New York Governor Hochul signed two laws, which aim to protect consumers from (1) unwanted subscriptions by requiring notice to consumers for upcoming automatic renewals with clear instructions for canceling, and (2) confusion over prices by requiring merchants to post the highest price a consumer may pay for a product regardless of payment method.
Section 527-a of the general business law related to unlawful practices (S.5941B/A.3245D) was amended effective December 13, 2023. The amendment requires any business that allows a consumer to set-up an automatic renewal of one year or longer to notify such consumer of the upcoming automatic renewal 15-45 days prior to the cancellation deadline for such automatic renewal and include instructions on how to cancel such. The forgoing requirement does not apply to any business, or subsidiary or affiliate of that business, that is regulated by the Public Service Commission or the Federal Communications Commission. The following entities remain exempt from the requirements of this article: banks, bank holding companies, or the subsidiary or affiliate of either, or credit unions or other financial institutions, licensed under state or federal law; and any entity, or subsidiary or affiliate thereof, regulated by the department of financial services; security system alarm operators; any service provided by a business or its affiliate where either the business or its affiliate is doing business pursuant to a franchise issued by a political subdivision of the state; and sellers and administrators of a service contract, as defined pursuant to section seven thousand nine hundred two of the insurance law. The penalty provision (which was not amended) requires the attorney general to enforce violations, which may have a penalty of not more than $500 for a single violation and not more than $1,000 for multiple violations resulting from a single act or incident.
Section 518 of the general business law related to credit card surcharges (S.1048A/A.2672B) is amended effective February 11, 2024. The amendment requires merchants that impose a credit surcharge fee to post prices inclusive of the surcharge fee. Merchants are prohibited from (i) charging prices greater than the posted price, or (ii) imposing a credit card surcharge that exceeds the amount paid by the merchant to process the credit card transaction. Merchants may continue to offer a lesser cash price; provided, that the credit card price is posted alongside the cash price. Any merchant who violates this law shall be liable for a civil penalty not to exceed $500 for each violation, recoverable in an action or proceeding brought in a court of competent jurisdiction. This law may also “be enforced concurrently by the director or commissioner of a municipal consumer affairs office, or by the town attorney, city corporation counsel, or other lawful designee of a municipality or local government, and all moneys collected thereunder shall be retained by such municipality or local government.” This law does not expressly provide for a private right of action but a claim could be brought by an individual under Section 349(h) of the general business law for deceptive acts and practices.
The FTC and CFPB have attacked the use of “dark patterns” in automatic renewal subscription services. The CFPB issued a circular addressing the circumstances under which “negative option marketing practices,” such as automatic subscription renewals, can violate the Consumer Financial Protection Act prohibition of unfair, deceptive, or abusive acts or practices. The FTC sued Amazon for its unfair practices related to Prime subscription automatic renewals. In September, we released an episode of our Consumer Finance Monitor Podcast, “Shining a Bright Light on Digital Dark Patterns,” in which we discussed the CFPB’s and FTC’s stances on use of “dark patterns.”
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