Consumer Online Payment Transparency and Integrity Act

I 118TH CONGRESS 1ST SESSION H. R. 2460 To provide for automatic renewal protections, and for other purposes. IN THE HOUSE OF REPRESENTATIVES APRIL 3, 2023 Ms. CLARKE of New York introduced the following bill; which was referred to the Committee on Energy and Commerce A BILL To provide for automatic renewal protections, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Consumer Online Pay- 4 ment Transparency and Integrity Act’’. 5 SEC. 2. AUTOMATIC RENEWAL PROTECTIONS. 6 (a) IN GENERAL.—A person who sells a good or serv- 7 ice to a consumer pursuant to a contract that includes 8 a free-to-pay conversion or negative option feature or any 9 other automatic renewal provision shall disclose such fea- 10 VerDate Sep 11 2014 22:14 Apr 12, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2460.IH H2460 pbinns on DSKJLVW7X2PROD with $$_JOB 2 •HR 2460 IH ture or provision and the cancellation procedure clearly 1 and conspicuously in the contract. 2 (b) AUTOMATIC RENEWAL.—A person who sells a 3 good or service to a consumer pursuant to a contract that 4 will automatically renew unless the consumer cancels the 5 contract, shall— 6 (1) notify, in the same manner as the consumer 7 entered into the contract, the consumer of— 8 (A) the first automatic renewal (and of 9 each automatic renewal thereafter) not less 10 than 7 days (or a longer time period as deter- 11 mined appropriate by the Commission) before 12 the commencement of the renewal period; and 13 (B) how the consumer may cancel the con- 14 tract, which shall include— 15 (i) an online mechanism for cancella- 16 tion provided by the person; and 17 (ii) a toll-free telephone number, email 18 address, postal mail address, or other cost- 19 effective, timely, and easy-to-use mecha- 20 nism for cancellation provided by the per- 21 son; 22 (2) on an annual basis and notwithstanding the 23 consumer’s consent to the initial term (or any subse- 24 quent term), obtain the consumer’s express informed 25 VerDate Sep 11 2014 22:14 Apr 12, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2460.IH H2460 pbinns on DSKJLVW7X2PROD with $$_JOB 3 •HR 2460 IH consent to renew the contract before charging the 1 consumer for the renewal; and 2 (3) notwithstanding the consumer’s consent to 3 the initial term (or any subsequent term), in the 4 event that the person has actual knowledge that the 5 consumer has not used the good or service provided 6 under the contract for a period of 6 consecutive 7 months since the consumer’s most recent express in- 8 formed consent— 9 (A) obtain the consumer’s express in- 10 formed consent to the automatic renewal before 11 charging the consumer for the automatic re- 12 newal; and 13 (B) notify the consumer that the consumer 14 has a right to terminate the contract and re- 15 ceive a prorated refund for the remaining por- 16 tion of contract. 17 (c) FREE TRIAL.—A person who sells a good or serv- 18 ice to a consumer pursuant to a contract that includes 19 a free-to-pay conversion feature with a free trial period, 20 shall— 21 (1) notify, in the same manner as the consumer 22 entered into the contract, the consumer of— 23 (A) the automatic renewal not less than 7 24 days (or a longer time period as determined ap- 25 VerDate Sep 11 2014 22:14 Apr 12, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2460.IH H2460 pbinns on DSKJLVW7X2PROD with $$_JOB 4 •HR 2460 IH propriate by the Commission) before the expira- 1 tion of the free trial period; and 2 (B) how the consumer may cancel the con- 3 tract, which shall include— 4 (i) an online mechanism for cancella- 5 tion provided by the person; and 6 (ii) a toll-free telephone number, email 7 address, postal mail address, or other cost- 8 effective, timely, and easy-to-use mecha- 9 nism for cancellation provided by the per- 10 son; and 11 (2) notwithstanding the consumer’s consent to 12 the free trial, obtain the consumer’s express in- 13 formed consent to the automatic renewal not less 14 than 7 days (or a longer time period as determined 15 appropriate by the Commission) before the expira- 16 tion of the free trial period and before charging the 17 consumer for the automatic renewal. 18 (d) AUTOMATIC RENEWAL VOID.—In the case of a 19 violation of subsection (a), (b), or (c)— 20 (1) the applicable automatic renewal provision 21 shall be void, and the contract shall terminate upon 22 the occurrence of such violation; and 23 (2) the person who violated subsection (a), (b), 24 or (c) shall provide the consumer with a refund for 25 VerDate Sep 11 2014 22:14 Apr 12, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2460.IH H2460 pbinns on DSKJLVW7X2PROD with $$_JOB 5 •HR 2460 IH all amounts paid by the consumer due to such viola- 1 tion. 2 (e) DARK PATTERNS.—With respect to a contract 3 that includes a free-to-pay conversion or negative option 4 feature or any other automatic renewal provision, a con- 5 sumer’s consent obtained through the use of dark patterns 6 shall not be considered express informed consent. 7 (f) EXEMPTIONS.—The requirements under sub- 8 sections (a), (b), (c), and (d) shall not apply to a service 9 contract or any other person or contract determined ap- 10 propriate by the Commission. 11 (g) EFFECTIVE DATE.—The requirements under this 12 section shall take effect on the date that is 1 year after 13 the date of enactment of this Act. 14 SEC. 3. ENFORCEMENT BY THE COMMISSION. 15 (a) UNFAIR OR DECEPTIVE ACTS OR PRACTICES.— 16 A violation of section 2 or a rule promulgated under this 17 Act shall be treated as a violation of a rule defining an 18 unfair or a deceptive act or practice under section 19 18(a)(1)(B) of the Federal Trade Commission Act (15 20 U.S.C. 57a(a)(1)(B)). 21 (b) POWERS OF THE COMMISSION.— 22 (1) IN GENERAL.—The Commission shall en- 23 force this Act in the same manner, by the same 24 means, and with the same jurisdiction, powers, and 25 VerDate Sep 11 2014 22:14 Apr 12, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2460.IH H2460 pbinns on DSKJLVW7X2PROD with $$_JOB 6 •HR 2460 IH duties as though all applicable terms and provisions 1 of the Federal Trade Commission Act (15 U.S.C. 41 2 et seq.) were incorporated into and made a part of 3 this Act. 4 (2) PRIVILEGES AND IMMUNITIES.—Any person 5 who violates section 2 or a rule promulgated under 6 this Act shall be subject to the penalties and entitled 7 to the privileges and immunities provided in the 8 Federal Trade Commission Act (15 U.S.C. 41 et 9 seq.). 10 (3) AUTHORITY PRESERVED.—Nothing in this 11 Act shall be construed to limit the authority of the 12 Commission under any other provision of law. 13 (4) RULEMAKING.—The Commission shall pro- 14 mulgate in accordance with section 553 of title 5, 15 United States Code, such rules as may be necessary 16 to carry out this Act, or to prevent unfair or decep- 17 tive acts or practices regarding free trials, automatic 18 renewals, or other contracts under which a con- 19 sumer’s silence or failure to take an affirmative ac- 20 tion to reject goods or services or to cancel an agree- 21 ment is interpreted by the seller as acceptance of the 22 offer. 23 SEC. 4. DEFINITIONS. 24 In this Act: 25 VerDate Sep 11 2014 22:14 Apr 12, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2460.IH H2460 pbinns on DSKJLVW7X2PROD with $$_JOB 7 •HR 2460 IH (1) COMMISSION.—The term ‘‘Commission’’ 1 means the Federal Trade Commission. 2 (2) CONSUMER.—The term ‘‘consumer’’ means 3 any person who seeks or acquires, by purchase or 4 lease, any goods or services. 5 (3) DARK PATTERNS.—The term ‘‘dark pat- 6 terns’’ means a user interface that has the substan- 7 tial effect of subverting or impairing user autonomy, 8 decision making, or choice. 9 (4) FREE-TO-PAY CONVERSION.—The term 10 ‘‘free-to-pay conversion’’ has the meaning given that 11 term in section 310.2 of title 16, Code of Federal 12 Regulations. 13 (5) NEGATIVE OPTION FEATURE.—The term 14 ‘‘negative option feature’’ has the meaning given 15 that term in section 310.2 of title 16, Code of Fed- 16 eral Regulations. 17 (6) SERVICE CONTRACT.—The term ‘‘service 18 contract’’ means a contract or agreement for a sepa- 19 rately stated consideration for any duration— 20 (A) to perform the repair, replacement, or 21 maintenance of property or indemnification for 22 service repair, replacement, or maintenance for 23 the operational or structural failure of any 24 motor vehicle or residential or other property 25 VerDate Sep 11 2014 22:14 Apr 12, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2460.IH H2460 pbinns on DSKJLVW7X2PROD with $$_JOB 8 •HR 2460 IH due to a defect in materials, workmanship, acci- 1 dental damage from handling, or normal wear 2 and tear; or 3 (B) to indemnify for the same, including 4 towing, rental, or emergency road service or 5 road hazard protection, and which may provide 6 for the service repair, replacement, or mainte- 7 nance of property for damage resulting from 8 power surges or interruption. 9 Æ VerDate Sep 11 2014 22:14 Apr 12, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6301 E:\BILLS\H2460.IH H2460 pbinns on DSKJLVW7X2PROD with $$_JOB