A new law signed by the governor last week week will make it easier for New Yorkers to cancel memberships, walk away from confusing service plans and unsubscribe from misleading subscriptions.
At a time when New Yorkers are being asked to stay home whenever possible, convoluted renewals have created a public health
hazard during the pandemic, including some who were told they had to visit their gyms in person to cancel memberships, according to the bill sponsors.
New York will join 25 other states with some kind of regulation to protect against deceptive agreements by businesses. As a result, New Yorkers will no longer be responsible for deciphering the fine print on sales offers to determine whether or not they are being lured into a misleading agreement.
On Nov. 11, Gov. Andrew Cuomo signed the consumer protection legislation (S.1475-A (Hoylman)/A.3173-A (Dinowitz) into law due to the recent amplification of these general concerns brought on by the effects of COVID-19. Canceling subscriptions and memberships in person — as some agreements previously required — is no longer just a hassle, but a public health hazard. Also of concern is the frequency of repeated incidents of consumers being locked into an automatic renewal under false pretenses.
This new law will require businesses to be transparent with their contracts, automatic renewal offers and continuous service plans and allow New Yorkers to cancel subscription services with ease.
The bill was initially passed in February by the Senate and by the Assembly in July, but it was first drafted back in 2013 by Senator Brad Hoylman, D-Manhattan, and Assemblyman Jeffrey Dinowitz, D-Bronx. Concerns related to having people leave their homes and travel to their place of membership, such as a gym, to terminate their subscription has made the enactment of this law a much more urgent matter than in years past.
Steve August is 92 years old and his wife, Penny, is 80. They had to provide their gym with a doctor’s note in order to cancel their membership.
“I’ve been athletic all my life and always enjoyed working out at the gym. When I married, I infected my wife with the same enthusiasm to stay in shape by going to the gym with me. As long time gym goers, we appreciate Senator Hoylman’s effort to cancel our memberships, when COVID-19 made it unhealthy to go to the gym,” August said.
Hoylman has sponsored this legislation in the Senate since its original draft seven years ago. He was finally able to see it come to fruition when the governor signed it last week. He said he was especially concerned for elderly New Yorkers and those who are immunocompromised who have been required to go to gyms in person to cancel their memberships, even during the pandemic.
“Exercising during this pandemic is hard enough – New Yorkers shouldn’t have to jump through hoops or visit a gym in person simply to quit their membership,” Hoylman said. “Too many gyms, subscription boxes and other companies use misleading offers and promotions to lock unwitting customers into long-term contracts that are ridiculously difficult to get out of.
“This has been an issue for years, but during the pandemic, it poses a unique and severe risk to immunocompromised and elderly New Yorkers who should not have to risk their health to cancel memberships they no longer can use.”
The Better Business Bureau completed an in-depth study on these misleading business practices and found that they have swindled many consumers out of money. The study, published in December of 2018 stated, “Losses in cases of this type pursued by the Federal Trade Commission (FTC) over the last ten years total more than $1.3 billion. Fraudsters have created a global multi-billion dollar industry.”
The new legislation will punish businesses if they fail to clearly and conspicuously disclose all of the terms of automatic renewal offers or continuous service offers prior to subscription or agreement.
And it will now be illegal to use a third party for automatic renewal offers or continuous services to charge customers without consent. It will also be against the law if businesses neglect to provide acknowledgement of all aspects of the subscription including information regarding the cancellation policy.
For offers that are initiated by a free trial, businesses must acknowledge how to properly cancel the subscription before payments start.
As stated in the legislation, there has been an ongoing issue of consumers signing agreements without reading the easily missed fine print. Consumers may have agreed to certain offers under the notion that an offer or payment was for one time only, to then later receive continuous deliveries and charges to their card.
Businesses that operate in New York must now allow for convenient and free cancelation methods such as through a toll-free number, email address or postal address.
Also, if a consumer joined or subscribed to a service through an online sign-up method, businesses must also give the option for the consumer to cancel the service online in the same manner.
Under this legislation, “Companies are also prohibited from advertising products as “free” if the item is only distributed as part of an automatic renewal agreement.”
“Consumers have long maligned the onerous and occasionally impossible processes that are required to stop sending their hard-earned money to businesses like gyms or bait-and-switch scams,” said Assemblyman Jeffrey Dinowitz, the Assembly sponsor. “This new law will add a layer of protection for consumers and will force an end to these predatory business practices.”
The legislation will take effect on Feb. 9, 2021, exactly 90 days after Gov. Cuomo signed it into law.