Date: 03/15/2006
Final
BILL SUMMARY for SB06-040
HOUSE COMMITTEE ON BUSINESS AFFAIRS AND LABOR
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11:08 AM -- Senate Bill 06-040
Representative Buescher, prime sponsor, presented Senate Bill 06-040. He stated that the bill requires contracts that automatically renew and bill to a credit card to clearly and conspicuously disclose:
- the material terms of the offer;
- the automatic renewal provisions; and
- how to cancel the contract.
A violation of the bill would be a class 2 petty offense, punishable by a fine up to $250. Representative Buescher added that a violation of the bill would also constitute a deceptive trade practice under the Colorado Consumer Protection Act, punishable by a civil penalty of up to $2,000 per violation.
Representative Buescher responded to questions from the committee pertaining to the scope of the bill. He stated that the bill addresses companies that are not domiciled in Colorado, and would apply to any company that does business in the state. There was discussion about how the bill would be enforced and how companies would be informed of the new requirement. Representative Buescher stated that the Direct Marketing Association has a great network that will inform the companies.
11:17 AM
There was committee discussion on how contracts are currently canceled and how they would be canceled under the bill. Representative Buescher stated that he anticipates that the companies would include information on how to cancel these contracts with the renewal notice.
11:19 AM -- Garth Lucero, representing the Direct Marketing Association, a national and international trade association that represents businesses and nonprofit organizations that use direct marketing tools and techniques, testified in support of the bill. He explained that the association was involved in the drafting of the bill and distributed a fact sheet (Attachment B). Mr. Lucero talked about the positive aspects of automatic renewal contracts. He stated that the bill requires notice at the time of sale and at the time of renewal. There was committee discussion about why the bill would fall under the unsolicited goods statute. Mr. Lucero responded.
11:31 AM
Representative Marshall asked if the bill would make it harder for a consumer to get out of a contract. Mr. Lucero stated that the bill would protect consumer at the time the contract is created, at the time of renewal, and under the Fair Credit Billing Act if there are any billing errors. Representative Buescher added that the bill would give consumers additional notice of their right to cancel before the contract automatically renews.
11:41 AM -- Bill Imig, representing the Property and Casualty Insurance Association, testified. He stated that the association is concerned that the bill may conflict with some disclosure requirements that already exist in statute and that he is working with the sponsor on an amendment. Mr. Imig explained those conflicts at the request of the committee.
11:43 AM
Representative Marshall pulled the bill off the table until Monday, March 20 in order to allow the sponsor and the committee to work on some amendments.