Legislature Considers
Negative-Option Billing Ban
Have you ever accepted an item that is free
or at a reduced cost and were later told that by accepting the
item that you had agreed to purchase additional items? State
Representative Sue Jeskewitz, a Republican from Menomonee Falls,
and 20 other Republican and Democrat lawmakers have introduced
AB 574, a bill that would ban businesses from billing consumers
for goods or services without the consumer’s knowledge
or authorization.
This practice, known as “negative option
billing,” has generated numerous complaints to the Wisconsin
Department of Agriculture, Trade & Consumer Protection.
According to the department, the complaints take three different
forms.
Billings, Cards, Renewals
First, consumers complain they are being billed
for a product or service based on accepting a free or reduced-price
offer. The consumers argue that they were never told that they
would become obligated to make additional purchases. One example
is “free” pantyhose that many consumers received
several years ago. Consumers were unhappy when they were later
billed for additional unauthorized shipments.
A second example is where a consumer’s
credit card gets charged by a company for an unordered item.
This can happen because the company already has the consumer’s
credit card information from a prior purchase. An example is
where a consumer cashes a rebate certificate from a hotel, only
to find out later that he or she then became enrolled in a travel-card
subscription club.
A third example is a continuing agreement,
such as for lawn maintenance service, where the price is increased
without notice or is automatically renewed the following year
without notice to the consumer.
Representative Jeskewitz argues AB 574 is
needed because “consumers are being hurt by direct marketers
who offer trial delivery plans that make tempting offers but
do not clearly, if at all, reveal the terms of the sales plan.”
And, according to Wisconsin Trade & Consumer Protection
Administrator Janet Jenkins, the complaints her agency has received
“represent the tip of the iceberg since consumers are
less likely to file complaints about small dollar amounts.”
Jenkins believes these so-called negative-option billing practices
are “deceptive” and she supports AB 574.
Creating Curbs
AB 574 prohibits the following billing practices:
(1) charging a person for consumer goods or services he or she
did not agree to purchase or lease, (2) charging a higher price
to the consumer than that was agreed upon, unless the consumer
agrees to the higher price or is given the opportunity to cancel
without penalty, (3) charging a consumer for a service or product
under an agreement that is no longer in effect, (4) offering
free or reduced-price products or services to the consumer without
disclosing that acceptance commits the consumer to pay for other
products or services, and (5) misrepresenting that failure to
reject or return a delivery of a product or service obligates
the consumer to pay for the product or service.
According to the state Ethics Board, no organization
officially opposes the bill. However, some reservations have
been expressed by the lawncare industry. They argue they are
already regulated under other laws.
Do you have a position
on AB 574? You can let your state legislator know by contacting
the toll-free Legislative Hotline at 1-800-362-9472.
