A pair of bills amending California’s contract law would prohibit direct marketers from automatically billing consumers for products, services and memberships after a free trial period.
The measures, introduced Monday by Ellen Corbett and Darrel Steinberg, Democrat members of the state’s General Assembly, have been endorsed by Attorney General Bill Lockyer and the Consumers Union.
At expiration of the free trial period of a product or service, both measures would require companies to obtain a consumer’s permission before continuing to deliver—and bill them for—products and services, including group memberships.
Those requirements would be imposed on direct mailers under Corbett’s bill, AB-2578, and on telemarketers under Steinberg’s bill, AB-2775.
Corbett said in a statement at the two bills “will help empower consumers and ensure they are only billed for those purchases they have actually approved.”
Lockyer, noting a sharp increase in consumer complaints about unauthorized billing, said some firms have been billing consumers for a product, service or group membership immediately after the free trial period ends despite the fact the consumer “never gave their credit card or other account numbers to the telemarketer.”
Telemarketers, according to Steinberg, are able to bill consumers through arrangements with banks that let them merely tell the bank about the transaction without consumer confirmation.
In a related development legislation preventing banks and other financial institutions from selling or sharing a customers private financial information with affiliates or third parties for marketing purposes was endorsed Tuesday by the Assembly Banking Committee.
But the measure, AB-1775 which now goes to the Judiciary Committee for review, would permit banks and other financial institutions to share general, non-sensitive personal data such as names, address, and listed telephone numbers, with affiliates and third parties for marketing purposes without permission.
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