California Cracks Down on 'Predatory' Early Cancellation Fees (theverge.com) 53
California has enacted new legislation that aims to limit companies from charging consumers "exorbitant" fees to cancel fixed-term contracts. From a report: Assembly Bill 483 was signed into law by California Gov. Gavin Newsom on Friday, placing transparency requirements and fee limits on early terminations for installment contracts -- plans that allow consumers to make recurring payments for goods and services over a specified duration.
This includes services that lure consumers into signing annual contracts by allowing them to pay in installments that appear similar to rolling monthly subscriptions, but with hefty cancellation fees for not locking in for the full year. The bill bans companies from hiding early termination fee disclosures within fine print or obscured hyperlinks, and limits the total fee amount to a maximum of 30 percent of the total contract cost. The goal is to make it easier for Californians to take these fees into account when comparing between services, and lessen the financial burden if they need to end their contract early.
This includes services that lure consumers into signing annual contracts by allowing them to pay in installments that appear similar to rolling monthly subscriptions, but with hefty cancellation fees for not locking in for the full year. The bill bans companies from hiding early termination fee disclosures within fine print or obscured hyperlinks, and limits the total fee amount to a maximum of 30 percent of the total contract cost. The goal is to make it easier for Californians to take these fees into account when comparing between services, and lessen the financial burden if they need to end their contract early.
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Well, if you sign/engage yourself say for 1 year, it's a contract. If you want to stop using the service after 2 months, the service provider is in its full right to require a payment for the full year if he wants to, I don't see anything predatory with that. Consider yourself lucky if the service provider accepts to only bill you for say, 6 months.
Just don't engage yourself by contract if you don't expect to keep your words or ask for cancellation terms in advance if you don't keep your words.
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...meanwhile what it /actually/ does is force companies to present the terms "up front"; which is what you want.
I don't have much of a problem with requiring disclosure of terms when the contract is signed (not that I expect your average bear to pay much attention).
What I'm less comfortable with is limiting the fees. If you do that, companies are quite likely to make up the difference by raising prices elsewhere. How sure are you that's the right tradeoff? I'm certainly not. In fact, given that service providers and customers have negotiated themselves into the current pricing structure, I'm inclined to believe both
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I don't see any problem with a state government regulating business practices.
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What I expect you meant is that you're okay with government regulation of business that agrees with your own politics. Be care
time for someone to read some Locke (Score:2)
I don't agree with execution either, evwn though my government currently practices it. Luckily we don't live in a black and white world where I am require to accept one injustice in order obtain a bit of regulation.
I prefer the democratization of commerce such that it is transparent in its decision making process. If segregation goes from being commonplace to relatively unpopular, then by all means change those laws too. And of course when federal laws supercedes state and local law. @
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If it's in the fine print, then it was there to be read by the person before accepting the contract. What's the problem? That people didn't bother to even attempt to read what they were agreeing to? Heck, you could just drop the entire "contract" into AI and ask it to summarize.
Maybe people should READ something before agreeing to it. Crazy, I know. That's way to close to actually being an adult and taking on the responsibility of being an informed consumer.
If I were these companies, I'd just put it on bold
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Yes, I don't see this as "predatory" so long as the terms are presented up front. This really sounds like government protecting people from buyer's remorse which is not what they should be charged to do.
Part of the predatory part is the availability of alternatives. As a pathological case, consider a cable ISP that only allows 10-year contract with early termination fees. If there are no alternatives (other than just having no ISP), then the cable company is predatory.
Another part of being predatory is whether the upfront terms are easily digestible. Part of the California bill addresses this aspect, where terms are either hidden or otherwise presented to be either misleading or not easily understood by
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So you are saying I need to write this at a 3rd grade reading level in crayons?
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So you are saying I need to write this at a 3rd grade reading level in crayons?
Ah, the classic reductio ad absurdum [logicallyfallacious.com]. I see what you did there, sir.
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Hmm. I read your link but I'm not seeing how that relates to my response.
Another part of being predatory is whether the upfront terms are easily digestible. Part of the California bill addresses this aspect, where terms are either hidden or otherwise presented to be either misleading or not easily understood by normal non-lawyer consumers. Buyer's remorse only applies when the buyer initially understood the original terms.
This is where I say, do I need to low this to a 3rd grade level. What reading comprehension level do I need to assume (I hate doing that) the average person has? Considering most adults finish high school, it's not unreasonable to expect they can understand your typical contract.
The crayon part was just me being cheeky of course, but it does hint at my point. Do businesses now need to treat everyone like children because some subset ar
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P.S.S. I didn't notice who I was responding to was different then who I originally responded to. See, I was lazy and now look a tad foolish, though I did illustrate why what I wrote was indeed not a reduction to absurdity.
What's that got to do with the price of tea in... (Score:2)
...China, obviously.
Looks like you didn't want to feed the troll, even though you got me to look to see if there was any connection between your comment and the coward's. However you forgot to change the sock puppet's Subject. Sometimes the bogus Subject appears to be the only objective.
Actually, I should have gone for funny, as in:
What's that got to do with the price of tea in California?
How dare you try to cancel your subscription to the fancy tea of the month club?!?
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Well, if you sign/engage yourself say for 1 year, it's a contract. If you want to stop using the service after 2 months, the service provider is in its full right to require a payment for the full year if he wants to, I don't see anything predatory with that.
The thing is, if you stop using the service after two months, they aren't providing you a benefit, and it isn't reasonable for them to keep collecting money. And charging exorbitant fees has the net effect of forcing people to continue paying a month at a time because they can't afford the cancellation fee all at once. That's what makes it predatory.
If we were talking about a small company, where someone canceling service (e.g. a maid service) would mean that they have to go seek out other clients to stay
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You may missing a point, your subscription you engage yourself by contract to keep for a year becomes a financial asset for the company which can then use it to get loans, raise their stock value, etc. etc.
If you can then reverse your engagement as you see fit, nothing holds anymore.
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You may missing a point, your subscription you engage yourself by contract to keep for a year becomes a financial asset for the company which can then use it to get loans, raise their stock value, etc. etc.
If you can then reverse your engagement as you see fit, nothing holds anymore.
The part you're missing is that contracts like this are contracts of adhesion, and there may or may not even be an option to sign up one month at a time. And even if there is, having a penalty clause for canceling a contract is reasonable, but having a penalty clause that massively exceeds any plausible damages isn't, particularly when one of the parties in that contract has dramatically more power than the other, and that party is the one writing the contract and demanding the penalty clause. That's why
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...which can then use it to get loans, raise their stock value, etc. etc.
If you can then reverse your engagement as you see fit, nothing holds anymore.
Or can do capacity and capital purchase planning. It's a lot easier to run a company and make investments in the future if you have a stable revenue stream. Early cancellation fees are a profit center, sure, but they're also a way to make revenue more predictable.
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If you agree to a one year contract with, a value of say, $2000, I see no reason why you shouldn't pay the difference between whatever you already paid and $2000 if you want to end the contract early. Otherwise, it isn't really much of a contract.
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If you agree to a one year contract with, a value of say, $2000, I see no reason why you shouldn't pay the difference between whatever you already paid and $2000 if you want to end the contract early. Otherwise, it isn't really much of a contract.
Because that $2,000 is consideration for the other party providing something. If the penalty clause is the entire remainder of the contract fee, then the other party should also be compelled to provide service for the remainder of the contract term, or some equivalent consideration. Otherwise, it isn't really much of a contract.
If they get out of providing service, then you should get out of paying, except for some penalty to make up for sunk costs, e.g. the prorated cost of provisioning initial service,
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Because that $2,000 is consideration for the other party providing something. If the penalty clause is the entire remainder of the contract fee, then the other party should also be compelled to provide service for the remainder of the contract term, or some equivalent consideration. Otherwise, it isn't really much of a contract.
I agree. And they will! You're free to use the service until the expiration of the contract. Whether you actually use it or not is up to you.
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Because that $2,000 is consideration for the other party providing something. If the penalty clause is the entire remainder of the contract fee, then the other party should also be compelled to provide service for the remainder of the contract term, or some equivalent consideration. Otherwise, it isn't really much of a contract.
I agree. And they will! You're free to use the service until the expiration of the contract. Whether you actually use it or not is up to you.
That's not what a cancellation fee does, though. By definition, when you pay a cancellation fee, they are no longer providing service.
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As far as I am concerned, the importance of this law is that the person writing the contract has to make the terms clear to the person accepting it. "fine print" has always been a despicable legal tradition.
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Just don't engage yourself by contract
Ah yes, don't participate in modern society. I see you are very smart.
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I
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What in modern society requires signing up for monthly payments to any service? The only thing that even comes close for the average person is renting a property to live in.
Even if electric power, water, sewer, trash pickup, and gas for indoor heating (in areas that get snow) are included in your rent, other services with recurring payments include home and mobile Internet access, renter's insurance, car insurance, and health insurance.
Even the streaming services I have either have month to month options or bill me for the full year at the time of purchase. I don't need to use any of them as I could always choose to rent or purchase to own any of the content on those services.
A lot of shows on streaming services are never released on DVD.
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Two questions:
Because what usually happens is that you don't have a choice but to sign this contract, or you can't get the service at all.
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Agree. How is a one year "contracts if you can just quit without paying the full value of the contract by leaving early? Makes no sense.
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Just don't engage yourself by contract if you don't expect to keep your words or ask for cancellation terms in advance if you don't keep your words.
... and this law requires that you actually do have those terms in advance, and that they're not hidden from you until you want to know them.
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What, customer protection? Cannot have that! Because socialism. Or something.
Are you winning yet?
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Maybe read the contract before you accept it? You are not forced at gun point to accept this. I've bought real estate, cars, stocks, treasure bills and even a timeshare. It's called reading the contract. It's all in there but people are lazy.
I've never been forced against my will to accept any of these contracts. In fact, I initiated the process.
This law really sounds like a buyer's remorse for lazy people that can't be bothered to read what is provided.
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You really do not understand what you are talking about. You want to place requirements that makes sense for enterprises with lawyers on regular customers. That is insane.
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I support this (Score:4, Interesting)
B2B (Score:2)
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By your logic, why should you ever take out a loan for 2 years?
A loan is just a contract. You borrow $X in exchange for agreeing to pay back $Y.
Why shouldn't all your debts just die when you do?
Think about it before you answer.
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Loans always have such vile terms that I do my best to avoid them. I've been pretty successful, but sometimes there is no real choice. But whenever I bought a car it was cash down, no interest.
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I mean, when you die, it's literally not your problem anymore. Besides, you borrowed money. You better pay that back. You agreed to! No one forced you to take out the loan. You asked and likely had to get approved to take out the loan in the first place. So fulfill the contract and pay what you promised to pay. You honor your word, right? Right?!
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I do support this bill for a simple reason: You sign for service X for 2 years. After 6 months, the service is degraded for any reason, or the company decides to alter something that makes the service less valuable to you. It makes sense to have a clear picture, and a cap on costs, so I can decide the cost of 'betting' that this company will be able to offer consistency over the period of my contract.
I understand that the businesses like to know their future income to plan things ahead, but as a customer you have little protection in the quality of the service changes, and you don't feel like a battle with the mandatory arbitration company of their choice.
I generally support consumer protections, though California already protects against situations like you mention: if the service degrades, or the company makes an alteration, you have recourse to cancel. To add to your protection, put the recurring charge on a credit card and the CC company will go to bat for you.
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If the goal is to relieve Californians from a tedious burden of literacy, and taking responsibility for agreeing to and signing contracts
LOL @ contracts. An adhesion contract is not a real contract. Good thing too since nearly 100 percent of them are illusory. Unilateral modification clauses ameliorate even the appearance of a legitimate contract. Damn illiterate consumers keep writing those things in I guess. They should take some responsibility. And pull themselves up by their bootstraps while they
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i don't think "ameliorate" means what you think it means....
US Still behind (Score:3)
Whenever I have been to the USA I feel the whole country is just one giant con-job with all the hidden fees, taxes, etc etc etc.
Why do Americans put up with hidden fees ?
I see goods and services aimed at consumers in New Zealand, Australia, and others and the price I see is the price I pay.
"Too hard" is absolute BS, I hear there are these things called computers that can do this quickly and easily, in fact that is just what they are doing at the checkout.
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Other countries have had these rules for decades.
Whenever I have been to the USA I feel the whole country is just one giant con-job with all the hidden fees, taxes, etc etc etc.
Why do Americans put up with hidden fees ?
I see goods and services aimed at consumers in New Zealand, Australia, and others and the price I see is the price I pay.
"Too hard" is absolute BS, I hear there are these things called computers that can do this quickly and easily, in fact that is just what they are doing at the checkout.
Because being lied to is "freedom".
Seriously, I've had more than one American use this argument to defend fraudulent advertising practices. Apparently its up to the audience to determine what is true or not despite most of the audience being completely unable to do so.
This morning I read about another ad being banned for misleading information and I thought, "won't this make companies more afraid to use risky advertising techniqes" and my second thought was "good".
Demand month to month contracts (Score:2)
In America you can be fired for any reason, just as long as it isn't an illegal reason thanks to "Employment-At-Will"
So if your job is that precarious, does it even make financial sense to sign up for long term contracts of more than 30 days?
Being able to live is getting more precarious as time goes on. Welcome to the "Precarious Economy". Eventually all workers will be Contractors or Gig workers and there will be no more "Regular Employees" other than those in the C-suite.
So If companies want to treat thei
First Rule of Acquisition (Score:2)
Once you have their money, you never give it back.
Airlines next please (Score:1)