California Cracks Down on 'Predatory' Early Cancellation Fees (theverge.com)
- Reference: 0179781602
- News link: https://slashdot.org/story/25/10/14/176237/california-cracks-down-on-predatory-early-cancellation-fees
- Source link: https://www.theverge.com/news/799237/california-ab483-law-early-termination-fees
> 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.
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> 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.
[1] https://www.theverge.com/news/799237/california-ab483-law-early-termination-fees
I support this (Score:3)
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.
B2B (Score:2)
B2B is notorious at this. Sign a lease for colocation or card processing or whatever and most of them want a multi-year commit. A commit that lets them cancel on you for free, but you cancelling costs insane fees or pay their total revenue. It's anticompetitive and basically ensures they can give subpar service if they want to.
Re: (Score:1)
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.
Re: (Score:2)
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.
Re: (Score:2)
> 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.
US Still behind (Score:3)
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.
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
Re: (Score:3, Interesting)
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.
Re: (Score:2)
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.
Re: (Score:2)
I don't see any problem with a state government regulating business practices.
Re: (Score:1)
You probably didn't intend for this interpretation of the government regulation business practices but I am to believe that you are on board with the government forbidding businesses to hire black employees or that would require businesses serving black customers to segregate them from white customers? Those are examples of government regulation of business that actually occurred.
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. @
Re: (Score:2)
> 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
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?!?
Re: (Score:1)
> 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
Re: (Score:1)
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.
Re: (Score:3)
> 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
Re: (Score:1)
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.
Re: (Score:2)
> 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,
Re: (Score:1)
> 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.
Re: (Score:2)
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.
Re: (Score:1)
> Just don't engage yourself by contract
Ah yes, don't participate in modern society. I see you are very smart.
Re: (Score:2)
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. Many people sign yearly leases for apartments that have some penalty for cancellation, but people can always opt for a a monthly lease if they don't want to commit for a full year. I can't think of much else a regular person actually needs aside from something like a car loan. The only penalty there is that they repossess your car.
I
Re: (Score:2)
Two questions:
Did you have a choice? Was there an option, maybe even a more expensive one, that did not include the lock-in?
Is the company where you signed the contract a monopoly?
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.
Re: (Score:2)
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.
Re: (Score:2)
> 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.
Re: (Score:2)
What, customer protection? Cannot have that! Because socialism. Or something.
Are you winning yet?
Re: (Score:1, Troll)
Why not just move to some place like Cuba or Venezuela and get all these protections you need?