Five broadly written bills were introduced in state legislatures in 2017 seeking to limit the scope of automatic membership contract renewals. One bill passed with revisions and four failed to pass, according to the International Health, Racquet & Sportsclub Association (IHRSA),
The advocacy team for IHRSA targeted these bills, helping to alter the California bill that passed while also helping to deter proposals in Alabama, Minnesota, Virginia and Wyoming, according to IHRSA.
The California legislation, which offers new rules that blend free trials with automatic renewal, will take effect in July 2018.
"We influenced the California rules, so we consider the result a victory, as the original bill was much more onerous," Suzanne Trainor, government relations coordinator at IHRSA, told Club Industry in an email.
On August 21, the California legislature released a new version of proposed rules for promotional offers (e.g. introductory or new customer trials) that remedies concerns voiced by IHRSA, IHRSA's Sacramento, California-based lobbyist and a coalition of businesses. As re-written, Senate Bill 313 requires businesses selling services that automatically renew and contain introductory or new customer time-limited trials to conspicuously convey the terms of the offer, including the price after the promotional trial concludes, Trainor said.
"Previously, the legislation proposed that a business issue a standalone authorization form and comply with similar administrative burdens, in order to offer a promotional or free trial or gift," Trainor said. "IHRSA was concerned that this would result in a health club having to issue two membership agreements for new customers, in some circumstances, and encountering difficulty in billing the consumer for services."
In four other states, IHRSA was effective in helping to defeat bills related to automatic renewals.
Alabama House Bill 405, introduced in March 2017, proposed that businesses alert customers with a written notification at least 30 days prior to a contract renewal (assuming the contract was at least for 12 months and would renew for a period greater than one month). The proposed notification would have outlined the manner in which businesses would inform customers about renewal and cancellation stipulations. Businesses also would have been required to disclose the automatic renewal terms up front in the original contract. After the bill was introduced, IHRSA representatives contacted the bill's sponsor, Rep. Randy Wood (R), and it later died in committee and never received a hearing.
In Minnesota, House File 676, originally filed in February 2017, included in it a proposal that would have required businesses to mail stand-alone automatic renewal notifications to customers. After a request by IHRSA’s advocacy team, the state legislature rejected the proposal; however, "similar proposals are pending in the legislature, and are eligible for consideration when the legislature reconvenes in 2018," according to an IHRSA.org blog by Jeff Perkins.
Virginia's House Bill 2430, also introduced in February 2017, would have required that businesses first receive affirmative consent from customers prior to charging for an automatic renewal. IHRSA representatives contacted the bill's sponsor, Rep. Marcus Simon (D), who ultimately exempted health clubs from this stipulation on the grounds that the Virginia Health Club Act already regulates contract renewals in the state. Simon re-drafted the bill accordingly prior to a committee vote, which ruled against advancing the legislation.
In February 2017, IHRSA representatives provided testimony to leaders in the Wyoming Senate opposing House Bill 227. The senators ultimately chose to not consider the proposal which, if passed, would have required that businesses provide customers with written or electronic notification of contract renewals between 30 to 90 days prior to cancellation deadlines.
Trainor noted that a number of indicators suggest legislators will consider automatic renewal restrictions in several states in 2018, including the District of Columbia, Minnesota, New Hampshire, New Jersey and New York.
IHRSA's advocacy team openly solicits legislative tips and inquiries.