2007 California Civil Code Title 2.6. Contracts For Discount Buying Services

CA Codes (civ:1812.100-1812.129)

1812.100.  (a) The Legislature finds that there exists in connection
with a substantial number of contracts for discount buying services,
sales practices and business and financing practices which result in
fraud, deceit, and financial hardships being perpetrated on the
people of the state; that existing legal remedies are inadequate to
correct these abuses; that the discount buying industry has a
significant impact upon the economy and well-being of this state and
its local communities; and that the provisions of this title relating
to such contracts are necessary for the public welfare.
   (b) The purpose of this title is to safeguard the public against
fraud, deceit, and financial hardship, and to foster and encourage
competition, fair dealing, and prosperity in the field of discount
buying services by prohibiting or restricting false or misleading
advertising, unfair contract terms, harmful financial practices, and
other unfair, deceptive, destructive, unscrupulous, fraudulent and
discriminatory practices by which the public has been endangered and
by which the public may in the future be harmed in connection with
contracts for discount buying services.  This title shall be
construed liberally in order to achieve the foregoing purposes.



1812.101.  For the purpose of this title, the following definitions
shall be used:
   (a) "Discount buying organization" means any person or persons,
corporation, unincorporated association, or other organization which,
for a consideration, provides or purports to provide its clients or
the clients or members of any other discount buying organization with
the ability to purchase goods or services at discount prices, except
that a discount buying organization does not include any of the
following:
   (1) Any discount buying organization in which the total
consideration paid by each client or member in any manner whatsoever
for the purchase of discount buying services from the organization
that either:
   (A) Does not exceed a one-time fee of fifty dollars () or an
annual fee of twenty-five dollars () to be paid on a yearly basis.

   (B) Does not exceed a one-time or annual fee of fifty dollars
() and the organization provides a majority of the goods and
services through purchases by members who walk in to a fixed location
operated by the organization.
   (2) Any discount buying organization in which the total
consideration paid by each client or member in any manner whatsoever
for the purchase of discount buying services from the organization
does not exceed a one-time or annual fee of one hundred dollars
(0) and the organization does all of the following in
subparagraphs (A) to (F), inclusive, and subject to subparagraph (G):

   (A) Offers buying services to clients or members through toll-free
telephone access, computer access, or video shopping terminals.
   (B) (i) During the first year of membership of each member, upon
the request of the member, provides a full refund of membership fees,
exclusive of any fees, however designated, not exceeding ten dollars
() in the aggregate, without conditions other than the surrender
or destruction of materials which allow the member to access or use
the service.
   (ii) (I) The organization shall establish an escrow account of
fifty thousand dollars (,000) for the purpose of providing refunds
to members, pursuant to clause (i).  If the fifty thousand dollars
(,000) deposited in escrow is depleted during the first year of
the existence of the escrow account, the organization shall within
three business days of depletion replenish the account in the amount
of fifty thousand dollars (,000).  For each calendar year
thereafter, the organization shall deposit in the account an amount
equal to refunds made from the account in the prior calendar year,
but not less than fifty thousand dollars (,000).  At any time the
balance in the escrow account decreases to 50 percent of the amount
funded that year, the organization shall within three business days
replenish the account back to the balance required at the beginning
of that calendar year.  The organization shall provide proof of the
establishment of the escrow account to the Secretary of State and
shall maintain records of all member requests for refunds and refunds
made pursuant to this clause.  The records shall be made available
for review upon request by the Attorney General, any district
attorney, or the Department of Justice.
   (II) The escrow account shall be established and maintained at a
federally insured bank or federally insured financial institution
independent of the organization with escrow instructions making the
bank or financial institution or an officer or employee thereof the
escrow trustee.
   (III) Refunds shall be made from the escrow account to any member
who provides proof of membership while a California resident and
requests, in writing, a membership refund, and has not previously
been refunded his or her membership fee.  The escrow trustee shall
issue the refund within 10 days of the date the written request is
received by the escrow trustee.  In addition, requests for refunds
may be made directly to and paid directly by the organization.
   (IV) Proof of creation of the escrow account, and membership
refund information, shall be provided to the members in the following
form:
   "The ____ (organization) has established an escrow account for the
refund of membership fees at ____ (financial institution).  Refunds
from the escrow account may, in addition to other remedies and
sources available to you, be obtained by mailing a written request
along with proof of membership to ____ (escrow trustee).  This refund
request shall not affect or limit any other remedy at law available
to you."
   (C) Provides at least 15 toll-free service lines to California
consumers devoted exclusively to customer service questions and
complaints.
   (D) Maintains a bond which meets the requirements of Sections
1812.103 and 1812.104, except that the principal sum of the bond need
only be twenty thousand dollars (,000).
   (E) (i) Possesses an unrevoked acknowledgment from the Attorney
General that the organization has provided to the Attorney General,
to the Attorney General's reasonable satisfaction, marketing
procedures and documents that clearly explain membership fee
cancellation and refund terms which include:
   (I) The amount of the initial membership fee and how and when it
will be collected.
   (II) If applicable, that a member must be advised, before any
charges are applied, that they need not provide billing information
in order to be charged a membership fee, in circumstances in which
the telemarketing firm has prior access to the member's billing
information.
   (III) In the case of trial membership offers, the duration of the
trial period and that if the member does not cancel within the trial
period he or she will automatically be charged the membership fee.
   (IV) Specifically how the member may cancel membership.
   (V) The written disclosure, printed in capital letters with a
minimum 14-point boldface type, indicating who to contact, both
directly through the company and through the escrow account, for a
refund.
   (VI) The written disclosure made at the time of solicitation and
at the time an enrollment package is sent to consumers.
   (ii) When an organization provides documentation that clearly
explains membership fee cancellation and refund terms to the Attorney
General's reasonable satisfaction, which includes the information
required by subclauses (I) to (VI), inclusive, of clause (i) of
subparagraph (E), the Attorney General shall issue a revocable
acknowledgment to the organization for it to obtain this exception.
The acknowledgment issued by the Attorney General is not evidence of
the adequacy or accuracy of the organization's actual disclosures and
representations provided to consumers.  No organization in any
marketing to consumers may make any reference to an acknowledgment
issued by the Attorney General under this clause.
   (F) Provides the disclosures listed in subclauses (I) to (VI),
inclusive, of clause (i) of subparagraph (E) to every prospective
member.
   (G) The exemption is null and void if the organization fails to
comply with the conditions set forth in this section or if the
Attorney General's office revokes the exemption due to a organization
not being in full compliance with all of the provisions of this
section.
   (3) Any discount buying organization in which persons receive
discount buying services incidentally as part of a package of
services provided to or available to the individual on account of his
or her membership in the organization, which is not organized for
the profit of any person or organization, and which does not have as
one of its primary purposes or businesses, the provision of discount
buying services.
   (4) Any person, corporation, unincorporated association, or other
organization, which, for a consideration collected from another
entity, provides or purports to provide the clients of the other
entity with the ability to purchase goods or services at discount
prices, if the clients of the other entity do not order from, or pay
any money to, that person, corporation, unincorporated association,
or other organization; however, the entity, from which the customer
purchases the right to obtain goods or services at discount prices,
shall comply with the requirements of this title.
   (b) "Contract for discount buying services" means a contract
between one party (hereinafter referred to as the "buyer") who is
purchasing the service for personal or family use, and a discount
buying organization, whereby the buyer for a consideration receives
the right to obtain goods or services from the discount buying
organization, or to utilize the discount buying organization services
in obtaining goods and services, at discount prices.
   (c) "Discount prices" means prices which are represented to be
lower on most or all offered goods or services than those generally
charged for the items in the locality in which the representation is
made.
   This definition is not intended to affect the degree of savings
which must be offered on an item or selection of items in order to
truthfully and without misleading consumers represent an item,
selection of items, or entire store as being "discount" or
"discounted."



1812.103.  Every discount buying organization shall maintain a bond
issued by a surety company admitted to do business in this state.
The principal sum of the bond shall be twenty thousand dollars
(,000).  A copy of such bond shall be filed with the Secretary of
State.



1812.104.  The bond required by Section 1812.103 shall be in favor
of the State of California for the benefit of any person who is
damaged by any violation of this title or by fraud or dishonesty or
failure to provide the services of the discount buying organization
in performance of the contract.  The surety shall be liable only for
the actual damages plus restitution and not the treble damages
permitted under subdivision (a) of Section 1812.123.



1812.105.  (a) When a deposit has been made in lieu of a bond
pursuant to Section 995.710 of the Code of Civil Procedure, the
person asserting a claim against the deposit shall, in lieu of
Section 996.430 of the Code of Civil Procedure, establish the claim
by furnishing evidence to the Secretary of State of a money judgment
entered by a court together with evidence that the claimant is a
person described in Section 1812.104.
   (b) When a person has established the claim with the Secretary of
State, the Secretary of State shall review and approve the claim and
enter the date of approval on the claim.  The claim shall be
designated an "approved claim."
   (c) When the first claim against a particular deposit has been
approved, it shall not be paid until the expiration of a period of
240 days after the date of its approval by the Secretary of State.
Subsequent claims that are approved by the Secretary of State within
the same 240-day period shall similarly not be paid until the
expiration of the 240-day period.  Upon the expiration of the 240-day
period, the Secretary of State shall pay all approved claims from
that 240-day period in full unless the deposit is insufficient, in
which case each approved claim shall be paid a pro rata share of the
deposit.
   (d) When the Secretary of State approves the first claim against a
particular deposit after the expiration of a 240-day period, the
date of approval of that claim shall begin a new 240-day period to
which subdivision (c) shall apply with respect to the amount
remaining in the deposit.
   (e) After a deposit is exhausted, no further claims shall be paid
by the Secretary of State.  Claimants who have had their claims paid
in full or in part pursuant to subdivisions (c) and (d) shall not be
required to return funds received from the deposit for the benefit of
other claimants.
   (f) When a deposit has been made in lieu of a bond, the amount of
the deposit shall not be subject to attachment, garnishment, or
execution with respect to an action or judgment against the discount
buying organization, other than as to an amount as no longer needed
or required for the purpose of this title that would otherwise be
returned to the discount buying organization by the Secretary of
State.
   (g) The Secretary of State shall retain a cash deposit for two
years from the date the Secretary of State receives written
notification from the assignor of the deposit that the assignor has
ceased to engage in the business of a discount buying organization or
has filed a bond pursuant to Section 1812.103, provided that there
are no outstanding claims against the deposit.  This written notice
shall include all of the following:  (1) name, address, and telephone
number of the assignor; (2) name, address, and telephone number of
the bank at which the deposit is located; (3) account number of the
deposit; and (4) a statement whether the assignor is ceasing to
engage in the business of a discount buying organization or has filed
a bond with the Secretary of State.  The Secretary of State shall
forward an acknowledgment of receipt of the written notice to the
assignor at the address indicated therein, specifying the date of
receipt of the written notice and anticipated date of release of the
deposit, provided there are no outstanding claims against the
deposit.
   (h) A judge of a superior court may order the return of the
deposit prior to the expiration of two years upon evidence
satisfactory to the judge that there are no outstanding claims
against the deposit or order the Secretary of State to retain the
deposit for a sufficient period beyond the two years specified in
subdivision (g) to resolve outstanding claims against the deposit.



1812.106.  Every discount buying organization, before obtaining the
signature of a potential buyer on any application or contract for
discount buying services, shall provide to the buyer, and shall allow
the buyer to retain, the following written disclosures:
   (a) The exact nature of the services it provides, specifying the
general categories of goods that are available at the discount buying
organization's place of business or warehouse, those categories of
goods, if any, that must be ordered or obtained through stores to
which the discount buying organization will refer the customer, and
those categories of goods, if any, that must be ordered or obtained
through the mail.
   (b) A list, current within the previous 60 days, of at least 100
items that are sold by or through the organization or available to
those who contract with the organization, identified by brand name,
model, and total price including a reasonable estimate of freight
charges, if any are to be imposed; a reasonable estimate of delivery
charges, if any are to be imposed; a reasonable estimate of setup
charges, if any are to be imposed; the discount buying organization's
price markup; and a reasonable estimate of any other charges the
discount buying organization imposes. These items shall be reasonably
representative as to the type of goods available. In lieu of
providing this list, the discount buying organization shall provide
and allow the buyer to retain a list of at least 100 items that were
purchased by its members through the discount buying organization
during the preceding 60 days. This list shall identify the items by
brand name, model, and total selling price including freight charges,
if any; delivery charges, if any; setup charges, if any; the
discount buying organization's price markup; and any other charges
imposed by the discount buying organization, and shall be
representative as to the type of goods sold and the prices charged
for the listed goods sold during that period. If the maximum number
of items available through a discount buying organization is fewer
than 100 in number, it may comply with this section by furnishing a
list of the total items available, identified as described above with
a statement that those are the only goods presently available. Any
list required by this subdivision shall state the date on which it
was prepared.
   (c) A statement of the discount buying organization's policy with
respect to warranties or guarantees on goods ordered, and the policy
with respect to the return of ordered goods, cancellation of orders
by the buyer, and refunds for cancellation or return.
   (d) A description of any charges, such as freight charges,
delivery charges, setup charges, seller's markup, and any other
charges that are incidental to the purchase of goods through the
discount buying organization and are to be paid by the buyer. A
disclosure of these costs in specific monetary amounts shall also be
made on each order placed through the discount buying organization.
   (e) If any stockholder, director, officer, or general or limited
partner of the discount buying organization, as the case may be:
   (1) Has been convicted of a felony or misdemeanor or pleaded nolo
contendere to a felony or misdemeanor charge, if the felony or
misdemeanor involved fraud, embezzlement, fraudulent conversion,
misappropriation of property, or a violation of this title.
   (2) Has been held liable in a civil action by final judgment or
consented to the entry of a stipulated judgment if the civil action
alleged fraud, embezzlement, fraudulent conversion, or
misappropriation of property, a violation of this title, the use of
untrue or misleading representations in an attempt to sell or dispose
of real or personal property, or the use of unfair, unlawful, or
deceptive business practices.
   (3) Is subject to any currently effective injunction or
restrictive order relating to business activity as the result of an
action brought by a public agency or department, including, but not
limited to, an action affecting any vocational license, a statement
so stating, and including the name of the court, the date of the
conviction, judgment, order, or injunction and, if applicable, the
name of the governmental agency that filed the action resulting in
the conviction, judgment, order, or injunction.



1812.107.  Every contract for discount buying services shall be in
writing and shall be subject to the provisions of this title.  The
address of the seller's discount buying facility and the residence
address of the buyer shall be clearly indicated on the face of the
contract.  A copy of the written contract shall be given to the buyer
at the time he signs the contract.  All blank spaces in the contract
shall be filled in before the contract is signed by the buyer.
Provisions or terms written by hand on the buyer's copy shall be
legible.  The contract shall disclose that a bond has been obtained
by the discount buying organization and that a copy of such bond is
on file with the Secretary of State.  The contract shall be specific
as to the period of time for which the discount buying services will
be available to the buyer.  This time period shall not be measured by
the life of the buyer.



1812.108.  All contracts for discount buying services, which may be
in effect between a seller or related sellers and a buyer, the terms
of which overlap for any period of time, shall be considered as one
contract for the purpose of this title.



1812.109.  No contract for discount buying services shall require
payments or financing by the buyer over a period in excess of two
years from the date the contract was entered into.



1812.110.  Every contract for discount buying services shall provide
that the buying services shall become available to the buyer within
seven days from the date the contract was entered into.



1812.113.  No contract for discount buying sevices shall require or
entail the execution of any note or series of notes by the buyer
which, when separately negotiated, will cut off as to any third party
any right of action or defense which the buyer may have against the
seller.


1812.114.  No right of action or defense arising out of a contract
for discount buying services which the buyer has against the discount
buying organization shall be cut off by assignment or transfer of
the contract to any third party.


1812.116.  (a) Every contract for discount buying services shall
provide that if any goods ordered by the buyer from the seller are
not delivered to the buyer or available for pickup by the buyer at a
location within his county of residence within six weeks from the
date the buyer placed an order for such goods, then any moneys paid
by the buyer for such goods in advance of delivery shall, upon the
buyer's request, be fully refunded unless a predetermined delivery
date has been furnished to the buyer in writing at the time he
ordered such goods and the goods are delivered to the buyer or are
available for pickup by that date.
   (b) Prior to receiving from a buyer any payments pursuant to the
terms of a contract for discount buying services, the discount buying
organization shall establish a trust account at a federally insured
bank or savings and loan association for the deposit, except for the
first fifty dollars () of a downpayment, of the contract payments
as they are received.
   If the discount buying organization sells or assigns the contract
for discount buying services to a third party and such third party
pays the discount buying organization as consideration an amount
which is commercially reasonable for the sale or assignment of the
contract, the discount buying organization shall deposit all funds
received from the third party into the trust account.
   If the discount buying organization in any manner transfers the
contract for discount buying services to a third party which is to
act as the recipient of contract payments from the buyer and such
third party does not pay the discount buying organization as
consideration for such transfer an amount which is commercially
reasonable, then all sums received by the third party from the buyer
shall be deposited in the discount buying organization's trust
account for contract payments.
   As to each buyer, during the first one-fourth or first six months
of the buyer's membership period, whichever is shorter, funds
representing no more than one-fourth of the contract price may be
withdrawn from the trust account. During each subsequent one-fourth
or six-month period, whichever is shorter, funds representing an
additional one-fourth of the contract price may be withdrawn from the
trust account.
   (c) (1) Prior to receiving funds for an order of goods or services
from any buyer, the discount buying organization shall establish a
trust account at a federally insured bank or savings and loan
association for the deposit of the funds.  The discount buying
organization shall deposit into the account all funds received from
buyers for orders of goods or services regardless of how the funds
are styled, including but not limited to, down payment, partial
payment, payment in full, freight charge, or any other terms.  If the
total cost of goods or services ordered by a buyer on any one day
does not exceed fifty dollars (), including taxes, freight
charges, delivery charges, markup and all other charges collected by
the discount buying organization, then the funds received from the
buyer need not be deposited in the trust account.
   (2) The trust account required by this section shall be created
and maintained for the benefit of buyers who order goods or services
from or through the discount buying organization.  The discount
buying organization shall not in any manner encumber the corpus of
the account and shall not withdraw money deposited therein on behalf
of a buyer except:  (i) in partial or full payment to the discount
buying organization's source for the goods or services ordered by the
buyer, or (ii) to make a refund to the buyer.  After the withdrawal
of money from a buyer's deposit pursuant to (i) or (ii) above, only
that portion of the remainder of the deposit which represents
compensation to the discount buying organization may be withdrawn.



1812.117.  (a) An affiliate discount buying organization may, at its
option, and with the express written consent of its parent, comply
with the trust account withdrawal provisions set forth in subdivision
(b), in lieu of those contained in subdivision (b) of Section
1812.116.
   (b) The affiliate shall comply with the trust account provisions
of subdivision (b) of Section 1812.116, except that:
   (1) As to each buyer, during the first one-fourth or first six
months of the buyer's membership period, whichever is shorter, funds
representing no more than one-half of the contract price may be
withdrawn from the trust account.
   (2) During the subsequent one-fourth or six-month period of the
buyer's membership period, whichever is shorter, the remaining
balance of the contract price may be withdrawn from the trust
account.
   (c) To qualify for the provisions set forth in subdivision (b),
(1) the affiliate shall maintain a surety bond of two hundred fifty
thousand dollars (0,000), and (2) the parent shall maintain an
aggregate surety bond of two million five hundred thousand dollars
(,500,000) and a letter of credit, as set forth in subdivision (d),
for all of its affiliates that qualify for the withdrawal provisions
of subdivision (b).  The bonds shall be issued by a surety company
admitted to do business in this state.  A copy of each bond shall be
filed with the Secretary of State, with a copy provided to the
Attorney General.  The affiliate's bond shall be in lieu of the bond
required by subdivision (a) of Section 1812.103.  The surety bonds
shall comply with the requirements of this section and shall be in
favor of the State of California for the benefit of consumers harmed
by any violation of this title by the affiliate, the failure of the
affiliate to comply with the terms of its membership contracts with
consumers, and the failure of the affiliate to comply with the terms
of any agreement with consumers for the purchase of goods or
services, provided the bonds shall cover only pecuniary loss and not
exemplary damages or treble damages permitted under subdivision (a)
of Section 1812.123, and provided further the parent's bond shall not
be drawn on until the affiliate's bond is exhausted.
   (d) The parent shall continuously maintain and provide to the
Attorney General as beneficiary an irrevocable letter of credit
issued by a California state chartered bank or a national bank with
its principal place of business in the State of California, in the
amount of one million dollars (,000,000), in a form satisfactory to
the Attorney General.  After the bonds described in subdivision (c)
have been exhausted, only the Attorney General, by and through the
Attorney General's deputy or assistant, may draw on the letter of
credit for the satisfaction of any final judgments based on any
violation of this title by the affiliate, the failure of the
affiliate to comply with the terms of its membership contracts with
consumers, or the failure of an affiliate to comply with the terms of
any agreement with consumers for the purchase of goods or services,
provided the liability is established by final judgment of a court of
competent jurisdiction and the time for appeal has expired or, if an
appeal is taken, the appeal is finally determined and the judgment
is affirmed, and provided further the letter of credit shall cover
only pecuniary loss and not exemplary damages or treble damages
permitted under subdivision (a) of Section 1812.123.  The letter of
credit shall provide that payment shall be made to the Attorney
General upon presentation to the issuer of a sight draft stating only
the amount drawn and signed by the Attorney General or by an
Assistant or Deputy Attorney General.  Any amount received by the
Attorney General under the letter of credit shall be used exclusively
to satisfy final judgments as described in this subdivision.  The
Attorney General may apply to the court for orders as desired or
needed to carry out the provisions of this subdivision.
   (e) In addition to other lawful means for the enforcement of the
surety's liability on the bonds required by this section, the surety'
s liability may be enforced by motion after a final judgment has been
obtained against an affiliate based on any violation of this title
by the affiliate, the failure of the affiliate to comply with the
terms of its membership contracts with consumers, or the failure of
the affiliate to comply with the terms of any agreement with
consumers for the purchase of goods or services.  The bond of the
parent shall not be drawn on until the bond of the affiliate has been
exhausted, as provided in subdivisions (c) and (d).  The motion may
be filed by the Attorney General, a public prosecutor, or any person
who obtained the judgment without first attempting to enforce the
judgment against any party liable under the judgment.  The notice of
motion, motion, and a copy of the judgment shall be served on the
surety as provided in Chapter 5 (commencing with Section 1010) of
Title 14 of Part 2 of the Code of Civil Procedure.  The notice shall
set forth the amount of the claim, a brief statement indicating that
the claim is covered by the bond, and, if the motion is to enforce
liability under the bond provided by the parent, a statement that the
bond provided by the affiliate has been exhausted or will be
exhausted if the motion is granted.  Service shall also be made on
the Attorney General directed to the Consumer Law section.  The court
shall grant the motion unless the surety establishes that the claim
is not covered by the bond or unless the court sustains an objection
made by the Attorney General that the grant of the motion might
impair the rights of actual or potential claimants or is not in the
public interest.  The court may, in the interest of justice, order a
pro rata or other equitable distribution of the bond proceeds.
   (f) (1) The bond required by subdivision (c) for an affiliate
shall be continuously maintained by the affiliate until the date the
affiliate ceases to make the election under subdivision (a) or ceases
to engage in the business of a discount buying organization.  The
bond required by subdivision (c) for the parent shall be continuously
maintained by the parent until the date all affiliates cease to make
the election under subdivision (a) or all affiliates cease to engage
in the business of a discount buying organization.
   (2) Notwithstanding the expiration or termination of any bond
required under this section, the bond remains in full force and
effect for all liabilities incurred before, and for acts, omissions,
and causes existing or which arose before, the expiration or
termination of the bond.  Legal proceedings may be had therefor in
all respects as though the bond were in effect.
   (3) The letter of credit required under subdivisions (c) and (d)
shall be continuously maintained for a period of four years after all
affiliates cease to make the election under subdivision (a) or cease
to engage in the business of a discount buying organization,
provided the period shall be extended until there is a final
judgment, as described in subdivision (d), entered in each action
seeking relief that may be covered by the letter of credit if the
action was filed before the expiration of the four-year period.
   (g) Subdivision (a) of Section 1812.121 does not apply to a
discount buying organization that offers substantially equivalent
alternative at-home ordering service through other generally
available channels of communications, such as the Internet, for the
same categories of goods and services, provided the ordered goods are
shipped either to the home or to a freight receiver within 20 miles
of the buyer's residence at the time the buyer entered into the
contract for discount buying services.
   (h) For purposes of this section, the following terms apply:
   (1) "Affiliate" or "affiliate discount buying organization" means
a discount buying organization that is a subsidiary of a parent, as
defined in paragraph (4), or operates under a franchise, as defined
in paragraph (3), granted by a parent.
   (2)  "Consumer" or "buyer" means and includes a client or member
of an affiliate discount buying organization.
   (3) "Franchise" has the same meaning as in Section 31005 of the
Corporations Code.
   (4) "Parent" means a business entity that directly or indirectly
has franchised or operated 25 or more discount buying organizations
for 10 years or more.



1812.118.  Every contract for discount buying services shall further
provide that such contract may be canceled at any time within three
days after the date of receipt by the buyer of a copy of the contract
by written notice to the seller at the address specified in the
contract.  If such cancellation is made, all moneys paid pursuant to
the contract shall be refunded.  Every contract for discount buying
services shall be subject to the cancellation privileges and comply
with the requirements of Sections 1689.6 and 1689.7 of this code.



1812.119.  (a) Any contract for discount buying services which does
not comply with the applicable provisions of this title shall be
voidable by the buyer.
   (b) No discount buying organization shall make or authorize the
making of any reference to its compliance with this title.



1812.120.  Any untrue or misleading information, representation,
notice or advertisement of the seller which has been received by or
made to the buyer prior to his signing a contract for discount buying
services shall render the contract for discount buying services void
and unenforceable by the seller.  No seller shall make or
disseminate such information, representations, notices or
advertisements.  The phrase "untrue or misleading information,
representation, notice, or advertisement" shall include any acts
which constitute violations of Chapter 1 (commencing with Section
17500) of Part 3 of Division 7 of the Business and Professions Code.
However, neither this section nor any other section of this title
shall operate to exempt discount buying services from any other
provisions of law, including the penalty provisions of Section 17536
of the Business and Professions Code and Section 3370.1 of this code.



1812.121.  (a) If a discount buying organization removes its place
of business or, if it conducts business at more than one location,
that place of business which is geographically closest to the buyer's
residence indicated on the face of the contract, more than 20 miles
farther from the buyer's residence than it was at the time the
contract for discount buying services was entered into, the
organization shall offer rescission and a pro rata refund to each
buyer affected, based upon the amount of time for which the buyer has
been a member of the organization.
   (b) If a discount buying organization discontinues providing any
category of goods or services disclosed in compliance with Section
1812.106 or otherwise represented to the buyer to be available at or
before the buyer's signing of the contract for discount buying
services, the organization shall offer rescission and a pro rata
refund based upon the amount of time for which the buyer has been a
member of the organization, to each buyer who was informed of the
availability of the category of goods or services to be discontinued
and signed a contract for discount buying services within the six
months immediately preceding the discontinuance of said category of
goods or services.


1812.122.  Any transfer by a discount buying organization of its
duty or obligation to provide services to buyers under its contracts
for discount buying services to another individual, corporation, or
other business entity, as a result of which a buyer shall have
available substantially fewer goods and services, shall constitute a
complete defense to an action for further enforcement of or
collection on such a contract for discount buying services which may
be asserted by any buyer who did not consent in writing, after a full
and fair disclosure of the categories of goods and services to be
provided by the new discount buying organization, to such transfer of
the duty or obligation of performance, and shall entitle such a
nonconsenting individual to rescind the contract and obtain a pro
rata refund from the transferor.



1812.123.  (a) Any buyer injured by a violation of this title may
bring an action for the recovery of damages and return of all moneys
paid by the buyer to the seller.  Judgment shall be entered for three
times the amount at which the actual damages, plus such restitution,
are assessed plus reasonable attorney's fees and costs.  In the
event that the court finds a violation of Section 1812.120 relating
to untrue or misleading statements, judgment shall be entered for one
thousand dollars (,000) plus reasonable attorney's fees or three
times the amount of actual damages plus restitution plus reasonable
attorney's fees, whichever is greater.
   (b) Notwithstanding any other provision of this title, any failure
to comply with any provision of this title except Section 1812.120
may be corrected within 30 days after the execution of the contract
by the buyer, and if so corrected, neither the seller nor his
transferee shall be subject to any liability under this title except
that of a suit for actual damages plus reasonable attorney's fees and
costs, provided that any correction must be concurred in, in
writing, by the buyer, or the contract shall be void and
unenforceable by the seller, who shall forthwith tender to the buyer
a full refund.  "Transferee" includes holders and assignees.



1812.125.  (a) Any person who violates subdivision (b) or (c) of
Section 1812.116 shall, upon conviction, be fined not more than ten
thousand dollars (,000) for each violation, or imprisoned in the
state prison, or imprisoned in county jail for not more than one
year, or be punished by both such fine and imprisonment.
   (b) Any person who violates any other provision of this title
shall be guilty of a misdemeanor.



1812.126.  The prohibitions of this title are not exclusive and do
not relieve the parties or the contracts subject thereto from
compliance with any other applicable provision of law.



1812.127.  Any waiver by the buyer of the provisions of this title
shall be deemed contrary to public policy and shall be void and
unenforceable.


1812.128.  If any provision of this title or the application thereof
to any person or circumstances is held invalid, such invalidity
shall not affect other provisions or applications of the title which
can be given effect without the invalid provision or application, and
to this end the provisions of this title are severable.




1812.129.  (a) The Secretary of State shall enforce the provisions
of this title that govern the filing and maintenance of bonds and
deposits in lieu of bonds.
   (b) The Secretary of State shall charge a filing fee not to exceed
the cost of filing the bond or the deposit in lieu of a bond
pursuant to Section 995.710 of the Code of Civil Procedure.