Testifiers highlight need to protect consumers from misleading contracts

Murky language can trap consumers into long-term deals

HARRISBURG, Feb. 26 – The House Majority Policy Committee met Monday morning to gather testimony on what can be done to better protect Pennsylvanians from entering misleading, confusing contracts. The hearing, hosted by Rep. Paul Takac (D-Centre), featured testimony from the PA Office of Attorney General (OAG) and National Conference of State Legislatures (NCSL).

“Contracts permeate virtually every aspect of our lives. They’re often extremely detailed and specific, using language that’s difficult to decipher and comprehend. Too many times, consumers have signed contracts they didn’t fully understand, leading to major financial repercussions,” said Takac. “It’s clear that we need more protections for consumers and stricter punishments for bad actors.”

Takac has already introduced legislation to strengthen the Unfair Trade Practices and Consumer Protection Law. His bill would establish a minimum penalty of $100 for unlawful contracts and allow consumers to pursue damages against a person who uses deceptive practices.

Monday’s hearing included testimony from Sarah Frasch, Chief Deputy Attorney General for the Bureau of Consumer Protection, who detailed some of the misleading contract cases the OAG has been involved in. Some of these contracts include continuity plans, negative option plans, free to pay plans, or other forms where the consumer signs up for one thing and then, by signing up, the consumer is then enrolled in a longer-term contract. Many times, consumers are unaware of the longer-term contract until their credit card statements show the charges. At this point, Frasch testified, it might be too late to cancel without paying a fee, or at all.

“Pennsylvania does not have a specific statute dealing with negative options or long-term automatic contract renewals, and some renewal periods last five years without the ability to cancel, leaving consumers stuck without options. said Frasch. “Contracts should be presented in a clear and conspicuous manner so that the consumer can easily read and understand the length of the contract, the services included, the cost, any fees associated with early termination, and how to cancel.”

Lawmakers attending Monday’s hearing also heard testimony from Heather Morton, the Director of Finances, Technology and Communication for NCSL. Morton compared Pennsylvania’s statutes to those of other states regarding consumer protections from misleading contracts. The commonwealth is not necessarily behind other states in these statues, but more can always be done.

“People have an expectation that when they sign a contract, they’ll get what they asked for. Nothing more, nothing less. But it’s clear consumers are being taken advantage of thanks to complex and confusing language included in those contracts,” said House Majority Policy Chairman Ryan Bizzarro (D-Erie). “We have a responsibility to level the playing field and make sure our friends and neighbors are being treated fairly.”

Monday’s hearing can be viewed here, while testimony can be found here. All other information about the House Majority Policy Committee can be found at pahouse.com/policy.