New consumer law to end automatic renewal of service contracts
A law that went into effect yesterday bars many types of companies from automatically renewing your contract without prior notification.
A law that went into effect yesterday bars many types of companies from automatically renewing your contract without prior notification or, conversely, from ending the business relationship without giving you a head's up of 30 or 60 days.
The new regulations do not apply to services classified as essential, including basic land line and mobile phone service (for voice calls only), cooking and heating gas supplies and subscriptions for emergency medical services. Suppliers of these services are authorized to renew service contracts automatically but they must inform customers between one and two months ahead of time about the end of the contract term.
Also exempt from the new law are contracts for periods of less than four months in which the customer can cancel the service without incurring a penalty.
Any business that violates the new law risks being sued and getting whacked with a punitive fine that is higher than the damages incurred by the customer.
MK Orit Noked (Labor), chairman of the Lobby for Consumer Protection Knesset caucus and the sponsor of the law, said the change closes a loophole that enabled businesses to automatically renew service contracts with new terms and prices. "It's not right to place the responsibility for monitoring the price on the consumer," Noked said. "Naturally, most customers don't keep track of the date on which a contract, or special terms, are due to end. As a result the business continues to take payments that are often more than the original amount the customer agreed to when the transaction was initiated," Noked said.