WIB: Calls For Small Business Contract Protection: SB 511

For more information, contact
Wayne Corey 608-255-0373

Small businesses in Wisconsin should be protected from automatic renewal clauses hidden in equipment and service contracts. The hidden clauses have become a serious problem for many small businesses who sign contracts for credit card processing machines and credit card processing services, business uniform services, waste hauling and disposal companies, specialized computer equipment and software services, telephone system and telephone services, cash transaction machines and industry specific diagnostic equipment.

Automatic renewal clauses would require formal timely mail notification of renewal under Senate Bill 511 authored by Senator Tom Reynolds (R-West Allis) and endorsed by WIB. The bill had a public hearing Monday before the Senate Labor, Small Business Development & Consumer Affairs Committee chaired by Senator Reynolds.

“Confusion caused by automatic renewal clauses can cause a small business to have simultaneous contracts with two companies for the same service because the unsuspecting small business bought a replacement contract believing that the original contract expired,” explained Wayne Corey, executive director of WIB.

Corey told the committee that WIB has seen numerous examples of the problem for many years as businesses call the WIB member HOTLINE for help in extricating themselves from contracts that were automatically extended without warning.

Attorney Gary Antoniewicz of The Boardman Law Firm, corporate counsel to WIB, told the committee that SB 511 “does not prohibit automatic renewal but simply makes a requirement for those seeking to enforce them that a reminder notice of the automatic renewal clause be sent out.”

Attorney Antoniewicz provided the committee with a copy of the fine print on page two of a credit card processing services agreement. “The merchant was correctly told at the signing that it was a three-year agreement. What the merchant wasn’t told was that it would renew for an additional two-year period unless the merchant sent notice between 90 and 120 days prior to expiration.” SB 511 would require the service seller to notify the merchant that an automatic renewal clause was about to be implemented.

WIB believes SB 511 is important small business legislation. SB 511 makes it more efficient to operate a small business in Wisconsin. WIB is urging the legislature to pass SB 511 during this last scheduled week of the 2003-04 session.