1794.4. (a) Nothing in this chapter shall be construed to prevent the sale of a service contract to the buyer in addition to or in lieu of an express warranty if that contract fully and conspicuously discloses in simple and readily understood language the terms, conditions, and exclusions of that contract, provided that nothing in this section shall apply to a home protection contract issued by a home protection company that is subject to Part 7 (commencing with Section 12740) of Division 2 of the Insurance Code.
(b) Except as otherwise expressly provided in the service contract, every service contract shall obligate the service contractor to provide to the buyer of the product all of the services and functional parts that may be necessary to maintain proper operation of the entire product under normal operation and service for the duration of the service contract and without additional charge.
(c) The service contract shall contain all of the following items of information:
(1) If the service contract covers a single product, a clear description and identification of the covered product. If the service contract covers a class of products, a description of the class of products covered by the service contract that is sufficiently clear so the buyer is able to discern the products covered.
(2) The point in time or event when the term of the service contract commences, and its duration measured by elapsed time or an objective measure of use.
(3) (A) A service contract may be offered on a month-to-month or other periodic basis and continue until canceled by the buyer or the service contractor in accordance with Section 1794.41 and, for electronic and appliance repair dealers, Section 9855.6 of the Business and Professions Code. If the service contract continues until canceled by the buyer or service contractor, the service contract shall do all of the following:
(i) Disclose to the buyer in a clear and conspicuous manner that the service contract shall continue until canceled by the buyer or service contractor and require the buyer’s affirmative consent to this provision.
(ii) Disclose to the buyer all alternatives that the seller offering the service contract offers, including any fixed-term service contracts or other service contract basis that does not continue until it is canceled.
(iii) Provide, at a minimum, a toll-free number, email address, postal address, and, if one exists, internet website the buyer can use to cancel the service contract. Cancellation shall not require the use of more than one of these methods to be completed and shall be effective immediately upon receipt of the request for cancellation.
(iv) If the service contract was entered into online, allow the buyer the option to cancel the service contract exclusively online, without engaging in any unnecessary steps that obstruct or delay the buyer’s ability to cancel the continuation of the service contract.
(v) (I) Provide for a refund to the buyer of any unearned amounts in accordance with Section 1794.41 and, for electronic and appliance repair dealers, Section 9855.6 of the Business and Professions Code.
(II) The amount of any refund, as well as any cancellation or administrative fees, under this paragraph shall be calculated based on the period, whether month to month or otherwise, for which payment is made and the amount of the payment for the period.
(III) A written notice of cancellation other than notice required by clauses (iii) and (iv) shall not be required to obtain a refund.
(B) This paragraph does not apply to vehicle service contracts.
(4) If the enforceability of the service contract is limited to the original buyer or is limited to persons other than every consumer owner of the covered product during the term of the service contract, a description of the limits on transfer or assignment of the service contract.
(5) A statement of the general obligation of the service contractor in the same language set forth in subdivision (b), with equally clear and conspicuous statements of the following:
(A) Any services, parts, characteristics, components, properties, defects, malfunctions, causes, conditions, repairs, or remedies that are excluded from the scope of the service contract.
(B) Any other limits on the application of the language in subdivision (b) such as a limit on the total number of service calls.
(C) Any additional services that the service contractor will provide.
(D) Whether the obligation of the service contractor includes preventive maintenance and, if so, the nature and frequency of the preventive maintenance that the service contractor will provide.
(E) Whether the buyer has an obligation to provide preventive maintenance or perform any other obligations and, if so, the nature and frequency of the preventive maintenance and of any other obligations, and the consequences of any noncompliance.
(6) A step-by-step explanation of the procedure that the buyer should follow in order to obtain performance of any obligation under the service contract including the following:
(A) The full legal and business name of the service contractor.
(B) The mailing address of the service contractor.
(C) The persons or class of persons that are authorized to perform service.
(D) The name or title and address of any agent, employee, or department of the service contractor that is responsible for the performance of any obligations.
(E) The method of giving notice to the service contractor of the need for service.
(F) Whether in-home service is provided or, if not, whether the costs of transporting the product for service or repairs will be paid by the service contractor.
(G) If the product must be transported to the service contractor, either the place where the product may be delivered for service or repairs or a toll-free telephone number that the buyer may call to obtain that information.
(H) All other steps that the buyer must take to obtain service.
(I) All fees, charges, and other costs that the buyer must pay to obtain service.
(7) An explanation of the steps that the service contractor will take to carry out its obligations under the service contract.
(8) A description of any right to cancel the contract if the buyer returns the product or the product is sold, lost, stolen, or destroyed, or, if there is no right to cancel or the right to cancel is limited, a statement of the fact.
(9) Information respecting the availability of any informal dispute settlement process.
(d) A service contractor may cancel a service contract offered on a month-to-month or other periodic basis only if any of the following occurs:
(1) The buyer fails to make timely payment.
(2) The buyer is otherwise in material breach of the service contract.
(3) The buyer has committed fraud in connection with the service contract.
(4) (A) The service contractor or its affiliate is the obligor under the service contract, and the service contractor or its affiliate is discontinuing this category of service contract no later than 30 days after the effective date of the cancellation.
(B) A cancellation or administrative fee shall not be charged to the buyer for a cancellation pursuant to this paragraph.
(5) (A) Neither the seller offering the service contract nor any of its affiliates is the obligor under the service contract, and the seller is discontinuing its offering of the service contract no later than 30 days after the effective date of the cancellation in favor of a service contract with a different obligor.
(B) A cancellation or administrative fee shall not be charged to the buyer for a cancellation pursuant to this paragraph.
(e) As used in this section:
(1) “Affiliate” means an entity that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with another specified entity.
(2) (A) “Affirmative consent” means any freely given, specific, informed, and unambiguous indication of the consumer’s wishes by which the consumer, or the consumer’s legal guardian, a person who has power of attorney, or a person acting as a conservator for the consumer, including by a statement or by a clear affirmative action, signifies agreement to the continuous until canceled nature of the service contract.
(B) “Affirmative consent” does not mean any of the following:
(i) Acceptance of a general or broad terms of use, or similar document, that contains descriptions of the coverages under the service contract along with other, unrelated information.
(ii) Hovering over, muting, pausing, or closing a given piece of content.
(iii) Agreement obtained through the use of dark patterns.
(f) Subdivisions (b) and (c) are applicable to service contracts on new or used home appliances and home electronic products entered into on or after July 1, 1989. They are applicable to service contracts on all other new or used products entered into on and after July 1, 1991.
(g) The amendments to this section made by the act adding this subdivision are applicable only to a service contract entered into on or after January 1, 2022.
(Amended by Stats. 2021, Ch. 452, Sec. 2. (AB 1221) Effective January 1, 2022.)