Fixed term installment contracts: early termination fees.

Plain English Breakdown

The effective date of AB-483 is not provided in the official summary or digest text, and it should be confirmed from additional sources.

Early Termination Fees for Fixed Term Installment Contracts

AB-483 prohibits sellers from charging early termination fees to consumers who end fixed term installment contracts before the contract's expiration, unless the initial contract clearly discloses these fees.

What This Bill Does

• Prohibits a seller from charging an early termination fee if the initial contract does not include clear and conspicuous written disclosure of the total cost or formula for calculating the highest possible early termination fee.
• Limits any early termination fee to no more than 30% of the total sum owed under the contract.
• Deems certain broadband internet providers compliant with these provisions, as specified.
• Does not apply to contracts regulated by other state or federal laws offering greater protections for consumers or home improvement contracts.

Who It Names or Affects

• Consumers who have fixed term installment contracts and want to end them early.
• Sellers using fixed term installment contracts with customers in California.

Terms To Know

Fixed Term Installment Contract

A contract where a customer agrees to pay for goods or services over a set period of time, and cannot change the terms easily without penalties.

Early Termination Fee

The fee charged when someone ends their contract before it is supposed to end.

Limits and Unknowns

• Broadband internet providers are considered compliant under certain conditions, but the exact details of these conditions are not specified in this summary.
• Does not apply to contracts regulated by other state or federal laws offering greater protections for consumers or home improvement contracts.

Official Summary Text

AB 483, Irwin.
Fixed term installment contracts: early termination fees.
Existing law makes it unlawful for any person doing business in California and advertising to consumers in California to make any false or misleading advertising claim. Existing law makes various unfair competition practices unlawful, including any unlawful, unfair, or fraudulent business act or practice and unfair, deceptive, untrue, or misleading advertising.
Existing law regulates how a contract may be extinguished, and prescribes requirements for the formation and cancellation of certain contracts, including dating service contracts, weight loss contracts, and home equity sales contracts.
This bill would, for contracts entered into or modified on or after August 1, 2026, prohibit a seller that uses a fixed term installment contract, as defined, from charging a fee to a consumer who terminates the
fixed term installment contract unless, at the time of entering the initial contract, the initial contract includes a clear and conspicuous written disclosure of the total cost of the early termination fee or the formula used to calculate the early termination fee and the highest possible early termination fee under the contract. The bill would also prohibit a seller that uses a fixed term installment contract from charging an early termination fee or any similar fee in an amount greater than 30% of the total sum for which the consumer is obligated under the contract. The bill would deem certain broadband internet providers to be in
compliance with these provisions, as specified. The bill would provide that its provisions do not apply to a fixed term installment contract that is regulated by state or federal law providing greater protections to consumers, as specified, or to a home improvement contract, as defined.
This bill would make a waiver of its provisions void and unenforceable.

Current Bill Text

Download Bill PDF