Plain English Breakdown
The effective date of the law is listed as blank in the metadata, though the bill specifies rules apply to contracts on or after August 1, 2026.
Rules for Early Termination Fees on Fixed-Term Contracts
This law sets rules for sellers who charge fees when customers end fixed-term installment contracts early, requiring clear written disclosures and limiting the fee amount.
What This Bill Does
- Requires sellers to include a clear and conspicuous written disclosure of the total cost or calculation formula of an early termination fee in the initial contract before charging it.
- Limits any early termination fee to no more than 30% of the total sum for which the consumer is obligated under the contract.
- Applies these rules only to contracts entered into or modified on or after August 1, 2026.
- States that certain broadband internet providers are considered in compliance with these requirements as specified by the law.
- Makes any agreement where a customer gives up rights under this law invalid and unenforceable.
Who It Names or Affects
- Sellers who use fixed-term installment contracts
- Consumers entering into or modifying such contracts on or after August 1, 2026
Limits and Unknowns
- The law does not apply to home improvement contracts.
- The rules do not cover fixed-term installment contracts regulated by state or federal laws that provide greater consumer protections.
- The specific details of which broadband internet providers are automatically in compliance are defined elsewhere.