Buying Service Licenses
The Georgia Buying Services Act (O.C.G.A. Sections 10-1-590 through 10-1-605) regulates buying services or clubs that charge members a fee to join and be eligible for the cooperative purchase of merchandise or services at below-retail prices. If you are the owner of a buying service, it is your responsibility to review all the code provisions cited above with your attorney and make sure your practices are in compliance, as Georgia law allows a penalty of up to $1,000 for violations of this law. We will summarize the main points here.
A buying service operating in Georgia must purchase an annual license, which carries an application fee of $50 and is good for one year. You may renew the license within the 90-day period preceding its expiration. You must also maintain a $25,000 surety bond for each location of your business for the protection of the club members.
Further, you are required to offer a three-day membership cancellation period. If a buying club member decides to cancel his or her membership, this must be done in writing by 12:00 midnight on the third business day from the day the contract was signed. The member will be entitled to a full refund, within ten days of the cancellation notice, of any membership fees paid.
Every buying service contract is required to contain the following notice in boldface type. If it does not, or the member never signed a contract, he or she may cancel at any time and by any means and not owe anything:
MEMBER'S RIGHT TO CANCEL
If you wish to cancel this contract, you may cancel by delivering or mailing a written notice to the club. To prove that you canceled, it is recommended that you send the notice by certified mail or statutory overnight delivery. The notice must say that you do not wish to be bound by the contract and must be delivered or mailed before 12:00 Midnight of the third business day after you sign this contract. The notice must be delivered or mailed to: (insert name and mailing address of club). If you cancel, the club will return, within ten days of the date on which you give notice of cancellation, a total refund. It is recommended that you mail the notice of cancellation by certified mail or statutory overnight delivery, return receipt requested; check with your post office as to the time when you will be able to mail a certified letter. Be sure to keep a photocopy of the notice of cancellation which you mail.
The Governor’s Office of Consumer Protection (OCP), which is charged with issuing licenses to clubs that are in compliance with the law, must approve all membership contract forms. The contract is required to state clearly the length of the membership, and you must deliver a copy to the consumer at the time of the contract’s execution. Any contract in violation of this statute is considered null and void.
A buying service must also keep certain records and make them available for inspection by OCP’s Administrator or his delegates during normal business hours on all normal business days. These records include:
- Accurate accounts of all transactions in Georgia;
- Copies of all agreements;
- The dates and amounts of payments made and accepted; and
- The names and addresses of all members in the state.
The Federal Trade Commission also monitors buying services and has enacted certain applicable rules. If a free trial offer is made by telephone and will become a paid membership, the telemarketer must obtain the consumer’s express consent, record the entire conversation, and ask the consumer to repeat at least the last four digits of his credit card number to complete the transaction.