PROTECTING WISCONSIN’S SMALL BUSINESSES

TO       :     THE WISCONSIN LEGISLATURE

DATE  :     March 25, 2009 

Wisconsin’s small businesses need protection from automatic renewal clauses hidden by big businesses in equipment and service contracts.  LRB-0915/3 is legislation that provides real protection for the small businesses in every legislative district.  Every legislator can make an important difference by being a co-author of this essential bill. 

Senator Robert Wirch is circulating LRB-0915/3 for co-authors.  This is major legislation for the small businesses of Wisconsin.  Businesses become trapped by automatic renewal clauses hidden in equipment and service contracts. LRB-0915/3 requires that the equipment or service provider tell their customers there is an automatic renewal clause and remind their customers in a timely fashion that the automatic renewal clause is about to take effect.  Confusion caused by automatic renewal clauses can cause a small business to have simultaneous contracts with two different companies for the same service because the small business bought a replacement contract believing that the original contract expired. There is never an escape from the multiple contracts! 

This is a basic out-of-state Big Business versus Wisconsin small business issue. Big out-of-state companies using the automatic renewal technique include sellers of credit card processing machines and services, business uniform services, waste hauling and disposal companies, specialized computer equipment and software services, telephone system and telephone services, cash transaction machines (cash registers) and industry specific diagnostic equipment.  For example:

The contract of a credit card processing company is for
36 months (3 years) with automatic renewal for 2 year periods unless            notice is given at least 90 days, but not more than 120 days, prior to            expiration.  This clause is buried in the contract in very fine print. 

We have many more examples and will be happy to share copies of contracts with any member of the legislature.  Business owners must constantly track the expiration date of a contract with an automatic renewal clause and often the business doesn’t even know the clause is in their contract! A small business that typically has as many as 10 contracts on equipment and services finds it impossible to keep track of the agreements and notices that go with each contract. 

The only reason for a big business to oppose LRB-0915/3 is if that big business wants to continue to prey upon unsuspecting small businesses. 

This legislation was conceived after innumerable calls to our WIB member HOTLINE.  WIB has constant daily contact with scores of businesses throughout our state.  We have had many years of complaints about automatic renewal clauses hidden in contracts for providing services or for the lease of business equipment.  The legislation has passed the Senate on a voice vote three consecutive sessions. 

The significant majority of companies selling services and leasing products with automatic renewal clauses are headquartered outside the State of Wisconsin.  Wisconsin small businesses are losing money because of this situation.  This legislation will protect them from significant ongoing losses in the future and make a difference for the businesses in your district. 

This bill is important small business legislation.  The only possible opposition will come from companies that want to continue to use automatic renewal contract clauses to trap small firms.  A hidden automatic renewal clause is unfair to your local businesses.

 LRB-0915/3 will correct the problem.   WIB hopes Wisconsin’s small businesses will have your support in this battle against out-of-state Big Business. 

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