Auto-Renew Your Faith in California’s Consumer Protections

Ah, auto-renewals. They’re a plague on us all. Who hasn’t signed up for a service and then forgotten to cancel it after they no longer needed or wanted it? Let’s not count the number of reminders on our phones to compare.

Yet, very few businesses operate without a subscription offering these days, your favorite law firm (yes, us) included. In response to this growing practice, California has enacted laws governing auto-renewals. California businesses with auto-renewal arrangements with consumers should make sure they are complying with the requirements set forth in the statute, in addition to any applicable federal laws, to avoid civil remedies. Note that California law defines “consumer” as “any individual who seeks or acquires, by purchase or lease, any goods, services, money, or credit for personal, family, or household purposes.” (Bus. & Prof. Code, § 17601)

Some Key Requirements:

When presenting the auto-renewing service or good, businesses must present the following information, among others, clearly and conspicuously (read: the consumer can’t possibly miss it) before the consumer signs up:

• That the arrangement will continue until the consumer cancels it;
• A description of the cancellation policy;
• That the consumer’s credit card or debit card, or third-party account, will be charged for the auto-renewal;
• That the automatic renewal or continuous service will automatically renew unless the consumer cancels;
• The length and any additional terms of the renewal period;
• How the consumer can cancel;
• If the notice is sent electronically, the notice includes either a link that directs the consumer to the cancellation process or provides another reasonably accessible electronic method that directs the consumer to the cancellation process if no link exists; and
• Contact information for the business.

If an auto-renewal agreement has a term of at least 1 year – so, year-long services like your Wifi service, for example – then the consumer must be notified of the auto-renewal at least 15 days and no more than 45 days prior to the auto-renewal.

One more biggy: if the business allows the consumer to accept the agreement online, then it must also provide the cancellation method online without creating additional hurdles. Simply, if a consumer signs up for a service online, then they must be able to easily cancel online too. No, they can’t be required to also call customer service to cancel.

There are additional requirements and exceptions under the law. Please see the statute or call your friendly neighborhood law firm for all requirements.

Fun Fact:

If the business sends products as part of its auto-renewal service – think subscription boxes with lots of goodies – and the business fails to comply with the law, then the consumer can consider those goods an unconditional gift from the business. Oh, I love gifts!

Main Takeaway:

California businesses with automatically renewing products should prepare their agreements carefully and ensure that the terms and practices meet California’s strict requirements.