California to Tighten Rules for Automatic Renewals
Seven years ago, we posted about a new law in California governing automatic renewals. The law generally requires that companies: (1) clearly disclose the material offer terms before a consumers subscribes; (2) obtain affirmative consent to the terms before the consumer is charged; (3) provide a confirmation to the consumer that includes the terms, a description of the cancellation policy, information on how to cancel, and, if the offer includes a free trial, that the consumer may cancel before being charged; and (4) provide an easy-to-use method for canceling. Since then, we’ve seen several lawsuits under the law, including this one.
The state recently enacted a new law that adds additional requirements to the ones already on the books. Under the new law, companies will also be required to:
- Provide a clear and conspicuous explanation of the price that will be charged after the trial ends;
- Obtain consent before charging a consumer for an automatic renewal or continuous service that is made at a promotional or discounted price for a limited period of time;
- Disclose how to cancel automatic renewal prior to payment for the continuing service after a free trial; and
- Allow consumers to cancel online if they signed up online.
Tags: Automatic Renewal