The explosion of the internet and e-commerce has led many businesses to offer their products and services through online subscription services. This has made it easier for consumers to quickly make purchases from their phone or computer, and it has also made it easier for companies to lock customers into subscriptions that renew automatically. These auto-renewal plans become problematic when companies use them to take advantage of customers who might not realize what they are signing up for. California’s Automatic Renewal Law (ARL) was a direct response to this problem, with state lawmakers codifying strong protections for consumers in these situations that go even further than federal laws on recurring contracts. The California ARL specifically requires businesses to disclose all relevant subscription terms to customers, get consent from the customers before charging their credit cards, and provide customers with a way to easily cancel the contract.
To learn more about the California automatic renewal law, keep reading.
What Requirements Does California’s ARL Impose on Businesses?
Automatic renewal subscriptions affecting California consumers are governed by the state’s Automatic Renewal Law (ARL), which is set forth in Cal. Bus. & Prof. Code §§ 17600. The California ARL requires companies to clearly and conspicuously explain “automatic renewal offer terms.” State legislators passed the law for the purpose of stopping companies from continually charging consumer credit or debit cards without the consumers’ explicit consent for ongoing shipments of products or ongoing provision of services.
When a business violates the ARL by failing to properly disclose information about an auto-renewal offer, it may be possible for the customer to file a consumer fraud lawsuit and seek financial compensation from the business. If you have been billed for an automatically renewing subscription that you did not want to be enrolled in, your first step should be to speak with a California false advertising lawyer.
What Information Must Be Disclosed in California Auto-Renewal Offers?
California’s Automatic Renewal Law (ARL) is among the most consumer-friendly in the entire country, with other states modeling their own ARLs after it. In fact, federal agencies like the Federal Trade Commission (FTC) are now revising their own recurring contract rules to work in tandem with California’s auto-renewal law.
The California ARL requires companies to disclose the following information before a customer enrolls in an automatic subscription program:
- That the subscription will continue until the consumer cancels.
- A description of the policy for canceling the subscription.
- Any recurring charges that will be charged to the consumer’s credit card, debit card, or bank account as part of the automatic renewal plan, as well as whether the amount of the charge may change and how often the consumer will be billed.
- The length of the automatic renewal term. (If the service is continuous, this must also be disclosed.)
- Any minimum purchase obligation.
“Clear and Conspicuous” Disclosures Required Under California’s ARL
Importantly, section 17602 of the California ARL requires that the automatic renewal offer terms must be presented to the consumer both before the purchasing contract is fulfilled and after enrollment in the form of an email or other post-sale acknowledgement. There can be no concealing of the auto-renewal offer at any point in the process. Moreover, there can be no attempts by the company to thwart or frustrate a customer’s attempts to cancel the subscription. That’s because the ARL explicitly requires businesses to provide a “cost-effective, timely, and easy-to-use mechanism for cancelation.”
Additionally, those disclosures must be plainly visible and obvious to the customer. In fact, there are strict guidelines for the manner in which the information is presented. For example, the terms of the automatic subscription service must be in “visual proximity” to the request for consent to the offer. Those terms must also be presented “clearly and conspicuously” so that they can be distinguished from the rest of the offer. This means that the text of the auto-renewal offer should be:
- In larger type than the surrounding text.
- In contrasting type, font, or color to the surrounding text of the same size.
- Set off from the surrounding text of the same size by symbols or other marks in a manner that clearly calls attention to the language.
Remedies Available Under California’s Auto-Renewal Law
What happens when a company violates the California Automatic Renewal Law (ARL) by failing to clearly and conspicuously disclose the terms and conditions of a subscription service? The answer to this question depends on the facts and circumstances of your particular case, which is why it’s important for you to speak with a Los Angeles false advertising attorney who has knowledge of both state and federal automatic renewal laws, as well as other applicable California consumer protection laws like the Consumers Legal Remedies Act (CLRA) and the far-reaching Unfair Competition Law (UCL). An experienced attorney may be able to force the company to stop its misleading sale and advertisement of services, in addition to helping you get full restitution of any expenses you’ve already incurred. In some cases, you may also be entitled to additional financial compensation for your losses or harm suffered.
Call the Los Angeles False Advertising Lawyers at Tauler Smith LLP
Tauler Smith LLP is a Los Angeles law firm that focuses on consumer fraud litigation, including violations of the California Automatic Renewal Law (ARL). Our false advertising lawyers represent plaintiffs in lawsuits filed against companies that misrepresent or fail to disclose the terms of their monthly subscription contracts. Call 310-590-3927 or email us to schedule a free consultation.