The Legality of Automatically Renewing Subscriptions

You know the feeling. You sign up for a one-year subscription—whether it’s for TV and internet services, food delivery, clothing, a dating app, or countless other products and services—intending to pay only for that year. Or you sign up for a “free trial,” thinking you will only be charged if you actually buy the service. But then, without your knowledge and consent, you are charged for an additional subscription period, or for a product or service you never intended to buy. Unfortunately, this happens to consumers every day, and companies often rely on these deceptive practices to get your business and your money.

The good news is that many states, including California, have laws like the Automatic Renewal Law (ARL) to ensure that consumers enter subscription programs with full knowledge and affirmative consent. To learn more, keep reading this blog.

What Is the Automatic Renewal Law?

In 2009, the California Legislature passed the Automatic Renewal Law, Business and Profession Code Section 17600 (the “ARL”), to “end the practice of ongoing charging of consumer credit or debit cards . . . without the consumers’ explicit consent for ongoing shipments of a product or ongoing deliveries of service.”

You may be entitled to relief under the ARL if any of the following apply:

1. You were charged for a subscription that automatically renewed without your knowledge and consent.
2. You signed up for a “free trial,” and without being able to cancel the service, were charged anyway.
3. You signed up for a “free trial,” and there was no “clear and conspicuous explanation” of the offer’s pricing or change in pricing upon the trial’s end.
4. You signed up for the subscription online, but there is no online cancellation option.
5. For non-online subscriptions, there are none of the following cancellation methods: (a) a toll-free telephone number; (b) an email address; (c) a postal address, if the seller directly bills the consumer; or (d) another “cost-effective, timely, and easy-to-use mechanism.”

What Are the Disclosure Requirements Under the ARL?

Under the ARL, any business initiating an automatic renewal or continuous service offer to a California consumer must:

• Disclose the terms of the offer.
• Obtain the consumer’s affirmative consent.
• Provide the consumer an acknowledgement of the order.
• Provide simple cancellation procedures, along with other miscellaneous requirements.

Whether they are offered orally or in writing, the offer terms must be disclosed in temporal or visual proximity to “the request for consent to the offer.” Id. § 17602(a)(1).

The disclosures must also be “clear and conspicuous.” Id. A visual disclosure is clear and conspicuous if it is “in larger type than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same size . . . in a manner that clearly calls attention to the language.” Id. § 17601(c). An audio disclosure is clear and conspicuous if it is “in a volume and cadence sufficient to be readily audible and understandable.” Id. Three other important aspects of the ARL are: A company must allow a consumer to cancel an automatic renewal or continuous service offer exclusively online if the consumer accepted the offer online ( § 17602(c)); and An automatic renewal or continuous service offer that includes a free gift or trial must have a “clear and conspicuous explanation” of the offer’s pricing or change in pricing upon the trial’s end ( § 17602(a)(1)); and A “free gift or trial” triggers a disclosure in the acknowledgement about how to cancel–and an allowance for cancellation–before the consumer pays for the good or service ( § 17602(a)(3)).

Can You Sue If Your Subscription Was Automatically Renewed Without Your Consent?

Although there is no private right of action under the ARL, a private plaintiff may bring an action under California’s Unfair Competition Law, Business & Professions Code §§ 17200 et seq. (“UCL”), for restitution and injunctive relief, as long as the plaintiff has suffered injury in fact and lost money or property. See Lopez v. Stages of Beauty, LLC, 307 F. Supp. 3d 1058, 1070 (S.D. Cal. 2018).

Contact the California False Advertising Lawyers at Tauler Smith LLP Today

Victims of suspicious or unauthorized charges on their credit cards should report illegal subscription renewals to the California false advertising lawyers at Tauler Smith LLP. Our experienced attorneys can investigate the subscriptions and help you obtain compensation. Call 310-590-5927 or fill out the online contact form to schedule a consultation.