Recurring Subscriptions Get a New Law in California
California has enacted updated legislation for the Automatic Renewal Law (ARL). The ARL governs the oversight of businesses with automatic subscriptions and renewal services. This legislation imposes new requirements on businesses that offer subscriptions and free trial offers.
The Automatic Renewal Law changes go into effect July 1, 2022. After July 1, companies offering automatically renewing subscription services to California customers must clearly notify consumers about subscription renewals, provide easy cancellations, display clear messaging and more.
These new amendments to the California law will impact companies offering subscription-style products and services to consumers. Businesses must reassess their online design and transaction pages to ensure compliance.
California’s ARL was one of the first of its kind, and other states have recently enacted ARLs with similar requirements so we can expect this to become the new normal. The Sunrise Integration ecommerce team has been preparing for these new requirements and is poised to assist new and existing clients with these regulations.
What are the New Requirements?
The Automatic Renewal Law comes with a host of new and notable requirements for businesses. Some of the more critical updates include:
Obtain “affirmative consent” to the terms, and the cancellation policy
Businesses must provide renewal reminders, 15 to 45 days before renewal, to customers who agreed to a contract term of one year or more.
Businesses offering free or discounted trials lasting more than 31 days must provide a renewal reminder 3 to 21 days before the trial period expires.
Provide easy access to cancellation links and provide online cancellation of subscriptions purchased online.
If the subscription offers a free trial period, the business must state specifically, before starting the subscription, what it will cost you after the trial period ends.
Businesses that offer subscription plans should ensure that customers are notified of this information prior to beginning the subscription. Failure to inform customers could lead to various legal issues depending on the state. It's time to review your subscription plan.
How Does this Affect Your Business?
Here at Sunrise Integration, we work with many subscription businesses and Recharge development projects. All these clients need to review their site messaging and notification practices. Any business that fails to comply with automatic renewal laws risks legal consequences including class action lawsuits. States are cracking down on deceptive subscriptions and so-called, "dark patterns" that mislead consumers.
So, what can happen if you don't comply? Match.com was ordered to pay $2 million in civil penalties to a state task force as the company's online sign-up processes failed to "clearly and conspicuously" inform consumers that they were enrolling in an automatic renewal service. Match.com also failed to inform customers how to cancel the subscription while simultaneously making the cancellation process lengthy and tedious. California used this as an example of the types of practices the state is trying to prevent for consumers.
Need a Guiding Hand for Your Subscription Policies?
The Automatic Renewal Law is complicated and affects a wide base of a company's customers. Your business could be liable so now is the best time to get ready. If you offer recurring subscriptions, then let's get your service into compliance and avoid any consumer legal action.
Our expert ecommerce team will get your business into compliance and provide an audit of your subscription services.