California Stiffens User-Notification Rules for Some Auto-Renewing SubscriptionsJune 23, 2022 – Client Alert
New rules require reminders just before yearlong subscriptions renew or 32+-day free trials convert to paid subscriptions.
If your business provides automatically renewing subscriptions to consumers, California will soon have new reminder requirements for certain subscribers about renewal and cancellation. These new rules take effect July 1, 2022, and apply to yearlong subscriptions and free trials lasting more than 31 days.
Gov. Gavin Newsom signed the requirements, an amendment of California’s existing Automatic Renewal Law (“ARL”), into law last October. The full text of the amended law, California Business & Professions Code § 17602, is available here. We’ve also attached a comparison of the old and new versions here.
First, some helpful reminders…
If your business provides any kind of automatically renewing subscription, the ARL already contains strict requirements. These aren’t changing, so remember to always:
- Tell consumers the cost & frequency of any automatic renewal before or during subscription enrollment or processing payment.
- Summarize those details, and include cancellation instructions, in a message to each subscriber after enrollment (in an email, for example). This message must also include cancellation instructions.
- Inform the subscriber of any change in the cost of their subscription before an automatic renewal. In the same message, provide an easy way to cancel (for example, a link).
- At all times, include in consumers’s settings an easy-to-find cancellation link or else an easy-to-find email form where they can request cancellation.
- Make sure consumers can see all the above, by placing the info in bigger type, a different font, a different color, or a special box that makes it stand out from the rest of your message.
The new requirements go into effect July 1, 2022 (just in time for the holiday weekend).
Subscriptions with a 32+-day free trial (or gift) or an initial duration of one year or longer.
Reminders – the new normal
The ARL will now require an additional reminder message (an email, for example) to be sent to subscribers just before their subscription auto-renews.
The reminder message must be sent to subscribers between 3 and 21 days before renewal (for a 32+-day trial) or between 15 and 45 days before renewal (for a yearlong subscription) and must also:
- Remind subscribers of the date the subscription renews, its duration and cost.
- Instruct the subscriber how to cancel if they wish—and provide them with a link to cancel.
- Include your business’s contact info.
- Make sure the subscriber can see all the above, either by placing it in bigger type, a different font, a different color, or a special box that makes it stand out from the rest of your message.
Don’t forget or flout the law
Violations of the ARL are actionable by private parties—including in class actions—and through public enforcement. ARL noncompliance is enforceable by private plaintiffs under California’s unfair competition law, which permits classwide relief, as long as the ARL violation caused economic injury (Cal. Bus. & Prof. Code § 17200; see also Mayron v. Google LLC, 54 Cal. App. 5th 566, 574 (2020)).
Public enforcement by civil action is also available to the California attorney general, district attorneys and city attorneys (Cal. Bus. & Prof. Code § 17206). As of this writing, we are not aware of any public enforcement actions alleging violations of the ARL. But § 17206 allows for both injunctive relief and statutory penalties, capped at $2,500 per violation. And while public enforcement hasn’t specifically targeted ARL violations to date, it’s still not the kind of free trial you want for your business.