Navigating the Legalities of Subscription Services and Automatic Renewals

Americans embrace automatic renewal subscription programs. Renewal programs make it easy to access products and services, and consumers love them. However, regulators and legislators are concerned about consumer deception that can accompany automatic renewal services. People are often unaware of subscription terms, renewal periods, or cancellation procedures.

Learn about consumer protections concerning subscription services and renewals. If you need further guidance, a local consumer protection lawyer can help.

Understanding Automatic Renewal Clauses

We live in an age of subscription services and automatic renewals. Subscription-based goods and services are available in many areas of life.

Recurrent billing allows merchants to bill your debit or credit cards. Subscription renewals are common for streaming services, online marketplaces like Amazon Prime, or software-as-a-service providers like Microsoft 365 or Adobe Creative Cloud.

Automatic renewal describes a subscription service that renews automatically. The automatic renewal terms generally require a renewal at the end of the original contract or after a specific time.

Key Laws Governing Subscription Services

The automatic renewal process is simple enough. But it’s subject to federal and state laws. Automatic renewals are also subject to credit card rules.

Without laws governing subscription services, sellers can cause consumers serious harm. Harm can occur when:

• Sellers mislead you about pricing and other terms and conditions
• Sellers repeatedly charge you for subscription services they do not want
• Sellers make it challenging to understand the cancellation method that will result in ending the subscription
• Sellers fail to obtain your informed consent before enrolling you

The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) have regulatory oversight over specific laws governing automatic renewals. Both federal agencies have brought enforcement actions to stop deceptive and harmful practices impacting consumers.

States Have a Patchwork of Auto-Renewal Laws

Several jurisdictions nationwide have recently updated their business-to-consumer automatic renewal or subscription service renewal legislation. They now require companies to provide consumers with enhanced procedures regarding:

• Affirmative consent from the purchaser
• Notice requirements for consumers
• Clear cancellation policies
• Auto-renewal reminders

Several states, including California, Colorado, Delaware, Vermont, and Illinois, have laws addressing auto-renewals. States are exploring ways to make new laws even more helpful for consumers. Here are a few examples.

California

For example, under California’s automatic renewal law, companies offering a subscription with a term of one year or more or a free trial period exceeding 31 days must give you notice before renewal.

New York

Under New York’s law, businesses offering consumer contracts must adhere to the following:

• The auto-renewal terms must be conspicuous
• The auto-renewal terms must be clear
• The business must obtain affirmative consent from the purchaser
• The business must send an enrollment acknowledgment to the consumer
• The cancellation policy must match the subscription method
• The free trial must have cancellation options
• The business must provide disclosures about any material changes to the agreement

The District of Columbia

In Washington, DC, businesses that auto-bill consumers for goods or services must follow certain rules, such as:

• Clearly and conspicuously disclosing the auto-renewal provision
• Notifying customers at the end of the auto-renewal term that auto-renewal will occur unless the customer cancels the contract
• Notifying customers about the impending expiration of a free trial one to seven days before the trial period’s expiration date

Consumer Rights Under ROSCA

The FTC enforces the Restore Online Shoppers’ Confidence Act (ROSCA), which Congress enacted in 2011. ROSCA is a federal law prohibiting sellers from deceptive practices when selling goods and services. It seeks to protect online consumers from misleading practices and governs online negative-option sales.

For years, the FTC has enforced the Negative Option Rule. This rule addresses pre-notification plans. Negative options include the following:

• Continuous service subscriptions
• Automatic renewals
• Free trial period offers to paid subscription
• Membership clubs

The Federal Trade Commission recently proposed amendments to the Negative Option Rule, including a “click to cancel” provision. This provision would make the cancellation process for continuous services more straightforward for consumers and require subscription-based businesses to make it just as easy for consumers to cancel their enrollment as it was to sign up.

The proposed rule would expand coverage. It would apply to all negative option marketing forms and include all media, such as the internet, telephone, in-person, and printed material.

Disputing Unauthorized Renewals

If a vendor violates your rights regarding an auto-renewal plan, you can take steps to protect your consumer rights. You can dispute a charge for an unauthorized renewal. It’s always best to contact the vendor directly and explain the situation. If that doesn’t resolve the issue, you can do the following:

• Contact your credit card issuer or bank
• Report the fraud to the FTC
• Report the complaint to the Better Business Bureau

If none of the steps you take to dispute the unauthorized renewals bring the resolution you need, you may need to file a lawsuit for financial damages with a consumer protection lawyer. To win, you must prove that the vendor billed you outside the subscription contract terms.

Managing Your Subscriptions

If you don’t live in a state with enhanced protections, keeping up with your subscriptions is critical. It’s a good practice for everyone to keep track of all digital subscriptions. You can:

• Make a list and review it monthly or quarterly
• Set calendar appointments to remind you to perform your review
• Get an app to help you track your monthly subscriptions
• Review your account statements to make sure you’re not missing a subscription on your list

Canceling unwanted subscriptions is easy if they’re billed via Google Play or Apple’s App Store. Follow their respective instructions. If your automatic subscription is billed to a credit or debit card, contact the vendor and opt out. If your best efforts fail, you may need to seek legal help.

Need Help? Contact a Consumer Protection Lawyer

If you were enrolled in an auto-renewal program without your consent or have had trouble canceling a subscription service, contact a local consumer protection lawyer. They can provide legal advice and explain your legal options.