This alert provides an update on California’s consumer subscription auto-renewal statute which has now been in effect for over a year. Auto-renewal subscription arrangements, which renew or continue until cancelled by the consumer, are permissible if they satisfy specific communications requirements under California’s SB 340 (Business and Professions Code Section 17600), which is consistent with but more concrete and specific than Federal Trade Commission (FTC) requirements. The consumer’s initial order or commitment to an auto-renewal purchase of goods or services must be preceded by required disclosures: that the subscription will continue until the consumer cancels; a description of the cancellation policy; the initial amount of the recurring subscription charge, and that it is subject to future change; the length of the auto-renewal term (e.g. one year); and any minimum purchase obligation (e.g. a one-year subscription). Such information must be “clearly and conspicuously” presented, and in “visual proximity” (close by) any onscreen subscription offer or order button. The consumer must receive a written order acknowledgment “that is capable of being retained”, such as a printable email, including an email address or toll-free telephone number for the seller offering an “easy-to-use mechanism for cancellation”. The consumer must also be given a chance to cancel a free-trial service before being charged.
This auto-renewal law does not apply to a business operating under a local, state, CPUC or FCC certificate or franchise, or its affiliates, nor to insurance companies, banks, alarm company operators, and other regulated businesses. (Bus. & Prof. Code §17605)