Your credit card gets charged by some company every month and you don’t even remember signing up for a subscription. What can you do?
California’s Automatic Renewal Law can help you stop automatic renewal payments. The California Legislature enacted the Automatic Renewal Law in 2011 to, “end the practice of ongoing charging of consumer credit or debit cards or third-party payment accounts without the consumers’ explicit consent for ongoing shipments of a product or ongoing deliveries of service” After a couple of amendments over the years, including one that is set to take effect on July 1, 2022, here’s what you need to know:
- Companies cannot present you with an automatic renewal offer unless it is “clear and conspicuous.” That means that the automatic renewal offer has to be in a larger font than the surrounding text, in a contrasting font or color to the surrounding text, or set off by symbols or other marks. Takeaway: If you were presented with an automatic renewal offer, take a look at the original agreement to see if the offer was “clear and conspicuous.”
- The clear and conspicuous presentation of the automatic renewal offer has to be made before you sign on the dotted line (or click “accept” in a web transaction). Takeaway: A company can’t tell you, after the fact, that your card is being charged for an automatic renewal.
- If there is a free trial period, the company needs to tell you (before you agree to anything) exactly what it will cost you after the trial ends. Takeaway: This one is pretty self-explanatory -- you aren’t supposed to be surprised at the price of the renewal.
- A company can’t charge your credit (or debit) card for an automatic renewal without first obtaining your “affirmative consent” to the automatic renewal offer. Takeaway: Courts haven’t yet decided what this “affirmative consent” requirement means. In an unpublished decision by the Ninth Circuit Court of Appeals, the court held that this requirement does not mean that the consumer has to give affirmative consent twice -- once to the automatic renewal itself and once to the agreement to charge the consumer’s credit card. The consumer only has to give affirmative consent at the same time to the whole package, i.e., consent to the automatic renewal and to the recurring charges to the consumer’s credit card.
- The company has to provide an easy way for consumers to cancel the service. Takeaway: The company can’t make it unreasonably difficult to cancel. It must provide a toll-free telephone number, email address, or a postal address for cancellation requests. However, if the consumer accepts the automatic renewal offer online, the consumer must be allowed to cancel the service online too. In other words, the consumer who signed up online can’t be made to send a snail mail letter to the company to cancel the service.
On July 1, 2022, the Automatic Renewal Law will change again. The new version will require the company to provide a consumer who either (1) accepted a free gift or trial lasting with a promotional period of more than 31 days or (2) accepted an automatic renewal offer with an initial term of one year or longer with a renewal notice that “clearly and conspicuously” states all of the following:
- That the automatic renewal or continuous service will automatically renew unless the consumer cancels.
- The length and any additional terms of the renewal period.
- One or more methods by which a consumer can cancel the automatic renewal or continuous service.
- If the notice is sent electronically, the notice shall include either a link that directs the consumer to the cancellation process, or another reasonably accessible electronic method that directs the consumer to the cancellation process if no link exists.
- Contact information for the business.
The July 1, 2022 version of the Automatic Renewal Law also makes it easier for consumers to cancel their automatically renewing subscription.
The Automatic Renewal Law is complicated, but the bottom line is that, if you have entered into an automatic renewal agreement with a company, there is a strong chance that the company did not comply with all of the requirements of California law. That means you may be able to hold the company accountable for all of the charges it made to your credit or debit card. So what about those phantom credit charges that you can’t remember ever signing up for? Contact Strauss & Strauss for an evaluation of your situation, as it may be that we can help you get the money owed to you from illegal renewal charges.
Thus, the ARL's core requirements are that: (1) businesses must clearly and conspicuously disclose automatic renewal terms of any offer, as defined by the statute; (2) they must obtain a consumer's affirmative consent; and (3) they must provide consumers with an acknowledgment containing the terms of the automatically renewing offer and cancellation information. See Id. ¶ 23.
Private citizens in California may enforce ARL violations as predicate claims under California's Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code §§ 17200, et seq., which prohibits “any unlawful ... business act or practice[.]” See Id. ¶ 72. Additionally, ARL violations may constitute acts of false advertising in violation of California's False Advertising Law (“FAL”), Cal. Bus. & Prof. Code §§ 17500, et seq. See Id. ¶¶ 93-97. Finally, ARL violations may also constitute violations under California's Consumers Legal Remedies Act (“CLRA”), Cal. Civ. Code §§ 1750, et seq. See Id. ¶ 102-05.