What You Need to Know About Auto Renewal Laws in California

What You Need to Know About Auto Renewal Laws in California

Auto-Renewal Laws Have you ever had the experience of signing up for that irresistible free trial only to discover a couple of days or weeks later that your credit card has been charged a ludicrous amount of money for a monthly subscription? Usually you put your credit card information in and get your first month or first product free or at a steep discount. But it’s not just the first month – you’re now signed up to pay every month going forward. It can be infuriating, especially when the original offer is misleading and you don’t realize you’re going to be on the hook for more payments. California’s lawmakers realize the problems inherent in signing people up for paid services they don’t want or didn’t consent to, so they’ve put laws in place to govern the use of auto-renewal programs.

These kinds of auto-renewal offers seem to be on the rise for consumers, many of whom don’t even realize that they are on such a plan until the charge hits their credit card. At that point, it might even be too late to have the charges reversed – unless you can show that the company violated California’s auto renewal law.

California’s Auto Renewal Law

The auto renewal law is outlined under the California Bus. and Prof. Code § 17600. California’s auto renewal law is applicable for any arrangements where a purchasing agreement or paid subscription is automatically renewed until the consumer cancels it. The law mandates that businesses disclose their subscription terms in a clear and conspicuous manner, including details about how to cancel the service or item to begin with, and that they get affirmative consent before any consumer’s credit or debit card is charged on a recurring basis. This applies not just to online subscriptions but those obtained via telephone or hardcopy methods.

This statute in California actually came about due to a number of reports that magazine and music subscriptions were continuously charging consumers without consumers being aware that this would happen. Many different companies have already been hit with lawsuits in this manner, including SiriusXM, Dropbox, Birch Box, Blue Apron, Hulu, Spotify, Sea World, and even Tinder.

The establishment of these rules have led to a surge in consumer class action lawsuits arguing that many businesses across the state are providing subscription-based services or goods to California consumers and sneakily signing them up for auto renewal features.

What Terms Need to Be Disclosed by a Business?

The law requires that businesses clearly and conspicuously (meaning it can’t be hidden in fine print or confusing legalese) inform customers of all relevant terms, including:

  • That the subscription or purchasing agreement will remain active until the consumer cancels
  • Whether there are minimum purchase obligations and what those minimums are
  • An explanation of the cancellation policy associated with the offer
  • The length of the automatic renewal term or the details about continuous service unless the term length is chosen by the consumer
  • Details regarding the recurring charges that will be charged to the debit or credit card with a third party and the amount that could change

In addition to these details, the business is also responsible for providing consumers information about:

  • A cost-effective and easy-to-use mechanism for cancelling
  • The automatic renewal of continuous service offer terms

What Should I Do If I Think a Business Violated These Laws?

The California auto-renewal law was put in place to protect consumers and if you believe that a company has violated these rules, you need to consult with an experienced attorney about your rights. Gather all the information you received from the company when you signed up for their initial offer and copies of when your credit card or bank account was charged. Putting together a chronological story can help you prepare for an initial meeting with an attorney. If you were misled by an auto-renewal subscription, you may be entitled to take part in a class action lawsuit or to make a personal claim for a refund and other damages.


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