Does your business provide subscription services in California? New changes to California’s Automatic Renewal Law for Subscription Merchants will be in effect in July 2022.
California Governor Gavin Newsom signed new legislation earlier this month to protect consumers and increase transparency. So what does this mean? Here is a quick breakdown.
New notice requirements:
1️⃣ For free trials and promotional periods longer than 31 days
・When a consumer accepts a free gift or trial lasting more than 31 days that turns into an automatic renewing offer (“free gift” excludes a free promotional item or gift different from the subscribed product) OR accepts a promotional or discounted price for an automatically renewing offer in which the promotional period lasts more than 31 days
➡️Notice for an upcoming automatic renewal is required at least 3 days before renewal and up to 21 days before the promotion ends
2️⃣ For offers with an initial term of 1 year or longer
・When a consumer accepts an offer where the initial term is 1 year or longer and automatically continues until the consumer cancels
➡️Notice for an upcoming automatic renewal is required at least 15 days before renewal and up to 45 days before automatic renewal offer renews
📝The notice must clearly and visibly state
1) that the automatic renewal or continuous service will automatically renew unless the consumer cancels
2) at least one cancellation method
3) for electronically sent notices, a direct link to the cancellation process or an accessible electronic method to direct the consumer to the cancellation process if a link doesn’t exist
4) length of service and additional terms of the renewal period
5) business contact information
New cancellation requirements:
1️⃣ Merchant must provide an online cancellation process that doesn’t “obstruct or delay the consumer’s ability to terminate the automatic renewal or continuous service immediately.”
2️⃣ Method of cancellation must be provided in one of the formats below:
・A direct link or button prominently located in the consumer’s account, profile, device, or user settings
・An immediately accessible termination email provided by the business in which a consumer can send to the business without additional information
*Businesses may require account authentication prior to cancellation, but they must also permit consumers to cancel offline, such as a toll-free number, should the consumer be unable or unwilling to authenticate their account.
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