California recently enacted changes to its automatic renewal and continuous service offers ("Offers") statute, which fall into two camps: (1) adding free gifts and trial offers to the existing disclosure and consent requirements and expressly requiring price disclosures, and (2) mandating an online-only cancellation method for offers accepted online. These changes take effect on July 1, 2018.
Free Gift or Trial Offers and Price Disclosures
Under existing law, advertisers must present Offer terms clearly and conspicuously before fulfillment of the subscription or purchasing agreement, and in close proximity (visually or temporally) to the request for Offer consent. Beginning on July 1, 2018, Offers that include a free gift or trial must clearly and conspicuously disclose the "price that will be charged after the trial ends or the manner in which the subscription or purchasing agreement pricing will change upon conclusion of the trial."
Additionally, trial offers are now explicitly covered by that portion of existing law that requires a business to obtain affirmative consent to an agreement containing the Offer terms before charging the consumer. From July 1, 2018, businesses may not charge a consumer for an auto-renewal or continuous service without prior affirmative consent to an agreement specifying the terms, "including the terms of an automatic renewal offer or continuous service offer that is made at a promotional or discounted price for a limited period of time."
Online Cancellation for Online Orders
California's recent amendments also impose an entirely new requirement on businesses to provide an exclusive online cancellation method for Offers accepted online. Beginning on July 1, 2018, "a consumer who accepts an automatic renewal or continuous service offer online shall be allowed to terminate the automatic renewal or continuous service exclusively online." Online consumers are not required to cancel Offers online, but must be given the option, and cannot be required to do anything offline – i.e., place a call or send a letter – in order to cancel an Offer originally accepted online.
The amendments suggest that businesses can comply with this online cancellation requirement through "a termination email formatted and provided by the business that a consumer can send to the business without additional information."
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
