Assembly Bill 2863 broadens consumer protections for subscription-based services and mandates stricter consent, cancellation and recordkeeping practices
On July 1, 2025, Assembly Bill 2863 took effect, expanding the scope of California's Automatic Renewal Law (ARL). The legislation includes numerous provisions applicable to businesses offering subscription-based or continuous service agreements. Notable updates include:
- Broader coverage – The ARL now applies to subscription agreements that involve free-to-paid conversions, not just paid auto-renewals.
- Affirmative consent requirement – Businesses must obtain the consumer's express affirmative consent to the renewal or continuous service terms.
- Clarity in terms – Contracts may not include provisions that undermine or obscure the consumer's ability to provide valid affirmative consent.
- Verification retention requirements – Businesses must retain verification of the consumer's affirmative consent for a minimum of three years or one year following contract termination, whichever is longer.
- Annual reminders – Consumers must receive an annual reminder that includes the renewal frequency, amount charged and clear instructions for cancellation.
- Matching cancellation methods – Businesses must provide cancellation options through the same channel used to initiate the subscription (e.g., online, phone, in-store).
Next Steps for Businesses
Companies offering products or services that automatically renew should ensure that all customer interactions — from sign-up to cancellation — comply with Assembly Bill 2863. For guidance on how Assembly Bill 2863 may impact your business or to revaluate your compliance program, please contact your Barnes & Thornburg attorney.
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.
