Many consumers may have enrolled in automatic renewal services without even knowing about it. It is not uncommon for businesses to offer discounts for auto-enrollment, but they fail to adequately disclose the nature of the transaction. Consumers appreciate the cost savings and efficiency of these automatic renewals, but there are times where consumers find themselves being auto deducted for services they never contracted to receive.
WHAT MUST BUSINESSES DO TO COMPLY WITH AUTOMATIC RENEWAL LAWS IN CALIFORNIA?
California has some of the strictest laws and regulations in the country for just about any area affecting consumers, such as consumer false advertising, wage and hour laws, carcinogenic product labeling, and more. It is not surprising that automatic renewal laws in California are some of the strictest as well.
California's automatic renewal laws are contained within the California Business and Professions Code 17600-17606. These laws were enacted on December 1, 2010.
Under the California automatic renewal laws, businesses are required to adhere to the following:
The business is required to present the terms of the automatic renewal clause in "clear and conspicuous" language which should be set apart from the surrounding text by using a larger type, contrasting font or color, and set aside by symbols or other marks in such a way that "clearly calls attention to the language" of the automatic renewal terms.
The business is required to obtain affirmative consent from consumers before charging their credit card or debit card account for the automatic renewal of the subscription-based service.
The business must provide an acknowledgment that describes the automatic renewal clause was offered. It must include terms of the continuous renewal as well as the related cancellation policy. Information on how to cancel the subscription must be "capable of being retained by the consumer." Notice of material changes to the terms of service must be clear and conspicuous as well.
Under section 17603 of the California Business and Professions Code, the regulation states that if a business sends goods or products to a consumer without having first obtained affirmative consent from the consumer, "the goods, wares, merchandise, or products shall for all purposes be deemed an unconditional gift to the consumer" and the consumer shall not bear the responsibility of any related costs for the items or their shipping.
FEDERAL AUTOMATIC RENEWAL CLAUSE ENFORCEMENT
States must not only comply with their state-specific automatic renewal laws, but they must also follow regulations specified under the Federal Trade Commission's Act, 15 U.S.C. Section 41, et seq., which sets up requirements for companies to disclose their auto-renewal clause policies in an honest and clear manner.
Some automatic renewal lawsuits filed under this FTC Act have involved free trials of a subscription-based service where the company charged the consumer for the service after the trial had ended.
HAS THIS HAPPENED TO YOU?
If you believe a company may have violated automatic renewal laws, you may be eligible to file an automatic renewal lawsuit in order to recover damages.
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