Regulation of automatically renewing contracts is continuing at the state level with Washington DC. The law which originally passed in March of 2019 has now been funded and will take effect in October 2020.
The Automatic Renewal Protections Act of 2019 now stipulates new requirements, including a second opt-in for contracts that include a free trial before charging the consumer for the automatically renewing paid term.
Here are the details:
- The law requires businesses that offer a product or service to disclose the automatic renewal clause clearly and conspicuously in the contract along with the cancellation procedure.
- If the initial term of the contract is 12 months or more and the contract automatically renews for a term of one month or more the seller must send a renewal notice.
- This notice has to be sent even if, for instance, a first year annual term subsequently renews monthly.
- The annual notice must be sent no less than 30 days and no more than 60 days before the first cancelation deadline for the first automatic renewal and thereafter annually.
- Notices which are sent by mail must be sent by first class mail.
- If renewal notices are sent by email the notices must include an active weblink to allow the consumer to cancel the automatic renewal.
- The law requires that an offer which includes a “free gift or trial” must include a clear and conspicuous explanation of the price that will be charged at after the trial ends, or the manner in which the pricing will change upon conclusion of the trial.
- If a contract provides a free trial of one month or more which automatically renews, the seller must send a notice no later than 15 and no earlier than 30 days before the expiration of the free trial.
- The law also requires that the seller obtain affirmative consent to the automatic renewal separate from the consent to the free trial prior to charging the consumer. There are potentially different interpretations as to when this “second” opt in can be obtained.
The law will apply even to contracts entered into before the effective date. That will require renewal notices where applicable.
