Online marketing plans which have recurring billing models are convenient and beneficial to both consumers and marketers but be aware that in the wake of the booming subscription-based business model a number of states are enacting or updating their laws to strengthen consumer protection.
As previously reported, California’s recently enacted Senate Bill 313 enhances what was already one of the most stringent auto-renewal laws in the United States.
As of July 1, 2018, the revised law will now also require that:
- any continuous service offer which includes a free gift or trial, include in the offer a “clear and conspicuous” explanation of the price that will be charged after the trial ends or the manner in which the pricing will change upon conclusion of the trial;
- businesses obtain the consumers’ consent before charging a consumer for the automatic renewal;
- businesses disclose how to cancel before the consumer pays for the goods or services; and
- any offer accepted online must now also allow consumers a mechanism for cancellation online. This is an important change for marketers and will prevent inbound phone cancelation save attempts.
In addition to California notorious class action lawsuits, California District Attorneys are now pursuing marketers under the California Auto Renewal Task Force (“CART”) to enforce of California’s laws.
Insider Take
Given the current scrutiny of subscription-based recurring billing programs, particularly in California, marketers should take the time to re-examine their auto-renewal programs well before the new requirements go into effect.
