As we anticipated, on September 28th, California’s governor signed into law new requirements for subscription and membership companies with negative option plans.
California SB-313 Advertising: automatic renewal and continuous service offers.
Existing CA law already makes it unlawful for a business that makes an automatic renewal offer or continuous service offer to fail to present the automatic renewal or continuous service offer terms in a clear and conspicuous manner.
On July 1, 2018, the new law will require that if such an offer includes a free gift or trial, the offer must also include a clear and conspicuous explanation of 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 in close proximity to the offer.
Also, if a consumer accepts an automatic renewal or continuous service offer online cancellation must be able to be completed exclusively online, which may include a termination email formatted and provided by the business that a consumer can send to the business without additional information.
Insider Take
California has recognized the potential for confusion with free trials that automatically convert to a recurring charge and is seeking to explicitly require that disclosures are made up front.
