Washington D.C. Enacts A New Law Affecting Recurring Billing Subscriptions

There is a new law enacted in Washington D.C. which will place new restrictions on businesses that sell goods or services to consumers pursuant

There is a new law enacted in Washington D.C. which will place new restrictions on businesses that sell goods or services to consumers pursuant to a contract that automatically renews. The law is called the Structured Settlements and Automatic Renewal Protections Act of 2018.

This new law would require businesses that sell goods or services on a recurring basis to clearly and conspicuously disclose their automatic renewal provisions and cancelation procedures to consumers at the time of purchase and notify consumers before renewal for any contracts with an initial term of 12 months or more that will automatically renew for a term of 1 month or more before the first automatic renewal and annually thereafter. This notice must be sent no earlier than 60 and no later than 30 days before the automatic renewal cancellation deadline and can be sent by mail, e-mail, text message, or in-app notification.

The requirement of both proper notice and sending a renewal notice is not new to businesses selling on a recurring billing basis. What is new is the additional requirement for free to pay conversions. Businesses offering free trials, for either goods or services, with a free term of at least 1 month must now also receive the consumer’s affirmative consent in addition to the consumer’s initial acceptance of the offer. The wording of the statute is unclear and could require that this affirmative opt-in be acquired by the consumer pursuant to a notice that must be sent 1-7 days before the expiration of the free trial term. One could also argue that the affirmative opt-in could be obtained upon sign up. Either way, this goes further than most laws. Although you might remember that as of this July Vermont also is now requiring an affirmative opt-in acceptance for automatically recurring terms. 

The DC law also explicitly includes any automatic renewals for contracts entered into before the law went into effect.

Obviously, this is a huge change and will affect free to pay conversions. If you sell with a free to pay recurring billing plan feel free to reach out to see what you need to do for compliance with this new statute.

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