A new law was recently signed by Governor Gavin Newsom in California that goes into effect on July 1, 2022, which adds more requirements to California’s already strict law pertaining to automatic renewal. Some of these requirements are “borrowed” from other states laws that already exist. Some do not. The full language of Assembly Bill No. 390, chapter 450 is available online.

Free Trials

If a subscription company’s offer includes a free or discounted trial period of 31 days or more, they must now send consumers a reminder that the service will renew, and specify the length of the renewal term and explain how to cancel. This notice must be sent between three and 21 days before the expiration of the trial period. [Note the timing for renewal notices below if the initial discounted term is one year to ensure subscription companies comply with both requirements]. Businesses are exempt from this requirement if the consumer did not accept an offer online, and the seller has no phone or email contact information.

Renewal Notices

If a subscription company’s offer of goods or services has an initial term of one year or longer, the company must send a reminder that includes similar information to what is required for free trials. This notice must be sent between 15 and 45 days before the expiration of the term.

Cancellation

California was the first state to require that consumers be allowed to cancel online if they signed up for the goods or services online. The new law adds detailed specificity to this requirement. Subscription companies must provide a cancellation option through a prominently located direct link or button which may be located within a customer account or profile OR within device or user settings.

Companies can also provide cancellation options through an immediately accessible termination e-mail provided by the business that a consumer can send without additional information. At this time, we don’t have details on how this should work.

Businesses can require account information or other methods of authentication online prior to cancellation. However, if a consumer is unwilling or unable to authenticate their account online, companies must permit them to authenticate or cancel offline using another method (e.g., toll-free number, email address, or postal address).

Insider Take

Most of our members are already complying with some, if not all, of these requirements. To ensure they are complying with California’s new law before July 1, 2022, we recommend all subscription companies review their post-sale communications with consumers and cancellation processes and test them out.