Advertising Law Blog

Effective July 1, 2018, the new California Automatic Renewal Law amends Section 17600 of the Business and Professions Code.  Among other things, the revised law

• Requires businesses making a continuous service offer that includes a free gift or trial to 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;
• Prohibits businesses from charging a consumer’s credit or debit card or third-party account for an automatic renewal without first obtaining the consumer’s consent;
• Requires businesses to disclose how to cancel the continuous service before the consumer pays for the goods or services; and
• Mandates that companies provide an online cancellation mechanism for consumers who accepted the automatic renewal offer or continuous service offer online.

TAKE AWAY: Compliance with the California auto-renewal law is critical for in-state and national advertisers.  California is notorious for private plaintiff actions, including claims under California’s Unfair Competition Law.  In addition, a number of California District Attorneys have begun pursuing auto-renewal programs under a joint task force.   Given the current scrutiny of auto-renewal programs, marketers should take the time to re-examine their auto-renewal programs now before the change goes into effect on July 1, 2018.