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States Crack Down on Problems With Automatic Renewals

Have you ever signed up for a service and then noticed a new charge on your account a month or a few months later? If so, you’re not alone: a growing number of consumers are frustrated with automatic renewal practices companies use to sign you up for subscriptions.

Automatic Renewals More Popular Than Ever

Consumers are becoming more familiar with automatic renewal services, however, some companies are not providing enough information upfront to make it clear that a renewal charge will ultimately be assessed. The automatic renewal practice is showing up in various consumer contracts of all different types.

When consumers try to cancel the service, it’s often difficult and confusing and can take more time and garner more frustration on the buyer’s part. For other people who feel duped by automatic renewal practices, it’s more about the fact that companies don’t clarify on their websites, checkout pages, or other literature that the person is actually signing up for automatic renewals.

Consumer groups and legislators are noticing the widespread use of this difficult-to-spot practice and many states already have laws on the books about it. Other states are looking to add automatic renewals restrictions.

A growing number of consumer complaints associated with this practice has led to a surge in state activity of restricting these forms of automatic renewals or at least requiring that the companies provide consumers with information in the form of disclosure.

Legislation that would restrict auto-renewals have already been introduced in eight states, and 22 states already impose requirements on some automatic renewal contracts. In states like Oregon and California, the laws will apply to the vast majority of consumer contracts. Cancellation notice instructions and specific disclosure requirements must be provided to consumers, in addition to ways to make canceling relatively simple for automatic renewals.

Only certain types of businesses are targeted by the laws in other states like in Arkansas and New Hampshire, where home security companies and health clubs must comply. The primary purpose of all of these updates at the state level is to give consumers the relevant information before they sign a contract and to empower them with the information to cancel the subscription or renewal service down the road if they wish to do so.

Advocates for these requirements argue that these are necessary to protect consumers from entering unknowingly into renewal agreements and then forcing the customer to pay up for a service or product they never wanted.

Companies making use of automatic renewal services believe that these new rules are unnecessarily burdensome and that a network of different requirements state by state can make it extremely challenging for national companies that do business in multiple places.

However, legislators are looking for ways to assist with cutting down the number of consumer complaints and making it easier for consumers to understand upfront what they are responsible for as well as the action they need to take if they choose to cancel.    

Have you already been affected by automatic renewals and think you have a legal claim? Talk to the experienced lawyers at Bradley/Grombacher to learn more about your rights. Fill out the form on this page for a FREE case evaluation. 


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