More and more companies are using auto renewals to charge consumers for goods, memberships and other services on an automatic basis. Some are calling this practice deceptive and consumers should be aware of common auto-renewal practices that companies might use to trick them into spending money.
Auto-renewals refer to schemes where companies store consumers’ bank account information or credit or debit card and then charge them on a recurring basis.
While some companies tout auto-renewal practices as convenient, consumers have been increasingly critical and state lawmakers are starting to listen. However, since more and more consumers are signing up for services or purchasing goods online, it has been easier and easier for companies to implement deceptive auto-renewal practices.
For example, from 1998 to 2004, Time Inc. automatically renewed magazine subscriptions for thousands of consumers without their knowledge. When consumers refused to pay for the subscription, Time was accused of using drastic collection techniques to extract money from those consumers. In 2006, Time agreed to settle a class action lawsuit over their auto-renewal practices and has since paid $4.3 million to more than 108,000 Class Members and agreed to change its billing policies.
Consumers taken by surprise by an auto renewal charge on their credit card or bank statement have also had trouble getting the fee removed, or even getting in touch with the company to stop the renewal.
Companies have also been known to refuse to refund the charge and “forget” to un-enroll the customer who is unaware until they are charged again. Consumers have reported having trouble with websites when they attempt to un-enroll.
Auto-renewal charges are also missed on seldom-used credit cards or bank accounts until the consumer has been charged. Further, unscrupulous companies have been known to covertly enroll consumers in an auto-renewal subscription as a part of a discount or free service.
Currently, state law regulates how auto-renewal practices are implemented. Some states do not regulate the practice, but the law that applies depends on where the consumer is located. This means that even if a company is in a state without an auto-renewal law, they could be held accountable under the auto-renewal laws of the states in which their customers reside.
California and Oregon have enacted tough laws protecting consumers from deceptive auto-renewal practices. In fact, 22 states have laws regulating auto-renewals.
Even consumers in states with no clear auto-renewal laws have protection from deceptive auto-renewal practices. State attorneys general have noted increased concern and consumers who have been hit with an unfair charge should contact their AG’s office. They may also want to look into filing a deceptive auto-renewal lawsuit.
In general, companies who use auto-renewal practices should adhere to a few basic requirements, including;
- Using terms that are clear and conspicuous;
- Obtaining affirmative consent from consumers;
- Notifying consumers of the terms of the auto-renewal;
- Providing clear cancelation terms;
- Notifying consumers of any changes to the auto-renewal; and
- Providing consumers notice of upcoming auto-renewal charges.
An experienced auto-renewal attorney can help if you’ve been the victim of a company’s deceptive auto-renewal policy. They can attempt to get the charges stopped and help you recover money lost to the scheme. An auto-renewal attorney can also help you join a class action lawsuit over a company’s deceptive auto-renewal practice.
If you paid a deceptive auto-renewal fee, the consumer protection lawyers at Bradley/Grombacher want to hear about it. Fill out the form on this page now for a FREE case evaluation.