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Are Auto-Renewal Subscriptions Legal?

If you’ve ever been taken by surprise by an auto renewal charge on your credit card or bank statement, you may wonder “are these legal?”

More and more companies and institutions are using auto renewal subscriptions. Under this system, a company will store your credit card information and charge you periodically for a “subscription” to a service, membership, or good of some kind.

Consumers have been complaining about auto renewal subscriptions – they are often missed on seldom-used credit cards or bank accounts until they’ve been charged. Consumers also feel duped when they are covertly enrolled in an auto renewal subscription as a part of a discount or free service offered by the company. Then, when a customer complains, companies often refuse to cancel the fees they’ve already charged and make it a hassle to even cancel the subscription in the first place.

Consumers should be aware that California law requires companies to follow strict regulations to use auto renewal subscriptions and they may be entitled to protection.

California Auto Renewal Subscription Law

In 2010, the California Legislature enacted a law to regulate the use of auto renewal subscriptions. Under California law, auto renewal subscriptions must meet several different requirements;

  • The terms of the auto renewal must be clear and conspicuous;
  • Customers must provide affirmative consent;
  • The terms of auto-renewal and ability to cancel need to be described before the customer consents;
  • Companies must provide consumers with notices of material changes to terms of service; and
  • Companies must also provide consumers with a notice of renewal before charging for the auto renewal.

In California, if a company enrolls you in an auto renewal subscription without your consent, any goods or services they provide you is considered an “unconditional gift.” This means that you get to keep any of the benefits of the subscription and the company must return any renewal fees they charged you; however, recent judicial rulings have limited what consumers can get – if you used the service provided under the subscription, you may not get your renewal fee back.

Additionally, California law requires that companies make it clear how consumers can cancel their auto renewal. Cancellation processes should be easy and not time consuming. For example, the company could provide a toll-free number for cancellations.

Companies that do not adhere to California’s auto renewal subscription law could face penalties. Oftentimes its up to the consumer to file an auto renewal class action lawsuit to force the company to end it’s deceptive practices.

For example, Spotify was hit with a class action lawsuit over its auto renewal policy in California and a number of State Attorney Generals have expressed concern of the unscrupulous use of the practice. Although the practice is legal if companies meet all of the state requirement for the use of auto renewal, many do not.

If you believe you have been charged unfairly for an auto renewal subscription, you may want to contact an experienced attorney. It can be difficult to navigate the various state laws and company policies over auto renewals. Additionally, an experienced attorney can help organize a group of consumers who have been taken advantage of by a company’s auto renewal policy an initiate a class action lawsuit.

Think you have a case to file an auto renewal lawsuit or class action lawsuit? Fill out the form on this page now for a FREE case evaluation by the consumer protection attorneys at Bradley/Grombacher.

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