With consumer reliance on the internet for shopping continues to rise, California lawmakers have set some of the toughest standards for companies that want to use automatic renewals.
Auto-renew is attractive for companies in the online age. Consumers enter payment information and companies can renew goods and/or services indefinitely and charge a recurring fee. Unfortunately, unscrupulous companies have been known to make cancelation of auto-renew services next to impossible. Consumers also complain that the terms and even the fact that they are signing up for auto-renew are hidden from them until they are hit with a monthly fee on their credit card statement.
Consumers have also banded together to bring class action lawsuit against companies who allegedly used auto-renew deceptively. Spotify, Lifelock, Blue Apron, Tinder, Dropbox, and Hulu have all been hit with class actions over their automatically renewing subscriptions.
Governor Jerry Brown enacted laws requiring companies to meet high standards if they want to hit consumers with auto-renew fees. Under the auto-renew law in California, auto-renew contacts must meet the following standards:
- Clear and conspicuous terms must be provided;
- Consumers must be told how to cancel;
- The cancellation process must be easy and available online;
- Cancellation must be possible before the consumer is hit with a fee following a free-trial or gift;
- Affirmative consumer consent must be obtained prior to charging a non-discounted renewal fee; and
- Any changes to the price or terms must be disclosed to the consumer before they are charges.
While California has enacted the strongest auto-renewal laws, other states have responded with legislation as well. Twenty-two states also have laws about auto-renew. Additionally, over fifty bills over auto-renewal were introduced at the state level in 2017 alone.
The Federal Trade Commission has also taken action against companies who allegedly used deceptive auto-renew to bilk consumers with unexpected fees. In one class action over AdoreMe subscriptions, the FTC required the company to be $1.38 million.
Consumers can take steps to protect themselves from deceptive auto-renew subscriptions while they are shopping online. Before entering in credit card or other financial information, consumers should read the terms. Additionally, experts recommend searching for company reviews to see if other consumers have complained of enrollment in auto-renew. If other consumers have a complaint, consider another company.
Free gifts or trials should be thoroughly reviewed for hidden terms that sign consumers up for an automatic renewal. Consumers should be sure that the company provides clear and easy to follow instructions for canceling the auto-renew. Usually, free gifts and trials must be canceled by a certain date to avoid an auto-renew charge – consumers should take note and be sure to cancel well in advance of that date.
There are also a number of apps that will automatically review consumer credit information and notify consumers of any auto-renew charges. Some apps will even attempt to unsubscribe from the auto-renew automatically.
Consumers who discover an unexpected auto-renew charge can take steps to cancel, if possible. Unfortunately, some companies make it very difficult, if not impossible to cancel auto-renew. Consumers who are having trouble canceling can contact their bank or credit card company to see if they can stop the payments or dispute the charge.
Finally, consumers who are still being hit with unexpected auto-renew charges can contact an experienced attorney at Bradley/Grombacher to help evaluate their claim and take legal action if necessary.