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California’s Auto-Renewal Law: eCommerce vendors take note

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eCommerce vendors doing business in California take note.  California leads the country in aggressive efforts to stop automatically recurring charges to consumers.  Under California’s Auto-Renewal Law (Cal. Bus. & Prof. Code § 17600 et seq.), eCommerce vendors must allow online cancellation of auto-renewing memberships that were commenced online.  Requiring customers to cancel these auto-renew subscriptions via phone or mail is no longer be allowed.

The Auto-Renewal Law even applies to promotional offers, such as those including free trials or special pricing, that are followed by automatic charges.  Specifically, “[i]f the offer also includes a free gift or trial, the offer shall include clear and conspicuous explanation of the price that will be charged after the trial ends or the manner in which the subscription or purchasing agreement pricing will change upon conclusion of the trial.”  Cal. Bus. & Prof. Code § § 17602(a)(1). The business must also disclose in the acknowledgement how to cancel, and allow the consumer to cancel before the consumer pays for the goods or services. Cal. Bus. & Prof. Code § § 17602(a)(3).  Businesses that allow for the acceptance of offers online must provide for the termination of the service online as well.  

California’s Auto-Renewal Task Force (CART) is busy bringing suit to stop unauthorized payment renewals; CART investigates businesses for possible state and federal violations of automatic renewal contracts. CART members are prosecutors representing Santa Monica, Santa Clara county, San Diego county and Santa Cruz county.

Better to comply than to be in the crosshairs of CART; companies selling online to Californians should review the Auto-Renewal Law to ensure they are complying with its provisions.

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