CA Automatic Renewal Law Overview
California's Automatic Renewal Law (ARL) is designed to protect consumers from unintended subscription renewals and deceptive business practices. Key provisions of the ARL, including recent amendments from AB 2863 effective July 1, 2025, include:
Clear Disclosure: Companies must clearly inform consumers about automatic renewal terms, cancellation rights, renewal prices, and subscription length before completing the transaction.
Affirmative Consent: Businesses must obtain explicit, affirmative consent from consumers before enrolling them in automatic renewals or continuous service programs.
Easy Cancellation ("Click-to-Cancel"): Companies must allow consumers to cancel subscriptions through the same method they used to subscribe (e.g., online sign-up requires online cancellation options).
Cancellation Transparency: The cancellation process must be straightforward and free from additional barriers or steps that delay or complicate cancellation.
Renewal Reminders: Businesses must send clear reminders of subscription terms, renewal dates, and cancellation instructions at regular intervals (annually).
Penalties and Enforcement: Violations can result in legal action, fines, injunctions, consumer restitution, and potential reputational damage.
“...Must allow consumers to cancel at will, and without engaging any further steps that obstruct or delay the consumer’s ability to terminate the automatic renewal or continuous service immediately.” ”
Assembly Bill 2863 (AB 2863)
In September 2024, California enacted Assembly Bill 2863 (AB 2863), amending its Automatic Renewal Law (ARL) to enhance consumer protections regarding automatic subscription renewals and continuous service offers. A key provision of this amendment mandates that businesses provide a cancellation mechanism through the same medium used for the initial subscription sign-up. This means that if a consumer subscribes online, the business must offer an online cancellation option; if the subscription was initiated via phone, cancellation must also be possible over the phone.
This "click-to-cancel" requirement is designed to simplify the cancellation process, ensuring that consumers can terminate their subscriptions without unnecessary hurdles. The law specifies that the cancellation method must be straightforward, allowing consumers to cancel "at will, and without engaging any further steps that obstruct or delay the consumer’s ability to terminate the automatic renewal or continuous service immediately."
Additionally, AB 2863 requires businesses to obtain explicit affirmative consent from consumers before enrolling them in automatic renewal programs and to send annual reminders about subscription terms, renewal dates, and cancellation instructions.
These amendments will take effect on July 1, 2025. Businesses offering subscription services to California consumers should review and, if necessary, update their subscription and cancellation processes to ensure compliance with these new requirements.
Associated Penalties
Assembly Bill 2863 (AB 2863), enacted in September 2024 and effective from July 1, 2025, strengthens California's Automatic Renewal Law (ARL) by mandating that businesses provide consumers with straightforward cancellation methods, matching the medium used for subscription sign-up. While AB 2863 does not explicitly outline specific penalties for non-compliance within its text, violations of this law can lead to significant consequences under California's existing consumer protection frameworks.
Potential Consequences for Non-Compliance:
Legal Penalties and Fines: Businesses that fail to adhere to the requirements of AB 2863 may face legal action initiated by regulatory authorities or consumers. Such actions can result in court-imposed fines and penalties.
Injunctions: Courts may issue injunctions to prevent businesses from continuing non-compliant practices, compelling them to modify their subscription and cancellation procedures to align with the law.
Restitution and Damages: Companies might be required to provide restitution to affected consumers, refunding charges incurred due to non-compliance. Additionally, they could be liable for damages, including potential punitive damages, depending on the severity and intent of the violation.
Reputational Harm: Beyond legal repercussions, non-compliance can damage a company's reputation, leading to loss of consumer trust and potential declines in customer retention and acquisition.