Automatic subscriptions have become a normal part of today’s business model. It allows the consumer to enjoy products and services uninterrupted and without the need to re-enter credit card information or contact the seller. In addition, businesses also enjoy using automatic subscriptions because it gives them a guaranteed steady stream of cash and predictable sales.
At first, many of these automatic subscriptions began as “free trials,” where the business would not charge the consumer’s credit card until the free trial had expired. However, if the consumer failed to opt-out before the expiration of the free trial, the consumer would be charged for the product or service until the consumer explicitly cancelled.
Therefore in 2010, California enacted California Business & Professional Code § 17600 et seq., which now requires each business that engages in automatic subscriptions, to get the explicit consent from the consumer. In effect, this allows the consumer to affirmatively agree to the continued charges before they purchased the product or service.
According to California Business & Professions Code § 17600 et seq., businesses who use automatic subscriptions must first disclose the terms and cancellation policy in a clear and conspicuous manner prior to the consumer’s purchase.
The consumer does not need to be misled or deceived in order for the business to be potentially liable for failing to disclose the terms and cancellation policy in a clear and conspicuous manner. Although no exact disclosure language is required, consumers should be aware of automatic renewal subscription terms that are short, vague, and/or ambiguous are likely insufficient.
Who is Affected?
Consumers who purchased a particular service or product as part of an automatic subscription without a clear and conspicuous disclosure of the terms and cancellation policy prior to the completion of the transaction. For example, this may include:
- Consumers who have purchased a service or product as part of an automatic subscription from any business that failed to disclose the terms and cancellation policy prior to completing the transaction.
- Consumers who have purchased a service or product as part of an automatic subscription from any business that failed to conspicuously disclose the terms and cancellation policy, maybe providing only a link to the terms and conditions which buried in it, contains information about the automatic subscription renewal terms
Additionally, the consumer must be subsequently charged for the continued service or product.
If you believe you were subjected to an automatic subscription that failed to provide clear and conspicuous disclosure of the terms and cancellation policy prior to the completion of the transaction, please call or email us today for a free consultation on your case.