Page 8 - GS210701
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ReadersSpeak
Automatic contract renewals and state law explanation of the price that will be
charged after the trial ends or the
e wish to thank John DeVries, president and manner in which the subscription or
CEO of National Processing Agency Inc., for purchasing agreement pricing will
sending us the following about state laws per- change at the trial's conclusion. It
W taining to automatic renewal agreements: also prohibits a business from charg-
ing a consumer’s credit or debit card,
"California’s Senate Bill 313, which went into effect in 2018, is among the most or account with a third party, for an
stringent legislation pertaining to auto renewal law (ARL). Under the law, a automatic renewal or continuous
business that makes an automatic renewal offer or continuous service offer service offered at a promotional or
that includes a free gift or trial must include in the offer a clear, conspicuous discounted price for a limited time
without first obtaining the consum-
er’s consent.
"In addition, if such an offer includes
a free gift or trial, the business must
disclose how to cancel, and allow
the consumer to cancel before pay-
ing for the goods or services. And
it requires that a consumer who ac-
cepts an automatic renewal offer or
continuous service offer online be
allowed to terminate it, as specified.
"California’s original ARL was al-
ready broader and more detailed
than the requirements of the federal
Restore Online Shoppers’ Confi-
dence Act (ROSCA). The stricter Cal-
ifornia rules came amid a significant
increase in class action litigation on
behalf of consumers under Califor-
nia's original statute, including a re-
cent multimillion-dollar judgment
against EHarmony.
"Under the ARL, a company that en-
ters into an auto-renewal contract
with a California consumer can be
held liable for violations; therefore,
businesses offering goods or ser-
vices on an auto-renewal basis in
California should comply with the
updated rules. In particular, compa-
nies with a free trial or promotional
pricing models should revise their
pre-and post-purchasing disclosures
to comply with the new require-
ments. Class action litigation can be
costly, disruptive and risky for any
businesses."
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