NOTE: For the latest overview of automatic renewal laws, please view our more recent update on the topic.
From streaming music and television to diaper and grocery deliveries, subscription services have become part of consumers’ daily life. However, while these subscription services — which enable customers to continue receiving a prescribed service, perhaps indefinitely, without having to hit “purchase” for each transaction — are clearly popular, they also create potential for abuse, and consumer protection regulations are beginning to catch up. While merchants are likely familiar with the Restore Online Shoppers Confidence Act (ROSCA), which the federal government sanctioned in 2010, they must now stay abreast of a growing number of state regulations.
Several states have had laws in place for many years regulating “automatic renewals” or “evergreen clauses” in contracts, but these laws regulated a particular service, like home alarm products, health club memberships or home repair services. However, over the last year, individual states have enacted regulations to protect consumers from unknowingly entering into other types of subscription services agreements, including some laws that broadly regulate “service contracts.” The laws spell out what must be disclosed to the consumer and at what point in the transaction it must be disclosed. Some states, like Oregon and California, even specify details on how the consumer must be able to cancel the subscription services. As of today, almost half of the states have some sort of regulation in place, and eleven states are currently proposing bills.
It is important for merchants to stay apprised of and understand these ever-changing regulations, because the penalties for failing to comply can be severe, ranging from rendering the subscription services contract null and void to a violation of the state’s unfair and deceptive practices act.
To help merchants prepare for and comply with all state laws, we’ve created a survey of automatic renewal laws in all 50 states. The guide includes detailed overviews of existing automatic renewal laws in each state, as well as up-to-date information about proposed automatic renewal laws currently pending legislative action.