We have seen an increase in lawsuits alleging automatic renewal law (“ARL”) violations in the State of California. Because our readers may not be familiar with the ARL and the lawsuits that have followed, we discuss below: (1) the ARL in greater detail; (2) recent ARL lawsuits for alleged violations of the statute; and (3) how to comply with the ARL.
Let’s Discuss the ARL and Ensuing Lawsuits
The intent of the ARL, as stated by the California State Legislature, is “to end the practice of ongoing charging of consumer credit or debit cards or third party payment accounts without the consumers’ explicit consent for ongoing shipments of a product or ongoing deliveries of service.” Codified within California’s Business and Professions Code (“BPC”), the ARL requires companies that offer “continuous services” or “free-to-pay conversions,” as those terms are defined under the ARL, to clearly and conspicuously provide consumers with certain disclosures, including, among other things: (1) presenting the automatic renewal/continuous service terms in close proximity to the request for consent to the offer; (2) obtaining affirmative consumer consent to the agreement’s terms; (3) providing consumers with an acknowledgement that includes the renewal offer/continuous service terms, cancellation policy, and information regarding how to cancel; and (4) providing notice of the following: (a) that the renewal/continuous service will continue unless consumers cancel; (b) the length of the renewal period; (c) the amount or range of costs consumers will be charged and the frequency of those charges, if applicable; (d) one or more methods by which consumers can cancel; and (e) contact information for the applicable business. If companies provide consumers with the aforementioned notice electronically, the ARL requires the notice to include a link that directs the consumer to the cancellation process, or “another reasonably accessible electronic method that directs the consumer to the cancellation process if no link exists.”
Unsurprisingly, Plaintiffs’ attorneys have taken notice of the ARL and lawsuits alleging violations of the law have followed. Although the ARL does not provide a private right of action, lawsuits have used purported ARL violations as the predicate for unfair or deceptive practices claims and/or false advertising allegations under: (1) California’s Consumers Legal Remedies Act; and (2) laws governing unfair competition and false advertising that are contained in the BPC. By way of example, these ARL lawsuits allege, among other things, that companies violated the ARL by failing to provide: (1) “clear and conspicuous” disclosure of cancellation policies; and (2) acknowledgements which include the automatic renewal/continuing service offer terms and information about how consumers can cancel.
If You’re Reading This, It’s Not Too Late for Help with ARL Compliance
As our readers know, California is an extremely consumer-friendly state with numerous laws aimed at protecting California residents. The ARL is yet another example of this, and the spike in recent lawsuits alleging ARL violations highlights the need for companies to hire experienced counsel. The attorneys at Klein Moynihan Turco have decades of experience in advising businesses on California consumer protection/privacy laws and other federal and state consumer protection laws, including defending businesses in regulatory and privately litigated matters.
If you have been named as a defendant in an ARL lawsuit or need assistance with federal and state consumer protection law compliance, please email us at info@kleinmoynihan.com or call us at (212) 246-0900.
The material contained herein is provided for informational purposes only and is not legal advice nor is it a substitute for seeking legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
Attorney Advertising
Photo by Vitaly Gariev on Unsplash
Similar Blog Posts:
California Data Broker Registration is Not Optional!
