In the past several years, a handful of states around the country have enacted laws governing the use of automatic renewal and continuous service provisions in consumer agreements. Most recently, Connecticut enacted Public Act No. 23-191 (“Connecticut’s Automatic Renewal Law”), which will go into effect on October 1, 2023. Connecticut’s Automatic Renewal Law prohibits the use of automatic renewal and continuous service provisions in consumer agreements unless certain disclosures and obligations are met. We have summarized some of the key provisions of this law for your reference. Please note that this blog is not intended to include an exhaustive list of the law’s requirements.
SOME KEY DISCLOSURE OBLIGATIONS AND REQUIREMENTS MANDATED BY CONNECTICUT’S AUTOMATIC RENEWAL LAW
Connecticut’s Automatic Renewal Law states that “[n]o business shall enter into, or offer to enter into, a consumer agreement with a consumer if such agreement includes an automatic renewal provision or a continuous services provision, unless . . . ” that business discloses to the consumer:
- That the agreement will automatically renew (or the services will be continued, if a continuous service agreement) until the customer takes action to prevent the automatic renewal or prevent or terminate the services;
- A description of how the consumer can go about preventing the automatic renewal or terminating the continuing services;
- All recurring charges that will be billed to the consumer;
- Length of the automatic renewal term, unless the consumer selects it; duration of the term if a continuing consumer services agreement;
- Any minimum purchase obligations; and
- Contact information for the business.
Additionally, the business must maintain a toll-free telephone number, email address, postal address or other online means that a customer may use to prevent the automatic renewal or to terminate the continuous services. Any material changes in the terms of these agreements must be disclosed before the change takes place, with a description of the how to cancel.
REQUIREMENTS WHEN FREE GIFTS OR TRIAL PERIODS ARE OFFERED
For those consumer agreements offering free gifts or trial periods, Connecticut’s Automatic Renewal Law requires that businesses disclose to consumers, before entering into the agreement, the amount that the consumer will be charged after the trial period ends.
For consumer agreements that are offered electronically or telephonically, and offer, among other things, a free gift, trial period or discounted or promotional price period, the business must disclose that there will be an automatic renewal unless the consumer takes an action to prevent automatic renewal, the length of the term, and a description of how to terminate the automatic renewal.
Where the free gift, trial period, discounted or trial promotional period is at least 32 days in duration, the disclosures must be made at least 21 days after the trial or promotional period commences and not earlier than 3 days before it expires; and if 1 year long, the disclosures must be made at least 15 days before such period expires, but not more than forty-five days before such period expires.
STRICT GUIDELINES ON HOW DISCOSURES ARE TO BE MADE TO CONSUMERS WITH AUTOMATIC RENEWAL AGREEMENTS
Connecticut’s Automatic Renewal Law sets forth strict guidelines for how disclosures to consumers are to appear if the agreement is entered into electronically or in writing (i.e., text size, typeface, font, color, etc.), and telephonically (i.e. cadence, volume). As to consumer agreements that are entered into online, the business must allow the customer to be able to prevent renewal or cancel online, by either a direct link or electronic mail message, as further specified within the law.
CONSUMER’S AFFIRMATIVE CONSENT REQUIRED FOR PAYMENT
It is important to note that no business offering automatic renewal or continuing services agreements may charge a consumer, even if at a promotional or discounted rate, without having “obtained such consumer’s affirmative consent to such renewal or continuous consumer services.”
CONNECTICUT’S AUTOMATIC RENEWAL LAW IS NOT APPLICABLE TO B2B AGREEMENTS
The Connecticut Automatic Renewal law does not apply in the business-to-business context. The law applies solely to consumer agreements, defined as “any verbal, telephonic, written or electronic agreement[s], initially entered into or amended on or after October 1, 2023 between a business and a consumer under which a business agrees to provide consumer goods or consumer services to a consumer.”
NO PRIVATE RIGHT OF ACTION
Connecticut’s Automatic Renewal Law does not provide for a private right of action. The law will be enforced by its Attorney General.
OTHER STATE AUTOMATIC RENEWAL LAWS AND PROPOSED FTC REGULATIONS
In recent years, other states that have enacted laws governing the use of automatic renewal provisions include California, New Jersey and Colorado. Further, the Federal Trade Commission is proposing, among other things, “click to cancel” procedures that would require sellers “to make it as easy for consumers to cancel their enrollment as it was to sign up.”
To ensure that your subscription-based practices comply with state and FTC regulations, it is essential that you consult with seasoned legal professionals. The attorneys at Klein Moynihan Turco have years of experience in providing clients with federal and state automatic renewal law compliance advice.
If you need assistance with updating your marketing practices and procedures, 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 obtaining 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.
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