State legislatures throughout the country are increasingly enacting laws to protect consumers online. Many of these new laws address a person’s digital interaction with a company’s website, including the purchase and, automatic renewal of, a subscription. The root of these regulations seems to concern the level of consumer awareness and need to obtain informed consent before charges are incurred. As readers of our blog know, California, in particular, recently strengthened its automatic renewal laws. For example, as of July 1, 2022, companies offering automatically renewing subscription services to California State customers must, among other things, clearly and conspicuously notify consumers, within the applicable notice period, of how to cancel their subscriptions. New Jersey is one of a group of jurisdictions to follow suit with a newly-approved law.
What are the Important Legal Requirements Contained in New Jersey’s Automatic Renewal Law?
The New Jersey regulations will go into effect on August 1, 2023, and apply only to a “service contract,” which is defined as a contract or agreement between a provider and a consumer. The statute describes a number of applicable service-related contracts (such as maintenance, repair, or service of property), as well as items and situations that are not covered. Please note that these regulations only apply to consumer service contracts that are for a period of 12 months or longer, and which automatically renew for a period of more than one month (unless the consumer cancels the subject contract).
Significantly, service providers must provide the consumer with written or electronic notification of the automatic renewal provision. The law specifies that “[n]otification shall be provided to the consumer not less than 30 days nor more than 60 days before the cancellation deadline pursuant to the automatic renewal provision.” It further indicates that such notification shall disclose, clearly and conspicuously:
(1) that unless the consumer cancels the contract, the contract will automatically renew; and
(2) methods by which the consumer may obtain details of the automatic renewal provision and cancellation procedure, whether by contacting the provider at a specified telephone number or address, by referring to the contract, or by any other method.
How do these New Automatic Renewal Laws Impact your Business?
Business owners who offer automatic renewal subscription programs (as well as free-to-pay conversion and/or continuity plans) must be aware of applicable laws and regulations, or else face the prospect of significant fines and penalties. As states update and strengthen their laws to protect consumer rights, it is important to address these regulations, provide requisite notice, and obtain consumer express consent. The attorneys at Klein Moynihan Turco have years of experience dealing with federal and state automatic renewal law compliance across the country.
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.
Related Blog Posts: