On November 11, 2020, New York Governor Andrew Cuomo signed New York State Senate Bill S01475 into law (the “Law”), which requires marketers to provide clear and conspicuous disclosures in connection with all automatic renewal and continuous service offers presented to New York consumers. This auto-renewal Law will go into effect ninety (90) days after it was signed.
What changes are forthcoming?
New Requirements for Auto-Renewal Offers
The Law amends New York’s General Business Law, requiring businesses that advertise automatic renewal and continuous service offers to New York State consumers to provide clear and conspicuous notice of the following terms:
- The subscription or purchasing agreement will continue until the consumer cancels; and
- A description of the cancellation policy that applies to the offer.
Under the Law, language on a website is not considered clear and conspicuous unless it is presented in a larger font size, a contrasting typeface, or is set off by symbols so that it presented in a manner that “clearly calls attention to the language.” The new auto-renewal Law will also make it unlawful to charge a consumer’s credit or debit card, or to use a third-party to charge a consumer, without first obtaining the consumer’s affirmative consent to enter into the auto-renewal contract. Businesses will also be required to provide consumers with an acknowledgement that includes the automatic renewal offer terms and cancellation policy. In addition, if the offer includes a free gift or trial period, businesses must provide a clear and conspicuous disclosure advising that the consumer may still cancel before incurring a charge.
Auto-Renewal Law Compliance
The New York Law also makes it easier for consumers to cancel automatically renewing offers. For example, the Law provides that a consumer who accepts an auto-renewal offer online must be allowed to cancel the offer renewal “exclusively online.” Please note that if a business sends a product or service to a consumer under an auto-renewal plan without first obtaining the consumer’s affirmative consent, such product or service will be deemed an “unconditional gift” under the Law.
The Law provides the Attorney General with the authority to seek an injunction for violations and allows a court to impose civil penalties of up to $500 for a single knowing violation and up to $1,000 for multiple violations resulting from a single act or incident. Critically, the Law affords businesses the opportunity to avoid liability if they can demonstrate, by a preponderance of the evidence, that the subject violations were unintentional and resulted from bona fide errors that occurred despite procedures designed to ensure compliance with the Law.
As readers know, New York is not the first state to impose strict auto-renewal laws in recent years. Business engaged in auto-renewal consumer contracts must strictly comply with the patchwork of state laws that may affect their activities. Accordingly, it is recommended that companies retain qualified legal counsel to help navigate the statutory and regulatory schemes and emerging issues presented by applicable state and federal law. If you are engaged in promoting automatically renewing, continuous service, or free-to-pay conversion offers to consumers, please e-mail us at firstname.lastname@example.org, or call us at (212) 246-0900 for regulatory compliance assistance.
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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