New York has enacted a sweeping law that regulates automatic renewal programs (subscriptions) modeled after California's automatic renewal law
The law impacts all membership and other subscription-based business models
It's a trend. New York will join 25 other U.S. states that have passed or enhanced existing automatic renewal laws to address consumer advertising, disclosures, consent, and cancelation
The new law (New York Senate Bill 1475) goes into effect on February 9, 2021.
Key requirements:
- Subscription offer terms must be displayed in more clear and conspicuous type than surrounding text (e.g. in advertising)
- Subscription terms must include the
following disclosures:
- subscription will continue until the consumer cancels
- description of the cancellation policy
- amount of the recurring charges, and that the amount may change, if that's the case, and by how much the amount may change, if known
- length of subscription term or that the service is continuous
- minimum purchase obligation, if any
- The business must first obtain the consumer's affirmative consent to the subscription
- The business must provide a cost-effective, timely, and easy-to-use mechanism for cancellation. There must be an online method of cancelation for online subscriptions
- The business must provide an acknowledgment that includes the subscription terms, cancellation policy, and other information about how to cancel
- If the offer includes a "free gift" or "free trial", the offer must include a clear and conspicuous explanation of the price that will be charged after the trial
- If there's a material change in terms, the business must provide the consumer with a clear and conspicuous notice of the change and provide information about how to cancel
- If there is a violation of this law, the New York Attorney General may seek an injunction and an order for restitution. Courts may impose civil penalties of $100 per violation, or up to $500 per "knowing" violation.
Advertisers and businesses offering memberships or other subscription-based services should take steps to ensure their advertising and consumer terms and conditions comply with automatic renewal laws in New York and other states.
Originally Published by Sheppard Mullin, December 2020
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