In the State of Vermont, the "Automatic Renewal Provisions in Consumer Contracts" law ("Vermont Auto-Renewal Law") governs agreements entered into between a consumer and a seller that have the following attributes: 1) an initial term of one year or longer; and 2) a term that renews for a subsequent period of time that is longer than one month. As of July 2019, any such contract may not automatically renew unless the seller satisfies several requirements set forth in the Vermont Auto-Renewal law.
What Obligations do Sellers have under the Vermont Auto-Renewal Law?
Most notably, the Vermont Auto-Renewal law has a double opt-in requirement. Specifically, in addition to accepting the contract as a whole, a consumer must take a separate "affirmative action" to opt into the automatic renewal provision itself. These opt-ins occur when the initial contract is accepted. Please note that, prior to prompting the consumer to opt-in, the offer must "clearly and conspicuously" communicate the terms of the automatic renewal provision in plain language and in bold-face type.
In addition to the foregoing double opt-in requirements, Vermont's Auto-Renewal law requires sellers to provide written or electronic notice to consumers between 30 and 60 days before the earliest of: 1) the applicable automatic renewal date; 2) the termination date of the contract; or 3) the date by which the consumer must provide notice of cancellation. This provides the consumer with the opportunity to opt-out and terminate the contract before the automatic renewal term commences. Please note that the auto-renewal law does not apply to contracts with financial institutions, credit unions or contracts for insurance. However, the definition of consumer does include businesses (in addition to individuals), such that business-to-business contracts come within its strictures.
Auto-Renewal Laws – Proceed with Caution
Please note that sellers need to comply with the Federal Trade Commission's ("FTC") auto-renewal rules, in addition to the applicable state laws.
The FTC requires that subscription sign-up processes be clear and conspicuous and include 1) the amount or range of charges; 2) if applicable, any increase in costs after a trial period ends; 3) the recurring basis of charges; and 4) the dates charges will be submitted for payment. In addition, the law requires that consumers are afforded the ability to cancel their subscriptions as easily as they signed up for them. If a seller's subscription plan fails any of the Vermont auto-renewal law and/or FTC requirements, the business will be subject to regulatory action, including potential civil penalties.
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Originally Published by 28 July 2018 and updated on 8 April 2022
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