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On July 1, 2025, California amended its Automatic Renewal Law (ARL) (Cal. Bus. & Prof. Code § 17600 et seq.), enumerating new obligations for businesses and providing enhanced rights to consumers.
Importantly, the new amendments have given rise to a wave of new consumer class action complaints. Law firms such as Pacific Trial Attorneys (Scott J. Ferrell and Victoria C. Knowles) and repeat plaintiffs such as Monica Sanchez, Miguel Esparza, Jose Licea, Tawnya Rodriguez, Rebeka Rodriguez, Luis Licea, and Silvia Garcia have filed dozens of putative class actions in California courts alleging violation of the ARL in recent months. Alleged damages often include full restitution of all charges paid, injunctive relief, and, when combined with related consumer protection laws like the Consumers Legal Remedies Act (CLRA, Cal. Civ. Code § 1750 et seq.), Unfair Competition Law (UCL, Cal. Bus. & Prof. Code § 17200 et seq.), and False Advertising Law (FAL, Cal. Bus. & Prof. Code § 17500 et seq.), significant statutory damages and attorneys' fees.
Like the Federal Trade Commission,1 California's legislature and enforcers2 are focused on auto-renewing or "negative option" products and services: consumer services, subscriptions, and plans that continue until the consumer cancels them or that automatically renew. The ARL also applies to arrangements where a consumer receives a free service or product for a "free trial" or limited period and is charged unless they cancel before the trial period ends.
The 2025 ARL amendments require businesses to clearly and conspicuously state:
(1) when the automatic renewal or continuous service will automatically renew,
(2) the length of any additional terms of the renewal period,
(3) the amount or range of costs the customer will be charged,
(4) the frequency of charges, and
(5) the methods by which the customer can cancel the renewal.
If the notice is electronic, the business must provide a link that directs the consumer to the cancellation process. A business must offer a toll-free phone number, email address, or other easy-to-use cancellation method.
The 2025 amendments3 also require that businesses give the consumer notice at least seven days but no more than 30 days' notice of a change in fee for a renewal service, including instructions on how to cancel. Businesses must also give consumers annual reminders about their auto-renewal or continuous service plan using the same communication method as used to enroll in the plan. The annual reminder must identify: (1) the product or service, (2) the frequency and amount of charges, and (3) how to cancel. If the consumer enrolled in an auto-renewal or continuous-service plan online, they must be able to cancel it online at will, and the business cannot engage in any steps that obstruct or delay the consumer's ability to cancel immediately.
The ARL now also requires businesses to obtain explicit consent before charging customers for auto-renewal products, and to provide a "clear and straightforward" method to cancel unwanted subscriptions. Complying with the clear and straightforward standard can be tricky. For example, one California federal court found that a notice on the page where the customer was asked to choose the length of the subscription with the automatic renewal language did not meet the "clear and conspicuous" standard under the ARL because it was printed in "text that is smaller and lighter in color than all other information on the page". Farmer v. BarkBox, Inc., No. 522CV01574SSSSHKX, 2023 WL 8522984, at *4 (C.D. Cal. Oct. 6, 2023). On the other hand, an overlay with a sufficiently large font and format that shaded the rest of the webpage and prevented users from accessing website content until clicking the "I accept" button was deemed reasonably conspicuous. Kaplan v. Athletic Media Co., 705 F. Supp. 3d 992, 1002 (N.D. Cal. 2023).
Businesses offering subscriptions, free trials that convert to subscriptions, or periodically renewing paid loyalty and incentive programs are strongly encouraged to consult legal counsel to audit their websites, analyze their disclosures, and review their cancellation workflows immediately to avoid costly class action litigation or enforcement actions. For help with ARL compliance, or if your business receives a demand letter or complaint, contact Buchanan's consumer class action defense attorneys.
Footnotes
1 In 2021, the FTC issued an enforcement policy statement signaling its intention to use its existing tools, including the Restore Online Shoppers Confidence Act (ROSCA) (which includes goods and services, requires disclosures of terms, obtaining express consumer consent, and simple cancellation mechanisms) and the Negative Option Rule (16 C.F.R. Part 425) to ramp up enforcement efforts against companies that deceived consumers. Later that year, the FTC issued an enforcement policy statement signaling its intention to use ROSCA and the Negative Option Rule to ramp up enforcement efforts against companies using negative options to deceive consumers.
2 County and city enforcers have formed a coalition, called the California Automatic Renewal Task Force (CART), to collaborate for the specific purpose of autorenewal enforcement. The most recent CART action resulted in a $7.5 million settlement with HelloFresh. That case alleged the company misled consumers into recurring subscription charges without adequate notice or authorization, in violation of the state's Automatic Renewal Law.
3 The ARL was also amended in 2022, that amendment (i) mandated businesses to provide a notice to consumers before a trial period ends, including the term of any automatic renewal and instructions on how to cancel the renewal, and (ii) enumerated requirements allowing a consumer to terminate the automatic renewal or continuous service immediately.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
