In the fall of 2021, the FTC issued a new policy statement pertaining to subscription offers, automatic renewals and negative option marketing. This seems to have fallen “under the radar” and I want to make sure you are aware!
Automatic Renewals
Automatic renewals and subscription models are used throughout the US in daily life. You may run a business with a community or membership site, you may subscribe to products that are shipped automatically through direct sales companies and/or Amazon, you may pay monthly for streaming services ++
The FTC received complaints from consumers throughout the US that “subscribers” were unaware they were on a subscription and/or didn’t know how to “opt-out” that in October, 2021 they advised they would ramp up enforcement against companies offering subscription services via an autorenewal or negative option offer. There are three main areas in the FTC policy:
- Clear and Conspicuous Disclosures. Any autorenewal or negative option offer should clearly and conspicuously disclose all material terms, including the price, whether the price will increase after a trial period, any recurring charges, the deadline for the consumer to stop the charges, payment submission date(s) for each charge, and all information necessary to cancel the contract.
- Express and Informed Consumer Consent. A company offering an autorenewal or negative option should obtain the consumer’s express and informed consent, which should be obtained separately from any other consents and not obtained via any detracting or contradictory language that muddles the consumer’s ability to give informed consent.
- Ease of Cancellation. A company offering an autorenewal or negative option should provide the consumer with a simple and efficient mechanism to cancel the subscription and offer that mechanism via the same media (e.g., mobile application or website) that the consumer used to enroll in the subscription plan.
To read the policy, here is a link: https://www.ftc.gov/news-events/news/press-releases/2021/10/ftc-ramp-enforcement-against-illegal-dark-patterns-trick-or-trap-consumers-subscriptions
Privacy Law Updates in 2022
State legislatures have long been involved in regulating privacy of various types of information or of specific industry sectors. For example, laws protecting student information, individuals’ social security numbers, medical information and other types of information.
However, consumer privacy issues have grown in importance in state legislatures recently, including in 2022. At least 35 states and the District of Columbia in 2022 introduced or considered almost 200 consumer privacy bills in 2022.
Comprehensive (sometimes also called omnibus) consumer privacy legislation was the most common type of bill being considered—almost 70 bills in at 25 least states and the District of Columbia. Comprehensive legislative proposals generally regulate the collection, use and disclosure of personal information by businesses and provide an express set of consumer rights for collected data, such as the right to access, correct and delete personal information collected by businesses.
Five states have enacted comprehensive consumer privacy laws:
- California Consumer Privacy Act of 2018 (Cal. Civ. Code §§ 1798.100 et seq.) and California Consumer Privacy Rights Act, 2020 (Proposition 24)
- Colorado Privacy Act, 2021 S.B. 190 (Effective July 1, 2023.)
- Connecticut 2022 S.B. 6 (Personal Data Privacy and Online Monitoring) (Effective July 1, 2023.)
- Virginia Consumer Data Protection Act, 2021 H.B. 2307|2021 S.B. 1392 (Effective Jan. 1, 2023.)
- Utah Consumer Privacy Act, 2022 S.B. 227 (Effective Dec. 31, 2023.)
To check what’s happening in your state, here is information from the National Conference of State Legislatures: https://www.ncsl.org/research/telecommunications-and-information-technology/2022-consumer-privacy-legislation.aspx
National Consumer Law Council lists Consumer Law Rights Taking Effect In States in 2022 here: https://library.nclc.org/consumer-law-rights-taking-effect-2022
For our California readers, pay attention to this about automatic renewals. California Automatic Renewal Law: AB 390, signed into law on October 4, 2021, and effective July 31, 2022, amends the California Automatic Renewal Law, Cal. Bus. & Prof. Code § 17602, to require businesses to send notice to consumers explaining how they can cancel online subscriptions before the expiration of a free trial or promotional price that lasts more than thirty-one days.
Users who sign up online must be able to cancel their subscription immediately and at will by either a direct link or button on the website or a preformatted email that the consumer can send without adding additional information. Businesses will be required to send a reminder notice to subscribers fifteen to forty-five days before renewal of a subscription with an initial term of one year or longer.
troutman.com provided this information for Colorado, Delaware and Illinois readers. These states have laws on the books too! In Colorado, Companies must disclose the information in a clear and conspicuous manner before executing the contract.
- The contract will automatically renew or extend after the initial period for a set period of not more than one year unless the consumer gives express written consent for a longer renewal term;
- A description of the cancellation policy that applies to the offer;
- Any recurring charges made to the consumer’s card as part of the autorenewal contract;
- The length of the automatic renewal term; and
- The minimum purchase obligation, if any.
Delaware contains a broad requirement that a company disclose the terms of an automatic renewal contract clearly and conspicuously. Clearly and conspicuously means in a larger type than the surrounding text, or in a contrasting type, font, or color of the surrounding text, or set off from the surrounding text of the same size by symbols or other marks.
Businesses must notify a consumer between 30 to 60 days prior to the cancellation deadline, and such notice should clearly and conspicuously disclose:
- That unless the consumer cancels the contract, the contract will automatically renew;
- The date the contract will automatically renew if not cancelled;
- The date the consumer must cancel the contract to avoid automatic renewal;
- The procedures to cancel the contract; and
- How the consumer may obtain details of the automatic renewal contact (i.e., a phone number, address, a copy of the provision, or access to the contract).
Illinois. While Illinois already has an automatic renewal law, it is adding a provision regarding cancellations.
In the notice provided 30 to 60 days prior to an automatic renewal, any company that makes an automatic renewal offer online must provide a toll-free phone number, email, postal address, or other cost-effective, timely, and easy-to-use mechanism for cancellation. A consumer who accepts an automatic renewal offer online must be allowed to exclusively terminate online, which may include a termination email formatted and provided by the company that a consumer may send without additional information.
Stay Informed
It’s crazy to keep on top of changes these days! Demands at work, home, with family, friends +++ keep life moving pretty fast.
Time for contingency planning seems nuts when you barely have time for now. Yet … I was happy when a fire broke out near me last week that I knew I had my “go bags” ready to go. Thankfully, the firefighters put out the fire quickly. It was a humble reminder that we never know what we don’t know.
When it’s time for you to focus on practical and actionable steps you can take now while you are living, and/or have questions, pop me a note: Lynn@thelivingplanner.com. Or check out my Free Monthly Checklists you can start quickly! https://courses.thelivingplanner.com/f/monthly-checklists
If you’d like general information about what I do and why I do it, my website is: https://thelivingplanner.com and my online courses/resources will give you an idea of what I offer to assist people, pets and businesses on this website: https://courses.thelivingplanner.com
This quote by Thomas Edison says it well. “Good fortune is what happens when opportunity meets with planning.” 💗 — Lynn
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