California Makes it Easier for Consumers to Cancel an Online Subscription
California’s law regulating online subscriptions was updated effective July 1, 2018 requiring that accounts opened online must be permitted to be cancelled online.
A consumer who accepts an automatic renewal or continuous service offer online shall be allowed to terminate the automatic renewal or continuous service exclusively online. Cal. Bus. & Prof. Code § 17602 (c).
New provisions also cover free or discounted trial periods. A cancellation notification must be given prior to the end of this period giving the consumer information on how to cancel prior to being charged the new or non-discounted price. Cal. Bus. & Prof. Code § 17602 (a)(3).
Here is a short list of companies who found themselves defending a class action suit based in this California law: Vemma Nutrition; Spotify; Dropbox; Tinder; LifeLock; Birchbox; Google and Apple.
You business should take the following steps to protect against non-compliance:
1. Your auto renewal terms should be stated clearly and conspicuously (including the offering, price, frequency of charges and length of minimum terms).
2. Put a process in place to obtain your client's affirmative consent before they pay and explain to your clients how to cancel online, if the subscription is created online.
3. It is a good idea to send your client a confirmation email with all the relevant offer terms and the cancellation policy before the first payment or before a price increase