Regardless of whether your interest is home goods or hunting, it is undeniable that companies are quickly embracing the rise of digital when offering entertainment and personal services to consumers. Automatic renewal programs seem to dominate a lot of our world today, think: music, games, television, movies, magazines, meal deliveries, gym memberships, eyelash extensions, and much more. With all of these automatic renewal programs in place, it is easy to see how consumers would forget to cancel certain subscriptions they no longer wanted. Trust us, we know. One of us unintentionally received Seventeen Magazine well into her 20s.
So, you may be asking yourself, are there any legal obligations for companies that offer these automatic renewal programs to notify consumers before auto-renewing the subscription? The answer in many states – whatever the industry – is yes. As more and more services are offered on subscription and renewal bases, companies should familiarize themselves with the applicable state laws that govern this space.
Automatic renewal laws (ARLs) govern, among other matters, the processes for disclosing to consumers upcoming automatic renewals. ARLs vary in scope and strictness state to state and have not been adopted nationally. For example, currently Arkansas’ ARLs only apply to professional home security contracts, and Iowa’s ARLs only apply to gym memberships. Meanwhile, Delaware’s ARLs broadly apply to almost any automatically renewing consumer contract regardless of industry. Delaware’s ARLs mandate companies to provide consumers with a notice of the renewal term no less than 30 days and no more than 60 days before the cancellation deadline if the subscription is for a term of greater than 12 months that will automatically renew for a term greater than 1 month.
Currently, there is a lot of legislative movement in this space. New York is one of the states that most recently signed into law a new automatic renewal bill, which went into effect on February 9, 2021. Massachusetts and Alabama may follow soon, as bills in these states were proposed in February 2021.
In conclusion, it is important for companies who currently offer, or are considering offering, automatically renewing subscription-based goods or services to contact legal counsel for assistance navigating compliance in all applicable states. For questions related to automatic renewal laws, please contact a member of Jackson Walker’s Entertainment, Digital, & Sports practice.
Shannon Zmud Teicher is an advocate and counselor with deep experience in intellectual property, media, and technology. Her practice consists of advising and litigating for clients in the areas of trademark, copyright, social media, advertising, marketing, and entertainment. Representative clients include: web and app developers, e-commerce sites and other online services, traditional marketing departments, established media (TV, radio, newspapers, magazines), new media, as well as fashion and jewelry designers, influencers, and celebrities.
Serene W. Ateek is an associate in both Jackson Walker’s Corporate & Securities group and Entertainment, Digital & Sports group. Her practice focuses on assisting clients in an array of corporate transactions, including merger and acquisitions, startup counseling, private offerings, and general corporate governance matters. Serene has helped social media influencers navigate the Federal Trade Commission’s Endorsement Guides and publishing companies comply with automatic renewal laws across multiple states.
The opinions expressed are those of the authors and do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates. This article is for informational purposes only and does not constitute legal advice.