California is getting tough on practices that make it difficult for consumers to cancel subscriptions and memberships. If your business offers subscription-based services to California consumers, take note: significant changes to the state’s Automatic Renewal Law (ARL) go into effect on July 1, 2025.
The revised ARL is designed to address consumer frustration with unclear disclosures and difficult cancellation processes. Under the new requirements, businesses must obtain express affirmative consent to renewal terms, provide clear and conspicuous disclosures, and offer easy-to-use cancellation methods. If your business utilizes auto-renewal or continuous service models, now’s the time to double-check your processes and contracts such as your Terms of Use/ Terms of Service.
With the deadline fast approaching, businesses should act now to review and revise subscription flows, disclosures, renewal notices, and cancellation processes to ensure full ARL compliance. Failing to comply could lead to enforcement from state regulators—or lawsuits from private plaintiffs, an increasingly active group in this area of consumer protection.
Key Amendments to California’s ARL:
- Affirmative consent: Businesses must obtain “express informed consent” for recurring charges.
- Clear and conspicuous disclosures before enrollment: Businesses must disclose key terms—such as renewal conditions, billing frequency, cancellation policies, and pricing changes—clearly, conspicuously, and in proximity to the enrollment request.
- Notice requirements: Businesses must notify consumers of any change(s) to auto-renewal plans, price changes, expiration of free trials and promotions, and any material changes in terms. Subscription terms must be repeated in a post-transaction acknowledgement that can be retained by the customer, e.g. an email.
- Annual reminders: Businesses must provide annual reminders for all subscriptions.
- Channel-specific cancellation: Businesses must provide a “cost-effective, timely and easy-to-use” cancellation mechanism, such as a toll-free phone number or e-mail address.
- Click-to-cancel requirement: Businesses must provide “easy and simple” cancellation procedures. Cancellation must be “at least as easy” as signup.
- Prohibition on material misrepresentations: The law prohibits misleading statements or omissions about any material aspect of the transaction, including the renewal terms.
In effect, these developments mark the end of call-to-cancel policies for most online subscription-based businesses. If you accept signups online, you will need to allow customers to cancel online, too.
Bottom line: make sure your subscription practices are as clear and consumer-friendly as possible. July 1 will be here before you know it.
Please contact us should you have any questions about how the updated California ARL may impact your business and to help you update you consumer facing contracts (e.g. Terms of Service/ Terms of Use).
