Automatic Renewal Law
Business and Professional Code Section 17600-17606
It is the intent of the Legislature to end the practice of ongoing
charging of consumer credit or debit cards or third party payment
without the consumers'
explicit consent for ongoing shipments of a product or ongoing
deliveries of service.
For the purposes of this article,the following definitions
means a plan or
arrangement in which a paid subscription or purchasing
agreement is automatically renewed at the end of a definite
term for a subsequent term.
(b) "Automatic renewal offer
following CLEAR AND CONSPICUOUS
(1) That the subscription or
purchasing agreement will continue until the consumer cancels.
(2) The description of the cancellation policy that
applies to the offer.
(3) The recurring charges that will be charged to the
consumer's credit or debit card or payment account with a
third party as
part of the automatic
renewal plan or arrangement, and that the amount of the
charge may change, if that is the case, and the amount to
which the charge will change, if known.
(4) The length of the automatic renewal term or that the
service is continuous, unless the length of the term is chosen
by the consumer.
(5) The minimum purchase obligation, if any.
or "CLEARLY AND CONSPICUOUSLY"
means in larger type than than the surrounding
text, or in contrasting
type, font, or color to the surrounding text of the same
size, or set off from the surrounding text of the same
size by symbols or other marks, in a manner that clearly
calls attention to the language. In the case of an
audio disclosure, "CLEAR
AND CONSPICUOUS" and "CLEARLY AND
CONSPICUOUSLY" means in a volume
and cadence sufficient to be readily audible and
means any individual who seeks or acquires, by purchase or
lease, any goods, services, money or credit for personal,
family or household
(e) "Continuous service"
means a plan or arrangement in which a subscription or
purchasing agreement continues until the consumer
cancels the service.
SHALL BE UNLAWFUL
for any business MAKING AN AUTOMATIC RENEWAL OR CONTINUOUS
to a consumer in this state TO DO ANY OF THE FOLLOWING:
(1) FAIL TO PRESENT
the automatic renewal
offer in terms or continuous service offer terms IN A CLEAR AND
MANNER before the subscription or purchasing
agreement is fulfilled and in VISUAL PROXIMITY, or in
the case of an offer conveyed by voice, in temporal
proximity, TO THE REQUEST FOR
CONSENT TO THE OFFER.
(2) CHARGE THE CONSUMER'S
CREDIT OR DEBIT CARD
or the consumer's account with a
third party for an
automatic renewal or
continuous service WITHOUT
FIRST OBTAINING THE CONSUMER'S AFFIRMATIVE CONSENT TO
THE AGREEMENT containing the automatic renewal offer
terms or continuous service offer terms.
(3) FAIL TO PROVIDE
acknowledgement that includes the automatic renewal or
continuous service offer terms, cancellation
policy and INFORMATION REGARDING HOW TO CANCEL in
a manner that is capable of being retained by the
consumer. If the offer includes a free trial, the
business shall also disclose in the
acknowledgement HOW TO
CANCEL and ALLOW
THE CONSUMER TO CANCEL BEFORE THE CONSUMER PAYS FOR THE
GOODS OR SERVICES.
(b) A business making
automatic renewal or continuous service offers shall provide a toll-free telephone
number, electronic mail
address, a postal address only when the
seller directly bills the consumer, or another cost-effective,
timely, and EASY-TO-USE
MECHANISM FOR CANCELLATION that shall be
described in the acknowledgement specified in paragraph
(3) of subdivision (a).
(c) In the case of a material change in the terms of the
automatic renewal or continuous service offer that has
been accepted by a
consumer in this state,
the BUSINESS SHALL PROVIDE
THE CONSUMER WITH A CLEAR AND CONSPICUOUS NOTICE OF
THE MATERIAL CHANGE AND PROVIDE INFORMATION REGARDING
HOW TO CANCEL in a manner that is capable
of being retained by the consumer.
(d) The requirements of this article shall apply only
prior to the completion of the initial order for the automatic
renewal or continuous
service, except as follows:
(1) The requirement in
paragraph (3) of sub-division (a) may be fulfilled after
completion of the initial order.
(2) The requirement in sub-division (c) shall be
fulfilled prior to implementation of the material change.
In any case in which a business
sends any goods, wares, merchandise or products to a consumer,
under a continuous service agreement or automatic renewal of a
purchase, WITHOUT FIRST OBTAINING THE
CONSUMER'S AFFIRMATIVE CONSENT as described in Section
17602, THE GOODS, WARES, MERCHANDISE
OR PRODUCTS SHALL FOR ALL PURPOSES BE DEEMED AN UNCONDITIONAL
GIFT TO THE CONSUMER, who may use or dispose of the same
in any manner he or she sees fit without any obligation whatsoever
on the consumer's part to the business, including, but not limited
to, bearing the cost of, or responsibility for, shipping any
goods, wares, merchandise or products to the business.
(a) Notwithstanding Section
17534, a violation of this article shall not be a crime.
However, all available civil remedies that apply
to the violation of this
article may be employed.
(b) If a business complies with the provisions of this
article in good faith, it shall not be subject to civil remedies.
article shall become operative on December 1, 2010.
The following are exempt from this
requirements of this article:
(a) Any service provided by a business or its affiliate
where either the business or its affiliate is doing business
pursuant to a franchise
issued by a political subdivision
of the state or a license, franchise, certificate,
or other authorization issued by the California Public Utilities
(b) Any service provided by a business or its affiliate
where either the business or its affiliate is regulated by the
CPUC, the Federal
Communications Commission, or the
Federal Energy Regulatory Commission.
(c) Any entity regulated by the Department of Insurance
(d) Alarm company operators, as defined in Section 7590.2
and regulated pursuant to Chapter 11.6 (commencing with Section
of Division 3.
(e) A bank, bank holding company, or the subsidiary or
affiliate of either, or a credit union or other financial
institution, licensed under
state or federal law.
(f) Service contract sellers and service contract
administrators regulated by the Bureau of Electronic and Appliance
Repair pursuant to
Article 4.5 (commencing with
Section 9855) of Chapter 20 of Division 3.
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