Washington D.C. is in the process of enacting the Structured Settlements and Automatic Renewal Protections Act of 2018 (the “Act”). In part, the automatic renewal law Act would place new restrictions on businesses that sell goods or services to consumers pursuant to a contract that automatically renews.
What are the key provisions of the Act?
Automatic Renewal Law Notice Requirements
Washington D.C.’s proposed automatic renewal law would require businesses that sell goods or services on a recurring basis to clearly and conspicuously disclose their automatic renewal provisions and cancelation procedures to consumers at the time of purchase (sign up). For contracts with an initial term of twelve months or more, that will automatically renew for a term of one month or more, businesses must notify consumers of the auto-renewal by first-class mail, email or another easily accessible form of communication, such as text message or mobile phone application. This notice must be sent no later than thirty days before the automatic renewal cancellation deadline.
Additionally, businesses that offer free trials of goods or services, with a term of one month or more, must receive the consumer’s affirmative consent to sign up for the automatic renewal program one to seven days before the expiration of the free trial term.
Automatic Renewal Law Compliance
In addition to Washington D.C., businesses should be aware of state level automatic renewal laws, including that of California, as well as the Federal Restore Online Shoppers’ Confidence Act. Businesses that offer free-to-pay conversions and continuity programs should consult with experienced counsel to ensure that they comply with the state and federal automatic renewal laws.