California, Vermont and the District of Columbia led the way

Bustin’ Out All Over

Ah, June! It’s a magical month. The Northern Hemisphere has tilted as far as it can toward the center of all warmth and energy – the sun. Life has returned in full bloom. Adorable baby animals are born. Everyone feels entitled to wear shorts.

And, for some reason, auto-renewal legislation is in full swing.

What is it about June that calls forth the efforts of eager statehouse legislators to vanquish shady auto-renewal schemes? We don’t know, but we imagine them loosening ties, rolling up sleeves and kicking off heels in a festival of legislative frenzy.

It’s a rite of spring that produced legislation that spanned the nation, from California to Vermont, last June.

(There is also D.C.’s recent law, but it was enacted in January and doesn’t fit our painstakingly themed intro, so we’d rather not mention it.)

In any case, June 2019 arrived with an auto-renewal legislative package from the North Dakota Legislature, which passed its own law in the beginning of the month. The provisions are similar to law in its sister states, but here’s a brief summary.

Anyone selling products in North Dakota under an automatic renewal (auto-renewal) plan – defined as an arrangement in which a paid subscription or purchasing agreement is automatically renewed for a period of more than one month at the end of a definite period for a subsequent period – needs to present the terms of the auto-renewal in a clear and conspicuous manner, in proximity to the offer, before a subscription is fulfilled. Further, the seller needs to provide an acknowledgment that includes the terms of the auto-renewal offer, information about how to cancel in a manner that the buyer is capable of retaining, and a simple procedure for cancellation that is cost-effective and timely. To be clear and conspicuous, the terms must be “readily apparent, readable, and understandable to the person to which the language is disclosed.” Among other requirements set forth in the new law, the seller needs to receive “affirmative consent” from the customer to the auto-renewal terms.

Further, a seller that offers auto-renewal plans must provide an email, snail mail or text notice for renewals scheduled for more than six months after the initial purchase that lets the customer know that they “may cancel the contract and avoid automatic renewal.” Any seller making changes to the renewal agreement after the fact is required to notify the customer about the change and cancellation instructions.

The North Dakota attorney general is empowered to seek remedies for violations of the new statute. Further, the statute sets forth a private right of action for consumers to bring an action to enjoin a violation or for restitution, or both, and a court may award the plaintiff costs, expenses and reasonable attorney’s fees.

The Takeaway

Companies should audit their auto-renewal programs to assure that they are in compliance with auto-renewal laws. We’ll keep you up to date on other states’ auto-renewal legislation, no matter what season it passes in.