Welcome to the Spring Equinox edition of our Q1 2025 auto renewal legislative update (granted, we're about 2 weeks late on the equinox, but we actually started drafting this monster on March 21!).  ICYMI, the Spring (aka Vernal) Equinox marked the day when the Sun crossed the celestial equator, moving from south to north, causing days to become longer and temperatures warmer.  On behalf of the entire Northern Hemisphere, thank you Mother Nature for doing your thing!

TL;DR. No notable developments to report on the FTC's Negative Option Rule, but various inactions related to the Rule suggest our previous expectations of its demise may be wrong!  Intrigue!  And lots of crazy activity happening in the statehouses in Q1, especially in New England, where the Massachusetts Attorney General issued new and unique (Read: troublesome) rules for auto renewal offers (and junk fees) and a bill in Connecticut that would prohibit companies from retaining consumer credit card numbers for future billing.  Yikes!  And speaking of New England, what a great segue to share one of our favorite 80s New Wave ballads from across the pond, Billy Bragg's “A New England.”  We also report below on “usual suspect” bills in Arkansas, Colorado, Maryland, New York, and Oklahoma, as well as some really onerous and farkakteh bills introduced in Georgia, North Carolina and Tennessee.

FTC Negative Option Rule

Briefly… a whole lotta nothing going on.  But in this case, nothing actually means something since non-action could be telling.  As we have previously reported, the Negative Option Rule is currently under attack on more fronts than Napoleon at Waterloo.  We have the consolidated petitions in the 8th Circuit seeking to set aside the Rule for failing to comply with appropriate rulemaking procedures, the possibility of Congress issuing a “joint resolution of disapproval” under the Congressional Review Act (CRA), and an agency chair who voted against the Rule and shares the current administration's disdain for all things rulemaking.  All very meaningful, and all very real.  But what we've noticed recently is that certain actions and inactions concerning the Rule suggest a departure from our (and many others') crystal balling that the Rule will go away.  Instead, based on what we are seeing, which we detail below, there is a strong possibility the Rule will go into effect as scheduled and possibly be used for political purposes.  Hear us out.

First, our last alert reported on a conversation we had with a staffer in Congresswoman Laurel Lee's (R-FL) office who said all rules under the purview of the House Committee on Energy and Commerce (of which Lee is a member) are ripe for a disapproval resolution under the CRA, including the FTC's Negative Option Rule.  The staffer could not, however, give us a firm or even ballpark date when a resolution might be introduced or considered by the Committee.  But given the frenetic pace at which other disapproval resolutions have been introduced (last count, just over 30, with two related to the CFPB here and here, and one from the IRS), the fact that nothing has happened on the Negative Option Rule to date (trust us, we check every day!) suggests it might not happen.  Can't say for sure, but it's possible.

Second, out in St Louis, the consolidated petitions challenging the Rule is ongoing, with the FTC having filed its initial Brief in support of the Rule on March 17, and on March 25 notifying the court of its counsel's availability for oral argument in May and June (which will likely occur after the Rule goes into full effect on May 14).  If the FTC intended to abandon the Rule (admin law scholars keep us honest here), it would have likely withdrawn its objection to the petitions (rather than file a brief in support), effectively defaulting on the case, and thus allowing the 8^th Circuit to decide in favor of petitioners.  And then … poof!  But the FTC continues to actively defend the Rule, so perhaps it wants it to go through?!? The plot thickens!

Last, neither Chairman Ferguson nor his recently appointed Director of Consumer Protection, Christopher Mufarrige, have made any public statement regarding the Rule, which is surprising given Ferguson's voting against it, suggesting they intend to let it come into full effect on May 14.  Why would Ferguson let the Rule go into effect having previously voted against it?  Well, and here we delve into political conjecture we typically try to avoid … it is possible the agency (and by extension, the current administration), may want to selectively enforce the Rule against companies or organizations it views as being hostile to or not “aligned” with the current administration's political agenda.  We don't offer this speculation lightly, but given the current administration's activities to date, it would not be surprising to see it use the Rule in a politicized way to advance it's agenda.  But again, all we can do is crystal ball here.  Hungry for more certainty, well, we hear Vegas puts the odds of the Rule going into effect roughly the same as Duke winning the NCAAM tournament Monday night in San Antonio, so there's that!

Meanwhile in the states:

Massachusetts

The Massachusetts Attorney General recently completed a rulemaking process that addresses hidden (“junk”) fees and auto renewal offers.  Apparently, the MA AG has the authority to develop its own rules under the Massachusetts Consumer Protection Act. Who knew?  Since we're talking about Massachusetts, do you think Alec Baldwin and Marky-Mark Wahlberg knew this when they were tailing Jack Nicholson and his crew for illegally fencing microprocessors in The Departed (“Did you know he was a cawp..I didn't know he was a cawp”)? Regardless, these new regulations are a doozy and go into effect on September 2, 2025. 

First, wrt to junk fees, the new regulations, found at found at 940 CMR 38.00, mirror similar requirements currently in California and proposed in New York and Virginia (among other states) by requiring sellers to disclose the Total Price of a Product (which includes services) as well as “the nature, purpose, and amount of any fees, charges, or other expenses that would be imposed on the transaction due to the purchase of that Product” (i) at the time of the initial presentation of the price, and any subsequent presentation, and (ii) prior to requiring a consumer to provide any personal information, including billing information.

“Total Price” means “The maximum price a consumer must pay for a Product, inclusive of all fees, charges, or other expenses… includ[ing] the maximum price a consumer must pay for any mandatory ancillary Product offered as part of the same transaction…[but not] Government Charges or Shipping Charges.”

Related, the FTC has also addressed the issue of hidden fees in its “Junk Fees Rule” rulemaking, the final version of which was announced on December 17, 2024, and slated* to go into effect 120 days following publication in the Federal Register.  *We say “slated” because FTC Chair Ferguson dissented from issuance of this Rule, like he did with the Negative Option Rule, noting that it was passed during a “lame duck” period under the Biden-Harris administration and suggesting it will never be enforced on his watch, “It is particularly inappropriate for the Biden-Harris FTC to adopt a major new rule that it will never enforce, as the Final Rule will not take effect until many months after President Trump takes his oath of office.  His incoming Administration should have the opportunity to decide whether to adopt rules that it, not the Biden-Harris FTC, will be called upon to enforce.”

Back to auto renewal. The new MA regulations would require companies to disclose clearly and conspicuously (using the FTC's definition) the usual suspect enrollment terms prior to obtaining a consumer's agreement to purchase, but for offers including a Trial Offer (free or reduced price), the terms must also include the actual calendar date (i) by which the consumer must cancel a trial offer to avoid being charged, and (ii) on which the consumer will incur the charge if not cancelled.  The. Actual. Date.  That may be a pickle.

Cancel.  Sellers must provide a “simple mechanism” to cancel the negative option, which must be as easy to access and use as the method to enroll, which must, at a minimum, be in the same medium as enrollment.

Renewal Notice.  For terms longer than 31 days, sellers must send customers a notice between 5 and 30 days prior the date required to cancel to avoid an upcoming charge, reiterating the offer terms, and, here we go again, the actual calendar date (i) to cancel to avoid the charge, and (ii) on which the consumer will be charged.  Really, Massachusetts, why?  The notice must be delivered in the same medium as the enrollment “or through a commonly-used medium that is reasonably calculated to be seen and understood by an ordinary consumer, and that is affirmatively chosen by the consumer to be their preferred method of contact.”  “Affirmatively chosen?”  What?

Payment Receipt.   For renewal terms of 31 days or less… buckle up, this is where its gets bumpy… a seller must send a notice that includes the same disclosures as above, plus, “the amount the consumer has been charged at auto-renewal and instructions as to the mechanism by which the consumer may cancel.”  You read it right, kids… “has been,” as in already charged.  So this is effectively a charge receipt…for even monthly charges!  Who does this?  As some readers may recall, Mastercard had adopted a similar requirement in 2023, but walked it back following merchant uproar, making the receipt requirement only a “suggestion.”  Regardless, the Bay State appears to have picked up this mantle (See 2 Kings 2:13-15) by placing an onerous requirement on all sellers of monthly subscriptions.

The only saving grace here, for both the Junk Fee and auto renewal regs, is an exemption in Section 38:08 declaring the Rule pre-empted by applicable federal law, which may be effective if the FTC's Junk Fee and Negative Option Rule survive the various challenges ahead of them and how broadly (or narrowly) the MA AG interprets the scope of the regulation's preemption.

Connecticut

HB 5744 was introduced in the state Assembly on January 21, 2025.  This. Is. Really. Bad.  It would add a new section to the state general statutes prohibiting a business from requiring consumers to authorize the business to store their credit or debit card information “(A) as a precondition to entering into, or amending, a consumer agreement with the consumer, or (B) for purposes of any automatic renewal provision or continuous services provision.”  Yikes!  If enacted, this bill would effectively prohibit companies from storing consumer card numbers for auto renewal subscription products/services.  Several industry groups submitted testimony opposing the bill at a public hearing on February 19, all arguing it would harm consumers by requiring them to enter their account information separately for commonly used (and often necessary) services such as utility bills, insurance premiums, oil deliveries, and subscription services.  The good news is that there has been no movement on the bill since the February 19 hearing.  But let's not get lazy… companies located in or have a meaningful presence in The Constitution State, pick up the phone or get in the car and head to Hartford to let your voice be heard, stat!

As if that weren't enough, the Connecticut Senate also introduced SB 1357 on February 20, which would amend one* of the state's existing auto renewal laws at Section 42-158ff. (*CT is one of a few states with multiple laws governing auto renewal offers, the second at Sec. 42-126b). The bill would require sellers to disclose the usual suspect offer terms (including free trial terms) clearly and conspicuously (following the California definition) and allow cancellation by phone, email, online or postal mail.  If online, a seller must include a link or other electronic means a consumer may use to cancel.  It would require sellers to provide subscribers with a notice of a material change to the subscription program with instructions on how to cancel. If a free gift/trial period is offered that lasts 32 days or longer (32…wha?!?), the seller must send consumers a notice between 3-21 days before the end of the period at which time the consumer would be charged for the subscription if not cancelled.  If the initial term is for least one year, a renewal reminder notice must be sent between 15-45 days prior.  The bill would exempt any company or division of a company that is regulated by the FCC.  If approved, the bill would become effective October 1, 2025.

Meanwhile, outside of New England…

Arkansas

HB 1820 was introduced on March 17, 2025 and would be a new law for the “Natural State” (yup, that's their motto…its right there in the state's official coloring book!)  We noticed there was not a lot of independent thinking going on in Little Rock as the bill appears to have stolen provisions from been inspired by various other cuckoo regulatory schemes.  The bill generally hits the basics…requires that the offer terms be presented clearly and conspicuously and sending an order acknowledgment.   But here's where it gets funky.  It would require businesses to maintain consumer consents for 3 years or 1 year after the contract is terminated. Um, hello, Arkansas, the FTC proposed this same requirement in the proposed amended Negative Option Rule, but dropped the one year post termination requirement and just kept the 3 year mandate in the final rule.  C'mon, keep up Razorbacks!  The bill also adopts the most confusing part of California's amended ARL, requiring sellers to “send consumers a notice before confirming the consumer's billing information,” whatever that means.  It would require sellers to send a prebill notice (1) prior the end of a free trial lasting more than 31 days (sent between 3 and 21 days prior to billing), and (2) for an initial term of a year or longer, sent 13-45 days prior.

It would allow consumers to cancel via a toll-free telephone number, email, postal mail or any other cost-effective, timely and easy-to-use mechanism, and consumers who enrolled online could cancel online.  Like California, the bill would prohibit a seller from obstructing a consumer's ability to cancel, but allows offering a discount or other benefit (aka save) or informing consumers of the effect of their cancellation.  It would require a notice to be sent (i) of a material change to the program, with instructions on how to cancel, (2) of a price change, between 7 and 30 days prior the change, and (3) an annual reminder in the same media as the consumer enrolled or in which the consumer is accustomed to interacting with the seller.   

Colorado

SB-25 145 was introduced February 5, 2025 and is moving quickly.  It would amend existing law CO Rev Stat, 6-1-732 to allow “one-step online cancellation” by prohibiting the imposition of additional actions that would obstruct or delay a consumer's ability to terminate.  In response to a cancel request, a seller would be allowed to offer a save attempt (discounted offer, retention benefit or information regarding the effect of cancellation) as long as an equally prominent cancel button is presented alongside that offer/disclosure, which, if clicked, would cancel the contract.   The bill would allow the Attorney General to adopt rules to implement and enforce the law. If approved, absent a referendum petition (whatever that is) the bill would, from our reading, become effective 90 days after the Assembly adjourns (but don't hold us to that).

Georgia

HB 529 was introduced on February 2, 2025, is moving quickly in the assembly, and is a doozy!  The “Georgia Online Automatic Renewal Transparency Act” would amend the current auto renewal law at Ga. Code Ann. §§ 13-12-2 – 13-12-3.   It would allow contracts to include an auto renewal provision, BUT it must allow consumers the ability to reject that feature, thus preventing the contract from renewing after the first term. Yup, you read that right!  This right to reject the auto renewal feature must be written in the contract, and be signed by both the seller and consumer.  It would require a renewal notice to be sent for contracts with an initial term of 12 months or more that renew for a specified term or more than a month. For contracts longer than one year, sellers must provide and obtain consumer acknowledgement and affirmative acceptance of their “intention to not cancel.”  The bill includes several exemptions, including financial institutions and services provided by the business or an affiliate that is regulated by the FCC. 

While all of this sounds extremely onerous and counterintuitive for a typical subscription offering, we note that the current law's definition of a “service contract” (“a written contract for the performance of services for a specified period of time”) suggests the law is intended for contracts governing the provision of services by sellers, such as landscaping, repair or the like.  While there is neither legislative history nor case law supporting (or rejecting) this position, as the wording of the definition includes “the performance of services,” it could reasonably mean the rendering of actual services and not necessarily a subscription offering.  We also note the absence of any publicly reported enforcement of the law by the state.

Maryland

HB 107, which is similar to MD SB 1040/HB 1049 (fka SB 49), was introduced on January 8, 2025, and would create a new law for the “Old Line State” or “Free State”(we would have thought it was the “Soft Shell Crab State” or “TerpNation,” but alas, it is neither).  The law would apply to automatic renewal contracts that renew for more than a month following a definite initial term (presumably exempting monthly subscriptions?).  It would require clear and conspicuous disclosure of the offer terms (a mix of CA and FTC), a simple cancellation method and prohibit hindering or delaying a consumer's ability to cancel.  If free trial or gift is offered, the terms must disclose the price if not canceled, and require a notice (i) to be sent 3-21 days before the end of trial with info on how to cancel, and (ii) if the term is for a year or longer, a notice 15-25 days before the date of the renewal.  If sent electronically, the notice must include a link that directs consumers to the cancel process.  Consumers who order online would be allowed to cancel online.  If approved, the bill would become effective October 1, 2025.

New York

SB 5615 was introduced on February 25, 2025, and is currently before the Senate Committee on Consumer Affairs and Protection.  An Assembly companion bill AB 3928 was introduced January 30 and has been passed by that chamber. Both bills would amend the current auto renewal law at GBL 527-a.  The effective date is unclear, as one version of the bill says January 2026 (no precise date, just some time in “January”) and one says 180 days after becoming law.  The bill would require sellers to send consumers an order acknowledgement reiterating the autorenewal or continuous service terms and the cancellation policy and information on how to cancel, in a manner that may be retained by the consumer.  If the offer includes a free gift or trial, the notice must state the price that will be charged at the end of the trial if not cancelled. If the trial is greater than 31 days, the notice must be sent 3-21 days prior to the date by which the consumer must cancel to avoid the charge.  A consumer who enrolls in a service in a particular medium (i.e., phone, online) will have the right to cancel in the same medium, and such methods must be disclosed in the initial order terms.  If the seller will change the amount of a fee under an existing contract, it must send affected consumers a notice between 7 and 30 days prior to the change stating the new fee and instructions on how to cancel.

North Carolina

HB 188 was introduced on February 24, 2025 and would amend existing law at General Statute § 75-41.  Notably, the bill would amend the law to narrow its scope to only contracts with a term greater than a month that auto renews for more than one month. That's good news for monthly-renewing subscriptions (but not others), as the amendment would require offer terms to be presented in 12 pt bold type with “a space beside the [auto renewal] disclosure to be initialed by the consumer acknowledging the consumer's specific consent to this provision of the contract.”  Wait..What?  Initial?  Who does that?  And how would that work for an online order form or over the phone?  For contracts renewing for 6 months or more, sellers must send a renewal notice 15-60 days before the renewal.  The “good news” is that the amendment would only impact contracts entered into on or after the bill's proposed effective date of January 1, 2026.

Oklahoma

Oklahoma HB 1851 was introduced on February 13,2025 and would create a new law in the Sooner State titled the “Oklahoma Fair Renewal Act.”  It would require sellers to disclose offer terms clearly and conspicuously (following CA), but oddly also allowing for a link to the AR terms under certain circumstances.  If that wasn't weird enough, the bill also has a bit of an identity crisis, seemingly not knowing what lane it wants to be in.  The definition of “automatic renewal offer terms” requires disclosing that “an automatic renewal contract will automatically renew or extend after the initial period for a set term not to exceed one (1) year unless the consumer gives express written consent for a longer renewal term.”  Unclear on whether this means a contract cannot renew for a term longer than a year, or that the contract may not renew for more than one year after the initial term absent consumer consent.

The bill would require sellers to send an order acknowledgement reiterating the offer terms and including the methods to cancel, which may be retained by the recipient.  It would require a “simple, cost effective, timely, easy-to-use, and readily accessible mechanism to cancel” and provide a safe harbor for companies that provide a direct link to cancel on the seller's website, consumer's account or profile or contained in an electronic device.  Sellers would be required to send a notice of a material change, and a renewal notice where the initial term is for a year, sent 25-40 days before the renewal.  The bill is silent on the timing for renewal notices for terms less than a year, which is troubling.  The bill includes several exemptions, including for services provided by a company or its affiliates or subsidiaries that are regulated by the FCC or a state insurance or banking department.  If approved, it would be effective November 1, 2025.

Tennessee

SB 302, the “Tennessee Consumer Protection and Subscription Renewal Act” was introduced on January 27, 2025, and is similar to companion bill HB 420.  It would amend and replace the state's current auto renewal law at Tenn. Code Ann. 47-18-133.  Various aspects of the bill are extremely troubling because, in addition to including usual suspect provisions of other state laws (e.g., disclosures, cancel rights), it would also prohibit (i) requiring a consumer to provide a credit or debit card or other payment information as a condition of accepting a free gift or trial, and (ii) charging a consumer for a regular (non-trial) renewal price without first sending the consumer a notice at the end of the trial and obtaining the consumer's consent to be charged.  Yikes! 

Similar to many other state law requirements with regard to a material change to the program terms, this bill would require sellers to send consumers a notice of the change with information on how to cancel, BUT, if the change would result in the consumer “incurring a financial cost,” the consumer must affirmatively consent to the change.  Unclear on what exactly they are getting at here.  Further perplexing is the bill stating that a failure to comply with this requirement (and only this requirement) would allow a consumer to bring an action in court and the court awarding a fine up to $5,000, along with punitive damages and court costs and fees (including atty fees).  Really confusing and odd that this remedy only applies to this provision.

The bill would also require sellers to provide a separate notice that the contract will automatically renew and continue until cancelled, AND obtain the consumer's affirmative consent to the notice.   Two issues here: (1) It is unclear whether this “notice” must be included in the initial enrollment terms, but separate from other information (whatever that means), or in a subsequently sent notice. (2) Does obtaining the consumer's affirmative consent to the notice mean a check box?  We just don't know. 

If the auto renewal will occur more than 60 days following enrollment, the entity with the direct billing relationship with the consumer (Read:  could be a third party platform such as Apple or Google) must “provide a clear and conspicuous notice to the consumer of when” they will be charged.  As above, it is unclear if this means the notice must be included in the initial offer terms or sent later, just before the billing.  If the renewal will occur a year or more after enrollment, the same billing entity must send a notice 15-45 days before renewal.

The bill would exempt several categories of companies governed by other state or federal agencies, such as the FCC.  If enacted, this bill would become effective July 1, 2025.