Reporting today on Q1 legislative developments in the auto renewal space.  Briefly, 6 bills were passed (GA, ID, KY, ND, TN, VA) with effective dates ranging between July 1, 2023 and January 1, 2024, one awaiting the governor's signature (IL), and 9 bills introduced with 4 showing some life (CT, NY, PA, RI), and 5 appearing to be go nowhere (MA, MO, NJ, TX, UT).  Only two cultural references in today's report...reply back with the answers and win some Cobalt swag!  No Purchase Necessary, just gotta read the full alert!

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Enacted

Georgia HB 528.   The Georgia Online Automatic Renewal Transparency Act, signed by Governor Brian Kemp on May 3, 2023, effectively replaces the existing state auto renewal law at Ga. Code Ann.,§§ 13-12-2 – 13-12-3. The new law goes into effect January 1, 2024.  The bill almost identically mirrors the CA ARL (especially with respect to cancellation, where consumers who enroll online will have the right to cancel online, “at will, and without engaging any further steps that obstruct or delay the consumer's ability to cancel the …service.”).

The bill does not provide a private right of action.  Civil penalties are not available if a defendant company's violations occurred in good faith.

Idaho HB 116.   Signed into law by Governor Brad Little on March 21, 2023, this bill amends current law 48-603g and becomes effective July 1, 2023.  The bill effectively walks back the current law's requirement to have sellers provide two methods of cancellation, to now just require a single “cost effective, timely, and easy-to-use online mechanism that may include a termination email formatted and provided by the seller, all at no cost to the consumer.”  And it gets better…. while a violation of the law is a violation of the Beehive State's consumer protection act, the amendment expressly states that a violation “does not create a private right of action or serve as a basis for a private right of action under any other provision of law.”  Plus, no civil penalties may be sought against a seller that makes a good faith effort to comply with the law.

Kentucky SB 30.  Signed by Governor Andy Beshear on March 23, 2023, with an effective date of January 1, 2024, this new Blue Grass State law requires sellers to:

• disclose the offer terms clearly and conspicuously (similar to the CA ARL);
• send an order acknowledgment reiterating the terms and how to cancel;
• allow consumers to cancel by calling a toll-free telephone number, sending an email, mailing a letter via USPS (if a bill is sent), or another cost-effective, timely, and easy-to-use mechanism;
• allow consumers who enroll online the ability to cancel online, which may include a seller-formatted termination e-mail; and
• send a notice to customers in the event of a material change to the terms of the offer, with instructions on how to cancel.

The law provides a laundry list of exempt entities and only applies to contracts entered into after the effective date.

The law has a unique and interesting enforcement mechanism; in the case of a first violation, a seller must provide a prorated refund for the most recent paid term based on when the seller is notified of and corrects the error.  If the seller fails to provide a prorated refund or has a second or subsequent violation, the Attorney General may bring an action to obtain: (a) a temporary or permanent injunction against future violations; (b) restitution for consumers who incurred a loss of money or property as a direct result of the violation; and (c) penalties not to exceed $500 per violation.

North Dakota HB  1228.  Signed into law by Governor Doug Burgum on April 7, 2023, this bill expands the scope of the existing auto renewal law N.D. CENT. CODE ANN. § 51-37-02 from the sale of “merchandise” to include services.  Only applies to contracts entered into after July 31, 2023.

Tennessee SB 1449  This companion bill to H.B. 136 was signed by Governor Bill Lee on March 21, 2023, and takes effect January 1, 2024.  Not much to see here, as it only expands the number of entities exempt from the current auto renewal law to include, among others, companies offering motor vehicle extended service contracts, road hazard contracts, dent removal contracts, or motor vehicle key fob replacement contracts.  Obviously a huge relief for all those key fob sellers in the Volunteer State.

Virginia SB 1540.  Signed into law by Governor Glenn Youngkin on March 23, 2023, this bill amends the current auto renewal law at § 59.1-207.46 and becomes effective July 1, 2023.   The law now defines “clear and conspicuous” similar to the California ARL and includes a number of new exemptions from the law.

Passed By Legislature, Awaiting Governor Signature

Illinois SB 328  Introduced on February 2, 2023 and passed by both houses on May 8, 2023, this bill, awaiting the Governor's signature, would amend the current Automatic Contract Renewal Law 815 ILCS 601/1 to (i) prescribe the particular disclosures that must be made to a consumer prior to enrollment, (ii) define “clear and conspicuous” similar to the California ARL, (iii) require an order acknowledgment that includes the auto renewal terms, cancellation policy and information regarding how to cancel (which could be a link to instructions) in a manner that may be retained by the consumer, and (iv) if the offer includes a free gift or trial, how to cancel before the consumer pays for the goods or services associated with the offer.

Introduced With Movement

Connecticut HB 5314.  This bill, which passed the house on May 17, 2023, and placed on the senate calendar two days later, is a confusing and infuriating balagan to comprehend.  It supplements (and does not replace) a similar existing law Conn. Gen. Stat. Ann. § 42-126b, which narrowly applies to only contracts with a specified term of 180 days or more that renews for a period of more than 31 days, and to free trials.

Initial Disclosures.  For electronic or written offers, this new bill would require sellers to present the offer terms in a manner that tracks how the California ARL defines “clear and conspicuous,” but without using that term. All other states following Cali use this defined term, but Connecticut is obviously too cool for that. In the immortal words of Cher Horowitz, “Ugh, as if!”  Oh, and the terms must be disclosed in a manner that may be retained by the consumer.  This may prove particularly challenging where an offer is made online or via an app where a consumer may not have the ability to print the offer page. The required disclosures include:

1. that the subscription will renew unless/until cancelled,
2. how to cancel, and, if disclosed electronically, include a link or other electronic means the consumer may use to take such action,
3. all recurring charges that will be charged to the consumer's payment method, and if the amount of such charges is subject to change, the amount of such change if known,
4. the length of any automatic renewal term for the agreement unless consumers have the ability to select the length of such term,
5. any additional provisions concerning the renewal term,
6. any minimum purchase obligation, and
7. contact information for the business.

Whew! That's a lot, and more than any other state law requires, especially bullets 2 and 7, which require a link to the cancel method for online and app offers, and contact info for the company, respectively.

Cancellation.  Sellers would have to allow consumers the ability to cancel by a calling toll-free telephone number, sending an email or letter via USPS postal mail, and an online means.  Akin to the California ARL, consumers enrolling online must be able to cancel online, at will and without having to take any offline action.  Online cancel options may include (i) a prominently displayed direct link or button located either within the consumer's (1) account or profile, or (2) device or user settings, or (ii) an email message from the business to the consumer, which is immediately accessible by the consumer and to which the consumer may reply without obtaining any additional information.  Sellers would be prohibited from obstructing or delaying a consumer's effort to cancel.

Also like, California, sellers may require subscribers who maintain an account with the seller to enter their account information or otherwise authenticate their identity before allowing them to cancel.  But, a consumer who is unwilling or unable to do this must be allowed to cancel by calling a toll-free telephone number, or sending notice of cancellation via email or USPS to the seller.

Material Change. In the case of a material change to the offer terms, sellers would have to send a notice to consumers identifying the change and how they can cancel.

Free/Intro Trial Periods.  Even though current CT law § 42-126b addresses free trials, HB 5314 is a bit broader, as it includes disclosure and notice requirements for free gift or a trial period, in which case sellers would have to disclose in the offer terms (i) the price that will be charged following expiration of such period, and (ii) how the price might change following expiration of such period.

Notice Following Free/Intro Trials.  Where an offer is made electronically or by telephone and includes a free gift or trial period, or a discounted or promotional price period, the seller would have to send the consumer a notice prior to the expiration of the period disclosing the following information:

1. that the subscription will automatically renew unless and until cancelled,
2. the duration of the subscription,
3. any additional provisions concerning such renewal terms,
4. how the subscription may be cancelled, and
5. if offered electronically, a prominently displayed direct link or button, or an electronic mail message.

As for the timing of this notice, unless the seller does not collect or possess a consumer's email address or telephone number, if the free gift or trial period or discounted or promotional price period is at least thirty-two days in duration (read, generally: more than a month), the notice must be sent “at least twenty-one days after such period commences and not earlier than three days before such period expires,” and if such period is at least a year, the notice must be sent “at least fifteen days but not more than forty-five days before such period expires.”  Aside from the fact that this provision rivals the clarity of a Thomas Pynchon novel, we think these drafters intended the timing to mean 3-21 days and 15-45 days prior to the trial/promo expiration, respectively.  

Request for Written Invoices.  The bill would also require sellers who bill customers by electronic invoice the ability to request and receive these invoices in paper form.

If passed, this bill would become law on October 1, 2023.

New York S382.   Introduced on January 6, 2023, and advanced to a third reading on May 18, 2023, this bill, which mirrors A930 and is not limited to auto renewal contracts, would amend section 391 of the general business law to require any business that contracts with a consumer to allow cancellation using the same method used to enter such contract, including but not limited to, in writing or online.  Will be interesting to see if the drafters considered subscription sales made by telephone or in person.

New York A3245. Introduced on February 2, 2023, and amended for a third reading on May 9, 2023, this bill would amend Sections 3 and 8 of the GBL §527-a to allow consumers who accept  an automatic renewal or continuous service offer online to terminate the contract online, which may include a termination email formatted and provided by the business that a consumer can send to the business without additional information.  It would also require a business to allow a consumer who accepts an automatic renewal or continuous service offer for an initial paid term of one year or longer that renews for a paid  term of  six months or longer, to notify such consumer of the upcoming renewal between 15 and 45 before the date on which to cancel to avoid the charge, and instructions on how to cancel.

Pennsylvania HB 116.  Introduced on March 7, 2023, and re-referred to House Consumer Protection, Technology and Utilities Committee on May 3, 2023, this bill would amend the Keystone State's Unfair Trade Practices and Consumer Protection Law to require any business

entity that makes an automatic renewal or continuous service offer for goods or services to consumers to:

• Provide an order acknowledgment to the consumer disclosing the offer terms, the cancellation policy and information regarding how to cancel the goods or services in a manner that is capable of being retained by the consumer. If the offer includes a free gift or trial, to also disclose how to cancel the goods or services and allow the consumer to cancel the goods or services before the consumer pays for the goods or services.
• Disclose the offer terms in a contract in bold face with a font size equal to the font size of the surrounding text, or a font size of ten points, whichever is greater.
• Allow a consumer who accepts the offer online the ability to terminate exclusively online, which may include an email formatted and provided by the business, without requiring the consumer to provide additional information.
• In the case of a material change in the terms of the offer, provide affected consumers with a clear and conspicuous notice of the material change and information regarding how to cancel the goods or services in a manner that is capable of being retained by the consumer.

A violation would be considered an unfair or deceptive act or practice and subject to the enforcement provisions and private rights of action specified in the Unfair Trade Practices Act.  The law would become effective 60 days after signed by the governor.

Rhode Island. S.B. 171.    Introduced on February 16, 2023, and scheduled for consideration on May 23, 2023, this bill generally (okay, identically) mirrors the CA ARL.  If passed, will go into effect January 1, 2024.

Introduced With No Movement

Massachusetts H 545.  Introduced on February 16, 2023, with no movement since, this is largely a “free trial roll-to-pay” bill, requiring certain enrollment disclosures, affirmative consumer consent, notice to prior to billing and allowing consumers various ways to cancel including in the same method they enrolled.

Missouri HB 1029.  Introduced on February 2, 2023, and other than a public hearing on February 21, 2023, there has been no other activity.  The bill would create a new law, requiring (i) disclosure of the offer terms clearly and conspicuously, (ii) sending an order acknowledgment reiterating the terms and how to cancel,  (iii) allowing consumers to cancel by calling a toll-free telephone number, sending an email, or mailing a letter via USPS (if a bill is sent), and (iv) a notice in the event of a material change to the terms of the offer.   The Attorney General would have the right to enforce the law and there is no private right of action. If signed into law, it would become effective July 1, 2024.

New Jersey A526.  Introduced on January 11, 2023, with no action since, this bill generally mirrors the CA ARL.  Not likely to move.

Texas HB 2165.  Introduced on February 10, 2023, and pending in committee since April 24, 2023, this bill appears stalled.   Pretty consistent with general requirements under most state laws.  Notably, it expressly states there is no private right of action for violations and allows a company to cure deficiencies following notice before the AG can bring an enforcement action.

Utah HB  382   Introduced on February 3, 2023, with no action since March 3, 2023.   Not much to see here in terms of obligations—would require a renewal notice between 30-60 days prior to a renewal and no less than three days prior to the end of a free trial.  Empowers the Division of Consumer Protection to being enforcement actions and levy fines of up to $2,500 per violation.  No express private right of action.