What Is it?
This law deals with consumer contracts that have a renewal feature with recurring payments. The law states that companies that have a cancellation policy on any recurring payments must have those policies outlined ‘conspicuously’. The law defines this conspicuous text as ‘in larger type than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same size, or set off from the surround text of the same size by symbols or other marks, in a manner that clearly calls attention to the language.’
If a company has any recurring billing for a certain feature, that company must state their cancellation policy clearly to the customer. This law also states that a company (not ones operating under a local or state certificate or franchise) must have:
- a clause in their terms that stands out to customers that they can cancel their billing
- an outline for customers on how they’re able to cancel their billing
- a customer’s consent to the agreement
This law was revised and updated in 2018.
Updated the 2018 Bill
In 2018 California’s revised Automatic Renewal Law went into effect. This revision included stricter guidelines. The new revisions first stated that a customer that enrolls in a recurring billing payment, should be able to cancel their recurring billing online. Another updated rule is, if your company offer a promotional gift, etc. your company must notify customers how to cancel your auto-payment before they’re charged. In addition to this, the seller must also let the customer know if what the price will be after the promotion ends. There are easy measures you can take to ensure that you’re in compliance with these new regulations. For example, businesses can make the cancellation process easier for their customers and letting your customers know of any changes before they are implemented.
Consequences
If a company fails to carry out this law, then it could result in a recompense of all the revenue made from renewals collected from those customers in California. This could pose huge potential problems and loss for many companies. Many people didn’t hear about, or looked over, the first introduction of this bill in 2010. The best way to make sure your company is in compliance, is to have regular reviews of your disclosures and contracts. Moreover, this law only applies to people in the state of California. To date their have been several nationally recognized companies, that are currently not in compliance with ARL. So, if a customer wants to file a complaint against a company in violation of ARL, they have to be living in California.