Subscriptions and auto-renewing payments

It is critical that companies operating in the Subscription industry make note of the California Senate Bill No. 313, which goes into effect on July 1st, 2018 . Subscription customers are currently protected by Section 17602 of the California Business and Professions Code, which, among other things, makes it unlawful for businesses to hide their subscription terms, charge the customer's credit card without obtaining affirmative consent or failing to provide information about how to cancel the subscription.

Senate Bill No. 313 takes that protection to the next level by appending additional guidelines that relate to subscriptions, trials and free gifts. Specifically, businesses will now be required to:

  • Provide a clear explanation of the new price the customer will be charged when their trial is over
  • Obtain the customer's consent to charge their credit card or other account for an automatic renewal at a promotional or discounted price for a limited period of time
  • Allow the customer to cancel the automatic renewal before they pay for the goods or services, if the service offer included a free gift or trial
  • Allow customers who accepted renewal terms online to terminate their automatic renewal exclusively online

For additional information, please refer to the State of California Legislative website.