This week, California amended its automatic renewal and continuous service offer law (ARL). Key provisions include the addition of “free-to-pay conversions,” consent obligations, misrepresentation prohibitions, request for cancellation procedures, price change notifications, and reminder and recordkeeping requirements. The new law takes effect July 1, 2025.
Express Affirmative Consent Required
The law will require “express affirmative consent” for all automatic renewal and continuous service offers. While the ARL provides no definition, class action plaintiffs’ attorneys, the California attorney general (AG), and California’s Automatic Renewal Taskforce (CART) are likely to interpret it similarly to the Federal Trade Commission’s (FTC) definition of “affirmative express consent,” i.e., “freely given, specific, informed, and unambiguous indication of an individual consumer’s wishes demonstrating agreement by the individual, such as by an affirmative action, following a clear and conspicuous disclosure to the individual.”
In another nod to the FTC, the updated ARL borrows language from the agency’s proposed Negative Option Rule and prohibits companies from including information that “interferes with, detracts from, contradicts, or otherwise undermines the ability of consumers to provide their affirmative consent[.]”
We expect a significant uptick in litigation alleging that a checkbox is required for consent to subscription programs. The law now explicitly requires companies to maintain verification of the consumer’s affirmative consent for at least three years, or one year after the contract is terminated, whichever period is longer.
Requests for Cancellation
In some ways, the law tightens requirements surrounding methods of cancellation. In addition to requiring companies to provide certain cancellation methods, companies must now allow consumers to cancel through the same medium as was used to enroll. For example, if the consumer enrolled via phone, companies must answer promptly and respond to voicemails requesting cancellation within one business day. This codifies the position taken by the FTC and CART and indicates that email or phone cancellation methods would not be sufficient for web- or app-based transactions.
Retention Offers Allowed: Codification of a “One Save Rule”
California will allow companies to present retention offers during the cancellation process by offering discounts, benefits, or other information as long as the company first informs the consumer that they may complete the cancellation process at any time. Once a consumer indicates a request to cancel, the company must promptly process the cancellation. If the consumer attempts to cancel online, the company must simultaneously and prominently display a direct cancellation link or button.
This reflects a stark break from the FTC’s proposed Negative Option Rule, which currently prohibits any “save” attempts unless the consumer has consented to receive them. If the Rule is finalized, it will highlight the difficulties in complying with both federal and state requirements for companies operating nationwide.
Free-to-Pay Conversions, Free Trials Defined
The updated law incorporates “free-to-pay conversions” into the definitions of “automatic renewal” and “continuous service” plans, arrangements, or contract provisions. Often framed as “free trial” offers, these plans allow consumers to test products or services without payment for a limited time. After the trial period, consumers are automatically enrolled in a paid auto renewal/subscription plan. Companies were previously required to disclose the recurring price after the end of free trial periods, but the new update will expand the majority of the ARL’s requirements to all free-to-pay conversion offers.
Material Representations Prohibited
A new provision prohibits misrepresenting, expressly or by implication, any material fact related to the transaction, including, but not limited to, the inclusion of an automatic renewal or continuous service, or any material fact related to the underlying good or service.
This would significantly broaden companies’ potential liability under the law and allow regulators and class action plaintiffs to target companies for any misstatement or misrepresentation of their policies—even if unrelated to the autorenewal program—such as their refund policy, guarantees, and any fees. In fact, it might allow enforcers to file autorenewal lawsuits challenging claims about the underlying product, such as a company’s failure to substantiate claims, failure to disclose material connections with endorsers and influencers, and even “greenwashing” by making allegedly misleading environmental claims. The change codifies the FTC’s approach in recent enforcement actions and the proposed Negative Option Rule.
Change Notification and Annual Reminders
Companies must notify consumers of any changes to an existing autorenewal plan they previously enrolled in. These notifications must be provided no less than 7 and no more than 30 days before the changes take effect.
Annual reminders with specific disclosures—even if the autorenewal term is not one year or longer—are now required. The reminder would need to disclose the automatically renewing product or service, the frequency and amount of autorenewal charges, and the cancel mechanism.
The amendments will only apply to a contract “entered into, amended, or extended” on or after July 1, 2025. Thus, while companies have some time to come into compliance, now is a good time to review your offers.
