On September 24, California Governor Gavin Newsom signed Assembly Bill 2863 into law. The bill amends California’s existing regulations on automatic renewal offers and continuous service offers made to California consumers.
The bill introduces several updates, including changes to the law’s consent requirements. Under the updated law, a business must obtain the consumer’s “express affirmative consent” to the automatic renewal or continuous service terms.
Some of the most significant changes include expansions regarding how a customer may cancel their automatic renewal or continuous service and a new required notice. The ability to cancel must be available in the same medium used for the transaction or the medium in which the consumer is accustomed to interacting with the business. This may include, but is not limited to, in person, by telephone, by mail, or email. Additionally, for toll-free telephone cancellations, calls must be answered promptly during normal business hours, and businesses must not obstruct or delay the consumer’s ability to cancel. If a consumer leaves a voice message requesting cancellation, it must be processed within 24 hours. Moreover, existing law requires that consumers who purchased online must always be able to cancel electronically.
Finally, the bill adds a new annual notice requirement. The notice must identify the applicable product or service, the frequency and amount of the charges, and the means to cancel. This is in addition to the requirement to always send consumers notices regarding the end of a promotional pricing and if material changes occur. The law is set to take effect on July 1, 2025.
Why It Matters
California, which already had the most comprehensive law in place, is again adding additional layers of requirements for businesses with automatic renewal and continuous service offers. Specifically, this comes after California’s Senate Bill 478 went into effect this July, which prohibited “advertising, displaying, or offering a price for a good or service that does not incorporate all mandatory fees or charges.” California’s attorney general now has even more tools at his disposal to regulate businesses and how they interact with consumers.
