Businesses with automatic renewal contracts—including subscriptions—should take note of Colorado’s new law that went into effect earlier this year on January 1, 2022.  While companies subject to other state’s auto-renewal laws and the Restore Online Shoppers’ Confidence Act (“ROSCA”) will be familiar with the three-prong approach of upfront clear disclosure, simple cancellation, and ongoing reminders, the Colorado law goes a step further by imposing notice obligations on month-to-month renewals.

Under the Colorado law, any automatic renewal contract must make the renewal terms and cancellation policy “clear and conspicuous” before the contract is accepted.  Clear and conspicuous is defined to mean in larger type than the surrounding text; in contrasting type, font, or color to the surrounding text of the same size; or set off from the surrounding text of the same size by symbols or other marks in a manner that clearly calls attention to the language.  The Colorado law also prohibits use of a link to present the offer unless it clearly discloses that it is a renewal contract.

The Colorado law also requires companies to provide a simple, cost-effective, easy-to-use mechanism for cancelling an automatic renewal contract or trial period offer.  Companies can comply with this requirement through a one-step online cancellation link that is located on the website and available immediately or after the consumer completes a reasonable authentication protocol.

However, perhaps the most notable aspects of the Colorado law are the provisions relating to ongoing reminders.  Similar to previously-existing laws in other states, contracts of one year or more require a renewal notice to be sent between twenty-five and forty days prior to each renewal.  But, the Colorado law also requires such notices for shorter contracts—e.g., month-to-month contracts—with such notice being given twenty-five to forty days before the anniversary of the initial enrollment.  This structure is similar to the new Delaware law, but that law applies only to merchandise and is therefore significantly narrower than the Colorado law.

The Colorado law contains various exemptions, including services regulated by the Federal Communications Commission, entities regulated by the Division of Insurance, bank or bank holding companies, financial institutions licensed under state or federal law, and air carriers.

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