Vermont’s new automatic renewal law for consumer contracts will likely create twice the work for companies using such programs, as it now requires a double opt-in for auto renewal provisions.
The new law applies to consumer contracts that have an initial term of at least one year and that automatically renew for a subsequent term longer than one month. Business-to-business contracts are also included in the definition of “consumer,” although an exemption is in place for insurance contracts and contracts between a consumer and a financial institution or credit union.
Pursuant to House Bill 593, companies must use clear and conspicuous language in boldface type to explain the renewal terms to consumers. In addition, once a consumer has accepted the new contract, he or she must separately opt in to the automatic renewal provision under the new law.
Written or electronic notice of the auto renewal must be provided to consumers no less than 30 days and no more than 60 days before the contract renews or terminates.
The measure, which became law on May 28 after Governor Phil Scott declined to sign it, takes effect on July 1, 2019. Violations of the terms will be considered unfair and deceptive acts.
To read House Bill 593, click here.
Why it matters: Enacted despite opposition from various Internet companies (including Amazon), Vermont’s double opt-in mandate is the first of its kind. Following the strict provisions recently enacted in California, this new requirement appears to be part of a trend to place heightened burdens on auto renewal programs. Companies making use of such programs should familiarize themselves with the new state laws and prepare for additional regulatory oversight.
