What to Know About California's New Online Cancelation Law

By Lisa M. Schaffer, Esq. on July 12, 2018 | Last updated on March 21, 2019

In today's busy world, we often overlook a few things, especially if they are not in plain sight. One of those frustrating and costly things is recurring fees for auto-renewal services and recurring purchases. And sometimes those fees could be more than we bargained for, such as "free trial" offers where you get one free month and then a $59/month fee charged automatically to your credit card. Sound familiar?

Perhaps the fees were in small print that wasn't caught. Or perhaps we forgot to put a note in our calendar to cancel the subscription. Now, California has a new law concerning online cancelation. Here's what you need to know.

Surprise Credit Card Charges

This is the common scenario: You find a strange bill on our account, so you call the credit card company about fraudulent charges. But you're told told that it is a monthly fee for a product or service we signed up for, and unfortunately for you, the free-trial, or reduced-rate, has expired.

So, you then need to call the company making the charges to get them reduced or terminated, which is never easy because either they don't pick up or they give the sales hustle all over again. And this all started because of some marketing you saw for their supposedly great product. It can feel a little unsafe to shop online after being burned by these scams, but California is now offering some Consumer Protection around this issue.

California's New Automatic Renewal Law (ARL)

Thankfully for consumers, California Senate Bill 313 was passed to protect consumers from fees associated with "any business that makes an automatic renewal or continuous service offer to a consumer in this state." (Yes, that means Californians are protected as well as people outside of the state if the company also offers the product or service in California.) There are quite a few great consumer protections in this bill:

  • Any "bait and switch" in pricing must be very transparent. If consumers are offered a free trial or gift, there must be a clear and obvious explanation of how much the customer will be charged if they choose to keep the item or continue receiving the service. Same goes for trial pricing that goes to a higher standard price once the trial period has ended.
  • Regarding these changes in pricing or charges for free gifts, consumers are required to be told how to cancel BEFORE they are charged for the gift or the higher subscription price.
  • If the subscription was started online, consumers must be able to cancel it online. No more dealing with fruitless or contentious phone calls with these businesses! One click of a button, and the service is canceled.

This law went into effect on July 1, 2018. If you have been charged in any manner you think violates this bill, contact a consumer protection attorney to see if they can help correct these charges, or if you can join a class action lawsuit against the violator.

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