Has a business or service charged you an automatic auto-renewal fee? Want to know whether the auto-renewal fees are legal or appropriate? Well, it depends on the auto-renewal laws of the State you live in.
Slightly fewer than half of U.S. states have automatic renewal statutes that govern how and what businesses need to disclose to a consumer when an agreement contains an auto-renew clause. Automatic renewals are when a goods or service provider bills you periodically without getting your express consent before each time it bills you. This is common with gym memberships, where you sign up once but are charged monthly for your membership without the gym calling you each month to ask you if it is okay. You can go a year without ever seeing or talking to anyone from that gym yet still be billed each month.
Automatic renewals can be convenient for both the consumer and the business, provided that both parties are on the same page. Some businesses may try to take advantage of the fact that consumers may not realize they are agreeing to automatic renewals or are likely to forget about them. Many states have passed auto-renew laws to give consumers more clarity about when these provisions apply and what they entail, though there are differences depending on the state.
One of the most robust auto-renew laws is in California. California law requires businesses that offer good or services through auto-renew to ask for consent from consumers for automatic renewal and to provide conspicuous language explaining the terms. The business must also offer a cheap and easy way for customers to cancel their subscriptions, such as a toll-free number or an email address. Connecticut, Illinois, and Oregon have similar laws.
While California’s law applies to all kinds of goods and services, other states have narrower laws. For example, Florida and Georgia’s laws only apply to services. Even more narrowly, New York and Utah’s laws only apply to service contracts for repair or maintenance of real or personal property. Many other states’ automatic renewal statutes only apply to very specific categories, such as health clubs. This is true for Maryland, New Hampshire, and South Carolina. Similarly, Rhode Island’s law only applies to leases of personal property, Tennessee’s only applies to alarm services and buyers clubs, and South Dakota’s is only relevant to telecommunications contracts.
Further, the remedies available for consumers also vary. In a state with a broad law like California, there is a private right of action for consumers to sue the business. Conversely, in more narrowly protective states, violations of automatic renewal laws may constitute grounds to sue under unfair business practices laws, or merely be void and unenforceable parts of the contract.
Different states sometimes have substantively different laws, as is the case for automatic renewals. Consumers need to find out the laws of their state so they know what requirements and protections apply.
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Sergei Lemberg is an attorney focusing on consumer law, class actions related to automotive issues, and personal injury litigation. With nearly two decades of experience, his areas of practice include Lemon Law (vehicle defects), Debt Collection Harassment, TCPA (illegal robocalls and texts), Fair Credit Reporting Act, Overtime claims, Personal Injury cases, and Class Actions. He has consistently been recognized as the nation's "most active consumer attorney." In 2020, Mr. Lemberg represented Noah Duguid before the United States Supreme Court in the landmark case Duguid v. Facebook. He is also the author of "Defanging Debt Collectors," a guide that empowers consumers to fight back against debt collectors and prevail, as well as "Lemon Law 101: The Laws That Lemon Dealers Don't Want You to Know."
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I had a contract with regus and they did auto renewal automatically. I was also charged hidden fees. My invoices were never the same. I asked for an explanation of the fees and no one responded. Now they’re threatening me with a lawsuit saying that I owe them money.
I ordered a skin cream online as a trial, had to pay shipping. I did not see anything in the order about an automatic renewal so when the charge of $79.00 popped up in my bank account I blocked the payment. The company called and said that I had entered into an automatic renewal agreement and since I had not cancelled (how can you cancel something you are not aware of?), I have to pay the amount of $79 plus a charge. They say I can dispute this but they will win. Am I obligated to pay the fee? Pretty pricey for a small jar of skin cream.
Do you have any articles about other countries’ auto renewal laws, especially top markets like Canada, Mexico, Australia, and European countries?
Thanks,
Marie Wilson