Have you ever agreed to a “free trial” of a magazine and then – next thing you know – you’re charged for it each month? Or signed up for a club membership that automatically billed you each year whether you wanted to continue or not? That is automatic renewal.
What are Auto-Renewals?
Automatic renewal happens when you sign up for something once, but are given access to it, and are billed for it, periodically. For example, a chocolate-of-the-month club might charge your credit card each month before it sends you the chocolate, or a computer software company might automatically charge you each year to allow you to keep accessing the application. As auto-renew has become more popular, so has the potential for people to unwittingly become victims of auto-renew clauses.
The good news is that there are ways to avoid accidentally agreeing to – and paying for – more than you intended. First, automatic renewal clauses should be disclosed in any contracts you agree to, so make sure you read the terms and conditions of any purchases you make. The language of the clause will often use the term “automatic renewal,” “recurring charge,” or similar language. Some states have laws regulating the way companies use automatic renewal clauses. For example, in California, the automatic renewal clause in a consumer contract must be visible and conspicuous, such as by being larger than the nearby type or in a different color or font. It also requires people to opt-in to the auto renewal rather than needing to opt-out if they don’t want it. However, not all states have these consumer protections.
Another thing to be mindful of if you don’t want to sign up for auto renewal is your payment method. Automatic renewal works by charging your credit card, debit card, or bank account without your express permission each time. So, if you really only intend to sign up for a “free trial” of a magazine, for example, you shouldn’t need to give your credit card number. Be careful when you give this information out for something that is supposed to be free. Relatedly, keep an eye on your credit card and bank statements to make sure you are not being charged for an automatic renewal that you may have forgotten about or never meant to agree to in the first place.
Finally, if you do find yourself in an auto-renew situation, whether by accident or on purpose, remember that you can cancel it by contacting the business. Some states mandate that businesses using auto-renew provide consumers with convenient and low-cost ways to cancel their automatic renewals, such as a toll-free phone number or email address. Depending on your contract, you should be able to cancel your automatic renewal in a reasonable timeframe. For example, if you are signed up for the chocolate-of-the-month club and it bills you on the first of each month, you may need to provide 30 days notice. If it is currently the 15th and you call today to cancel your membership and auto-renew, you may be on the hook for one more month of chocolate, but that should be the last time you are billed. Provisions related to canceling auto-renew should be in the contract or terms and conditions you agreed to when you signed up.
Automatic renewal can be very convenient for those who want it, and there are ways to avoid it for those who don’t. Make sure you read closely what you are agreeing to, think about the method of payment you use, pay attention to your bills, and remember to cancel immediately if you find that you unintentionally signed up for auto-renew.
About the Author:
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."
Have you ever agreed to a “free trial” of a magazine and then – next thing you know – you’re charged for it each month? Or signed up for a club membership that automatically billed you each year whether you wanted to continue or not? That is automatic renewal.