Georgia Passes New Regulations on Automatic Renewal Plans

Georgia has recently passed new legislation aimed at regulating the use of automatic renewal provisions in service contracts. The law, which goes into effect on July 1st, applies primarily to all automatic renewal provisions "under which a service contract is renewed for a specified period of more than one month if the renewal causes the service to be in effect for more than six months after the day of the initiation of the service contract."

For quite some time, Georgia has relied upon the FTC's rule regulating negative option plans. See Ga. Comp. R. & Regs. 122-4-.01 (adopting 16 C.F.R. 425 by reference). Under the new legislation, however, Georgia law will now explicitly require sellers to disclose the presence of an automatic renewal provision "clearly and conspicuously" in the contract or contract offer. The term "clearly and conspicuously" is left undefined.

Additionally, Georgia will now impose more stringent requirements upon sellers who use service contracts with "a specified period of 12 months or more and that automatically renew[ ] for a specified period of more than one month, unless the consumer cancels the contract." Sellers will be required to provide their customers with written or electronic notification of the automatic renewal provision no less than 30 days, but no more than 60 days, before the cancellation deadline. The notification must "clearly and conspicuously" disclose: (1) that the contract will automatically renew unless the consumer cancels the contract; and (2) the methods by which the consumer may obtain details of the automatic renewal provision.

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