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DC Enacts Automatic Renewal Law

As we have discussed in previous blog posts, subscription-based business models and the automatic renewal techniques they popularly employ have garnered attention from regulators in recent years. The District of Colombia has now passed its own law regulating automatic renewals. With the passage of this law, D.C. joins many other states in requiring specific disclosures from advertisers who utilize automatic renewals as an integral part of their business model.  The law has provisions similar to those in certain states, but also has important timing requirements.

The D.C. law requires advertisers who sells goods or services with an automatic renewal provision to clearly and conspicuously disclose said automatic renewal provision and the relevant cancellation procedure in the contract.

In addition, advertisers who sell goods or services with an initial term of 12 months or more that will automatically renew for a term of one month of more, must notify the consumer of the first automatic renewal 30 to 60 days prior to the automatic renewal date. Such notice must be sent to the consumer via first class mail, email, or, if specifically authorized by the consumers, another “easily accessible form of communication” such as text message or through an App. The notice must clearly and conspicuously disclose that the contract will automatically renew unless the consumer cancels it, the cost of the goods or services for the term of the renewal, the deadline for cancellation, and the methods of cancellation.

Finally, advertisers who sell a free trial of a good or service with a trial period of one month or more, and where the contract automatically renews at the end of the free trial period, must notify the consumer of the automatic renewal between one and seven days before expiration of the free trial period. The advertisers must also obtain the consumer’s affirmative consent to the automatic renewal before charging them for the automatic renewal. Importantly, this consent must be obtained even if the consumer has affirmatively consented to the free trial.

Takeaway: Compliance with D.C.’s new automatic renewal law is critical for in-jurisdiction and national advertisers. Given the current scrutiny of auto-renewal programs, marketers should take the time to re-examine their auto-renewal programs and ensure compliance with all applicable state and federal laws, including D.C.’s new law.

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