CLIENT ALERT: Vermont Becomes First State to Require Onerous “Double Opt-In” with Respect to Automatic Renewal Provisions

Following up on other states recently enacting additional restrictions on automatic renewal provisions, on May 28, 2018, Vermont House Bill 593, an omnibus consumer protection bill, was allowed to go into effect without the signature of Governor Phil Scott, making Vermont the first state to require a “double opt-in” with respect to automatic renewal provisions.

The new law, which goes into effect on July 1, 2019, applies to “consumer” contracts with an initial term of at least one year and that automatically renew for a subsequent term longer than one month. In addition to requiring clear and conspicuous language in bold-face type regarding the renewal terms, the law requires that a consumer—separately from accepting the contract itself—take some affirmative action to opt in to the automatic renewal provision.  Vermont is the first and only state in the country to require this second, affirmative opt-in.  The seller or lessor must also provide the consumer with written or electronic notice of the automatic renewal no less than 30 days, and no more than 60 days, before the contract renews or terminates.  Read the full text here.

While the law applies to “consumer” contracts, it also includes business-to-business contracts, as businesses are included in the definition of “consumer” under Vermont law. The law does exempt insurance contracts as well as contracts between a consumer and a financial institution or credit union.

The law passed despite strong opposition from a variety of Internet companies (including Amazon and Match.com), Vermont-based businesses, magazine publishers and trade associations.  Amazon, citing the “onerous requirements for subscription services that are not required by any other state,” claimed in a letter to Vermont’s House Committee on Commerce and Economic Development that the additional opt-in provision “would require significant changes to sign-up processes, and would create multiple steps that make it more difficult and confusing for customers, without any meaningful benefit.”

Compliance with Vermont’s new consumer protection law is critical for both in-state and national companies that do business in Vermont or with Vermont consumers. As significant changes may be required, marketers should be sure to re-examine their automatic renewal programs before the law goes into effect on July 1, 2019.

Please contact the Olshan attorney with whom you regularly work or one of the attorneys listed below if you would like to discuss further or have questions regarding this law or other automatic renewal provision legal requirements.

This publication is issued by Olshan Frome Wolosky LLP for informational purposes only and does not constitute legal advice or establish an attorney-client relationship. In some jurisdictions, this publication may be considered attorney advertising.

Copyright © 2018 Olshan Frome Wolosky LLP. All Rights Reserved.