CLIENT ALERT: North Dakota Introduces Automatic Renewal Law – Prohibits Renewal Periods Exceeding Twelve Months in Consumer Contracts
Following other states that have recently enacted regulations and additional restrictions on automatic renewal provisions in consumer contracts, on April 9, 2019, North Dakota House Bill 1195, which enacts a new chapter of the North Dakota Century Code relating to certain marketing practices involving automatic renewal, was signed by Governor Doug Burgum and filed with the Secretary of State.
North Dakota’s new consumer protection law, which applies to contracts for the sale of merchandise entered into after July 31, 2019, requires that sellers of merchandise under agreements containing automatic renewal provisions present the terms of such renewal in a clear and conspicuous manner along with information on a cost-effective, timely and simple procedure for cancellation before a subscription or purchasing agreement is fulfilled. When the renewal period is longer than six months, sellers must provide a clear and conspicuous written notice to the buyer—by first-class mail, e-mail or other easily accessible form of communication—that includes the procedure for canceling the contract at least 30 days, but no more than 60 days, before the contract renews or terminates. Read the full text here.
A unique requirement of the new law is that the automatic renewal period under an agreement for the sale of merchandise may not exceed 12 months.
The law has a number of ambiguities, one of which is the meaning of the term “merchandise” is not defined.
The law exempts contracts for the sale of insurance and public utilities and does not apply to banks, bank holding companies, credit unions or other financial institutions.
Compliance with the new law is critical for both in-state and national companies that conduct business in North Dakota or with its residents. Marketers should re-examine their automatic renewal programs for contracts that will be entered into after July 31, 2019.
Please contact the Olshan attorney with whom you regularly work or one of the attorneys listed below if you have questions regarding this law or other automatic renewal provision legal requirements.