Check Your Enrollment Path: New York Enacts Comprehensive Automatic Renewal Law
Olshan’s Advertising, Marketing & Promotions Practice Group chair Andrew Lustigman and associate Morgan Spina have authored an article published in NYSBA Inside entitled “Check Your Enrollment Path: New York Enacts Comprehensive Automatic Renewal Law.” The article discusses the proliferation of continuous service models, a subscription whereby sales to a consumer typically continue until the consumer takes an affirmative act to cancel the subscription. Concerns over these models include how the terms must be disclosed to consumers, the type of consent that must be obtained from purchasers prior to signing them up to an automatic renewal program, and the ways in which cancellation of an automatically renewing contract may be effectuated. “With the passage of Senate Bill 1475,” the authors explain, “New York has just joined the list of states with some of the most onerous automatic renewal laws. The law, which goes into effect on February 9, 2021, significantly expands the limited applicability of New York’s existing automatic renewal law, New York Gen. Oblig. Law § 5-9031, which only applies to contracts ‘for service, maintenance or repair to or any real or personal property’ that automatically renew for longer than one month.” They note that “with the passage of this new law, there does not appear to be any plan to repeal Section 5-903. As such, businesses must ensure they put policies and processes in place to comply with Senate Bill 1475, but they must also continue to comply with Section 5-903, if applicable.” Key provisions of the New York Automatic Renewal Law include disclosing auto-renewal offer terms more conspicuously than surrounding text, obtaining affirmative consent from the consumer, sending an enrollment acknowledgement to consumers (including a cancellation policy), providing subscribers with a “cost-effective, timely, and easy-to-use” cancellation process, disclosing any material changes to the auto-renewal contract, and a safe harbor for businesses under certain circumstances. The authors conclude with an outline of how the law will be enforced, how it compares to California’s automatic renewal law (California Business and Professions Code § 17602), and how business can take advantage of the safe harbor provision.
Read the article in its entirety here.