CA: Auto Renewal Law Updates, Effective July 1, 2025

On September 24, 2024, Governor Newsom signed Assembly Bill No. 2863 into law, which amends California’s Auto Renewal Act (ARL), a set of consumer protection laws addressing businesses that sell automatically renewing subscriptions to products or services. These updates will now go into effect on July 1, 2025. In today’s post I go over some key changes to be aware of, for B2C companies.

‍ARL Background

In 2010, California enacted the ARL, which imposes detailed disclosure requirements for any recurring subscription services in the state, requiring business to clearly and conspicuously disclose offer terms and cancellation policies in any offer that contains an automatically renewing subscription. Among other things, it also requires companies to obtain affirmative consent and provide an acknowledgement email with the offer’s terms and conditions. This law has been amended multiple times, most recently with the below changes.

‍Applicability

The existing ARL and most recent amendment applies to: 

• B2C companies: businesses selling consumer products and services in California.
• Free-to-pay conversions: subscriptions that begin with a free trial and automatically convert to a paid subscription after the initial trial period. This means that companies must get affirmative consent to the paid subscription terms when offering the free trial.

‍Prior to Purchase

When a consumer is on the purchasing page, these additional requirements must be met:

• Affirmative Consent: businesses must obtain “express informed consent” to sign up to recurring charges. 
• Clear and Conspicuous Disclosure: The key terms must be clearly disclosed before purchase, which include renewal conditions, billing frequency, cancellation policies, and pricing changes, all clearly, conspicuously, and in proximity to the enrollment request. There’s no hiding the ball on this one.

‍After Purchase

• Post-Transaction Notice: The subscription terms and conditions must be repeated in a post-transaction acknowledgement that can be retained by the consumer, such as an email.
• Ongoing Notice: Businesses must notify consumers of any change to the auto-renewal plans, such as price changes, expiration of free trials, and other material changes.
• Channel-Specific Cancellation: Businesses must provide a cost-effective, timely, and easy-to-use cancellation mechanism, such as a toll free number or email address. For businesses that offer subscriptions online, they must also allow their consumers to cancel online.
• Easy Cancellation: The overall cancellation process must be easy and simple, as easy as it is to sign up. 
• No Material Misrepresentations: No misleading statements or omissions of terms are allowed.

Note that these requirements are effective July 1, 2025. If you are a company selling subscriptions to consumers in California, you’ll need to comply with these requirements. You should reach out to an experienced commercial attorney to review your Terms and Conditions, or Terms of Service, and update accordingly.

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