Edward Kiledjian

California has taken a significant step to protect consumers with the passage of the "Click to Cancel" law. This new legislation aims to make it easier for consumers to cancel subscriptions and automatic renewals.

What is the "Click to Cancel" Law?

Assembly Bill 2863, officially known as the "Click to Cancel" law, requires companies offering automatic renewals and continuous services to provide consumers with a simple means to cancel their subscriptions. The key provisions include:

• Easy Cancellation: Businesses must offer a clear, prominently displayed option to cancel subscriptions online, matching the ease with which consumers originally signed up.
• Annual Renewal Reminders: Companies must send annual reminders to subscribers, detailing the cost, terms, and cancellation process.
• Express Consent for Renewals: Businesses must obtain "express affirmative consent" from consumers before enrolling them in subscriptions, including free-to-paid conversions.

When Was It Passed and When Does It Take Effect?

Gov. Gavin Newsom signed AB 2863 into law on Sept. 24, 2022. The law will take effect on July 1, 2024, giving subscription-based businesses time to adjust their processes and ensure compliance.

What Does It Mean for Companies?

For subscription-based companies, this law represents a significant shift toward consumer empowerment:

• Adaptation Required: Businesses will need to revisit their subscription management systems, cancellation processes, and consent practices to align with the new law's requirements.
• Building Consumer Trust: Companies that proactively embrace these changes can leverage them to build stronger relationships with their customers.
• Prepare for Wider Adoption: Given the similarities between AB 2863 and proposed federal regulations, subscription businesses should anticipate similar laws in other states or at the national level.

What Does It Mean for Consumers?

The "Click to Cancel" law offers several benefits to consumers:

• Easier Cancellations: Consumers will be able to cancel subscriptions as easily as they signed up, often with just a click or two.
• Increased Transparency: Annual reminders will help consumers keep track of their subscriptions and associated costs.
• Protection Against Hidden Fees: The law aims to prevent consumers from being trapped by confusing processes or hidden fees.

Conclusion

California's "Click to Cancel" law sets a new standard for subscription services, making it clear that consumer protection is a priority. While the law only applies to California residents, its impact may be felt more broadly as companies adapt their practices and other states consider similar legislation.

As we approach the July 2024 implementation date, both businesses and consumers should stay informed about these changes. For businesses, it's an opportunity to demonstrate commitment to customer satisfaction. For consumers, it's a welcome relief from the frustration of difficult cancellation processes.