New York, following the lead of several other states (see here, here, and here for just a few), has enacted a detailed law governing automatic renewal and continuous service programs. The law, just signed by Governor Cuomo (yes, Governor Cuomo has to deal with matters other than COVID), institutes requirements much like those in California: it requires businesses to present the terms of auto-renew offers in a clear and conspicuous manner, prohibits businesses from charging consumers without their affirmative consent to the auto-renew terms, and requires businesses to provide the offer terms and cancellation policy in a manner capable of being retained by the consumer. Any goods or services provided under an auto-renew program where the business does not obtain the consumer’s affirmative consent shall be deemed a gift to the consumer. Further, the law allows the state to seek injunctive relief and the court to issue penalties of $100 per violation, and up to $500 per “knowing” violation.

The law goes into effect in February.

First introduced by State Senator Brad Hoylman in 2017, the bill gained traction this year. Its principle requirements are as follows:

  • The offer terms (amount of charge, how often the consumer will be charged and for how long, and whether the charge amount will change, and the minimum purchase amount, if any) must be presented in a clear and conspicuous manner before the subscription is fulfilled and in proximity to the request for consent to the offer. Note that “clear and conspicuous” is defined in the statute as meaning larger type than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same size, or set off from the surrounding text of the same size by symbols or other marks, in a manner that clearly calls attention to the language.
  • If the offer includes a free trial, the offer must clearly and conspicuously disclose the price that will be charged at the end of the free trial.
  • The business must obtain the consumer’s affirmative consent to the terms.
  • The business must provide an “acknowledgment” that can be retained by the consumer (think email receipt) that includes the automatic renewal terms, cancellation policy, and information regarding how to cancel.
  • There must be an “cost-effective, timely, and easy-to-use” mechanism for cancellation. And if a consumer can subscribe online, she must be able to cancel online.
  • If there’s a material change to the terms (think price), the business must notify consumers prior to the change and tell them how they can cancel.

Any business already offering subscription plans in compliance with the requirements of California’s detailed law should not be too daunted by New York’s. Plus, the law provides as follows: “no business shall be deemed to have violated the provisions of this section if such business shows, by a preponderance of the evidence, that the violation was not intentional and resulted from a bona fide error made notwithstanding the maintenance of procedures reasonably adopted to avoid such error.”

As readers of this blog know well, auto-renew programs are the subject not only of frequent legislative activity, but also regulatory enforcement at the federal, state and local level, not to mention self-regulatory actions at NAD and class actions. Businesses offering subscriptions are well-advised to ensure their programs are compliant.

(Description of image for visually-impaired readers: a chalkboard with "only yes is yes" written on it.)