Click To Cancel: California Updates Automatic Renewal Law, Echoing FTC's Proposed Negative Option Rule

On September 24, California Gov. Gavin Newsom signed into law AB 2863, amending California's already stringent automatic renewal law. For those who have been trying to keep up with the constantly changing automatic renewal environment—including proposed changes at the federal level—you already know that California has long led the pack on auto-renewals and prohibiting the use of "dark patterns" to obtain consumers' consent. Well, the trend continues.

Key changes to California's law include the following:

• Includes negative option programs: Expands the definition of "automatic renewal" to include "a plan, arrangement, or provision of a contract that contains a free-to-pay conversion or …," which effectively places negative option programs under the automatic renewal umbrella.
• Consistent with that expansion, the new law adds a definition of "free-to-pay conversion," which means, "in an offer or agreement to sell or provide any goods or services, a provision under which a customer receives a product or service for free for an initial period and will incur an obligation to pay for the product or service if they do not take affirmative action to cancel before the end of that period."
• Requires consent to the automatic renewal: The new law also makes it unlawful to fail to obtain the consumer's express affirmative consent to the automatic renewal or continuous service offer terms. This is a significant change because it effectively requires two consents: one for the terms of the service being offered and a separate one for the automatic renewal.
• Prohibits confirming billing info prior to key notices: The new law also makes it unlawful to fail to provide a consumer with a notice, before confirming the consumer's billing information, disclosing that the offering will automatically renew until the consumer cancels, the length and any additional terms of the renewal period, and the amount or range of costs the consumer will be charged.
• Cancellations and "save" attempts: Click-to-cancel is now the law of the land in California. Consumers must be able to cancel their subscriptions as easily as they signed up. The new law includes specifics on how businesses may convey "save" offers when consumers attempt to cancel (such as a new discounted offer or retention benefit), disclosures that must be made during the cancellation attempt, and the requirement to act promptly if the consumer persists in wanting to cancel.

This is a summary of key provisions—businesses impacted by the new law will want to review it closely and ensure that they are prepared to comply before the effective date: July 1, 2025.