AB 2863

Bill Subjects

Abstract

Existing law regulates automatic renewal offers and continuous service offers that businesses make to California consumers. Existing law defines "automatic renewal" for these purposes to mean a plan or arrangement in which a paid subscription or purchasing agreement is automatically renewed at the end of a definite term for a subsequent term. Existing law also defines "continuous service" to mean a plan or arrangement in which a subscription or purchasing agreement continues until the consumer cancels the service. This bill would revise those definitions to include a provision of a contract containing those subscriptions or purchasing agreements and to include a plan, arrangement, or provision of a contract that contains a free-to-pay conversion. The bill would further define "free-to-pay conversion" to mean, 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. Existing law makes it unlawful for a business that makes an automatic renewal offer or continuous service offer to a consumer in this state to take or fail to take certain actions relating to the communication of, and consent to, the terms of the offer. In this regard, existing law requires, among other things, the business to present the terms in a clear and conspicuous manner before the subscription or purchasing agreement is fulfilled and in visual or temporal proximity to the request for consent to the offer, as specified. Existing law also requires the business to provide an acknowledgment that includes the automatic renewal offer terms or continuous service offer terms, cancellation policy, and information regarding how to cancel in a specified manner. This bill would require the business to obtain the consumer's express affirmative consent to the automatic renewal or continuous service offer terms, as defined. The bill would prohibit the business from including any information in the contract that undermines the ability of consumers to provide their affirmative consent, as specified. The bill would require the business to maintain verification of the consumer's affirmative consent for at least 3 years, or one year after the contract is terminated, whichever period is longer. The bill would prohibit the misrepresentation of material facts or terms related to the transaction, as provided. The bill would also require the business to send the consumer an annual reminder that discloses, as specified, the product or service to which the automatic renewal or continuous service applies, the frequency and amount of the associated charges, and the means to cancel the service. Existing law requires a business that makes an automatic renewal offer or continuous service offer to provide various methods for cancellation or termination, including by toll-free telephone number, email address, a postal address, another cost-effective, timely, and easy-to-use mechanism for cancellation, or online if specified requirements are met. This bill would require the ability to cancel or terminate to be available in the same medium that the consumer used in the transaction that resulted in the activation of the automatic renewal or continuous service, or the same medium in which the consumer is accustomed to interacting with the business, as specified. The bill would require a mechanism for cancellation by toll-free telephone number to, among other things, be answered promptly during normal business hours and not obstruct or delay the consumer's ability to cancel the service or feature, as specified. In this regard, the bill would also specify that it is not an obstruction or delay to provide a discount offer or other consumer benefit or to inform a consumer of the effect of the cancellation if the consumer remains able to cancel or terminate the automatic renewal or continuous service, as specified. Existing law requires, in the case of a material change in the terms of the automatic renewal or continuous service that has been accepted by a consumer in this state, the business to provide the consumer with a clear and conspicuous notice of the material change and information regarding how to cancel in a specified manner. This bill would additionally require, in the case of the business changing the fee, including changes the consumer affirmatively consented to in an existing plan or arrangement, the business to provide a clear and conspicuous notice of the fee change and information regarding how to cancel in a specified manner no less than 7 days and no more than 30 days before the fee change takes effect. Existing law requires a business that made an automatic renewal or continuous service offer that includes a free gift or trial, a promotional or discounted price, or an initial term of one year or longer, as specified, to provide the consumer with a certain notice a certain number of days before the promotional period expires or the offer automatically renews, as prescribed. Existing law requires the notice to clearly and conspicuously state specified information, including that the service will automatically renew unless the consumer cancels and the method by which the consumer can cancel the service. This bill would also require the business to provide the notice to the consumer before confirming the consumer's billing information. The bill would also require the notice to include the amount or range of costs the consumer will be charged and, if applicable, the frequency of those charges a consumer will incur unless the consumer takes timely steps to prevent or stop those charges. This bill would apply its provisions to contracts entered into, amended, or extended on or after July 1, 2025.