SACRAMENTO, CA — (09-27-24) — California’s state assembly enacted this week, a new law that significantly tightens the rules on ‘Automatic Renewal of Paid Website Subscriptions’.
According to the text in AB 2863: Automatic renewal and continuous service offers, “Businesses must receive clear and affirmative consent from customers before charging for services under an automatic renewal or continuous service arrangement, and must send annual reminders to customers that include a full summary of services provided, a breakdown of charges and how to cancel membership.”
“Given that many adult websites operate on subscription models, including free-to-pay conversions where a free trial leads to paid services unless canceled, this law will significantly impact operations,” said industry attorney Corey D. Silverstein.
Silverstein also stated that adult businesses offering such subscriptions will face an extra administrative layer for compliance, regular communication with customers and record-keeping. The law also protects businesses from claims of hidden fees or unauthorized charges.
According to AB 2863: Automatic renewal and continuous service, the new law also requires online businesses to have a simplified process for a user to cancel a subscription, including allowing cancellation through the same medium used for the original transaction as well as a clear “Click to Cancel” button.
Silverstein recommends that adult businesses take steps to comply with the law before it takes effect July 1, 2025. This will help to mitigate risks while maintaining consumer trust and avoiding potential legal liability.
Article by: Keith Witchka, Staff Writer
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