The laws and regulations surrounding subscription-based offers continue to change on a regular basis. Federal and state regulators and private plaintiffs continue to lodge challenges against companies selling products and services on a recurring basis. Moreover, new cases and law enforcement activity offer evolving interpretations on how to comply. Given the substantial developments, companies offering products or services on an automatically renewing basis should take heed.

The primary federal regulator of autorenewal programs, the Federal Trade Commission (FTC), remains as active as ever in enforcing the Restore Online Shoppers’ Confidence Act (ROSCA), the federal statute governing online negative option programs. The FTC has filed multiple new lawsuits against companies selling products and services on a negative option basis and continues to litigate cases that it has filed.

The district attorneys in the California Automatic Renewal Task Force have also continued to bring actions at a furious pace, demonstrating their clear intention to pick up where the FTC has left off. In fact, the task force recently filed a lawsuit in California state court against Match.com, even though the FTC had already filed a lawsuit against the company. The California district attorneys also announced settlements with Classmates.com, Home Chef, CheckPeople.com, and Care.com, among other companies, and the consent decrees have imposed increasingly stringent requirements on the settling businesses.

State attorneys general are also targeting companies under their respective state statutes. For example, the District of Columbia attorney general alleged that Town Sports International, the parent company of the Washington Sports Club gyms, violated DC’s automatic renewal law by providing inadequate disclosures to consumers prior to enrollment and failing to send customers a renewal reminder.

State legislatures are also hard at work, establishing additional requirements for these programs. Last month, New York’s automatic renewal law went into effect, which requires companies to provide pre- and post-purchase disclosures, obtain customers’ affirmative consent, and provide an easy-to-use cancellation mechanism. The California legislature has also introduced a bill that would amend California’s automatic renewal law to strengthen the law’s protections for trial programs and further simplify the cancellation process.

Meanwhile, private class actions are continuing. A recent case filed against the weight-loss app Noom alleges that the company provided inadequate disclosures prior to consumers’ enrollment and seeks to bring claims on behalf of a nationwide class. Other recent cases provide additional guidance on the content and presentation of disclosures, including the disclosure’s font size and the use of hyperlinks.

Venable has years of experience tracking the legal developments in this space and helping clients develop disclosures and consent, cancellation, and notice mechanisms corresponding to the various laws and prevailing interpretations. We’ve helped clients with compliance counseling advice, consumer terms and conditions, FTC investigations and settlements, state regulatory actions, and private class actions involving subscription programs and automatic renewal laws.

View our webinar to learn more about the legal landscape surrounding automatic renewal programs, including legal requirements under these laws, how to avoid a challenge, and what to do in the event a challenge arises.

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Photo of Ellen T. Berge Ellen T. Berge

Ellen Berge provides counsel on regulatory compliance, government investigations, contract negotiations, and general business matters. Ellen focuses on advertising, marketing practices, payment processing, and merchant services. Her clients include major brand advertisers and direct-response retailers, and lead generators, telemarketers, media agencies, software providers…

Ellen Berge provides counsel on regulatory compliance, government investigations, contract negotiations, and general business matters. Ellen focuses on advertising, marketing practices, payment processing, and merchant services. Her clients include major brand advertisers and direct-response retailers, and lead generators, telemarketers, media agencies, software providers, and others who serve them. On the merchant services side, she leads a practice that works with banks, processors, sales agents, payment facilitators, independent software vendors, and fintech and financial services businesses. Ellen also serves as the firm’s managing partner of Professional Development and Recruiting.

Ari N. Rothman

Ari Rothman’s nationwide practice focuses on all legal facets of Internet and mobile marketing, telemarketing, and payment processing. Ari represents advertisers, affiliate networks, lead generators, advertising agencies, payment processors, ISOs, and others in contract negotiations, compliance matters, federal and state government investigations before…

Ari Rothman’s nationwide practice focuses on all legal facets of Internet and mobile marketing, telemarketing, and payment processing. Ari represents advertisers, affiliate networks, lead generators, advertising agencies, payment processors, ISOs, and others in contract negotiations, compliance matters, federal and state government investigations before the Federal Trade Commission (FTC) and state attorneys general, and private litigation. As a result of this experience, he offers a unique perspective when counseling clients and helping them find creative solutions to complex problems.

Shahin O. Rothermel

Shahin Rothermel counsels and defends clients on issues involving advertising, marketing, e-commerce, privacy, social media, promotions, sweepstakes, and subscription programs. Shahin regularly represents clients before the Federal Trade Commission (FTC), state attorneys general, district attorneys, the National Advertising Division (NAD), the National Advertising…

Shahin Rothermel counsels and defends clients on issues involving advertising, marketing, e-commerce, privacy, social media, promotions, sweepstakes, and subscription programs. Shahin regularly represents clients before the Federal Trade Commission (FTC), state attorneys general, district attorneys, the National Advertising Division (NAD), the National Advertising Review Board (NARB), and the Electronic Retailing Self-Regulation program (ERSP), in addition to handling complex consumer class actions and competitor disputes in federal and state courts.