Press Release

Senate Passes Legislation to Protect Consumers with Automatic Service Renewals

SB 313 requires businesses providing the renewals to improve notification, allow consumers to easily cancel the arrangement

April 20, 2017

SACRAMENTO – Legislation by Sen. Bob Hertzberg, D-Van Nuys, that protects consumers who sign up for a free trial with an automatic renewal for a service that comes with a charge today passed the Senate.

SB 313 requires businesses to make it just as easy for consumers to cancel the arrangements as it was to sign up for them. The bill directs businesses to notify consumers three-to-seven days before they are charged for an automatic renewal, and it requires businesses to obtain a consumer’s stand-alone authorization for the renewal.

The legislation passed the Senate on a bipartisan 34-4 vote and now goes to the Assembly for consideration.  

“Consumers need to know what they are buying and under what terms, and what they need to do to cancel the arrangement,” Herzberg said. “This legislation requires transparency. It makes clear that consumers must directly authorize any renewal of service with a charge, and that businesses must make canceling it easy to do.”

In recent years, consumer complaints regarding automatic service renewals have triggered numerous lawsuits, including class-action lawsuits filed against Hulu, Dropbox and Spotify. While current law says the terms of trial offers and automatic renewals must be conspicuously posted on websites or communicated directly to consumers, canceling the service can be difficult to do.

Furthermore, when consumers sign up for free gifts or trial offers that come with an automatic service renewal, businesses are not required to get separate authorization for the charged service. Trial offers can run so long – for months or even years – that consumers sometimes forget that the service eventually comes with a charge and can be surprised to see it appear on credit card bills.

The legislation is sponsored by the Consumer Federation of California.

“Instead of relying on the value of a product to win customer loyalty, many businesses use a free offer to lure a consumer into a subscription that is difficult to cancel,” said Richard Holober, executive director of the Consumer Federation of California. “SB 313 promotes basic fairness by ensuring that consumers know exactly what they are agreeing to, and are not given the run-around if they try to cancel a subscription for a product or service they don’t want.”

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Bob Hertzberg, chair of the Senate Committee on Natural Resources and Water, represents nearly 1 million San Fernando Valley residents of Senate District 18, which includes part of Burbank and the following communities in Los Angeles: Arleta, Granada Hills, Hansen Dam, Lake View Terrace, Mission Hills, North Hills, North Hollywood, part of Northridge, Pacoima, Panorama City, Sherman Oaks, Studio City, part of Sun Valley, Sylmar, Toluca Lake, Valley Glen, Valley Village, Van Nuys, the City of San Fernando and Universal City. See a district map at http://sd18.senate.ca.gov/district.  After serving in the Assembly from 1996-2002, including two years as Speaker, Hertzberg invested in solar, wind and electric-car projects; and worked for structural changes in government through the Think Long Committee of California. Learn more at www.senate.ca.gov/hertzberg.

MEDIA CONTACT: Andrew LaMar
Communications Director
Senator Robert M. Hertzberg
Capitol Building, Room 4038
Sacramento, CA 95814
(916) 651-4018

 

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