Hertzberg Unveils 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
SACRAMENTO – Sen. Bob Hertzberg, D-Van Nuys, has introduced legislation that allows consumers to sign up for a free trial without agreeing to an automatic renewal for the service that comes with a charge.
In addition, 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 days before they are charged for an automatic renewal, and it requires businesses to obtain a consumer’s separate authorization for the renewal.
“In today’s fast-paced world of e-business, consumers often sign up for a free trial without being aware that it turns into an automatic renewal with some charge attached,” Hertzberg said. “This legislation 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, Spotify and LifeLock. 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.
“Businesses making free trial offers should be open and transparent with consumers about how they can cancel a product or service,” 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 an offer or service.”
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
Senator Robert M. Hertzberg
Capitol Building, Room 4038
Sacramento, CA 95814