California Automatic Contract Renewal Lawsuits

Last Updated on August 6, 2024

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At A Glance

This Alert Affects:
California residents who signed up for a service or product that automatically renews after a set time period, such as every week, month or year.
What's Going On?
California has strict laws when it comes to automatic renewal charges. When a company – regardless of location – fails to provide California residents with information on how to cancel or doesn't clearly disclose the terms of its automatic renewal contract, consumers may be able to sue the company to get their money back.
What Kind of Products/Services?
The law applies to services such as the home delivery of food, cosmetics, clothes, etc., as well as dating websites and entertainment subscriptions.

Attorneys working with ClassAction.org would like to speak with any California resident who was charged automatically for an ongoing product or service.

California has strict laws regarding what companies can and cannot do when it comes to recurring charges and a number of major companies, including Spotify, Hulu and eBay, have already been sued for failing to comply with these requirements. In California, notice of recurring charges and how to cancel must be clearly disclosed to the customer – and when a company fails to do this, consumers may be able to sue and get their money back.

Are Automatic Renewal Contracts Legal?

In general, automatic renewal contracts are legal. Some states, namely California, however, have strict laws that apply to these types of contracts.

For instance, in California, notice of automatically renewing charges must be disclosed in a “clear and conspicuous” way. The laws defines “clear and conspicuous” as text that is larger than the text surrounding it. Alternatively, if the text is the same size, the language about the renewing charges must be in a contrasting type, font, color, or otherwise draw attention to itself.

In California, clauses about automatically renewing charges must be close to the line where the consumer signs the contract or the button that authorizes an online purchase. Companies must also provide California residents with information on cancellation policies, including how to cancel the service.

This law pertains to California residents only – however, it applies regardless of the location of the company offering the service. If a company fails to comply with these requirements, all goods or services the consumer has received under their automatic renewal service agreement are deemed a “gift” to the consumer.

What Kind of Products and Services Fall Under the Automatic Renewal Law?

  • Dating websites
  • Home delivery services (such as those for food, wine, cosmetics, clothes, etc.)
  • Entertainment services (such as music, TV or movie streaming subscriptions)

Automatic Billing Lawsuits

Since California’s Automatic Purchase Renewal Statute came into effect in December 2010, a handful of lawsuits have been filed against companies like Hulu, Spotify and eBay.

Additional cases include:

  • LifeLock faced a lawsuit alleging the company failed to present the automatic renewal terms of its identity theft protection contracts in a clear and conspicuous manner.

  • Blizzard Entertainment was sued after the company allegedly failed to conspicuously provide automatic renewal terms when the plaintiff bought a subscription to play World of Warcraft online.

  • AAA was hit with a lawsuit after allegedly failing to inform the plaintiff that his membership would automatically renew.

  • Birchbox, Inc. was sued for allegedly failing to disclose automatic renewal terms and provide information on its cancellation policy to people who signed up for their monthly cosmetic deliveries.

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