Automatic Renewal Contracts Uncovered: Key Strategies and Best Practices

Michael Jaeger | Mayer Brown

Michael Jaeger represents clients in class actions and complex litigation in state and federal courts across the country, with a particular emphasis on privacy and consumer protection defense. Clients turn to Michael for advice on claims brought under the California Consumer Privacy Act, the California Invasion of Privacy Act, Illinois’ Biometric Information Privacy Act, Florida’s Security of Communications Act, the Telephone Consumer Protection Act, California’s Unfair Competition Law, California’s Consumers Legal Remedies Act, the Americans with Disabilities Act, and California’s Unruh Civil Rights Act, among others.

Clients seek Michael’s counsel on compliance and litigation avoidance in the areas of privacy and data protection, online terms and conditions, arbitration provisions, class action waivers, and automatic renewal/continuing subscription programs. He is the author of Practical Law’s guidance on state automatic renewal laws and advised the Uniform Law Commission’s Recurring Service Charges Drafting Committee.

Companies also leverage Michael’s significant experience with business disputes and related litigation, including in the areas of labor and employment, COVID-19 liability, sports and entertainment, false advertising, product liability, civil RICO, construction defect, ERISA, and franchising.

I. Fundamentals of Automatic Renewal Contract Laws | 2:00pm – 2:40pm

• Automatic renewal contracts
  • Definition and scope
  • Common types of automatic renewal contracts (subscriptions, memberships, etc.)
  • Disclosure requirements and transparency
  • Consumer consent
  • Confirmations, annual notices, and notices of material change
  • Cancellations
• Federal laws and standards
  • The FTC’s revised Negative Option Rule
  • The Restore Online Shoppers’ Confidence Act (ROSCA)
  • FTC guidance and other federal regulations
• State-specific regulations
  • In-depth look at strict state laws (e.g., California)
  • Variation in state requirements and implications for multi-state businesses

II. Legal Compliance in Automatic Renewal Contracts (Part I) | 2:40pm – 3:00pm

• Drafting compliant automatic renewal disclosures
  • Elements of a well-drafted clause
  • Clear and conspicuous presentation requirements
  • Practical tips for obtaining and retaining consumer consent (e.g., opt-in checkboxes, electronic signatures)
• Transaction confirmations
• Strategies for sending effective renewal notices

Break | 3:00pm – 3:10pm

III. Legal Compliance in Automatic Renewal Contracts (Part II) | 3:10pm – 3:30pm

• Cancellation and opt-out options
  • Creating compliant cancellation processes
  • “One-click” vs. account login
  • Meeting specific federal and state requirements for cancellation processes
  • Can I try to “save” the cancellation?
• Notice of material change

IV. Implementation Strategies and Risk Management for Companies | 3:30pm – 4:10pm

• Risk management strategies
  • Identifying and mitigating compliance risks
  • Establishing internal audit and monitoring processes
• What companies should be doing to stay in compliance
  • Regular policy reviews and updates
    • Conduct periodic reviews of automatic renewal terms and cancellation policies
    • Monitor federal and state regulatory developments
  • Consumer-Friendly Cancellation Options
    • Implement and test various cancellation methods
    • Ensure cancellation methods are as simple as sign-up processes
• Documentation and record-keeping
  • Keep detailed records of consumer agreements, consents, cancellation requests, and refund processing
  • Use a system that can track renewal dates and send reminders or notifications as required by law
• Transparency in renewal notifications
  • Ensure renewal notices are sent in advance and meet disclosure requirements