American Privacy Rights Act (APRA): A Brief Overview
American Privacy Rights Act (APRA)
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California’s Automatic Renewal Law (ARL) was introduced to protect consumers from unwanted recurring charges, often stemming from unclear subscription and membership services. With the increasing number of online businesses offering subscriptions, this law ensures transparency and gives consumers the power to manage and cancel such subscriptions more easily. The ARL requires businesses to disclose recurring fees, seek explicit consent before charges, and provide reminders for upcoming renewals.
In this article, we will walk you through the essentials of California’s ARL, who it applies to, the key compliance requirements, and the penalties for non-compliance.
The California Automatic Renewal Law (ARL) (Cal. Bus. & Prof. Code §§ 17600) is a consumer protection law designed to prevent companies from automatically renewing customer subscriptions without proper notice and consent. It focuses on ensuring that consumers are fully informed about any recurring payments they might incur and that businesses operate with transparency.
The ARL specifically targets:
The law was enacted to tackle complaints from consumers who were blindsided by unexpected subscription renewals and charges. By mandating clear and conspicuous disclosures, California’s ARL significantly reduces the likelihood of customers being charged for services they no longer want.
The ARL applies primarily to California-based businesses and online platforms that sell recurring subscriptions or memberships. Whether the business operates within California or sells services to California residents, it must adhere to the ARL when dealing with automatic renewals.
Who is Exempt?
There are specific exceptions under the ARL:
For example, if a non-profit collects membership fees solely via mailed forms without retaining members’ email addresses or phone numbers, they are generally exempt from the ARL’s notification requirements. But, if a consumer later requests a cancellation, the business is required to honor it.
To comply with the ARL, businesses must meet several critical requirements when offering automatic subscription renewals. These provisions are outlined in California Code § 17602:
Businesses must obtain clear and explicit consent before charging customers for recurring subscriptions. This means a customer should know upfront that their credit card will be charged regularly, rather than being misled into thinking a subscription involves a one-time payment.
What to Include:
This information should be displayed prominently at the point of sale, not buried in fine print or hidden behind multiple clicks.
After a customer agrees to a recurring subscription, businesses must send a confirmation email that:
A crucial part of the ARL requires businesses to send a reminder notification before renewing an annual subscription or a free trial period exceeding 31 days.
For annual subscriptions, the reminder must be sent 15 to 45 days before the renewal date.
For free trials lasting over 31 days, the reminder must be sent 3 to 21 days before the end of the trial.
These reminders help prevent consumers from being caught off guard by renewal charges. The reminder must include:
As of July 1, 2022, the ARL mandates that businesses provide customers with an immediate, easy-to-use cancellation method. This can be a cancellation button or link within the user’s account settings or billing page. The cancellation process must be quick and straightforward, with no unnecessary hurdles or steps like calling customer support.
Businesses can also offer an option for customers to send a preformatted email to customer support, but this email should be generated through a link or button—eliminating the need for the customer to write an email themselves.
Non-compliance with the ARL can result in serious penalties, both financially and legally. There are two main types of penalties:
To avoid legal trouble and hefty fines, businesses must follow these steps:
The California Automatic Renewal Law (ARL) serves as a safeguard for consumers against unauthorized recurring charges. Businesses must stay compliant by being transparent about their subscription terms, obtaining explicit consent, sending post-sale confirmations, and making it easy for customers to cancel subscriptions. Failure to comply can result in costly lawsuits and civil penalties, as well as damage to a company’s reputation. By adhering to the ARL’s guidelines, businesses can maintain consumer trust while avoiding significant legal risks.
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