Section S1475 lists a number of « clear and visible » pieces of information that must be included in the terms of the auto-renewal offer, including: (1) that the subscription will continue until the consumer cancels; (2) the details of the cancellation policy; (3) recurring charges (and whether and to what extent the amount of the fees may change, if known); (4) the duration of the automatic renewal period or the notification that the service is continuous (unless the duration of the duration is chosen by the consumer); and (5) any minimum purchase obligation. It should be noted that New York already has a strict law on self-renewal (N.Y. Gen. Mandatory. Law § 5-903), which is limited to contracts « for the service, maintenance or repair of immovable or personal property ». However, section 1475 does not repeal this existing Act. Therefore, companies that fall within the scope of the existing law should review their practices, as they may have to comply with a second law on automatic renewal starting in February of next year. Third, the new LRR requires consumers to receive a confirmation – « in a manner that can be maintained by the consumer » – which includes, among other things, the conditions for automatic renewal and information on how the contract can be terminated. It also requires that cancellation procedures include a web-based option. Sellers of consumer products and/or services in New York (and other regulated states) are advised to consult with legal counsel to ensure that their contracts or terms and conditions that include automatic renewal or continued provision of services comply with New York law to avoid liability, including potential consumer class actions. Specifically, the new New York LR does not repeal the existing LR, New York General Obligations Law § 5-903, which applies to both consumer and business-to-business contracts, but only to those « for service, maintenance or repair, or on real or personal property » for which the renewal period is longer than one month. The obligations imposed by the original LRA are less onerous than the new LRA, as it only requires businesses (by personal delivery or registered mail) to send a written reminder of an automatic renewal 15 to 30 days before the terms expire. As explained in detail below, these changes impose significant new obligations on companies operating in New York that offer goods or services on a subscription or auto-renewal basis.

The requirements are aligned with key provisions of the Restoring Online Buyers` Trust Act (« ROSCA ») and the Negative Options Rule, both enforced by the Federal Trade Commission (« FTC »), as well as stricter ARLs in other states, including California. To make things even more complicated, companies operating in New York may need to comply with both the new ARL and the original (and, of course, the ARLs of federal law and other states in which they operate), as explained below. States across the country have passed laws to deal with the automatic renewal of treaties. These state laws, commonly referred to as « automatic renewal laws » (ARLs), have been at the center of a series of consumer class actions directed against businesses across the country, particularly those that offer subscription-based products or services. Violations of these laws result in the threat of stiff fines or comparisons with high price tags. For example, California`s ARL has been used repeatedly by class action lawsuits and is known for its scope and often strict enforcement. In addition, as a practical incentive to obtain appropriate consent, Article 1475 states that if a company sends goods to a consumer under a continuous service contract or an automatic renewal of a purchase without first obtaining the express consent of the consumer, those goods will be considered an « unconditional gift to the consumer » who uses the goods without further obligation or payment (including shipping), or can get rid of. Note: One question that has arisen in a dispute under the California Auto Renewal Act is whether the unconditional gift provision applies only to tangible goods or digital products or services.

The New York text does not explicitly cover this distinction. Subscription plans, from video or music streaming services to online magazines and courses to continuity services that offer everything from coffee beans to cleaning products, have become an essential part of our lives, especially in recent times, as the COVID-19 pandemic has forced consumers to rely on online stores to meet their most basic daily needs. It is therefore not surprising that the focus is once again on consumer protection issues related to automatic renewal plans or continuity services. Faegre Drinker`s consumer contracts team will closely monitor the new ARL and any government law enforcement and private lawsuits that we believe will attempt to establish a private right of action. Questions about compliance with these ARLs and other RNAs can be directed to the authors listed below or to your regular Faegre Drinker contact. For more information on other government ARLs and compliance issues, click here. The following five points provide an overview of compliance with New York`s recently passed auto-renewal law: As with California law, there is no explicit private right to sue. However, California law states that « a violation of this law must not be a crime. However, all available civil remedies applicable in the event of a breach of this Article may be applied. Armed with this language, private litigants have made claims under the state`s consumer protection laws, with the predicate of deceptive practice and economic damages due to violations of the California State Automobile Renewal Act. For example, online dating service Bumble reached a $22.5 million class action settlement last summer for failing to disclose the terms for automatic renewal of the Bumble Boost weekly subscription or for obtaining the plaintiff`s explicit consent to automatically renew the premium service in violation of California and New York consumer protection laws. (King v.

Bumble Trading, Inc., No. 18-06868 (N.D. Cal. July 15, 2020) (preliminary settlement approval of $22.5 million)). New York joins other states such as California, the District of Columbia, Florida, Georgia, Hawaii, Illinois, Louisiana, New Mexico, North Carolina, Oregon, Vermont and Virginia, which have passed similar laws that largely govern the use of auto renewal clauses by sellers of goods and services in contracts with their consumers. By law, any company that submits an auto-renewal or continuous service offer to a consumer in New York must: According to S1475, the first of the two requirements listed above applies to the auto-renewal agreement before completing the original order; The third requirement must be met after the completion of the initial order. Mobile application operators should assess the notification and consent requirements under the new law given the small screen size on which relevant notices and conditions are displayed and the legal requirements that offer conditions are presented at the « visual proximity » of the consent mechanism (for example, the « I accept » or « Pay now » button). The law requires that the terms of the auto-renewal offer be presented « clearly and conspicuously, » but questions whether a visible hyperlink (in a larger, edging font) to a page with the terms of auto-renewal offers would be in compliance with the law, or whether the required notices should be presented literally in full to the user near the « I Agree » button.