Automatic renewals continue to be a big priority for state regulators. When companies work to develop strategies to comply with the growing patchwork of specific state laws in this area, they often start by looking at California, since that state has some of the most stringent requirements in the country. California has been a moving target, though, as it has imposed specific requirements in 2010, 2017, and 2021. That target will soon move again, after Governor Newsom signed a new law that will start adding more requirements next year.

Here’s a summary of some of the key changes to the law:

The new law explicitly applies to “free-to-pay conversions,” which are generally defined as agreements in which consumers will receive something for free for an initial trial period, but will later be charged unless they cancel before the end of the trial period.
The law explicitly requires “express affirmative consent” to the automatic renewal terms beyond consent to an agreement containing the terms. And in a nod to the growing concern about “dark patterns,” the law prohibits companies from including information in a contract that undermines the ability of consumers to provide affirmative consent to the automatic renewal.
The law will require companies to maintain “verification” records of a consumer’s affirmative consent for at least three years, or one year after the contract is terminated, whichever period is longer.
As with the FTC’s proposed expansion of its Negative Option Rule, the law will make it unlawful for companies to misrepresent any material fact related to the transaction, including any material fact related to the underlying good or service.
The law will generally require companies to allow consumers to cancel through the same method they used to sign up or interact with the business and will prohibit companies from obstructing or delaying a consumer’s attempt to cancel.
The law will put tight parameters on what companies can do to “save” consumers who want to cancel by presenting other offers, both by phone and online. On the phone, companies must first tell consumers that they can stop listening to the offers by reiterating their desire to cancel. If companies present alternative offers online, they must simultaneously and prominently display a button that allows consumers to cancel without viewing those offers.
The law will impose additional requirements for notices to consumers after they have agreed to the terms. For example, companies will have to provide notices of any fee changes and they will have to send annual reminder notices to consumers under an annual automatic renewal agreement. The law will require specific disclosures in these notices.

The law will apply to a contract entered into, amended, or extended on or after July 1, 2025. Although that leaves companies about nine months to prepare, we know that many companies engaged in a last-minute scramble to make the necessary changes after the law was last updated. It’s not too early to start thinking about what changes you’ll need to make to comply with this law and whether or not you want to make those changes for consumers outside of California, as well – especially since other states may be interpreting their laws to include similar requirements (even if they aren’t explicitly mentioned in the laws).

California Updates Its Automatic Renewal Law (Again)