California Advertising: Automatic Renewal & Continuous Service Offers

by Bill McClellan on Jul 13, 2017 3:20:04 PM Advocacy

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As you know, ERA has a laser focus on advocating before the Federal Trade Commission, Congress, and the like on your behalf. Due to the nature of the issues the association engages with, it's rare that a state legislative issue rises to the forefront and creates material risk for industry participants around the country. California’s engagement on CAN-SPAM in the early 2000's was an exception to this general rule. However, there is now another California bill, SB 313, that rises to that level. It could potentially have far reaching global implications that you should know about and follow.
 
As introduced by Senator Robert M. Hertzberg, SB 313 would affect trial offers, introductory offers, or free gifts used as incentives to enroll in an automatic renewal program by requiring a separate, stand-alone opt-in for the trial, introductory, or free component of the offer. The bill would also require that consumers be able to cancel automatic renewal offers “as easily as” they consented to them, and would require notice to consumers three to seven days before taking the next payment in continuous service offers. In summary, the bill would impose new and unnecessary burdens on legitimate businesses that offer automatic renewal and continuous services contracts in a way that is not viable for business and not helpful for consumers.

ERA is committed to responsible marketing practices that benefit everyone. However, we do not believe that this legislation fits that high standard as currently written. Therefore we have submitted a comment letter in general opposition while pointing out potential areas for improvement if the legislation proceeds.

In particular:

  • a standalone consent form is confusing and impractical with California law already prohibiting deceptive marketing practices
  • the concept of having additional checkboxes specifically for introductory, trial, or free gift offers is draconian and will ultimately create confusion for consumers
  • SB 313’s current cancellation requirements are vague and ultimately unworkable
  • these new marketing requirements will unreasonably burden businesses by creating an unworkable patchwork of different state-level rules that will seriously hamper nationally scaled business practices. 

Keep an eye on the developments for SB 313 as the next scheduled hearing date is Tuesday, July 18, 2017. Further, ERA commends the work led by the California Chamber of Commerce and supports amendments they have proposed to SB 313, which the Chamber submitted on July 5, 2017. Among other things, these proposed revisions would eliminate requirements to create an unworkable multi-step user interface for enrollment in affected offers.

We will continue to follow and work this issue on your behalf so stay tuned for more information as conditions merit. 


 About the Author

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Bill McClellan serves as ERA's Vice President of Government Affairs. Prior to joining the association, Bill worked as a lobbyist at the Georgia Automobile Dealers Association, covering the state legislature and Georgia's congressional delegation. Before working for the GADA, Bill managed political campaigns at both the congressional and state constitutional levels.

 

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