Written by: Dotan Hammer
The common business practice of automatically renewing consumer subscription plans is facing new and significant regulatory requirements under state laws in the United States. State-legislated consumer auto-renewal rules are taking effect, including in key business states such as New York and California.
New York
New York recently amended its auto-renewal law with stricter requirements for businesses using automatic renewal arrangements in their consumer subscription plans. The law applies to any business, including online services and apps, that offers renewing subscription plans to New York consumers. The law does not exempt businesses operating online that are established outside New York or outside the United States.
The amended law requires businesses to provide a notice to consumers under a much stricter ‘clear and conspicuous’ standard than before, regarding any automatically renewing subscription. The notice must include the amount of the costs that will be charged, the frequency of charges, and the deadline by which the consumer must act to prevent or stop further charges.
Businesses must also offer a cancellation mechanism that is always available and at least as easy to access and use as the mechanism by which the consumer provided consent to the automatically renewing subscription.
Subscription plans spanning one year or longer also require a reminder notification to the consumer at least fifteen days but no more than forty-five days, before, the automatic renewal date. These notifications should be sent in a manner selected by the consumer, including text, email, app notification, or any other notification channel offered by the business. Material changes to the subscription plan must be communicated to consumers in the same manner, at least five business days prior to the date of the change.
The amended New York law takes effect on November 5, 2025.
California
California also recently amended its auto-renewal law with stricter requirements for businesses using automatic renewal arrangement in their consumer subscription plans. Like the law in New York, the law in California applies to any business that offers renewing subscription plans to consumers residing in California.
A new key requirement in the amended law is that businesses must obtain the consumer’s “express affirmative consent” to any auto-renewal of periodic subscriptions, separate from the consumer’s consent to the overall contract.
Another new requirement for businesses is the obligation to issue consumers a reminder, once a year (regardless of the subscription plan’s frequency) – through the same medium that the business ordinarily interacts with the consumer, or the medium in which the consumer confirmed the auto-renewal. Consumers must be able to manage or cancel their subscription through that same medium.
Moreover, if the business wishes to change the terms in the automatically renewing plan to which the consumer is subscribed, it must notify the consumer 7-30 days before the changes take effect.
California’s amended automatic renewal law applies to contracts “entered into, amended, or extended” on or after July 1, 2025.
Takeaways
Digital retailers (offering tangible goods or online services) whose consumer base includes U.S. consumers and who offer automatically renewing subscriptions should take stock of the legal developments in the rules governing auto-renewals. These companies should determine what adjustments are necessary in their business practices and in their communications with consumers and develop a plan to implement the required adjustments.
We are available to assist with specific guidance and advice on this topic.
Dotan Hammer, Head of Global Privacy
Cyber, Privacy, and Copyright Group
Pearl Cohen Zedek Latzer Baratz
This update is intended for general knowledge purposes only. It does not cover all provisions of the regulations and the subject matter. It does not constitute legal advice and should not be relied upon as such.
