by Traverse Legal, reviewed by Enrico Schaefer - July 29, 2026 - Class Action Attorneys, Complex Litigation, Consumer Class Actions
If you run a subscription business and a plaintiff’s lawyer or a state attorney general has flagged how you handle sign-ups or cancellations, you are looking at real exposure, not a technicality. The same is true if you are trying to get ahead of it before a letter arrives. Here is what the automatic renewal laws require, what happens when you get them wrong, and what to do if you already have a demand letter or a complaint in hand.
An automatic renewal law, or ARL, regulates how businesses enroll customers in subscriptions that renew on their own and charge a card without a fresh purchase. These laws, sometimes called negative option or “click to cancel” laws, set rules for what you disclose before sign-up, how you get consent, and how easily a customer can cancel.
No, your headquarters does not matter. These laws protect the state’s residents, so the rule follows the subscriber. If a customer lives in California and you are based in Florida, you honor California’s rule. More than half the states now have some form of ARL.
The ones driving compliance work right now:
California amended its ARL through AB 2863. Signed September 24, 2024, in force July 1, 2025, amending Bus. & Prof. Code § 17600 et seq. It is the strictest cancellation standard in the country.
Minnesota’s first ARL took effect January 1, 2025. It applies broadly to indefinite or continuously renewing agreements, with an annual reminder requirement that applies regardless of term length.
Virginia amended its law through H.B. 744. Effective July 1, 2024, it requires a renewal notice when a renewal runs past 30 days and pushes the contract beyond 12 months, and it reaches contracts with small businesses, not just consumers.
Utah enacted its Automatic Renewal Contracts Act, effective January 1, 2025. Colorado and New York (Gen. Oblig. Law § 5-903) have longer-standing requirements, and 2025 brought new or amended laws in Arkansas, Connecticut, Maryland, and Massachusetts as well.
Four obligations show up across these statutes. Get all four right and you satisfy most of the patchwork.
Express affirmative consent to the renewal terms, documented separately. California requires the consumer’s express affirmative consent to the automatic renewal terms and records of that consent kept at least three years, or one year after termination, whichever is longer. Consent to your terms of service in general is not enough.
Clear and conspicuous disclosure before enrollment. Renewal conditions, billing frequency, cancellation policy, and pricing have to be disclosed clearly and near the enrollment request.
Cancellation as easy as sign-up. The cancel path must be as easy as the method used to enroll. If the customer signed up online, you have to let them cancel online, at will, without extra steps.
Renewal and price-change notices. California requires notice of a renewal price change at least seven days and no more than 30 days before the new fee takes effect.
Two Minnesota rules go past California and catch businesses that only built to the California standard. Minnesota bars “save” offers during cancellation unless the customer affirmatively agreed to receive them, and it requires a simple website cancel path for any business whose site has profile or subscription-management capability, regardless of how the customer signed up.
Free trials are now squarely covered. California’s AB 2863 expanded the definitions to include free-to-pay conversions, so a free trial that rolls into a paid subscription is regulated.
No. The Eighth Circuit struck down the FTC’s “click to cancel” rule on July 8, 2025, days before its main provisions were to take effect. There is no federal floor to rely on today. State law controls, and the FTC could try again, so build for the state requirements now rather than waiting.
The California ARL has no direct private right of action. Courts read the statute that way, but a violation feeds claims under the Unfair Competition Law (Bus. & Prof. Code § 17200), the False Advertising Law (§ 17500), and the Consumers Legal Remedies Act (Civ. Code § 1750). That is where the money is. Remedies include restitution of every charge, treated as an “unconditional gift” under § 17603, statutory damages up to $1,000 per violation under the CLRA, injunctive relief, and plaintiffs’ attorneys’ fees. Multiply per-violation damages across a subscriber base and a single flawed checkout flow becomes a class action.
Standing is the pressure point. In Mayron v. Google (Cal. Ct. App. 2020), the court held that the unconditional-gift provision alone does not confer UCL standing; the plaintiff has to tie the payment to the violation. That is a defense worth knowing before you concede anything. Alongside private class actions, state attorneys general enforce these laws directly.
Look for a firm that does both sides of this work: defends ARL demand letters and class actions, and builds compliant subscription flows, consent language, and cancellation paths. One without the other leaves a gap. Look for counsel who work across the states where you actually have subscribers, because California, Minnesota, and Virginia do not line up, and who work settlement-first where the exposure warrants it rather than running up fees on a claim that should resolve early.
Traverse, Attorneys and Advisors represents subscription and SaaS businesses on both the compliance and the defense side of automatic renewal law: reviewing and rebuilding sign-up, consent, disclosure, and cancellation flows against the current California, Minnesota, and Virginia requirements, and responding to demand letters and class claims brought under the ARL and related consumer statutes. If you have a letter, a complaint, or a flow you are not sure about, we can assess the exposure and the path.
Does my business have to comply if I am not located in California? Yes, if you have subscribers there. The automatic renewal laws protect the state’s residents, so they apply based on where your customer lives, not where your company sits.
Are free trials covered by these laws? Yes. California now defines automatic renewals to include free-to-pay conversions, so a free trial that converts to a paid subscription is regulated the same as any other auto-renewal.
Can I be sued personally under the automatic renewal law? California’s ARL has no direct private right of action, but plaintiffs sue under the UCL, FAL, and CLRA using the ARL violation as the predicate, and those carry restitution, statutory damages, and attorneys’ fees.
Is the FTC click to cancel rule still in effect? No. The Eighth Circuit vacated it on July 8, 2025. State automatic renewal laws still apply and are now the controlling standard.
What are the penalties for an automatic renewal violation? Under California law, charges can be treated as unconditional gifts subject to full refund, CLRA statutory damages can reach $1,000 per violation, and prevailing plaintiffs can recover attorneys’ fees, on top of injunctive relief and potential AG enforcement.
How do I make my cancellation process compliant? At a minimum, let customers cancel through the same medium they used to sign up, offer online cancellation if they signed up online, remove retention hurdles, and, for Minnesota, provide a website cancel path and drop unconsented save offers.
What should I do first if I get a demand letter? Preserve your current flow and consent records, avoid silent changes, size the per-violation exposure, and get counsel before responding.
Enrico Schaefer
Traverse, Attorneys and Advisors
enrico.schaefer@traverselegal.com
www.traverselegal.com
This article is general information, not legal advice, and does not create an attorney-client relationship. Automatic renewal laws vary by state and change often; consult counsel about your specific situation.
📚 Get AI-powered insights from this content:
As a founding partner of Traverse Legal, PLC, he has more than thirty years of experience as an attorney for both established companies and emerging start-ups. His extensive experience includes navigating technology law matters and complex litigation throughout the United States.
We’re here to field your questions and concerns. If you are a company able to pay a reasonable legal fee each month, please contact us today.
This page has been written, edited, and reviewed by a team of legal writers following our comprehensive editorial guidelines. This page was approved by attorney Enrico Schaefer, who has more than 20 years of legal experience as a practicing Business, IP, and Technology Law litigation attorney.
