On July 1, California's amended autorenewal law takes effect, and the Federal Trade Commission's (FTC) updated enforcement deadline for the primary requirements of the updated Negative Option Rule (so-called Click to Cancel Rule) occurs two weeks later. Although the Negative Option Rule is subject to the Senate's June 9 resolution for disapproval under the Congressional Review Act (CRA) and an ongoing court challenge, companies should nevertheless take heed. If your business hasn't updated its autorenewal practices to comply with the changes, now is the time.
(1) Disclosures
California's disclosure requirements have not changed significantly. However, the Negative Option Rule largely tracks these requirements, making California's standard the de facto national standard.
(2) Consent
California law now requires "express affirmative consent" to the automatic renewal. The statute does not mandate a specific consent method, but we expect regulators and class action plaintiffs to argue that the amended law requires an unchecked checkbox or similar mechanism.
The Negative Option Rule requires affirmative, unambiguous consent to the negative option feature, which must be obtained separately from any other part of the transaction. Like California, we anticipate the FTC and state regulators to argue this requires a separate unchecked checkbox or similar mechanism to obtain consent to the autorenewal, and we expect this issue ("is a checkbox required?") to be highly litigated.
Notably, California's law now has two sections regarding consent: (1) consent to the agreement containing the automatic renewal offer terms or continuous service offer terms; and (2) consent to the automatic renewal or continuous service offer terms. Though these appear in two separate sections, it is unlikely the legislature intended the law to impose new requirements for the website terms and conditions, i.e., the "agreement" containing the autorenewal terms.
(3) Cancellation
California's law previously required businesses to offer online cancellation to customers who enrolled online through a prominently located direct hyperlink or button within the customer's user account, profile, device, or settings; or an immediately accessible pre-formatted termination email.
Although the law still requires companies to process cancellation immediately with no additional steps or screens, it now allows businesses to present one single discount or benefit (i.e., one save attempt), as long as the customer is clearly and conspicuously informed that they can cancel at any time by stating or clicking they wish to cancel. The "cancellation" button must be displayed prominently and labeled "click to cancel" or words to that effect and appear immediately next to the save attempt. If the customer clicks this button, the business must immediately process the cancellation.
The law also addresses telephone cancellations, when offered, such as stating that voicemail cancellation requests must be honored within one business day.
The Negative Option Rule states the cancellation mechanism must be at least as simple as the method used to enroll, and must be through the same medium the customer used to enroll, including through the same mobile application, text, chat, instant message, email, software, or any online service. The mechanism must be easy to find when the customer seeks to cancel; must not require interacting with a live or virtual agent (e.g., chatbots) unless the customer used one to enroll; and must be easy to locate and use. For telephone cancellations, the telephone number must be answered or records messages, must be available during normal business hours, and must not be more costly than the number used to enroll.
(4) Annual Reminders (Even for Subscription Terms Shorter Than One Year?)
The FTC's Negative Option Rule does not address annual renewal reminders. California's existing law required renewal reminders for subscriptions with an initial term of one year or more (i.e., yearly subscriptions). The amended law introduces ambiguous language we expect plaintiffs and regulators to argue requires yearly renewal reminders, regardless of the subscription's length.
(5) Additional Notices
California's law already requires companies to send an additional notice 3-21 days before the discounted period ends for introductory periods lasting longer than 31 days that convert to full-priced subscriptions, including for free and discounted offers.
But California's updated law includes an odd new provision, stating that if there is a change in the fee charged under an existing offer, the business must provide notice 7-30 days before the fee change takes effect—even if the customer already affirmatively agreed to the fee change in their existing plan. It is unclear how these two requirements will be reconciled and applied to free or discounted trial offers lasting longer than 31 days, and whether challengers will argue that the addition imposes yet another notice requirement. Companies should evaluate their free or discounted trials to determine how to alert customers to the increased subscription price and whether two notices might be needed.
(6) Recordkeeping Requirement
California's amended law and the Negative Option Rule impose new three-year recordkeeping requirements, although businesses should recall that these records are needed for defending lawsuits and should be kept indefinitely.
We wish we could say these are the only upcoming requirements, but new state laws, amendments, and regulations requiring more changes to autorenewal offers will take effect this August and September, and in 2026. Stay tuned for more Fast VAST Updates on those, and if you have questions on compliance, please contact the authors.